Two of the most pressing concerns on Capitol Hill are 1) finding a way to restore cuts in veterans' pensions that were included in the budget deal brokered by Sen. Patty Murray and Rep. Paul Ryan; and 2) figuring out a plan to pay for extended emergency unemployment insurance for 1.3 million Americans whose benefits have run out.
They are vexing problems, but Republicans, led by Sen. Kelly Ayotte, came up with a proposal to solve them. The only difficulty was, the solution -- finding billions to pay for the restored pensions and unemployment insurance -- involved cracking down on a tax credit program in which illegal immigrants have fraudulently collected billions of dollars in improper payments. Stop the fraud, Ayotte argued, and then use the money saved to pay for pensions and unemployment insurance. It seemed like an elegant solution.
Except that Democrats would have none of it. Putting an end to the fraudulent collection of tax credits by illegal immigrants would hurt the most vulnerable, they argued. "This idea of going after children is one of the worst ideas I have ever heard," Democratic Sen. Barbara Boxer said in floor debate Thursday. "I am shocked — I am shocked. You're going to hurt children. You're going to take away food out of their mouths."
Ayotte's plan was in the form of an amendment to the Democratic bill to extend unemployment insurance. Ayotte broke with most of her Republican colleagues by voting to go forward with the bill; she did so specifically for the purpose of proposing her amendment. But Majority Leader Harry Reid slammed the door on the amendment and would not allow it to be considered.
The Ayotte amendment was remarkably simple. It would have required anyone collecting benefits from a program known as the Additional Child Tax Credit to supply a Social Security number in order to collect the money. An information sheet released by Ayotte's office noted a report from the Treasury Department inspector general explaining fraud in the ACTC program:
In 2011, the Treasury IG reported that individuals who were not authorized to work in the U.S. received $4.2 billion by claiming the ACTC. The ACTC is the refundable portion of the Child Tax Credit (CTC), which can reduce an individual's taxes owed by as much as $1,000 for each qualifying child. The audit found that "the payment of Federal funds through this tax benefit appears to provide an additional incentive for aliens to enter, reside, and work in the United States without authorization, which contradicts Federal law and policy to remove such incentives." The audit was based upon an analysis of tax returns filed by persons with Individual Taxpayer Identification Numbers (ITINs), which are issued to individuals who are required to have a taxpayer identification number for tax purposes but are not eligible to obtain a Social Security Number because they are not authorized to work in the United States…
In a 2012 report from WTHR Indianapolis, one whistleblower characterized the issue as a "huge fraud" that allows undocumented workers to claim the tax credit for children who do not even live in the country. The whistleblower — a tax consultant — stated "we've seen sometimes 10 or 12 dependents, most times nieces and nephews, on these tax forms…the more you put on there, the more you get back." In fact, one of the workers interviewed in the investigation admitted that his address was used to file tax returns by four other undocumented workers who in total claimed 20 children, resulting in tax refunds totaling nearly $30,000.
Congress' Joint Committee on Taxation, Ayotte said, "estimates that this change will save approximately $20 billion over ten years." Ayotte's amendment would not have ended the tax credit program; it simply would have required those receiving the refundable credit to have a Social Security number. It seemed a modest and reasonable measure, especially since it would help solve the difficult problems of veterans' pensions and unemployment insurance. But it was too much for Democrats, and now the Senate is back to square one.