That price tag should make them think twice

Imposing a mandatory Electronic Employment Verification System for all employers to check Social Security numbers of workers could cost $370 million to $470 million a year and increase the severity of identity theft, according to testimony given at a congressional hearing Thursday.

But a Social Security Administration official testified that the agency is willing and able to implement a large-scale verification system provided it receives adequate preparation time and funding.

The verification system, formerly known as Basic Pilot, allows employers to screen a prospective employee against a database of Social Security numbers. It has been operating as a small demonstration project for nearly a decade, though recently it has quadrupled in size to 17,000 employers. President Bush has proposed that it be expanded and made mandatory for all 5.9 million employers as part of his immigration control measures.

The Homeland Security Department has estimated that increasing the capacity of the verification system could cost $70 million a year for program management and $300 million to $400 million a year for compliance activities and staff, Richard Stana, director of homeland security and justice issues for the Government Accountability Office, told the House Subcommittee on Social Security.

The verification system can reduce document fraud ? when people present a false number ? but it cannot reduce identity theft when people present borrowed or stolen documents, Stana testified.

In related testimony, a computer expert noted that the verification system on such a large scale would be vulnerable to breaches, and the consequence of a breach would be severe because the system includes all primary personal identifiers used in this country.

"Any compromise, leak, theft, destruction or alteration of the data would have severe consequences to the individuals involved, including, but not limited to, identify theft and impersonation," said Peter G. Neumann, principal scientist in the computer science laboratory at SRI International Inc., who spoke on behalf of the U.S. public policy committee of the Association for Computing Machinery, a professional group.

Neumann said the system is vulnerable to security risks related to transmission of information, accountability for access to information, scalability to handle at least a thousand-fold increase in user volume, and accuracy of the data.

However, the Social Security Administration is prepared to move forward on the verification system expansion as long as it receives the appropriate support, testified Frederick G. Streckewald, assistant deputy commissioner in the SSA's disability and income security program office.

"It is vitally important that, when Congress makes a decision regarding the implementation of a mandatory program, we have adequate lead-time and resources."

"With these tools, we can effectively expand the EEVS and ensure that it works successfully without impinging on our ability to handle our other workloads," Streckewald said.

But there still is likely to be a risk of errors and false information in employment, verification based on the agency's experience with other types of errors, such as misreported wages, said Steve Schaeffer, assistant inspector general for the Social Security Administration Office of the Inspector General.

The Earnings Suspense File, the agency's repository for misreported wages, had accumulated about $586 billion as of October 2006, Schaeffer said. In 2004 alone, the misreported wages totaled $66 billion.

"Each wage item posted to the Earnings Suspense File represents a possible error in the calculation of someone's Social Security benefits or payments, and each represents a cost to the taxpayer incurred in trying to correct the misreported wage item," Schaeffer said.