Trump’s executive order is definitely legal. But what does it mean in practice?
Trump Ends Federal Subsidies for Illegal Immigrants
Please consider this White House Fact Sheet on Taxpayer Subsidization of Open Borders.
PRESERVING FEDERAL BENEFITS FOR AMERICAN CITIZENS: Today, President Donald J. Trump signed an Executive Order to ensure taxpayer resources are not used to incentivize or support illegal immigration.
- The Order directs Federal departments and agencies to identify all federally funded programs currently providing financial benefits to illegal aliens and take corrective action.
- It ensures that Federal funds to states and localities will not be used to support “sanctuary” policies or assist illegal immigration.
- It mandates improvements in eligibility verification to prevent benefits from going to individuals unlawfully present in the United States.
- President Trump is committed to safeguarding Federal public benefits for American citizens who are truly in need, including individuals with disabilities and veterans.
Executive Order Claims
- The surge in illegal immigration, enabled by the previous Administration, is siphoning dollars and essential services from American citizens while state and local budgets grow increasingly strained.
- Under current welfare laws, specifically the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), illegal aliens are generally barred from welfare programs. But if they’re granted parole, they are classified as “qualified aliens” and become eligible for various welfare programs on a sliding scale, with full eligibility granted within five years.
- According to the Center for Immigration Studies (CIS), providing welfare to one million illegal aliens could cost American taxpayers an additional $3 billion annually.
- The U.S. House Homeland Security Committee estimated that taxpayers could pay as much as $451 billion to care for illegal aliens and gotaways that have entered the United States unlawfully since January 2021.
- The Federation for American Immigration Reform (FAIR) calculated that American taxpayers spend at least $182 billion annually to cover the costs incurred by the presence of 20 million illegal aliens and their children, which includes $66.5 billion in Federal expenses plus an additional $115.6 billion in state and local expenses.
- The Congressional Budget Office (CBO) estimated that the Biden Administration’s open borders agenda, which sought to provide Medicaid-funded emergency services to illegal aliens, has cost Federal and state taxpayers more than $16.2 billion.
- The Biden Administration gave billions in taxpayer dollars to left-wing groups that facilitated mass illegal migration and provided legal services to challenge deportation orders.
- In addition, since 2021, more than $1 billion has been allocated through the Federal Emergency Management Agency (FEMA) to illegal aliens.
Already the Law Since 1996
Please consider H.R.3734 – Personal Responsibility and Work Opportunity Reconciliation Act of 1996
Title IV: Restricting Welfare and Public Benefits for Aliens – Declares that: (1) it is a compelling government interest to enact new rules for eligibility and sponsorship agreements in order to assure that aliens be self-reliant in accordance with national immigration policy; and (2) it is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits.
Subtitle A: Eligibility for Federal Benefits – Prohibits Federal public benefits (as defined by this Act) to aliens who are not qualified aliens (as defined by this Act). Stipulates that such prohibition shall not apply to: (1) emergency medical services; (2) certain emergency disaster relief; (3) public health immunizations and treatment of communicable diseases; (4) housing assistance; (5) certain in-kind community services; and (6) Social Security Act benefits under specified circumstances.
(Sec. 402) Makes qualified aliens ineligible (with limited exceptions for refugees, asylees, certain permanent residents, veterans and active duty personnel, aliens whose deportation is withheld, and aliens currently receiving benefits) for: (1) supplemental security income (SSI); (2) food stamps; (3) temporary assistance for needy families; (4) social services block grants; and (5) Medicaid.
(Sec. 403) Makes qualified aliens ineligible (with limited exceptions for refugees, asylees, and veterans and active duty personnel) for Federal means-tested public benefits (as defined by this Act) for the first five years after U.S. entry. Provides a special rule for certain Cuban and Haitian entrant assistance.
(Sec. 404) Requires each Federal agency administering a program covered by this title to post information and provide general notification to the public and program recipients, either directly or through the States, of the requirements concerning alien eligibility for any such program pursuant to this title.
Amends the Social Security Act and the United States Housing Act of 1937 to provide for State reporting of certain illegal alien information to the Immigration and Naturalization Service (INS).
Subtitle B: Eligibility for State and Local Public Benefits Programs – Makes an alien who is not a qualified alien, a nonimmigrant, or a parolee ineligible for State or local benefits (as defined by this Act). Stipulates that such prohibition shall not apply to: (1) emergency medical services; (2) certain emergency disaster relief; (3) public health immunizations and treatment of communicable diseases; and (4) certain in-kind community services.
(Sec. 412) Authorizes States to determine eligibility for State public benefits for qualified aliens, nonimmigrants, or parolees. States that refugees, asylees, certain permanent residents, and veterans and active duty personnel shall be eligible for all State public benefits. Sets forth transition provisions for aliens currently receiving assistance.
What Does the Executive Order Do?
The EO pertains to federal but not state assistance.
Note the FEMA claim is only $1 billion: “Since 2021, more than $1 billion has been allocated through the Federal Emergency Management Agency (FEMA) to illegal aliens.”
I certainly object to disaster relief from hurricanes and fires going to house illegal immigrants. And Trump will surely put an end to it. But for all the fuming, there’s not much to see.
What to Know About Trump’s Order Targeting Federal Benefits for Migrants
The New York Times discusses the setup in What to Know About Trump’s Order Targeting Federal Benefits for Migrants
The directive is short on specifics, but it says that Mr. Trump wants all federal agencies to find out what government funds are being given out improperly. The Office of Management and Budget and the so-called Department of Government Efficiency have 30 days to find other streams of federal funding to people who are in the country illegally.
What federal benefits are undocumented immigrants eligible for now?
Not many. There are some exceptions for emergency medical care and public schooling for children. But in general, people who are in the country illegally cannot receive federal benefits. This is enshrined in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Changes to eligibility would have to go through Congress.
The lack of federal benefits for undocumented immigrants is one reason some cities across the country have been struggling to support an influx of people who crossed the border illegally in recent years.
The NYT says “There is no current federal assessment for how much the federal government spends on undocumented immigrants.”
Trump does make claims, but most do not appear to be strictly Federal claims other than FEMA.
The CBO says “Medicaid-funded emergency services to illegal aliens, has cost Federal and state taxpayers more than $16.2 billion.”
The CBO dis not state what portion of Medicaid is Federal. AI says ~80 percent is Federal. So, 80 percent of $16.2 billion = $13 billion.
The claims by FAIR are on the wild side to say the least. A realistic direct funding estimate is $15 to $20 billion.
Three EO Realities
- Unless there is a state crackdown, the benefits may not amount to much.
- DOGE will investigate but expect exaggerated claims.
- This EO will increase fear in the migrant communities.
Perhaps the third bullet point is the primary purpose of the order.
Just because something is the law does not mean it is enforced. FEMA alone shows that it wasn’t.
I have no problem with enforcing the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
DOGE investigating the issue is a good idea.
Apprehensions Down 85 Percent
The U.S. Customs and Border Protection CBP Report shows that from Jan. 21 through Jan. 31, 2025, the number apprehensions along the southwest border dropped 85% from the same period in 2024.
Congrats to Team Trump.
Recessionary Items
- Illegal immigration has plunged.
- Trump will shut down whatever illegal aid is still happening.
- Tariffs and tariff uncertainties are up.
- Housing starts dropped 9.8 percent.
- Retail sales plunged.
All of the above items are recessionary at the margin. But we do not know what fiscal stimulus will be when Congress addresses the budget.
Importantly, we do not have any idea when budget progress might happen. If it’s two bills and not one, with border issues first, stimulus will be delayed.
There’s crazy stuff potentially on deck such as an “iron dome” defense shield for the US. How much would that cost?
The budget items are definitely inflationary but the above list is recessionary.
if Trump quickly resolves Russia, we may see a big disinflationary impact due to falling oil prices.
And the sudden halt to illegal immigration is very disinflationary for rent prices as well as recessionary.
It is very difficult to sort out the net impacts when we do not even know what the budget looks like.
Related Items
February 4, 2025: Job Openings Drop by 556,000 in December, Quits Show Job Finding Stress
Job openings have collapsed. And the number of quits confirms people are staying put.
February 5, 2025: ADP Payrolls Better than Expected But Two-Thirds of the Economy Has Stalled
ADP reported a better than expected 183,000 jobs in January, but small business trends are unsettling.
February 19, 2025: Housing Starts Drop 9.8 Percent, Unable to Retain Any Traction
Housing starts have mostly been rangebound since late 2022 as high prices and high mortgage rates dampen demand.
February 20, 2025: How Will 77,000 DOGE Terminations Impact Unemployment and Jobs?
As of Feb. 13, 77,000 employees accepted the offer, according to White House press secretary Karoline Leavitt.
On February 14, I noted Retail Sales Crash – Did the Consumer Finally Throw in the Towel?
The Census Department shows huge across-the-board declines in multiple categories, down 0.9 percent overall.
One aspect I did not discuss above is the net impact on retail sales due to the plunge in illegal immigration.