Who Pays for Government Savings? The Cost of Anti-Poverty Program Disparities

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This post is a continuation of my last installment “However, in Puerto Rico…” After reading the last installment, I hope the questions left on many of your minds are “Why did the U.S. create program disparities?” and “What do the disparities mean for Puerto Ricans?” This last post as a #UBLawResponds Student Attorney with the University at Buffalo School of Law’s Puerto Rico Recovery Assistance Legal Clinic will begin to process those two questions.

In 1982, there was widespread dissatisfaction with welfare programs, which President Reagan used to support welfare program reductions to curb the rate of domestic spending. These reductions were aimed at the working poor, with the intent that the poorest individuals would be spared from the budget cuts. The largest program cuts were to Aid to Families with Dependent Children (AFDC) (currently known as TANF) and the food stamp program (SNAP). Eligibility within these programs was lowered to exclude most working families, cutting AFDC participants by 250,000 families and the food stamp program by almost one million participants. Another change was the cutbacks on the Work Incentive Program by approximately 600,000 participants, which had been mandatory for AFDC recipients without children under 6. The last notable change was in deferring adjustments for inflation on all welfare programs[i]. These were the cuts that occurred in the states, were there was still a level of Congressional pushback against complete welfare destruction, but territories like Puerto Rico received even bigger cuts.

I won’t reiterate the specific programs that Puerto Rico had cut, but needless to say, it was a direct result of the 1982 campaign to reduce domestic spending and eliminate the working poor from all benefit programs. One continuing issue though are the adjustments for inflation, which the states have periodically, Puerto Rico is still not subject to. This has only aggravated the program caps, as more people become eligible, the program is unable to adjust or expand. So to answer the question “Why did the U.S. create program disparities?” The answer is money and the prioritization of reducing domestic spending over lifting individuals out of poverty and into self-sufficiency.

The second question “What do the disparities mean for Puerto Ricans?” is a bit more difficult to answer. Puerto Rico has a poverty rate of approximately 45% compared to the US rate of 14%. This rate is nearly double that of the most impoverished state in the U.S. While the factors that led to this poverty rate certainly don’t lie directly with the welfare changes, they certainly don’t help the situation, and likely led to a percentage of that number. The first installment addressed many of the welfare programs in Puerto Rico, so let’s start connecting the dots.

TANF is a program that in the states is intended to help those who are in deep poverty to live above half the poverty line. While many will argue the program has other benefits such as the ability to provide emergency support for families, the numbers that the TANF program reports are the children lifted out of deep poverty. In the US 90% of TANF recipients are single-mothers, which makes complete sense given the program intention, but in Puerto Rico 80% of TANF recipients are the disabled. This stark difference is due to the lack of SSI in Puerto Rico. Puerto Rico’s replacement block grant serves 36,000, though an estimated 300,000-350,000 would be eligible for SSI if the program existed. What this means is that the low-income disabled individuals who are unable to access the limited block grant turn to TANF instead, and the intended beneficiaries of TANF, the children, are left without these benefits.

Today, SNAP in the states is known as program aimed at supplementing the food needs of low-income workers. SNAP has many long-term benefits such as increased health outcomes, but is touted as a program that promotes self-sufficiency by smoothing the transition from welfare to work. In the states to qualify for SNAP a family of three would need a gross monthly income of $2,184 or less, while in Puerto Rico to qualify for their block grant a family of three would need a net monthly income of $599 or less. The discrepancy between eligibility shows that the Puerto Rican program is trying to address the high number of individuals living in poverty, but with a lowered eligibility income, more families become eligible and the program is unable to address this through any other means than cutting benefits. For a family of three the monthly benefit from SNAP to NAP is close to $200. With a lower income and lower food benefit, the Puerto Rican program may provide nutrition assistance, but it will not be able to promote self-sufficiency or provide a transition from welfare to work.

The Earned Income Tax Credit (EITC) has been the nation’s most successful anti-poverty program, combined with the Child Tax Credit, in 2016 8.9 million people, including 4.7 million children were lifted out of poverty, and the severity of poverty was reduced for 19.3 million people, including 7.2 million children. The EITC is designed to encourage and reward work, as the EITC grows with additional earnings until an individual reaches the maximum value, which would place them safely above the poverty line. EITC has been specifically important to single mothers returning to work. As mentioned in the first installment, the EITC is not available in Puerto Rico, and the Child Tax Credit only applies to families with more than three children. The exclusion of Puerto Rico from these programs has greatly disadvantaged low-income working Puerto Ricans and eliminated their chance of accessing a program known at lifting large numbers of people out of poverty.

All of this is to say that the U.S. cut and reformulated programs in Puerto Rico in order to save some money, but it has created a situation where the 45% of people living in poverty have minimal to no social supports to help lift them up. What makes matters worse is that the disparities are location-based, meaning that if a Puerto Rican were to move to Florida they would be eligible for all of the programs in the states. This creates a difficult question for Puerto Ricans – stay in Puerto Rico and live in poverty, or start a new life on the mainland and be given access to benefit programs people like me are eligible for as mainland U.S. citizens. Just not in Puerto Rico… where everyone is a U.S. citizen.

[i]Benenson, R., Social Welfare Under Reagan, 1984, CQ Press. http://library.cqpress.com/cqresearcher/document.php?id=cqresrre1984030900

However, in Puerto Rico…A Discussion on Anti-Poverty Program Disparities

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When a natural disaster strikes, U.S. citizens often rely upon FEMA to respond. But when FEMA benefits end, people are still left to pick up the pieces of their former lives. Those who were once secure financially now struggle, and those who were impoverished experience complete and total devastation. Anti-poverty programs play an important role in disaster recovery. Though imagine what would happen if the programs were unable to provide for all the people in need, or what if they did not exist at all… Puerto Ricans don’t have to imagine this scenario, because they are already living it.

Before Hurricane Maria hit, Puerto Rico was already experiencing high levels of poverty, with 43.5% of people living in poverty[1], compared to the national average of 12.7%[2]. While many factors contribute to the number, Puerto Rico’s anti-poverty programs do very little to help reduce it. Puerto Ricans are United States citizens, whether they live in the 50 states or in Puerto Rico[3], and as such, are entitled to receive all of the benefits and privileges granted to citizens. Yet, the law treats citizens living in Puerto Rico vastly different from how they would be treated on the mainland.

For example, the Supplemental Nutrition Assistance Program (SNAP) plays an important role in providing funds to purchase food, and in a disaster, can also help to replace food that was lost. SNAP is an entitlement program for most, meaning anyone qualified can receive benefits, which allows the program to respond to economic need[4]. However, in Puerto Rico, SNAP does not exist. It is replaced by a block grant program, which means that with limited funds, participation and payments are restricted, and the program has no ability to adapt to economic changes[5]. Puerto Rico also can not access disaster funds related to nutrition assistance without a special designation[6].

Unlike SNAP, programs such as Temporary Assistance for Needy Families (TANF), and Child Nutrition Programs that exist on the mainland are present in Puerto Rico. However, in Puerto Rico TANF mainly provides support for individuals with disabilities, who make up 80% of participants[7]. This is a stark contrast to the mainland, where 90% of TANF supports single mothers living in poverty[8]. While the participation in Puerto Rico may be influenced in part by the stigma of welfare, the absence of Supplemental Security Income in Puerto Rico likely plays the larger role.

Supplemental Security Income (SSI) is the federal program that provides direct assistance to low-income elderly and disabled individuals. However, in Puerto Rico, like SNAP this program does not exist, and has been replaced by a limited grant[9].  Before the hurricane, this limited program assisted approximately 36,000 people, who received a monthly benefit of around $75[10]. In contrast, if Puerto Ricans could access SSI, an estimated 300,000-350,000 people would be eligible for an average monthly benefit of $540[11].

The Earned Income Tax Credit (EITC) is known as the being the most effective anti-poverty program to date, and is an effective tool for stimulating the economy by increasing the workforce and raising the working poor out of poverty. However, in Puerto Rico, like SNAP and SSI, the EITC does not exist. The EITC creates incentives for people to enter the workforce, which is critical for Puerto Rico, as less than half of Puerto Rico’s people are in the workforce, with many participating in the informal economy[12]. It is also important to note that while the Child Tax Credit does exist in Puerto Rico, it only applies to families with more than three children[13].

This comparison of programs is intended to shed light on the disparities between the anti-poverty programs in the states and Puerto Rico, and provide insight into the difficulties facing Puerto Ricans before the hurricane hit. This issue will not go away anytime soon, and while my future posts will focus on implications and solutions, low-income and impoverished Puerto Ricans need our help now. I hope that you will consider donating to #UBLawResponds so that we can provide essential goods to the Puerto Ricans we serve through our work on the island.

My next related blog will delve into the implications of the limited nature of Puerto Rico’s programs, like how a simple change of address can bring a low-income family out of extreme poverty. But tonight I must sleep, because tomorrow we are heading out to finally begin the fieldwork component of our course!

[1] United States Census Bureau, Quick Facts: Puerto Rico, https://www.census.gov/quickfacts/PR

[2] United States Census Bureau, Income and Poverty in the United States: 2016, September 12, 2017, https://www.census.gov/library/publications/2017/demo/p60-259.html

[3] U.S. Citizenship and Immigration Services, INA: Act 302 – Persons Born In Puerto Rico, https://www.uscis.gov/ilink/docView/SLB/HTML/SLB/0-0-0-1/0-0-0-29/0-0-0-9711.html

[4] Elizabeth Wolkomir, “How Is Food Assistance Different in Puerto Rico Than in the Rest of the United States?,” November 2017, https://www.cbpp.org/research/food-assistance/how-is-food-assistance-different-in-puerto-rico-than-in-the-rest-of-the

[5] Id.

[6] 42 U.S.C.A. § 5179.

[7] The University of Texas at Austin: Child and Family Research Institute, Supporting Children and Families: TANF and Head Start in Puerto Rico, http://www.metro.inter.edu/hsrppr/doc/Supporting%20children%20and%20families.pdf

[8] Id.

[9] U.S. House of Representatives Committee on Ways and Means, “Appendix B: Social Welfare Programs in the Territories,” https://greenbook-waysandmeans.house.gov/2012-green-book/appendix-b-social-welfare-programs-in-the-territories

[10] Robin Rudowitz, “Navigating Recovery: Health Care Financing and Delivery Systems in Puerto Rico and US Virgin Islands,” December 2017, https://www.kff.org/medicaid/issue-brief/navigating-recovery-health-care-financing-and-delivery-systems-in-puerto-rico-and-us-virgin-islands/

[11] Id.

[12] Center for Puerto Rican Studies, “Welfare Reform and the EITC: Economic Development Recommendations by the Oversight Board,” https://centropr.hunter.cuny.edu/events-news/puerto-rico-news/economic-development/welfare-reform-and-eitc-economic-development

[13] Richard V. Reeves and Katherine Guyot, “Keeping our PROMESA: What the U.S. can do about Puerto Rico’s fiscal crisis,” https://www.brookings.edu/research/keeping-our-promesa-what-the-u-s-can-do-about-puerto-ricos-fiscal-crisis/