Trump’s Public Charge rule could cost Hawaiʻi tens of millions in revenue

News Release from Hawaii Appleseed

On January 27, 2020, the U.S. Supreme Court issued an order allowing the Trump Administration to begin enforcing its new “public charge” rule, which imposes new restrictions on immigrants who are considered likely to primarily depend on government benefit programs.

In the past, the federal government looked at the use of only a handful cash benefits, such as Temporary Assistance to Need Families (TANF), to determine if someone was likely to become a “public charge,” which in turn could lead to the denial of visas to travel to the United States as well as the rejection of residence and citizenship applications.

In early 2017, a Trump Administration draft of an executive order leaked to the media, outlining changes to “public charge” policies. The early leaks of the executive action reported that visa and citizenship applications would be denied based on the likelihood of obtaining any government benefit “determined in any way on the basis of income, resources, or financial need.”

Not only could individuals be denied entry to the country, but immigrants already residing in the United States legally could be deported, due to the rejection of visa renewals. The draft order also required those who sponsor an immigrant to reimburse the federal government for benefits received by the immigrant.

While the Department of Homeland Security did not formally issue the rule until August 2019, there is much anecdotal evidence that the rumors of this new public charge rule caused a “chilling” effect among immigrant families. Media reports from across the country describe how some immigrant families have decided to forgo all government benefits—even if they and their children were eligible for and sorely needed them—to avoid the potential negative consequences of the new public charge rule.

There is quantitative evidence here in Hawaiʻi, too, indicating that our immigrant families—including thousands with citizen children—have felt the “chilling” effect of the public charge rule, long before it was finalized and came into effect.

Hawaiʻi households with non-citizen members have been dropping out of food stamps faster than citizen households

The Supplemental Nutrition Assistance Program (SNAP)—formerly known as food stamps—helped nearly 160,000 Hawaiʻi residents afford to buy food for themselves and their families in fiscal year (FY) 2018. This included 4,000 non-citizens and 8,000 citizen children living with a non-citizen.

With the new public charge rule adding SNAP to the list of programs to be considered in public charge determinations, the chilling effect appears to have negatively affected SNAP participation in immigrant communities in Hawaiʻi.

Between fiscal years 2016 and 2018, there was a 9 percent drop in SNAP participation among citizens in Hawaiʻi, as would be expected in an improving economy. However, alarmingly, SNAP participation dropped much more sharply for non-citizens—by 33 percent over that same time period. In other words, over 5,300 more eligible Hawaiʻi residents may have gotten SNAP benefits in FY2018 if the public charge rule had not been announced in early 2017.

Thousands of U.S. citizen children are feeling the brunt of the public charge chilling effect

While the rate of SNAP participation for non-citizens dropped more than three times as much as that of citizens, the decline was even worse for citizen children living with a non-citizen in their household: their participation rate dropped by 38 percent, or four times that of citizens overall between FY2016 and FY2018. That means that over 3,800 more eligible citizen children could have benefited from SNAP if the public charge rule had not been announced.

The chilling effect of the public charge rule may have already led to lost economic activity

SNAP not only supports low-income and working-class families in Hawaiʻi, but it also pumps dollars into grocery stores, supermarkets, and other food retailers in local communities. Since the public charge rule was leaked in early 2017, there has been a significantly sharper drop in SNAP participation in the immigrant community, which means fewer federal dollars coming to Hawaiʻi.

If the decrease in SNAP participation among non-citizens and citizen children living with non-citizens had been the same as that of citizens overall, an additional 5,314 people would have participated in SNAP in Hawaiʻi in FY2018.

With an average monthly benefit of about $240 per person, or $2,874 per year, the public charge rule’s chilling effect may have caused a loss of over $15 million in SNAP that would have been spent at local businesses in FY2018. These types of losses will continue as long immigrant communities fear the consequences of the new public charge rule.

The public charge chilling effect likely to lead to millions in lost revenues and squeeze economic growth

The Fiscal Policy Institute (FPI) estimates that if the public charge rule goes into effect, 110,000 people in Hawaiʻi would experience a “chilling” effect. This count includes everyone in a family with an immigrant who is not a naturalized citizen or permanent resident, and who is currently receiving one of the public benefits named in the rule.

Among the people in the “chilled” population are 40,000 Hawaiʻi children under 18 years of age, of which 30,000 are U.S. citizens by birth. If hundreds of thousands of Hawaiʻi residents skip health care, food, and housing assistance in order to avoid problems with immigration, the result will be a sicker, hungrier, poorer Hawaiʻi.

The public charge rule also puts states at risk for losing tens millions of federal dollars. Looking only at health and nutrition supports, the two largest benefits named, FPI estimates that a 25 percent drop in enrollment for the chilled population translates into $66 million in lost federal funds for Hawaiʻi.

The loss of federal benefits in turn will create negative local economic ripple effects. Businesses such as grocery stores will lose income due to the decrease in SNAP recipients. Hospitals, doctors, and nurses will lose income due to a reduction in Medicaid usage. Many other businesses will lose revenue, as immigrant families that struggle to make up for the lost nutrition and health care benefits shift spending priorities.

This reduction in spending and income will result in lower investment and related job loss. FPI predicts a loss to Hawaiʻi’s gross domestic product of as much as $127 million, with an additional loss of 865 jobs, and $10 million in state tax revenue.

We all benefit when members of our community can access nutritious food. We create stronger, healthier communities, avoid expensive emergency healthcare costs stemming from inadequate nutrition, and we create a culture of treating people with basic human decency by ensuring that our neighbors’ most fundamental needs are met. Yet changes to rules governing access to federal benefit programs are hurting immigrant families, citizen children, and our local economy.

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SA: New federal rules could hurt immigrants and state economy