For almost a year, Donald Trump has made immigration enforcement the centerpiece of his campaign, and his promise to build a wall on the southern border the focus of his rhetoric. When asked how he planned to pay for it, Trump has bragged that he’d make Mexico pay for it — without explaining how that would work. Mexican officials from their president down have publicly scoffed at the claim, and Trump’s critics have chalked it up as one of his meaningless rhetorical flourishes.
- On day 1 promulgate a “proposed rule” (regulation) amending 31 CFR 130.121 to redefine applicable financial institutions to include money transfer companies like Western Union, and redefine “account” to include wire transfers. Also include in the proposed rule a requirement that no alien may wire money outside of the United States unless the alien first provides a document establishing his lawful presence in the United States.
- On day 2 Mexico will immediately protest. They receive approximately $24 billion a year in remittances from Mexican nationals working in the United States. The majority of that amount comes from illegal aliens. it serves as de facto welfare for poor families in Mexico. There is no signifcant social safety net provided by the state in Mexico.
- On day 3 tell Mexico that if the Mexican government will contribute __ billion to the United States to pay for the wall, the Trump Administration will not promulgate the final rule, and the regulation will not go into effect.
Bob Woodward and Robert Costa offer a serious but skeptical analysis of the proposal:
The proposal would jeopardize a stream of cash that many economists say is vital for Mexico’s struggling economy. But the feasibility of Trump’s plan is unclear both legally and politically, and also would test the bounds of a president’s executive powers in seeking to pressure another country. …
Nearly $25 billion was sent home by Mexicans living abroad in 2015, mostly in the form of money transfers, according to the Mexican central bank. In his memo, Trump said that “the majority of that amount comes from illegal aliens.”
But that figure includes cash from around the world, not just the United States. In addition, a Government Accountability Office report in January said that it is difficult to track how much money illegal Mexican immigrants are sending versus those working legally in the United States.
It’s difficult to track in part because of the illegality itself, although it’s notable that the Post uses a version of “illegal immigrants” to describe their situation. While Woodward and Costa report that the $25 billion comes from global remittances, it’s probably safe to assume that a significant portion of that comes from the US, where most Mexican expatriates would tend to live and generate the cash to remit in the first place.
In fact, we don’t have to assume anything. A February 2011 report from the CBO puts US-to-Mexico remittances in 2009 at $19.9 billion — pretty close to the $25 billion Trump cited as the current level. How much of that comes from legal or illegal immigrants? That’s a lot hazier, but that’s actually part of the point Trump’s making about the reach of illegal immigration and the Mexican government’s benefit from it. It won’t matter much as a practical concern; as long as it comprises a significant portion of that money flow, it will put pressure on Mexico to cooperate.
Legally, though, could the US government simply seize that cash and use it for other purposes? In fact, would there be any cash to seize at all? The disincentive would have illegal immigrants looking for more informal methods of getting cash back home, creating a black market for remittances, or simply holding onto the cash. The purpose of this plan isn’t to use that cash, however; it’s to starve the Mexican government into compliance with Trump’s plan, or failing that, to remove the incentives for Mexico to encourage illegal immigration in the first place.
That brings up the other part of this equation. How much would we need to build the wall?
Throughout the campaign, Trump has claimed that he could build his proposed U.S.-Mexico barrier for about $8 billion — a figure that numerous experts have described as dubious because of the costs and other obstacles to building a lengthy, impenetrable concrete barrier through numerous jurisdictions.
That’s a good question, but beside the point in a way. The purpose of Trump’s plan is to punish Mexico for illegal immigration and force it to stop encouraging the border flow. Whatever else one thinks of Trump, this plan shows he’s been thinking about the issue more than some would credit. And this solution has been used in the past, as National Review’s Jim Geraghty notes:
Would that even be possible? A Trump administration could erect a lot of legal, regulatory, and logistical obstacles to transferring money from the U.S. to Mexico. But those moves would enrage the banks and financial institutions that make money off the transfers, and probably spur interest in transfer methods that escape the attention and grasp of law enforcement. …
Still, the U.S. government can make it extremely difficult to send money to a country. The Treasury Department has enacted a series of regulations designed to restrict terrorism financing that holds intermediary banks responsible if the money they transfer ends up in the hands of terror groups. Somalia has no functioning traditional banks, and in February, U.S. banks largely stopped servicing the accounts used by money-transfer operators in Somalia. Somali-Americans are now complaining that they have no way to send money back to their families.
Trump’s pledge to “impound” remittance payments implies seizure, an act that would face a high legal bar to clear. But the government has successfully seized money in the accounts of criminals who smuggle illegal immigrants across the border.
“Enrag[ing] the banks and financial institutions” is a feature for Trump with his constituencies, not a bug. This will have plenty of people wondering why the government hasn’t tried doing this before now, too, especially among the same anti-establishment constituencies … and perhaps more broadly than that.
Update: Moe Lane and Caroline Baum throw some cold water on the plan:
@EdMorrissey Enforcement mechanism? Forget wire transfers. Send a check in the mail.
— Caroline Baum (@cabaum1) April 5, 2016
Checks? You can buy pre-paid Visa cards with cash, no trouble. Toss that in the mail and send it south. https://t.co/koViiB17BI
— Moe Lane (@moelane) April 5, 2016
Checks might be somewhat problematic for illegal immigrants to use, but either one would cut out the Mexican banks, and the Mexican government, from the revenue. It will also be less secure as a transmission method. At any rate, there will be plenty of workarounds — but the point is more to make it more difficult for the Mexican government to profit off of them.