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Prying Eyes
The information sharing that makes e-government possible is producing a backlash of concerns about privacy.


ick Young can't say enough about the benefits of the federal government's new hires database. As director of Virginia's child support enforcement agency, he takes pride in the fact that the database has helped him put millions of additional dollars in the pockets of parents raising children on their own.

Thanks to the 1996 Personal Respon-sibility and Work Opportunity Act, better known as welfare reform, all Virginia employers-indeed all employers in the United States-must tell the federal government whenever they hire a new employee. The new hires database, officially known as the National Directory of New Hires, includes not only information about newly hired employees, but quarterly wage reporting for every citizen and noncitizen who works for wages in the United States. The only people it misses are the self-employed. Every three months, employers send the Administration for Children and Families, part of the Health and Human Services Department, an update on each employee, listing his or her salary. State child support agencies can check the database to find parents who haven't paid the money they owe. Furthermore, state agents can track the deadbeat parents across state lines, a nearly impossible task before the database was created. The state agents can then order the deadbeat parent's employer to withhold a chunk of the employee's paycheck and send it to the child support agency.

"Seventy percent of my payments come from income withholding," says Young. "It's a marvelous way to do it." Yet, Young fears that this marvelous tool is at risk. "We're about one bad incident away from losing that database," he says. "If we don't safeguard that database, someone is going to say 'Whoa, we didn't mean to give you all that data.'"

That's why Young fought hard to convince policy-makers not to allow the Education Department to use the new hires database to track down student loan defaulters. Young, as president of the National Council of Child Support Directors, lobbied David Ross, President Clinton's child support director. But his efforts failed. In 1999, the Education Department won congressional approval for its plan, which budget analysts expect will yield an additional $1 billion in loan payments for the U.S. Treasury.

Protests Over Privacy

The use of databases and information sharing among federal agencies, or between federal and state government, and even between government and private industry, is reshaping the way government provides services. In almost every way, the changes are for the better, improving efficiency and the quality of government services. In the case of child support, it's played a key role in helping states more than double the amount they've been able to collect from delinquent parents.

But the creation of databases and the use of those databases for an ever-expanding list of purposes has raised concerns among privacy advocates. The notion that government knows where we work and how much we earn, where we live and how much money we have in our bank accounts, rubs many privacy advocates the wrong way. They say that these databases make citizens more vulnerable to identity theft, that they encroach on Americans' constitutional right protecting us from unfair searches and seizures, and that they violate that fundamental tenet of the American dream, the right to be left alone.

In April, the General Accounting Office rang some alarms with its report "Record Linkage and Privacy: Issues in Creating New Federal Research and Statistical Information" (GAO-01-126SP). In numerous cases, GAO found, the government has linked records from one government database with those of another database, often without requesting permission from those whose personal information is being examined. For example, in order to create models of the long-term health of the Social Security and Medi-care programs, the Con-gressional Budget Office has sought access to records compiled by the Census Bureau, the IRS and the Social Security Administration.

Similarly, the Health and Human Services Department's Substance Abuse and Mental Health Services Administration funds state efforts to measure program outcomes by linking records, GAO says. For example, program data on people treated for drug addiction are paired with their employment or criminal records.

In another GAO example, university researchers, working with a grant from the National Longitudinal Study of Adolescent Health, surveyed teen-agers on a wide variety of topics. The teens were asked to give the names of several friends. By linking surveys of friends, the researchers were able to gauge peer influences in teens' lives. Similarly, the investigators visited students' homes and used a handheld global-positioning device to track their locations, thus enabling the researchers to compare data for teens living near each other.

GAO researcher Judy Droitcour says her office launched the survey of its own accord. "We realized that the general public really wasn't aware of linkage, and probably many policy-makers weren't aware." GAO doesn't make judgments about whether the programs violate privacy, she says, but the agency does provide recommendations to agencies about protecting privacy while running linkage programs. "No. 1 is getting permission from the individuals involved," Droitcour explains.

In Hot Water

Those recommendations might come in handy. Since the revolution in e-government began in the early 1990s, numerous government agencies, both state and federal, have found themselves in hot water with privacy activists. In almost every case, the government's intentions were good. In 1997, activists pounced on the Social Security Administration when SSA began allowing citizens to access their Social Security records over the Internet. Likewise, the FBI faced an uproar last year when it acknowledged the existence of Carnivore, a computer program that allows law enforcement officers to read e-mail sent by suspected criminals. The Office of National Drug Control Policy got hit when it admitted to tracking the Web-surfing habits of visitors to its Internet site promoting the office's anti-drug media campaign.

"The federal government is, in fact, the largest collector, user and sometime abuser of citizens' personal and private information," according to a March report published by the libertarian privacy-rights group Privacilla, which is supported by the Heritage Foundation, Citizens Against Government Waste, Americans for Fair Taxation and other groups. From September 1999 to February 2001, federal agencies announced 47 times that they would exchange and merge personal information from databases about American citizens, according to the report. Among the findings: The Education Department's Office of Student Financial Assistance has arranged to exchange information not only with HHS, but also with the IRS, the Housing and Urban Development Department and the U.S. Postal Service in its quest to track down student loan defaulters. The Veterans Affairs Department also is accessing Postal Service and IRS databases to "locate taxpayers who owe delinquent debts to the federal government as a result of their participation in benefit programs administered by VA." Likewise, the Small Business Administra-tion is tracking down federal employees who have defaulted on SBA loans, using Defense Department and HUD databases.

In April, Knight-Ridder newspapers reported that the Social Security Admin-istration is cooperating with other federal agencies, such as the Education Department and the VA, to force delinquent debtors to pay the government what they owe. And for the first time in its history, the SSA is garnisheeing the Social Security benefits of debtors. The initiative is the result of the 1996 Debt Collection Improvement Act, and is only possible, according to SSA administrators, because of new technology enabling the agency to compare its database information with that of other agencies.

"Even the best-intended government programs have, as part of their design, the removal of citizens' power over information about themselves," according to the Privacilla report. "In the private sector, by contrast, privacy can be protected through a combination of educated consumer choice."

Accelerating E-Government

A recent survey compared the public's attitude toward electronic government with that of government employees and found wide discrepancies. Responding to the question of whether government should proceed quickly or slowly in implementing e-government, 65 percent of the public said the government should move slowly and carefully consider concerns about privacy and security. Government employees, by contrast, favored moving quickly by a margin of 56 percent to 31 percent, citing opportunities for improved services, communication and efficiency in government. Pollsters Peter D. Hart and Robert M. Teeter conducted the survey in August 2000 for the Council for Excellence in Government.

Attitudes among government employees and the general public also tend to diverge on the issue of security. Child support administrators like Wise, for example, say they are confident that the new hires database is secure. But two-thirds of the public respondents to the Hart/Teeter survey expressed concerns about the security of government data. There is evidence to support those concerns. For example, House Majority Leader Dick Armey, R-Texas, wrote to the House Veterans Affairs Committee in April to express dismay over reports that confidential veterans information can be widely accessed via the Veterans Affairs Department computer system.

But the beneficial nature of many government information-sharing programs has enabled them to slide through Congress with relatively little debate. The child support enforcement mechanisms enacted in 1996 provide a clear example. "No one wanted to become the congressman who opposes child support," says one Capitol Hill staffer who was skeptical of the effort. The bill coasted through Congress with scant opposition,

The enforcement tools that resulted are truly extraordinary. The new hires database now rivals in size the databases maintained by the IRS, the Census Bureau and the Social Security Administration. Because the agency provides quarterly wage reports, it now has access to better data on Americans' earnings than the IRS, which reports only on an annual basis. Maya Bernstein, an associate at the law firm of Fried, Frank, Harris, Shriver and Jacobson, who previously oversaw privacy issues at the Office of Management and Budget, is disturbed by the fact that information about any American who changes jobs is placed in the database, though only a small percentage of that group actually owes any child support. "You have over 200 million records, and last I checked we were talking about 6 million people who were noncompliant with their child support obligations," she explains.

In addition, the law requires that private financial institutions allow state child support agencies to access their records and put liens on funds held by deadbeat parents. The law requires states to begin collecting Social Security numbers when citizens apply for drivers' licenses, professional licenses and even hunting licenses. States can then deny licenses to delinquents until they pay up.

At the same time, the Administration for Children and Families has backed states that have taken their enforcement mechanisms even further. For example, ACF provided seed money to Rhode Island to help the state set up the Child Support Lien Network. The network enables state child support administrators to access insurance company records and place liens on settlements due delinquent parents. The 1996 welfare bill gave child support agents subpoena power over insurance company records. Five other New England states have joined the Rhode Island network, and Rhode Island's child support division plans to take its network national in the coming year.

By drafting private industry to track down child support evaders, the government has created unprecedented mandates on industry. If it's all right to use insurance company records to track child support evaders, why not use the companies to track down student loan defaulters, or tax evaders, or use the companies' records for myriad other government purposes? In the case of child support, the companies have worked hard to ensure that the government's needs are met in the most cost-effective manner. But could child support be just the beginning? "Child support is an area that has been given a lot of power to collect outstanding monies," says one insurance company executive. "If the same types of laws are passed for other types of obligations, we would have no choice but to participate."

Seeking Safeguards

Meanwhile, other government agencies are already itching to gain access to the new hires database. Some insiders believe the Education Department was just the beginning. The new hires database is just too substantial a resource for the government not to use it for other purposes, explains Bernstein. "Education is just the first to get on board.

There will be more." Bernstein cites a 1998 report issued by the federal government's inspectors general that said the database should be available to every federal agency. That concerns Bernstein, whose job at OMB required her to ensure the compliance of agencies with the 1974 Privacy Act, which establishes the government's responsibilities in safeguarding data about citizens. "There is a principle built into the Privacy Act that information collected for one purpose shouldn't be used for another purpose without the person's consent," she notes.

That's a primary reason Michigan Secretary of State Candice S. Miller, a Republican, decided to sue the federal government last year to avoid implementing the 1996 Personal Responsibility Act requirement that orders states to collect Social Security numbers from applicants for any state license. "The Secretary of State is opposed to the continued proliferation of the Social Security number beyond its intended purpose," says Anne Corgan, director of the Michigan State Department's legal services bureau. "The problem is that the number is personal information, which is the key to unlocking your identity. It puts people at risk that their identity can be stolen."

Indeed, identity theft is the most concrete of the possible repercussions that result from the increased availability of personal information. With access to a Social Security number and some other basic identifying information, a thief can procure credit cards in another person's name or access his or her bank account. Congress has held hearings on the problem, but has taken no action.

Still, no other state has raised such concerns. And even in Michigan, Gov. John Engler, also a Republican, supports the new enforcement tools, as does the state's child support agency.

Engler and other supporters of Social Security number collection point to results. For example, when President Clinton took office in 1992, child support agencies collected $8 billion from negligent parents. By 1999, that figure was $19 billion. Though just getting under way, the financial institution data match program has revealed nearly 1 million accounts held by deadbeat parents since August 1999 with a total value of $3 billion. Jack Murphy, administrator of Rhode Island's Child Support Lien Network, says his program offers the potential for collections of $2 billion per year. Across the United States, children and single parents are benefiting, says Laura Kadwell, president of the National Child Support Enforcement Association. "We in the child support enforcement world are very self-righteous about our mission. We are an agency that gets money to low-income families. It's hard to point out a more important purpose for government, and we want to preserve our ability to do that. We can't perform our mission without these tools."

But Kadwell acknowledges it's difficult to argue that child support agencies alone should have access to powerful tools like the new hires database. "I shared [Virginia child support chief Nick Young's] concerns about the student loan agency gaining access to the database, because we want to preserve our right to collect child support using these tools," says Kadwell. "But it's hard to say that we should have the database and only us. It's easy to see other legitimate government interests in using the data."