This sudden legislative attention to a decades-old problem stems from an Associated Press story two weeks ago about Social Security payments to Nazi war criminals. The Nazis in question immigrated to the U.S. after World War II, worked there long enough to qualify for Social Security, but then departed in the middle of Department of Justice investigations against them and then renounced their U.S. citizenship to head off the denaturalisation and deportation cases against them.
I was initially concerned that this bill might be used to attempt to deny Social Security benefits to other people who gave up citizenship, but as it turns out, the bill is written narrowly enough to target only Nazi war criminals — not even war criminals from other countries, let alone ordinary emigrants.
Sponsors and purpose
In her speech introducing the bill, Carolyn Maloney (D-NY) stated:
After the conclusion of World War II, thousands of people who participated in Nazi persecution fled to the United States and lied about their pasts to gain U.S. citizenship. The Department of Justice has successfully identified and deported hundreds of these individuals over more than three decades. There were, however, individuals who left the country of their own accord before being issued an order of removal, which would have terminated all federal benefits, including Social Security. Without this order, eligibility for these benefits remained intact and these individuals collected millions of dollars in federal benefit checks.
The Nazi Social Security Benefits Termination Act of 2014 would require the U.S. Attorney General to notify the Social Security Commissioner to terminate benefits for any individual who has renounced citizenship or been denaturalized on the grounds of participation in Nazi persecution. In the event that the Department of Justice identifies Nazi war criminals still residing in the U.S., it may initiate its denaturalization process as normal, and this rule change would allow benefits termination at the end of that process. The measure also requires an annual report to Congress from the Department of Justice on the number of individuals it has determined are disqualified for Social Security benefits under this new legislation as well as the number of active investigations against Nazi war criminals it continues to pursue.
Maloney is one of the few people in Congress who has made any effort on behalf of U.S. Persons abroad, but looking at the list of other co-sponsors might make you nervous: it’s filled with people who have repeatedly expressed their contempt for us. In the Senate, there’s Bob Casey and Chuck Schumer of Ex-PATRIOT Act infamy.
And in the House there’s an even longer list of reprobates. First we see Keith Ellison (D-MN), who has led the Congressional Progressive Caucus’ attempts to kill what they insultingly & misleadingly call the “foreign earned income loophole”. After that we have David Cicilline (D-RI) and Hank Johnson (D-GA), who have lent their strength to Carl Levin’s various crusades to make it impossible for U.S. emigrants to conduct ordinary financial transactions where they live. And finally there’s Jim McGovern (D-MA) and Steve Cohen (D-TN), who despite their membership in the Americans Abroad Caucus have supported numerous pieces of legislation to make life more miserable for actual Americans abroad, including passport confiscation and almost everything else mentioned in this paragraph.
In 1995, Congress and the Clinton administration quietly used the two-minute hate against billionaire ex-citizen Kenneth Dart to extend the scope of the expatriation tax to thousandaire ex-green card holders. With that history in mind, I was initially concerned that this bill’s publicly-stated purpose — denying benefits to ex-Nazis — was simply a smokescreen for its actual effect. However, a close reading of the bill’s actual text finds that, for once, these legislators aren’t trying to attack Americans abroad in general.
Under current law, the loophole mentioned by the AP and Maloney is the narrow grounds for termination of benefits in 42 USC § 402(n): only deportation — not abandonment of green card, renunciation of citizenship, nor even voluntary departure after denaturalisation — makes you ineligible for Social Security. More details can be found in SSR 68-45.
The new bill’s provisions for termination of benefits expand that a bit, but they are still quite narrowly targeted. From govtrack.us (which somehow managed to get the House bill’s full text before congress.gov did):
(a) In General
The following paragraphs shall apply notwithstanding any other provision of law:
(1) Social security benefits
A participant in Nazi persecution is not eligible for any benefit under sections 202 or 223 of the Social Security Act (42 U.S.C. 402; 423).
(2) Supplemental Security Income benefits
A participant in Nazi persecution is not eligible for any benefit under title XVI of the Social Security Act (42 U.S.C. 1381 et seq.), including any supplemental payment pursuant to an agreement for Federal administration under section 1616(a) of such Act (42 U.S.C. 1382e) and any payment pursuant to an agreement entered into under section 212 of Public Law 93–66.
So only participants in Nazi persecution, and not other ex-citizens, are made ineligible for Social Security benefits. The definition of “participant in Nazi persecution”, in the next section, is also quite narrow — possibly too narrow to accomplish the bill sponsors’ goals:
(b) Participant in Nazi persecution defined
For purposes of this Act, the term “participant in Nazi persecution” means an individual—
(1) with respect to whom an order admitting the individual to citizenship has been revoked under section 340 of the Immigration and Nationality Act in any case in which such revocation is based on conduct described in section 212(a)(3)(E)(i) of such Act (relating to participation in Nazi persecution); or
(2) who has lost status as a national of the United States by voluntary renunciation under section 349(a)(5) of the Immigration and Nationality Act pursuant to a settlement agreement entered into with the Attorney General in which such individual has admitted to conduct described in section 212(a)(3)(E)(i) of such Act (relating to participation in Nazi persecution).
In simpler terms, the bill as written cannot be used to strip benefits from other people who voluntarily gave up their U.S. status — not even Soviet or Rwandan war criminals who hid the fact that they should have been inadmissible to the U.S. under INA § 212(a)(3)(E)(ii), let alone ordinary American emigrants who worked in the U.S. for forty qualifying quarters. However, this assumes that the bill will survive the committee stage intact, without midnight amendments being added “for other purposes” in the manner of FATCA. (Also, the text of the Senate version of the bill is not yet available, though I’m assuming it will be the same.)
And even under current law, if American emigrants pay into the social insurance system of some other country long enough to qualify for benefits there — possibly even suffering double social security taxation due to the lack of a “Totalization Agreement” — their U.S. benefits will be reduced, thanks to the “windfall elimination provisions”. And due to another strange loophole in 26 USC § 6039G(d), denaturalised ex-citizens — unlike voluntary emigrants — don’t get “named-and-shamed” in the Federal Register, even though they’re subject to the exit tax at the time of denaturalisation (rather than the time of their actual departure from the United States).
Finally, all of us here who are familiar with U.S. nationality law will already have noticed the loophole in this bill: it only applies to renunciants and not relinquishers. An ex-Nazi who restores his former citizenship (or obtains a different one entirely — perhaps from Comoros, if he can’t afford the pricetag for the Commonwealth of Dominica), and uses that as the basis of an INA § 349(a)(1) expatriation claim, will remain eligible for Social Security benefits.