Why Is HUD Attacking Its Own Proposed Rule to Bar Illegal Aliens from Housing Assistance?

By Andrew Kloster on July 9, 2019

[A guest post by Andrew Kloster, Deputy Director of the Center for the Study of the Administrative State at George Mason University's Antonin Scalia Law School.]

The federal government provides various types of housing subsidies to low-income households. Over the past few years, the largest of these programs, the Housing Choice Voucher program, has received over $22 billion annually. All told, these programs under Section 214 of the Housing and Community Development Act of 1980 receive over $30 billion per year. Administered by the U.S. Department of Housing and Urban Development (HUD), the programs seek to help bolster community cohesion, ameliorate income inequality, and smooth macroeconomic transitions like those occurring in many areas of the country. Whatever one's opinion of the merits of these programs, they do represent the considered will of Congress and the American people, seeking to strike a pragmatic balance between American compassion and fiscal oversight.

There are always far more qualified applicants than HUD can serve at its existing funding level, but if the regulatory impact analysis (RIA) for a recent HUD proposed rule is to be believed, perhaps $210 million, or about 1 percent of program funds, are directed to "mixed" households with at least one individual who isn't a United States citizen or eligible resident alien. The amount of HUD money that HUD itself estimates is going to 31,811 ineligible ("likely illegal resident") individuals is $60.4 million each year.

While the funds in question are not huge, an important principle is at stake. When Congress creates broad delegations of authority but then appropriates funds far below the need of statutorily eligible beneficiaries, what Congress is saying is that it is up to the agency to prioritize who should receive benefits. For example, a federal law authorizing the purchase of up to two chickens for every American, combined with an appropriation of only enough for one chicken per American, would raise a question the agency must determine: Should every American get at least one chicken? Or should the agency try to maximize delivery of two-chicken packages to the neediest applicants until the money runs out? What the agency should not do is develop a benefit-delivery scheme that sends chickens to people ineligible for the program, which is apparently what HUD was permitting prior to Secretary Carson's laudable new proposed rule.

The proposed rule would bar subsidies for "mixed" households – i.e., households that contain a person who is likely to be an illegal resident. Given that the rule itself seems such a no-brainer, it is doubly concerning that the RIA, which is written by HUD bureaucrats, doesn't seem to support the department's own rule. When an agency proposes a rule and provides an RIA, it is giving the public notice about its regulatory priorities and the economic justifications for its actions. In this case, developing quality-control mechanisms and ensuring that taxpayer dollars are going to Americans and not ineligible non-citizens seems something that it's easy to economically justify – every dollar unlawfully spent is a dollar saved for the American taxpayer.

Yet as written, the RIA appears to be uninterested in ensuring that housing subsidies go only to eligible Americans – a goal that is not only mandated by federal statute, but also the subject of a May 23, 2019, presidential "Memorandum on Enforcing the Legal Responsibilities of Sponsors of Aliens." The RIA explicitly notes that by seeking to subsidize what it calls "non-mixed" households where every member of the household is eligible to receive subsidies, it will have to pay out more money per household. What had previously been the case is that HUD was apparently prioritizing "mixed" households where some members of the household were ineligible – as the RIA notes, "likely to be illegal residents." Thus, a house might have four individuals – three American citizens and one illegal resident. In that case, HUD would pay a pro-rated subsidy to the household worth 3/4 = 75 percent of the full subsidy. Because "mixed" households have higher incomes and subsidies were pro-rated, HUD was able to serve a larger number of households. This made political sense because HUD could say that its housing subsidy programs served almost five million households.

The problem is that a smaller subsidy to a greater number of households – many of which included illegal residents – meant that many non-mixed households with lower income and greater need were unable to obtain HUD assistance in a timely fashion. It's impossible to know precisely how these programs will be administered in the future, but it will certainly be welcome if HUD reprioritizes its expenditures to ensure that its funds are used lawfully, and to benefit only those Americans who Congress thought should enter the program. While Secretary Carson will undoubtedly be attacked when the program serves fewer households, he can rest easy knowing that the households served would now be among the neediest, and that all payments would be to eligible Americans only.

Unfortunately, the RIA appeared to count this reprioritization as a loss, and it claimed without evidence that program "quality" might decrease if the proposed rule is adopted. The RIA even suggested that it would be less costly to continue paying subsidies to existing mixed families than to promulgate the rule as written. Also concerning, the current RIA notes that it seems "ruthless" to enforce a policy that might lead to families deciding to evict household members that might jeopardize their housing subsidy. It is a rare supporting document that attacks the very rule it should be supporting, and I noted as much in my regulatory comment.

What's going on? While the politically appointed Trump HUD officials (with Secretary Carson at the top) support this regulatory change, appointees represent a small fraction of the federal workforce -- only about 4,000 in a workforce of about 2 million. In drafting rulemaking documents, HUD officials undoubtedly relied upon career civil servants. While many of them are quite capable, some are not, and while most faithfully execute the policies of the president in office, some do not. And without sharp, non-career economists and regulatory lawyers on staff, errors can sneak past a Secretary's signature, or past the Office of Information and Regulatory Affairs (OIRA) within the Executive Office of the President, which is the sub-agency tasked with improving and standardizing rulemaking across government.

But the buck stops with the chain-of-command, and hopefully HUD will take the opportunity to correct the record and explain the true costs of permitting payments to households with ineligible members ("likely to be illegal resident") and the true benefits of ensuring that HUD expenditures go to the neediest Americans first.

Topics: Welfare