A "New IDEA" Whose Time Has Come

By W.D. Reasoner on April 9, 2012

Recently, I wrote a blog about jobs, unemployed workers, and federal monies provided to state and local governments to jump-start "shovel ready" projects. I wondered who, in fact, was manning the shovels, given that there appeared to be no controls in place to ensure that the jobs that presumably resulted from these various public works projects went to American citizens and lawfully authorized workers. It's a question worth investigating and, to my knowledge, no one has done it.

According to the Government Accountability Office (GAO), "As of May 31, 2011, nearly $45 billion (about 95 percent) of Recovery Act transportation funds had been obligated for over 15,000 projects nationwide". Note that the $45 billion is for transportation funds alone, and yet neither the GAO, the Special Inspector General for the Troubled Assets Relief Program (SIG-TARP), nor anyone else can speak authoritatively to the issue of who got the jobs. To me, that is deeply troubling.

What is more, there appears to have been little consideration, either in the halls of Congress when the Recovery Act was passed, nor in the executive branch when it was signed into law, of how to ensure that the funds would actually achieve the purported goal: reducing unemployment for those legally entitled to work.

A key-word search of the American Recovery and Reinvestment Act of 2009 (Public Law 111-5) reveals only three substantive instances in which there is any expressed concern over aliens: The Small Business Administration is prohibited from providing loans to aliens unlawfully in the United States; no loan guarantees may be made pursuant to the Act for any firm that has been deemed by the Secretary of the Department of Homeland Security (DHS) or the Attorney General to have engaged in a pattern or practice of hiring illegal workers; and workers of public agencies or certain firms that relocate to foreign countries, or substantially import goods or services from foreign countries to the detriment of domestic workers, will not be entitled to adjustment assistance.

I applaud those sections, but as I observed previously when the funding involves grants or pass-throughs from the federal government to state or local governments, there appear to be no requirements that those governments, in turn, ensure that the ultimate recipients are lawfully authorized workers — and the executive branch seems to have done no strategic thinking on its end to instill safeguards, whether by attaching conditions to the funding such as a requirement that firms receiving project funding from state or local governments use the E-Verify system. Nor did DHS apparently ever contemplate insisting that its relevant component, Immigration and Customs Enforcement, incorporate worksite audits of key final recipients of federal monies into any of its fiscal year goals. I find all of this incredible and more than a little disturbing.

But there is at least one bill pending in Congress that would go a long way toward ameliorating this gap: the New Illegal Deduction Elimination Act (or "New IDEA Act" in short), introduced by Rep. Steve King (R-Iowa) on December 16 of last year. According to the official summary written by the Congressional Research Service, a nonpartisan arm of the Congress, the New IDEA Act:

  • Amends the Internal Revenue Code to deny a tax deduction for wages and benefits paid to or on behalf of an unauthorized alien. Extends to six years the period for assessing and collecting underpayments of tax due to deductions claimed for wages paid to unauthorized aliens.

  • Directs the Commissioner of Social Security and the Secretaries of Homeland Security (DHS) and the Treasury to jointly establish a program to share information that may lead to the identification of unauthorized aliens.

  • Requires the Secretary of the Treasury to provide taxpayer identity information to the Commissioner of Social Security and the DHS Secretary on employers who paid nondeductible wages to unauthorized aliens and on the aliens to whom such wages were paid.

  • Amends the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 to: (1) make permanent the E-Verify Program for verifying the employment eligibility of alien workers, (2) apply such program to current employees in addition to new hires, (3) establish a rebuttable presumption that employers who participate in the E-Verify Program and obtain confirmation of identity and employment eligibility have not violated hiring requirements under such Act, and (4) allow employers participating in the E-Verify Program to make a conditional offer of employment pending final verification of the identity and employment eligibility of the job applicant.

  • The bill may not be perfect, but it seems to me that this is a New IDEA whose time has come. Congress is in recess at the moment, but let's hope that this bill gets some traction when they reconvene.

Meantime … Hey! GAO! How about looking into what kind of controls should have been instituted to ensure that only lawfully authorized workers got, or are getting, their share of that $45 billion of taxpayer money?