Ted Cruz: Employers Hiring Illegals Under Gang of 8 Bill Are Wholly Exempted from ObamaCare Penalties

This speech from the U.S. Senate floor by Senator Ted Cruz is undated, but was clearly before the Senate’s Gang of 8 immigration bill passed. Cruz tries to offer an amendment to fix an “indefensible” problem with the bill but is not allowed to do so. Both the transcript and the video (below) are long. I encourage you to speed-read your way through it if you are short on time. None of us, through our own personal situation or the situations of those within our family and friends, who will not be affected. The bill has passed. This problem has not been fixed.

Ted Cruz

Ted Cruz

Begin transcript.

Madam President, I ask unanimous consent that the Senate set aside all pending amendments so that I may offer my amendment, No. 1580.

[inaudible voices from the Senate floor]

Madam President: Is there objection?

Madam President: Objections heard.

Madam President, the amendment I would have called up had not the majority party not objected, is an amendment that would have corrected one of the most egregious aspects of the Gang of 8 bill. Namely, it is a penalty that is imposed on U.S. employers for hiring U.S. citizens and for hiring legal permanent residents.

It is a striking result of the Gang of 8 bill as it intersects with the ObamaCare legislation. Let me explain how it operates.

Right now Madam President, for any company with 50 or more employees, if that company does not provide a sufficiently high dollar health insurance policy for low-income workers, that company faces a fine of $3,000.00 per worker.

Moreover, that fine is not deductible on the company’s taxes, which means as an effective matter to the company, the penalty is in the order of $5,000.00 per employee when you factor in the tax consequences.

That is the present status-quo under ObamaCare. That is the penalty that is visited on U.S. employers for hiring U.S. citizens and for hiring legal immigrants.

Now what does the Gang of 8 bill do to change that? The Gang of 8 bill takes some 11 million people who are here illegally and it grants them what is called RPI status – Registered Provisional Immigrant.

I have many concerns about legalization prior to securing the border, but this concern is all together separate from that. It is the simple reality that anyone granted RPI status, anyone granted legalization under the Gang of 8 bill is exempted from ObamaCare, which means that the employers who would be hiring them do not face the ObamaCare tax of $5,000.00 per employee, whether U.S. citizen or legal immigrant.

Now, what does this mean in reality? Let’s take an example, a simple hypothetical.

Madam President, I would ask you to envision a small business, Joe’s Burger Shack. Joe’s Burger Shack is owned by a small business owner. It is a series of small fast food restaurants, in any given state. It could be my home state of Texas or any state across the union. Now let’s assume that Joe’s Burger Shack has 100 employees, and Joe’s Burger Shack with 100 employees is a business doing relatively well. People are eating more hamburgers.

Joe decides he want to hire five more people. If Joe chooses to hire five U.S. citizens or if he chooses to hire five legal permanent residents, five legal immigrants, Joe faces a penalty of $25,000.00 for doing so. Five thousand dollars apiece, right off his bottom line to the IRS.

In contrast, if Joe decides instead to hire RPIs, who came here illegally among those 11 million who came here illegally, but granted RPI legalization under the Gang of 8 bill, Joe pays a penalty of $0.00.

Madam President, let me ask a simple common sense question. In this instance, Joe the small business owner, who is Joe going to hire?

This bill creates an enormous incentive to hire those here illegally and at the same time, it does it by creating a statutory penalty for hiring United States citizens and for hiring legal immigrants. Madam President, that makes no sense.

Let me give a second example. Suppose Joe is facing harder times. Because of ObamaCare penalties, Joe makes the decision that a great many fast food restaurants have made, to forcibly reduce worker’s hours.

ObamaCare kicks in when a worker works 30 hours a week, and so a great many small businesses, and particularly fast food restaurants, have been forced to forcibly reduce their restaurant’s employee hours to 29 hours a week or less.

Imagine that of Joe’s employees, 25 of them are RPIs, are formerly illegal immigrants who have received legalization under the Gang of 8 and 75 are either U.S. citizens or legal permanent residents.

If Joe wants to reduce the hours of 25 of his employees below the 30-hour threshold, because times are hard and he can’t afford the burdens that ObamaCare is putting on his business – if Joe forcibly reduces the hours of 25 U.S. citizen employees, or 25 legal immigrant employees [not RPIs], to below 30 hours a week, Joe saves potentially $125,000.00 a year in tax penalties. Five thousand dollars apiece times 25 employees.

In contrast, if Joe says instead, I want to reduce the hours, forcibly, of those who are here legally, that receive legalization through the Gang of 8, Joe saves $0.00 in tax penalties, because he is not paying the tax penalty, regardless of whether those here illegally are working 30 or 40 hours or more.

The question I would pose to you Madam President, whose hours will Joe reduce?

This statute puts an enormous incentive, an incentive from Congress for Joe to forcibly reduce the hours of United States citizens and legal permanent immigrants.

Let me give a third and even more stringent example. Imagine if Joe is facing great financial burdens as a lot of small businesses are. A lot of small businesses are struggling.

Imagine if Joe, instead, made the decision to fire all 100 workers – all 100 workers who happen to be United States citizens or legal permanent residents, and instead hire only those who are here illegally and been legalized under the Gang of 8. The consequence, simply doing the math, $5,000.00 per employee, means that Joe could save $500,000.00 a year in tax penalties.

Actually, the way ObamaCare works, it’s a complicated formula where there is an alternative avenue where Joe could well be paying $2,000.00 per employee, minus 30, which would get down when you factor in the tax savings, to about $200,000.00.

Anyway you measure it under ObamaCare’s complicated tax penalty formula, Joe could potentially save hundreds of thousands of dollars by firing his U.S. citizen employees, or his legal resident employees, and instead, hiring those who are here illegally.

Madam President, that doesn’t make any sense. That’s not an incentive that anyone rationally would set up, and that is what this Gang of 8 bill does.

To share how real this incentive is, this penalty for hiring U.S. citizens and legal permanent residents, I’d like to read a letter from one of my constituents. Mr. Allen Tharp, who is chairman and CEO of Old England’s Lion and Rose Restaurant, LTD in San Antonio. His letter reads as follows:

“My name is Allen Tharp and since 1985 I have been the sole owner and CEO of Allan Tharp LLC as well as the Lion and Rose Restaurant chain and a partner in the Golden Chick Restaurants.

Our corporate restaurants provide well over 1,000 jobs to fellow Texans. Our franchise restaurants provide many more.

I’ve been following the current debate over immigration reform very closely, and want you to aware that this bill, coupled with the new ObamaCare legislation, makes it much more affordable for a business like mine to employ Registered Provisional Immigrants than American workers.

I do not believe that was the intention of either legislation but it the irrefutable effect of both.

ObamaCare, as documented in numerous news stories, already creates an incentive for businesses to cut hours in order to avoid triggering the 50 full-time employee threshold that requires businesses to pay a fine if they do not provide government approved health insurance.

Because of this law I have been forced to cut back every single hourly employee in each of my companies, to no more than 28 hours a week. Cutting schedules from 40 to 28 hours a week has caused some hardship on many employees, however, our choice is either to provide part-time work or no work at all because our business cannot afford to comply with the severe consequences that would be imposed on us under this law if we continue to provide full-time employment to all these employees.

If the current immigration bill before the Senate, however, is made law, a business could hire Registered Provisional Immigrants instead of U.S. citizens and avoid triggering ObamaCare regulations and fines. Hiring RPIs over American workers, from a purely economic point of view, would be the best thing for my business.

I personally do not believe this is the right thing to do, but surely some of my competitors would. ObamaCare and the immigration bill is forcing employers to make extremely difficult choices.

I dont’ want to be in the position of choosing to grow my business or choosing to pay my fellow Americans. I want to do both. ObamaCare and the immigration bill will prevent me from doing so.

Madam President, this is a real CEO facing the real incentives of running a business under ObamaCare and looking at what would happen if this Gang of 8 bill passed into law.

What are the potential counter-arguments to this concern? Well, in the way of Washington, we don’t have to actually have to predict, because the proponents of this bill have followed a long, tried and true path in Washington. Namely, they gone to an extensively neutral reporter, at a main stream publication and urged them to quote ‘fact check’ the claim that the Gang of 8 bill with ObamaCare would put a penalty on hiring U.S. citizens and legal permanent immigrants [not RPIs], and the reporter compliantly gave the answers, the responses given by the Gang of 8. I would suggest Madam President, those responses are, on their face, singularly unpersuasive.

The first response that the Washington Post fact checker put up was a claim that quote, ‘Cruz is really creating a mountain out of a molehill,’ because quote, ‘the impact on employers is almost too miniscule to be noticed.’ That’s a quote from our friends at the Washington Post and their so-called fact check.

The basis of this is, they said, ‘well gosh, there are a lot of companies that do not have 50 employees. The number of employees with more than 50 employees, is really, really small, or as they put it ‘almost too miniscule to be noticed.’

Madam President, I’m going to suggest the claim that companies with more than 50 employees comprise a share of the economy that is miniscule, is facially absurd.

If you look at the data, 71 percent of all U.S. employees work at a company with more than 50 employees, so according to the Washington Post, it is an objective fact that the employers for 71 percent of all U.S. employees are quote ‘almost too miniscule to be noticed.’

To put that in raw numbers, that’s 80 million employees.

Madam President, I would suggest 80 million employees is, by any measure, not miniscule.

The second basis of the so-called-fact-check in the second response from the bill’s proponents was that, ‘well, under current law it is illegal for a potential employer to ask about the person’s immigration status.

Madame President, I would note that this is a particularly facile response that almost surely came from a lawyer, and as a lawyer myself, I will say that it is precisely the response that causes people to love lawyers, as they do, oh so much in today’s society.

Yes, it is true. There is a provision and statute that says you cannot ask about a person’s immigration status and base employment decisions on that, but the statute also requires you to check their immigration status before you hire them.

Moreover, there is no provision for employees volunteering this information, and if this bill passes, if there is a massive incentive to hire RPIs over U.S. citizens, the simple reality is, there will be massive economic incentives for employers to do so.

Madame President, let me note that this point is utterly irrelevant when it comes to reducing employee’s hours. Even if you engage in the Alice in Wonderland world where employers don’t know if an individual is an RPI or a U.S. citizen, once they are hired as a matter of legal requirement, they do know that and they are then, subsequently making a decision whose hours to reduce, the overwhelming economic incentive would be to reduce the hours of the U.S. citizen or the legal permanent immigrant [not RPIs] rather than those who are currently here illegally.

Madam President, I want to ask you, this penalty on U.S. citizens and on legal immigrants, who is this going to hurt the most?

It’s not going to hurt companies that are doing nuclear science research. It’s not going to hurt companies that are designing satellites.

It is going to hurt the workers that are working in the sorts of jobs where they face competition from those who are here illegally. It’s going to affect workers in the fast food industry. It’s going to hurt workers working in landscaping and construction.

Who is it going to hurt the most? If you look right now, today under the Obama economy, who is hurt the most, those who are most vulnerable among us.

Hispanics today have a 9.1 percent unemployment rate. Hispanic U.S. citizens, Hispanic legal immigrants will be directly harmed by this outcome.

African-Americans have a 13.5 percent unemployment rate. Right now under the Obama economy, it has gone up under President Obama. African-American workers will be hurt by this statutory penalty on hiring U.S. citizens and legal immigrants and teenagers.

Teenagers face an unemployment rate of 24.5 percent. If you look at jobs in the fast food industry, they are so often the first or second job a young teenager gets as he or she begins to climb the economic ladder. If Congress passes a bill that puts a major economic penalty on hiring a U.S. citizen or legal permanent resident, he or she may never get that job.

I’d like to read a letter from another constituent who is president of Painless Performance, a high-end car parts manufacturer in Fort Worth, Texas. The letter read as follows:

My name is Adrian Murray. I’m an immigrant. My parents moved to America from Ireland 55 years ago to seek opportunity and a better life. At the time, new immigrants had to have a sponsor and proof of future employment. I still have the letters written to the INS on their behalf. My parents later became naturalized citizens and raised me to respect America, her customs and her laws. That was back in the day when being an American citizen was prized.

To stand before a judge with hand raised pledging allegiance and fidelity to America was the dream of millions around the world.

We devalue America citizenship by making it a cheap tool for political gain.

My parents taught me to respect America’s exceptionalism, and therefore honor the institutions of this nation. Because of their example, I have built a successful business with 52 employees.

Many of those in my plant are legal immigrants from Vietnam. They too came here the right way and endured much hardship to obtain their citizen status. What am I to tell them? That their sacrifice was meaningless? That they should have just snuck in, that their citizenship has no value, that the joke is on them?

I would never exercise the option of replacing them with cheaper ObamaCare exempted workers. Would they not be justified in questioning the motives and validity of a government which would even consider giving an employer that option. What has this nation come to?

It is getting harder and harder to recognize America, a nation that once proudly held fast to the virtues of liberty and freedom is now seriously contemplating a law that amounts to nothing more than thinly disguised human trafficking.

Once the world’s greatest deliberative body, the Senate is set to vote this bill into law without bothering even to read it. This cannot be, this must not stand.

You know, it’s not too late, Mr. President. At the outset of my remarks I asked unanimous consent to call up my amendment to fix this problem and the Democrats in this body objected.

My amendment would address this problem by providing that ObamaCare shall be defunded until there are no longer any Registered Provisional Immigrants in line. That is the one way to correct this problem, to correct the statutory penalty on U.S. citizens and legal immigrants [not RPIs] if this bill were to pass, but as you’ve just seen, the majority party has just chosen to object to bringing up that amendment.

So far we have not had an open debate on amendments on this bill. A number of the proponents of this bill claimed they were going to fix this.

Here are a few of the comments of sponsors of this bill made concerning the amnesty tax loophole.

From my friend, the senior Senator from Arizona, John McCain [who referred to Cruz as a “wacko-bird”] quote “I think that is an issue and I think it needs to be addressed.” Also from Senator McCain, “we cannot give people who are not citizens the same benefits. That is the fundamental principle. We are trying to work around it so that an American is competitive for a job.”

A quote from a senior Democratic aide: “We are willing to work through these issues as the bill works its way through the Senate.”

Mr. President, I’m sorry to tell you those promises have not materialized. We haven’t worked through these issues and I cannot help but think of the very real impact it has in so many families, at least in my family, that impact would not have been hypothetical.

Fifty-five years ago my father came from Cuba as a legal immigrant. He was 18, he couldn’t speak English and when he arrived in Austin, Texas, penniless, he took a job like so many immigrants before him washing dishes making 50 cents an hour. The food services industry has provided such an opening portal for millions of Americans and for millions of immigrants throughout the world.

And yet if the Gang of 8 bill had been law in 1957 along with ObamaCare, my father who couldn’t speak English, who was glad to make 50 cents an hour so that he could take that money and pay his way through the University of Texas and go on to get a higher paying job, start a business and worked towards the American dream, my father might have been fired because of the Gang of 8 bill, because the impact of this legislation would have been to cost his employer $5,000.00 for hiring him, a legal immigrant.

My father’s skills at age 18 – I wouldn’t characterize him as a high-skilled dishwasher. He told me he got that job because he couldn’t speak English and he didn’t have to speak English to wash dishes. Take a dish and stick it under the hot water.

This incentive would have put a massive incentive for his employer to say, ‘I’m sorry you’re out of a job because we’re going to hire someone who didn’t follow the rules, didn’t come here legally – came here illegally because Congress penalizes us $5,000.00 for hiring you but it puts $0.00 penalty on hiring and individual who is here illegally.

Mr. President, I cannot think of a more irrational, a more indefensible system than a statutory penalty for hiring U.S. citizens or legal immigrants [not RPIs].

If this bill passes a number of things will happen. African American unemployment will almost certainly go up. It will be the United States Senate’s fault. This bill will penalize hiring African-Americans who are legal U.S. citizens, and instead will incentive hiring those who are here illegally.

If this bill passes Hispanic unemployment will almost surely go up. This bill penalizes hiring Hispanics who are U.S. citizens or legal immigrants who followed the rules.

If this bill passes, youth unemployment will almost certainly go up because young people who are just beginning to climb the economic ladder will be the most impacted by Congress deciding to put a $5,000.00 penalty on hiring that U.S. citizen, hiring that legal immigrant [not RPIs] and instead give a preference for hiring those here illegally.

Mr. President, if this bill passes Union households unemployment will very likely go up because it is working-class households that are facing the most direct competition and if that happens, it will be the fault of the United States Senate.

Mr. President, if this bill passes, unemployment among legal immigrants will almost certainly go up, because what this bill says is, if you hire a legal immigrant, the IRS going to impose a $5,000.00 penalty on you, the employer, but if you don’t hire that legal immigrant, if you reduce that legal immigrant’s hours, if you hire instead, someone who is here illegally, that penalty will go away.

Mr. President, that is utterly and completely indefensible.

No one in this body wants to see African-American unemployment go up. No one wants to see Hispanic unemployment go up, youth unemployment go up, union household unemployment go up, legal immigrant unemployment go up and yet every one of those will happen if this Gang of 8 bill passes without fixing this problem. If that happens, all 100 members of the U.S. Senate will be accountable to our constituents for explaining why we voted to put a federal penalty on hiring U.S. citizens and legal immigrants.

It makes no sense and it is indefensible. I hope this body will choose to pass my amendment and fix this grave defect in the Gang of 8 legislation. Thank your Mr. President and I yield the floor.

End video transcript

H/T The Conservative Lady who has commentary on the video and what the U.S. House might do now.

Ted Cruz on the Floor of the U.S. Senate Speaking on the Statutory Penalty to be Placed on Hiring U.S. Citizens and Legal immigrants (Not RPIs) (video)
Linked at What Bubba Knows – read about the Washington Times suing Homeland Security, and for legitimate reason.

Linked at Grumpy Opinions – read The Young and the Angry

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