The COVID-19 pandemic, and the economic chaos it has brought, has led to an explosion in the federal budget deficit. Nosediving economic growth leading to lower tax revenue, along with increased spending on social programs to get through the crisis, is a simple recipe for a giant gap between tax revenue and government spending.
But one agency’s finances have been hit especially hard by the pandemic, which is compounded by the fact the agency was already on hard times fiscally beforehand. That agency is USCIS, or the United States Citizenship and Immigration Services, and it plans to furlough 13,400 of its employees at the beginning of August if Congress does not allocate $1.2 billion to keep it solvent over the remaining two fiscal years.
USCIS, unlike Immigration and Customs Enforcement (ICE), focuses on the benefits side of immigration policy: mostly through processing applications for visas, asylum, and citizenship.
And unlike most federal agencies, which get their funding from tax revenue, USCIS relies predominantly on fee-for-service. In other words, USCIS pays for most of its functions by charging fees for the various applications it handles.
As The New York Times reported in May, the agency had planned on funding 97 percent of its $4.8 billion budget using fees. But the halts in travel thanks to the virus have led to a massive decline in applications, causing revenue to crash and putting the agency in dire financial straits. USCIS estimated that applications would fall 61 percent this year. However, it was already wrought with financial trouble long before the pandemic.
As the Migration Policy Institute noted, immigration petitions have declined sharply since the 2017 fiscal year due to reams of red tape imposed by the Trump administration. This decline led to a drop in revenue. At the same time, USCIS increased spending on fraud prevention and vetting by $298 million from 2016 to 2020. The Migration Policy Institute’s graph below suggests that such spending was rendering USCIS insolvent as early as fiscal year 2019.
Moreover, the agency instituted frivolous in-person interview requirements for the roughly 334,000 guest workers, spouses, and asylees applying to adjust their status to lawful permanent residency each year. Previously, it was a long standing policy for USCIS to waive these time consuming interviews barring unique circumstances, since these applicants had previously been screened. The agency also rescinded its “prior deference,” policy for visa renewals, meaning that it now treats each visa extension as a brand new case to be investigated, even if the job position, employer, and all other facts surrounding the case were unchanged. Wasteful policies like these are a major reason why processing costs for just five of the agency’s most common forms increased by $500 million from fiscal years 2016-2019, as the table from a recent analysis published in the NYU Journal of Legislation and Public Policy illustrates below.
Because most of the agency’s additional revenue went toward indiscriminate and duplicative vetting practices, the department became less efficient despite having more resources. The Migration Policy Institute pointed out that the wait list in USCIS petitions managed to grow from 1.4 million to 5.7 million despite falling application rates.
Yet, in spite of these growing backlogs, USCIS made no promise to improve processing efficiency when it proposed increasing application fees at the end of last year. The immigration company Boundless noted that the agency didn’t even specify how it would use 57 percent of the extra $1.3 billion in revenue it would receive from the fee hikes. USCIS also stated that it would transfer $122 million of its user fees over to ICE, an unlawful move according to a public comment submitted by the Americans for Prosperity Foundation and the LIBRE Institute. This wouldn’t have been the first time USCIS tried to shift its resources over to ICE. In July of 2019, when the agency was already facing unprecedented backlogs, acting USCIS director Ken Cuccinelli emailed his staffers asking them to perform work for ICE instead.
One major reason why USCIS has been able to spend so recklessly is because its reliance on user fees has left it largely out of the realm of congressional oversight. But at the same time, there’s an economic advantage to funding services through user fees as opposed to taxes. Having beneficiaries of a particular government service also pay the cost of it is economically more efficient and (arguably) fairer than taxation. However, user fees must be matched to the cost of the service provided: raising fees to a rate higher than that is just a tax by another name.
That’s certainly the direction where USCIS has headed in the last few years by forcing immigrants and their sponsors to pay more in fees for lower quality service. Meanwhile, the disincentives of high fees and delayed approval for visas indirectly hurts Americans, as reducing immigration reduces growth and job creation.
Because USCIS’s financial shortfall is mostly self-inflicted, it makes sense for Congress to play an oversight role in how the agency spends its fee revenue. This idea was proposed by U.S. Representatives Tony Cárdenas (D-CA) and Steve Stivers (R-OH) when they introduced the Case Backlog Transparency Act. This bill would require quarterly reports from USCIS and biennial reports from the Government Accountability Office to establish plans for eliminating the net backlog in cases. This would ensure that USCIS can be subject to congressional accountability while staying fee funded.
In the short term, lawmakers should consider alternatives to keep USCIS solvent before appropriating any funds. In addition to rescinding wasteful policies, the agency should also look to maintain its premium processing services, which allows beneficiaries to pay higher fees for quicker service. Previously, USCIS would suspend premium processing whenever it could not meet its 15 day deadline. Rather than suspending this service in the event it can’t reach its self imposed deadline, USCIS ought to extend it to 30 days. The agency should also make premium processing available to more types of forms.
Additionally, USCIS can generate revenue by recapturing the 176,000 green cards that previously went unused due to agency errors. According to the American Immigration Lawyers Association, such a proposal would generate hundreds of millions in revenue. Senators David Perdue (R-GA) and Dick Durbin (D-IL) have already requested that 40,000 of those unused green cards go toward foreign physicians and nurses treating COVID-19 patients in their bill from April, titled the Healthcare Workforce Resilience Act. Additional green cards would also be available for the family members of health care workers under this proposal, all of which will be subject to premium processing.
Declining immigration, along with careless spending, has driven USCIS into a financial hole. In the short term, it might make sense to fund some of the agency with tax revenue if other funding alternatives aren’t enough. But no matter what the immediate solution is for keeping USCIS solvent, American families, businesses, and taxpayers deserve an immigration system that operates with transparency and uses its resources as intended.