A plan to get federal support and funding behind digital identity proofing as a way to combat benefits fraud wound up on the cutting-room floor as the Senate crafted its $1.2 trillion infrastructure bill.
The bipartisan $1.2 trillion infrastructure bill that passed the Senate on Monday night has billions in technology investments, but a plan to dramatically ramp up the federal government's involvement in digital identity was left on the cutting-room floor.
A draft version of the Senate infrastructure bill, which was obtained by FCW, included $500 million for the Department of Labor to institute a grant fund to supply states with digital identity proofing tools that are compliant with National Institute of Standards and Technology to combat fraud in unemployment insurance benefits.
Identity proofing is front of mind for some policymakers in part because of reports of very high levels of potential fraud in unemployment insurance after benefits were enhanced and expanded by the Coronavirus Aid, Relief and Economic Security Act. A February memo from the Labor Department Office of Inspector General warned that "potential fraud throughout the nation could easily range into the tens of billions of dollars."
In addition to the program administered by the Labor Department, the draft legislative language called for the Office of Management and Budget to develop a plan for federal digital identity verification, including an inventory of current efforts and a study of the feasibility of establishing a governmentwide system that provides equitable access to users of government services and protects privacy. There was talk in the administration and in the Senate of adding $3 billion in funding for governmentwide identity solutions as part of the infrastructure bill.
Instead, the entire section on program integrity covering the digital identity grants program and the OMB policy push was removed from the bill before it came up for a vote and was not offered in any of the amendments that came up as the bill was debated on the Senate floor.
The White House and various Senate press offices by and large did not respond to emailed questions from FCW about what happened with the digital identity section of the bill.
According to Jeremy Grant, a managing director at Venable and the head of the Better Identity Coalition, a trade group that advocates for digital ID policies, the addition of the digital identity provisions was welcome but he was concerned about language that called for a federal digital identity program that did not extend to the private sector.
"In many ways, getting the strategy right from the start is more important than the dollar amount in the first year," Grant told FCW. "The idea that you can solve this just for government benefits doesn't really work at the end of the day," he said.
The stakes are high. A 2019 McKinsey report estimated that high levels of digital identity adoption in the U.S. could spur 4% growth in the gross domestic product by 2020. While that might be optimistic, it is clear that the absence of secure, accessible, interoperable digital credentials is encouraging online fraud and inhibiting the expansion of digital public services.
"The inability of the private sector to easily and securely identity proof consumers online is the most critical shortcoming in America’s digital identity infrastructure and leads to billions of dollars in identity-related cybercrime and fraud each year," the Better Identity Coalition noted in a submission to a request for comments from the Department of Homeland Security on a proposal for developing standards for mobile drivers licenses.
The House of Representatives is expected to take up the infrastructure bill in the fall. In addition, there's existing bipartisan House legislation, the Improving Digital Identity Act, that pushes for a federal role in the administration of credential management ecosystem. Grant said there's interest in a Senate companion bill to be introduced in the fall.