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Hearing of Government Management Information Technology Subcommittee of the House Government Reform & Oversight Committee Subject: Universal ID Cards

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REP. RON PAUL (R-TX): Thank you, Mr. Chairman. I really appreciate this opportunity, and I want to thank you for holding these hearings. The issue of privacy certainly is getting the attention of many people in this country, and it's starting to get the attention of many members of Congress. I do have a written statement that I would like to submit.

REP. HORN: Well, without objection, that will be. I might say, the minute we introduce any witness here, their full statement goes in automatically.

REP. PAUL: And I would like to add, there is one letter that came from a constituent that I would like to submit that letter as well.

REP. HORN: Without objection, at this point in the record.

REP. PAUL: Thank you. The issue of privacy certainly has been catching the attention of a lot of people. And last year I introduced this legislation to try to deal with it because we do hear from a lot of our voters who are saying, "Well, the Social Security number is being used too often and improperly." And in a technical sense, they're right. They're right in the sense that in a free society, they're not supposed to be monitored by the government by the way the Social Security number monitors us.

When we established the Social Security number in 1935-1936, it was never intended to be a national identifier. In 1970, the Congress passed a bill called the Bank Secrecy Act. That sounds like maybe it would preserve secrecy, but it did exactly the opposite. It made sure the banks knew more about us and the government got hold of more information.

Congress responded in 1974 by passing the Privacy Act, and it too sounded good and has a very good sentence in there that the taxpayers, the voters, will be protected and the Social Security number cannot be used as a national identifier. But unfortunately, in the same piece of legislation, it said the Congress could enact anything they want and mandate the use of the Social Security number.

So Congress since that time has ignored the good statement and picked up on the other statement that said that they do have the authority, according to the Privacy Act of 1974. And the Congresses have not been bashful. They're at 40 different programs now that use the Social Security number as the identifier. And in 1996, there was a giant leap forward to even expanding this more so, because the Immigration Act was written with a mandate for the Transportation Department to develop a national ID card through our driver's licenses.

Fortunately, with some effort, we've been able to rescind that particular piece of that authority. But also, in 1996 the Health Insurance Portability Act established a need and an authority to set up a national data bank and to have a national medical identifier. And today, with the government being so much involved in medicine, it was argued that this will make it more efficient for government to monitor and to manage medical care because the government is dealing with the HMOs, and this will make it more efficient.

And there is some plausibility to that particular argument, but it also invites the risks. Just as happens so often, what looks like a good program always has a down side, and the down side is that the government is going to have all our medical records. And as a physician, I certainly think that's a very dangerous thing, because our government doesn't have a real good record for protecting our privacy. They should be protecting our privacy, and there's a lot more time spent invading our privacy, because we do hear stories and they're not limited to one administration where the IRS has been abusive and has been used to invade our privacy, as well as we've heard about FBI files being abused.

So the American people are very frightened by all this. And my theory on why we heard so much from our constituents this year on the Census wasn't that the Census was that much more onerous. You know, I think the questions were probably similar to what's been going on for the last 20 or 30 years, because they've always asked a lot of questions.

I think the American people now are much more nervous about giving information to the government, and that's why I think they were complaining so much and worried about it. And even within the Census, they've introduced an idea that they were going to expand on the monitoring approach by having a test in there. They actually ask, as a test, 21,000 people for their Social Security numbers to see what they could learn and how well the people would respond.

So if we don't pay more attention to this, soon the Census will be monitored and our numbers will be used to report our numbers and our names to the Census. Already today, just about everything we do needs a Social Security number; I mean, if we're looking for a job, a birth certificate, death certificate, bank accounts, medical care. It's on and on; driver's licenses. There's some now that even in most states you can't even get a fishing license without a Social Security number.

This invites trouble, and the trouble is -- one of the worst down sides for this is that by having a universal ID number, it's a good way to bring all our information together of every individual. If we don't do it, we're in trouble with the government. Once this information is brought together, the job of ID becomes relatively easy. All you have to do is get the Social Security number. And because of government mandates, we've set it up for them.

And my bill deals with this. You can't use your Social Security number for anything other than Social Security. And take away the mandates. Don't tell the states, "Well, in order for you to get your highway funds, you'll put the Social Security number on your driver's license," those types of band-aids. We wouldn't be able to do that either.

So this is a broad approach. It's a serious approach. There's a lot of support for it. But I also understand very clearly the arguments against it, because they talk about government will be less effective. They believe that they can cut down on fraud if they use the Social Security number. But the real purpose of government in a free society is not to make the government efficient. The purpose of government in a free society should be to preserve our freedoms. And to me, privacy is equivalent to if not synonymous with freedom.

So if we are carelessly willing to sacrifice so much of our privacy and so much of our freedom for the argument that government may be more efficient, I think it's a dangerous direction that we're going in. So this is the reason I bring this to you. I appreciate very much your willingness to listen and to look at it, because I don't think this issue is going to go away.

And I think the nice part about it, from my viewpoint, from a civil libertarian viewpoint, is that it isn't, you know, a right-wing conservative issue and it's not a left-wing liberal issue. It is a civil libertarian issue which brings in a lot of people from both sides. And although we get a lot of support and understanding for the need for this, there's also the great hesitation to endorse this because they're frightened about what it might do in handicapping the efficiency of government. And I'll yield for questions.

REP. HORN: Let me ask you about Medicare. When we drafted the Medicare bill -- and I was on that team in the Senate staff in 1965 -- we followed essentially how Social Security had done it, and we modeled the Medicare part on it. Now, would you permit the use of the Social Security number for medical files in Medicare, since it's needed to make sure there are real people getting benefits and not somebody that's got a number? And there's no question there's a lot of misuse of the number in terms of people looking at the dead and all the rest. And if it hasn't been changed in Baltimore, I guess it gets away with it. But we'll get some testimony on that later. But how do you feel about including Medicare with a Social Security number?

REP. PAUL: I would think -- my first thoughts are, psychologically in my mind, without thinking it through in detail legally, I think of Medicare and Social Security being pretty close together. I think if that were the only problem, I don't think I would be here, you know, with this piece of legislation. But I think if we were to use it for Medicare, it could be very, very strictly limited to that, with the idea that that's part of the Social Security system, because I think of it as the same.

But I think when you get into the other medical programs, whether it's the managed care system that government has so much to do with or the Medicaid system and on and on, then I would not be nearly that generous. I would say that you should have another identifier, because there will always be the efficiency argument, whether it's an educational program or a medical program. But strictly limited to Medicare for the protection of the individuals, I think, is very important.

REP. HORN: In the testimony we expect to hear on the next panel, it'll be pointed out that if there isn't a common identifier when government agencies attempt to locate, that it creates a problem; for example, deadbeat dads. People with similar names may be mistakenly identified. And there is a real problem where the people aren't submitting their alimony ordered by the court. They move across county lines in California or they move across state lines. How would you address that problem if your bill became law?

REP. PAUL: I think states faced this problem prior to the time we had Social Security, because I don't think of deadbeat dads as a separate issue. I think that's a problem of somebody not paying their bills and meeting up to their financial responsibilities. So I would say that is a state issue. And if you're dealing with a cross-state problem, then those two states have to get together and work it out.

But prior to even the 1960s, we didn't have that, because it was only in the 1960s when we started really using it, and even in the 1970s, where we dealt with all the financial accounts. We didn't even have the Social Security number on our tax returns until 1961. So I would say that that is not the job of the federal government or the Congress to facilitate this collection. This is a very serious problem, but prior to the Social Security number it was handled as it is today, I'm sure.

REP. HORN: Well, I remember one study we had a few years ago on Pell grants, and those are the ones where generally they help the state schools and colleges. And one person was eligible on Pell grants in terms of the information he showed at the student financial aid office, but actually he was a millionaire. And that was found through interconnection of his Social Security number with that in the tax record. Does that bother you?

REP. PAUL: Well, it bothers me that fraud was committed, but I do not think that we eliminate the prosecution of fraud by preserving freedom for the large majority of people. We shouldn't sacrifice the privacy of 99 people because you might catch one person that's going to commit fraud. I don't think we sacrifice our ability to pursue fraud, because there would be ways of finding out if this person, you know, lied. But at the same time, you don't want to penalize and assume somebody is guilty of something and put a tremendous burden on them to follow so many of these privacy laws and let the government accumulate this information. I think the supposed benefit is not worth the sacrifice of personal liberty.

REP. HORN: My last question; then I'll turn it over to my colleague, Mr. Turner, your colleague from Texas. The written testimony of some of the second-panel witnesses suggest adding a penalty session. What's your view of that idea?

REP. PAUL: A penalty --

REP. HORN: Penalty session; you can look at it either way. If you misuse the Social Security number, should there be a penalty?

REP. PAUL: Well, I certainly think there should be a penalty on the U.S. government when they misuse the Social Security number. But we should just prohibit by law the abuse of the Social Security number, and then there would be -- you know, I think they used it because they've been granted the authority to use it and we encourage it. And as we set up a new program, we're always anxious to say, "Oh, the Social Security number is great.

" So we literally have it from cradle to grave now. So the penalty -- are you thinking about a businessman misusing the Social Security number?

REP. HORN: Well, I'm thinking about your bill, if it was put on the law books. Do you think there ought to be a penalty session to make sure that people obey that particular bill?

REP. PAUL: And you're referring to government people?

REP. HORN: I'm referring to anybody that uses a Social Security number, because I'm assuming that's what you're banning in your bill.

REP. PAUL: Well, I hadn't thought about that, and maybe I'm overly optimistic that if we pass the law and say, "Thou shalt not use the Social Security number," I would expect that we wouldn't use the Social Security number. I would think that if it were abused and the Social Security number was being forced on a state or Congress kept passing these laws, I guess the only penalty would be eventually at the polls, you know. And the American people would have to invoke the penalty. Right now I think we're getting close to that point where the American people are getting nervous about the invasion of their privacy, and it's an issue that they'd like to hear more about from us.

REP. HORN: So you don't feel that a penalty section is needed.

REP. PAUL: Well, at the moment I don't, but I'd have to admit I haven't thought it through completely. And I would certainly be open to suggestions on that if I could see the need for it.

REP. HORN: Well, I thank you. And I now yield to the gentleman from Texas, the ranking member here, Mr. Turner, for an opening statement as well as questioning the witness.

REP. JIM TURNER (D-TX): Thank you, Mr. Chairman. Welcome, Mr. Paul, a fellow Texan.

REP. PAUL: Thank you.

REP. TURNER: It's always good to have Texans before our committee. I really wanted to ask you; there's another bill that Mr. Kleczka has that would ban the use of Social Security number in both the public and the private sector. And I know you addressed that in your opening remarks, but expand on that a little bit. Why, if you fear the use of the Social Security number by government agencies contributes to the invasion of our privacy, why wouldn't you just say, "Let's just tell the private sector they shouldn't use it as well?"

REP. PAUL: Well, I deal with that, but a little more indirectly, because if the private sector uses the number, mainly because we've made it convenient for them to use it and we've mandated it too often. When you come to financial records -- I mean, we tell the banks what to do, and any time we do anything, we put the pressure on them to use that number, and then they accumulate the information and they're tempted to sell it and do whatever. And I think the fact that we do get them to accumulate all this information makes it much easier for identity theft.

But I don't think the answer to our problem is dealing with another set of regulations on business people and, you know, fill out these forms; like last year, when we passed the banking legislation, we said, "Well, what we need to do is make sure that some of this information isn't transferred, you know, within a certain corporation or closely aligned corporation." But what that actually did was mandated more forms to be filled out, which means there's more information accumulated under the Social Security number.

And I think the abuse in the private sector comes as a secondary consequence. If we weren't using it so much, there would be no reason for them to do it. But I don't see the answer coming by just putting another constraint or another form to be filled out by the private sector. I don't see that's where the problem is.

REP. TURNER: So you think the private sector would just slowly quit using the Social Security number? I mean, there's obviously multitudes of records out there that have all of us identified by our Social Security number.

REP. PAUL: If we didn't tie it all together, I think they would lose their enthusiasm for using it. And I don't see a convenient way of saying -- and we could say it, but can you imagine telling every individual that they are not allowed to use it? Then that means that we would have more snooping to make sure that nobody ever asked somebody for their Social Security number, you know.

But I think the abuse in this area should be dealt with on a property rights issue, fraud issue, local issue, but not by leaving the system in place and coming up with more of another rule. And this is our temptation here. Instead of looking at the basic problem, we're more tempted to come in and set up more rules and regulations on the private sector and not dealing with the source of the problem, which was our carelessness in allowing the universal identifier to be developed.

I mean, although it's not admitted that it's here and we've had a couple of victories, like "Know Your Customer," that was something I don't think too many of us supported, and they withdrew it. That was more banking regulations, as well as the national ID card authority. We got that removed. So we have minor victories, but I don't think overall we've reversed the trend, the need for, the desire for and the so-called benefits of a universal identifier very, very strong. And I think that's where the problem is and not with the private sector participating in the use of a Social Security number when they probably don't even need to.

You know, sometimes you wonder why so many businesses, you know, are always asking you for these Social Security numbers, and even when it's not the law. But people have been so conditioned to do it, so we have the government mandate the encouragement -- everybody accepts the Social Security number. Then we have businesses sort of jumping on. But I think the solution is back to making sure that we do not establish the principle of a national identifier. That's what my bill deals with.

REP. TURNER: Have you been able to address the cost of the abandonment of the use of the Social Security number by the federal government agencies?

REP. PAUL: No, not directly. But I know the cost of not doing it is very, very high in terms of privacy and individual liberty. And that's the cost that I'm looking at, because there's such an intrusion. There's a cost in that we facilitate ID theft. So that cost is tremendous. How much the cost would be if, let's say, we continue with our same type of federal education programs and medical programs; if they had different numbers, I'm not sure there would be a tremendous increase in cost on that. You know, they would just have to come up with a different number.

REP. TURNER: I guess there would also be some cost to state governments, maybe even local governments, that have come to rely on the Social Security number.

REP. PAUL: They'd have to quit relying on it. In the state of Texas, you know that it's only recent that we've had to give our Social Security number. It isn't on our driver's license. But that's the direction we were and probably still are moving in, that every state will have a universal driver's license with Social Security numbers. But we're now required to give it, even though it doesn't appear. So there is the connection.

The intertwining of being able to monitor and know everything about everybody is the universal identifier, which is the Social Security number. I don't want any pressure. As a matter of fact, my bill deals with this. We as a Congress cannot put pressure on the state to use the Social Security number. And maybe your question is saying, well, maybe the state wants to. And I think if we take away the incentive or the pressure and the mandates, they're less likely to.

REP. TURNER: We had a hearing just the other day in this committee on a proposal by Representative Hutchinson to have a study commission on the issue of privacy. I know we have several bills that are moving through the Congress, some regulations that have been proposed trying to protect our privacy.

Do you feel that we can point to some specific abuses that relate to the use of the Social Security number, where our privacy has been invaded? Do we have some specific examples on a wider scale that might point out the scope of the problem that you perceive that exists?

REP. PAUL: I don't think that would be difficult to find. Certainly the notion that we have a medical data bank, and assuming that there would be never a violation is almost too much to believe. And we do know specifically that our government too often has abused records like FBI records and IRS records, and they were never to be used in the political sense. And yet I think both administrations have been, you know, guilty of abuse of using these records in a political sense.

So I think people really are fearful of the government having their medical records. And we've made no inroads at all. We have made inroads on the national ID card, but we've made no progress at all in slowing up the national medical data bank with a Social Security number as the identifier. So I can't show you an example of how the government has, you know, abused that, but just gut instinct tells us it's not a very good idea. And the American people don't want it. That, I'm sure of.

REP. TURNER: Of course, the medical records are, by and large, in the private sector. Would there perhaps be some way to center in on specific areas that are particularly sensitive, like medical records, and perhaps do something in that area rather than just across the board in a blanket way?

REP. PAUL: Yeah, there'd be a lot better way. But that really confuses the movement toward national universal health care, because we're moving in that direction because so much is managed health care and HMOs. And once Medicare starts paying for HMOs, you know, they have to monitor it. They have to make sure patients don't abuse it, doctors don't abuse it, hospitals don't abuse is. And there's always the temptation to abuse the system, so the argument will be "We have to be able to monitor it." And then there'll be a good -- they use the idea, "Well, we need this information because it's good to study health, you know, and we get statistics and we can learn more about medicine." There'll be all these wonderful things that they're going to do.

So the odds of us developing a medical care system that is being developed and being able to maintain medical records, as I did for 30 years -- I mean, my medical records were in the office in a filing cabinet, and that was it. But now, when you get into the managed care system and the HMO, I mean, they can march in and look at your medical records and find out, you know, whether you've been abusing medical care, and they will just go through your files. And for efficiency's sake, they want these files to be changed.

You know, if somebody moves to New York, they don't want it the old-fashioned way that you mail the records and the patient carries them. They want HHS to have access to this and just transfer these medical files. That's what's coming, unless we're able to stop this. And even my bill doesn't deal with that overall problem as much as it slows it up in that it wouldn't have the universal identifier.

I mean, I would like to address the medical care system in this country, but that's not what this does. It just says that if you're going to move in the direction of a single-payer universal health care system in this country, which we're moving rapidly toward, that they cannot use the Social Security number so that they can do the matching up.

And, you know, when people want to know about individuals and they have a Social Security number and they can look up and find every piece of property you own, what your bank account is, and what kind of a disease you have, it will undermine the practice of medicine like you've never seen it, because I've talked to other physicians, and the natural tendency is to not keep good medical records.

You know, somebody comes in and they have controversial things to talk about. I mean, the good doctor's not going to write it down, because it's not going to be private. And we're moving in that direction. And the other physicians in Congress have admitted that to me already, that they have the same concerns.

REP. TURNER: Thank you, Mr. Chairman.

REP. HORN: I just have one comment on this, and that is numberitis. There's a very interesting editorial in the Newark, New Jersey Star-Ledger, and the columnist and editorial board notes, "We are challenged to remember E-mail addresses, office extension numbers, fax numbers, paging IDs, PIN numbers -- personal identification numbers -- Web site addresses. The other day," he says, "I telephoned a greenhouse manufacturer to buy some supplies. The service representative wanted to know my customer identification number. I told the woman I hadn't a clue. Then she asked for a serial number. But I wasn't about to trot out to the greenhouse and copy it down. Finally she settled for my zip code, and bingo, I was able to place my order. We must be given the third degree every time we want to purchase something. Do we really have to?"

And then it goes on, "In simpler times, all I had to know was my Social Security number and a couple of phone numbers. Now my head is so loaded with codes and personal identification numbers that it's understandable why my memory bank crashes from time to time. I'm not a techie or a geek. Programming isn't my strong suit. I've given up, for instance, the notion that I will ever learn how to program a video recorder. Besides that, I have neither the time nor the inclination to sit down and program numerical codes into, say, a Palm Pilot," et cetera.

So there's a lot of aspects of this, and we appreciate you coming here. And since my colleague, Mr. Turner, mentioned Representative Kleczka's statement here, if you'd like it put in the record at this point --

REP. TURNER: Yes, Mr. Chairman, Mr. Kleczka requested that we include his statement in the record.

REP. HORN: Without objection, it'll be put in the record at this place. Now, it's rather interesting. He's got a bill in also, and his bill is H.R. 1450, which is the Personal Information Privacy Act; PIPA, in other words. We're getting just like the executive bureaucracy here. He said H.R. 1450 would allow credit headers to include only names and addresses. The credit header could include an individual's telephone number only if it is already listed in the phone book.

Currently information such as Social Security numbers and mother's maiden names are available on credit headers, which are not protected by the Fair Credit Reporting Act. Under the FCRA, a person can purchase a credit report only if they are making a firm offer of credit or insurance or if they have the consumer's consent. Credit headers, which contain the aforementioned sensitive information, have no such protections and may be purchased by anyone, and so forth. It's a very interesting bill also. I don't know if you've had a chance to look at that.

REP. PAUL: Not in great detail, but we've talked about and we testified at another committee on that. And Jerry and I have worked closely together because we've written a letter to the clerk about why our Social Security numbers are on our voting cards, you know. (Laughs.) So we can't even vote without our Social Security number.

REP. HORN: That's right.

REP. PAUL: But most of us, you know, have not paid much attention to it. And they claim, "Well, we give you a chance to have it on or not," which isn't exactly true. So maybe next time, next go- around, everybody's going to have to fill out a form. "Do you want your Social Security number on your voting card or not?" Maybe if we don't have a Social Security number, we won't get to vote.

REP. HORN: And they'll probably ask us to put the Social Security number on the form we fill out, right?

REP. PAUL: That's right. (Laughs.)

REP. HORN: Okay. Well, thank you so much for coming.

REP. PAUL: Thank you very much.

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