The Trump Administration’s Regulatory War on Economic Security

February 06, 2020

In his State of the Union address this week, President Trump claimed that, “poverty was plummeting.” This is an overstatement. The biggest decline in poverty over the last decade happened in the second half of the Obama administration, particularly in 2016, when the poverty rate fell to 14.3 percent, a one-percentage-point decline from the previous year.

Since Trump took office, the poverty rate has barely budged. In 2018, the most recent year we have data for, 13.9 percent of people — nearly 45 million people — had income below the poverty line. These figures use the Supplemental Poverty Rate (SPM), one of two poverty measures published by the federal government. The SPM, unlike the other measure, takes account of taxes, including the Earned Income Tax Credit, and certain in-kind benefits not factored into the other poverty measure. It’s also important to note that both of these poverty measures substantially understate poverty relative to public opinion on what it takes not to be poor. 

Still, things could be worse. President Trump has largely failed to persuade Congress to adopt his administration’s proposals to cut health and economic security programs. Trump’s proposal to repeal the Affordable Care Act failed in the Senate in 2017. A year later, Congress reauthorized the Supplemental Nutrition Assistance Program (SNAP) without adopting the more punitive work tests on beneficiaries supported by the President. While all of the budgets offered by Trump have proposed massive cuts to economic security programs — including rental housing assistance, SNAP, Medicaid, Medicare, disability benefits, Temporary Assistance, and student financial aid — Congress has rejected nearly all of these cuts. If adopted, these proposals would have increased poverty and insecurity, even in the face of the otherwise positive economic headwinds.

At the same time, the administration is using regulations and other tools to attempt to cut many of these programs unilaterally. Most of these regulatory cuts have yet to be implemented fully or are just being implemented, so the impacts don’t show up in the income data we currently have from the Census Bureau, which only goes through 2018. What follows is a review of some of the regulatory cuts that will increase poverty and insecurity by cutting economic security programs.   


Cutting program eligibility by redefining the poverty line down: In a notice published in May 2019, the administration announced it was seeking comments on changing the inflation index used to update the official poverty line annually. There is little question that the official poverty line is set at a level far below broad social consensus about the minimum amount of income needed to meet basic needs. Yet, the administration’s preferred alternative inflation measures would cut the poverty line over time relative to what it would be using the CPI-U, the index currently used to adjust it. Since eligibility for many social assistance programs are linked to the official poverty line — including eligibility for Medicaid, Medicare Part B and Part D, Premium Tax Credits SNAP, and other food assistance — this change would have the effect of cutting program eligibility over time. Current Status: Pending. 

Reducing access to Medicaid, SNAP, and other programs among families that include immigrants: In October 2019, the administration adopted a final regulation that changes long-standing federal immigration policy on making “public charge” determinations. The rule is likely to reduce participation in Medicaid, SNAP and other programs by US citizens and immigrants who are eligible for these programs but live with one or more immigrant family members who could be affected by the rule. Current Status: The final regulation is currently being challenged in the federal courts and is blocked from taking effect in Illinois. In other states, the rule will take effect on February 24, 2020. Public education is important to limit the negative impact of the rule on program participation by eligible people living with immigrant family members. 

Disability Insurance 

Cutting Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI) by increasing the administrative burdens: In November 2018, the Social Security Administration (SSA) issued a proposed regulation that would increase the frequency of continuing disability reviews (CDRs) that can result in the termination of SSDI and SSI benefits. According to SSA’s estimates, the additional reviews will cost $1.8 billion over the next 10 years, while cutting SSDI and SSI by $2.6 billion over the same period. SSA’s estimates likely understate the administrative costs of the proposed change. Current Status: Pending, public comment period closed. 

Food Assistance

Cutting food assistance (SNAP) by forcing states to impose punitive work-hours tests: Under federal law, certain nondisabled adults not caring for dependents are limited to three months of food stamps (in a 36-month period) unless they are employed for at least 20 hours a week. However, federal law also gives the ability to waive this limit based on job availability. In December 2019, the Trump administration adopted a final regulation that sharply limits the ability states have to waive the limit based on job availability and to grant hardship exemptions to people who are subject to the limit. According to the administration’s own estimates, some 700,000 people will lose SNAP benefits as a result. Current Status: Final, but being challenged in court by 15 states and New York City. 

Cutting SNAP and increasing barriers to free school meals by taking away state authority to eliminate restrictive asset tests and expand eligibility to more working-class people: Under SNAP’s long-standing “broad-based categorical eligibility” policy, states have been allowed to adopt less restrictive income and asset tests. In July 2019, the Trump administration proposed a rule that would effectively eliminate this policy. According to the administration’s own estimates, more than 3 million people would lose SNAP benefits as a result. Current Status: Pending.  

Cutting SNAP by cutting allowances for heating and other utility costs: SNAP takes the shelter expenses of households — including rent, mortgages, and utility costs — into account when calculating SNAP benefits. In nearly all states, a state-specific standardized utility allowance (a fixed dollar amount) is used to determine shelter expenses. In October 2019, the Trump administration proposed a rule that would limit state discretion in setting utility allowances in a way that would significantly cut SNAP benefits in 29 states. According to the administration’s estimates, the rule would cut SNAP benefits by $4.5 billion over the next five years. Current Status: Pending. 

In addition to these three rules, the administration has several yet-to-be-published proposed rules in the regulatory pipeline that would further limit access to SNAP. 

Medicaid and Affordable Care Act 

Cutting Medicaid by allowing states to impose punitive work tests on beneficiaries:  Federal law does not impose, or authorize states to impose, work tests or other behavioral conditions on Medicaid beneficiaries. States can apply to HHS for waivers of various Medicaid provisions in federal law, but the Obama administration had rejected waivers seeking to impose work tests as inconsistent with the core objectives of the Medicaid. In January 2018, the Trump administration started approving state requests to impose work requirements in Medicaid. Current Status: The administration has approved waivers in 10 states that allow work requirements, but implementation has been blocked by the courts in three states and halted in two states. 

Cutting Medicaid by allowing states to require very low-income people to pay monthly premiums for coverage: Under current Medicaid rules, states may not charge premiums for Medicaid beneficiaries with low-incomes (before 150 percent of the federal poverty line).  However, the administration has approved waiver requests submitted by eight states that allow them to deny Medicaid to otherwise eligible low-income people who do not pay monthly premiums. Implementation in one of these states (Kentucky) has been blocked in the courts. Current Status: In addition to the states with approved waivers, three states have waiver requests pending. HHS also has a yet-to-be-published proposed regulation in the regulatory pipeline that will change Medicaid rules on premiums and co-payment. 

Cutting Medicaid by allowing states to convert to a block grant with few federal protections for beneficiaries: Under Medicaid’s joint financing structure, states generally receive one dollar or more in federal funds for every state dollar they spend providing Medicaid coverage. In order to receive matching funds, states must comply with various federal rules, including ones that provide important protections for eligible beneficiaries. Under guidance issued in late January 2020, the Trump administration will allow states to op- out of this system and instead obtain a fixed amount of federal funding to provide coverage to low-income, nonelderly adults. These states could ignore most of the existing federal protections and standards that apply to Medicaid. Current Status: Just announced. No state has requested to opt-into the new structure yet, but several are likely considering. 

Limiting access to federally funded health services by allowing discrimination on the basis of gender identity and limited proficiency in English: In May 2019, the Trump administration issued a proposed regulation that would strip out existing regulatory provisions that prohibit discrimination on the gender identity and weakening provisions that help ensure equal access for people with limited proficiency in English. The administration estimates that roughly 70,000 health care providers and other entities covered by the rule will change their policies to no longer prohibit discrimination on the basis of gender identity. Current Status: Pending, public comment period closed in August 2019.

Housing Assistance

Denying rental housing assistance to US citizens and eligible immigrants who live with ineligible immigrants. In May 2019, the Trump administration issued a proposed rule that would deny rental housing assistance — including public housing and housing choice vouchers — to otherwise eligible US citizens and immigrants who live with ineligible immigrants. Under a long-standing policy, the value of housing assistance provided to such families is reduced on a prorated basis, rather than denying assistance altogether to eligible people. The administration has estimated that 108,000 people will be displaced or evicted under the rule. Current Status: Pending.

Denying transgender and gender nonconforming people full and fair access to homeless shelters: Under a yet-to-be-published proposed rule, the Trump administration would allow homeless shelters receiving federal funds to deny shelter and discriminate in other ways against transgender and gender nonconforming people. Current Status: Under prepublication review at the Office of Management and Budget since April 2019.  

On-the-job protections and rights for workers

In addition to the cuts to economic security programs itemized above, the administration has proposed or made a long list of regulatory and other policy changes that undermine on-the-job protections and rights for workers. These include: 1) actions taken the Trump administration’s National Labor Relations Board to undermine collective bargaining rights; 2) issuing a final rule that will cut overtime pay by an estimated $1.4 billion annually; 3) proposing a rule in October 2019 that will allow employers to capture an estimated $700 million annually in tips provided to workers; and, 4) issuing a final “joint employment” rule in January 2020 that the Economic Policy Institute estimates will cost workers more than $1 billion annually by making it easier for large corporations to evade minimum wage and other worker protections under the Fair Labor Standards Act.

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