When former House Speaker John Boehner fell on his sword last fall, he cleared the way for then-Representative Paul Ryan to inherit the speakership without a looming political crisis hanging over his head. Speaker Ryan won’t face a vote on the debt ceiling until March 2017. The budget deal brokered under Boehner also found more room beneath the budget caps imposed by the sequester.
But the budget crisis is by no means over: It’s just been pushed back until after the upcoming election. “Perhaps Republicans will win the presidency, and secure semi-permanent victory in the budget war,” as Brian Beutler explained in The New Republic last fall. “If not, you can practically pinpoint the end of Paul Ryan’s speakership somewhere in the spring or summer of 2017.”
So the sequester, a product of the Budget Control Act of 2011, is far from over. Its effects on the economy are still being felt even as the economy improves. One lingering effect involves housing: A new report from the Center on Budget and Policy Priorities shows that budget sequestration has deepened the nation’s affordable-housing crisis in alarming ways. And if the Republican Party cannot solve its political impasse, the crisis is only going to get worse.
Federal housing assistance was capped by the sequester
The Budget Control Act of 2011 imposed mandatory caps on defense and non-defense spending. Those austerity measures went into effect in 2013 and expire in 2021, unless Congress removes them. Housing assistance falls under the non-defense discretionary spending side.
A small fraction of non-defense discretionary spending goes toward a category called economic security. It’s only a small fraction of the total (14 percent), but a big chunk of economic security involves housing assistance (55 percent). These funds include vouchers, rental aid, assistance for the homeless, and other forms of housing aid.
Since the sequester, non-defense discretionary spending has fallen to its lowest level since the Kennedy era. That means big cuts in federal housing expenditures.
Last year’s ease on spending caps hasn’t helped with housing
Even after easing in the budget deal delivered last fall under Boehner, spending on federal housing assistance falls well below pre-sequestration levels. In 2013, discretionary spending on housing aid was 13 percent of 2010 levels. The last budget deal restored some of that spending, but housing assistance for 2016 is still almost 5 percent lower than 2010 levels.
The cuts were deepest to public housing and HOME block grants. The cuts that were most deeply and immediately felt, however, were those to households that rely on housing choice vouchers. That program has fallen $228 million from 2010 to 2016; tens of thousands of families have lost this assistance as a result.
Overall housing assistance has declined since the mid-1990s
While the enactment of austerity measures in 2011 triggered steep cuts to federal spending on housing assistance, that spending has in fact been in decline for some 20 years now. The sequester just means that a problem that was bad has only gotten worse.
“One of the revelations is that there’s been this longer pattern of neglect by policymakers that really began in the 1990s,” says Doug Rice, senior housing policy analyst for the Center on Budget and Policy Priorities.
From 1965 to 1995, as the report explains, policymakers expanded access to federal housing assistance. During that span, the number of assisted rental units grew from about half a million units in 1965 to about 4.5 million units in 1995. After that time, though, the growth in the number of units slowed sharply.
Rental housing has only grown more unaffordable over time
Over the same period, as federal subsidies for rental housing slowed, the need for affordable rental housing has shot way up. It’s gospel by now that incomes haven’t increased to keep pace with the cost of rents. And it should be noted that the economy has steadily improved since 2011. But the gap between incomes and rents remains sizeable.
Moreover, worse-off households are much, much worse off in recent years as a result of this gap.
“From 2001 to 2013, the number of unassisted renter households with very low incomes (incomes no greater than 50 percent of the area median income) that are either paying more than half their income for rental costs or live in severely substandard housing—known as those with ‘worst-case needs’—increased 54 percent, from 5 million households in 2001 to 7.7 million households in 2013,” the report reads.
The U.S. Department of Housing and Urban Development recently launched the National Housing Trust Fund to help households struggling with worst-case housing needs. But relative to the need, the $174 million program is just a drop in the bucket.
“The relatively small expansions [in aid] we’ve seen over the last 10 to 20 years have really done almost nothing to check what has become a much sharper increase in worst-case housing needs among very-low-income renters,” Rice says.
What Congress can do (and what Congress is likely to do)
Ryan could make good on his recent promise (and quasi–presidential campaign ad) to address poverty in a more conscientious way the next time the House enters into budget negotiations. His current anti-poverty platform (to the extent that he has detailed his plans) involves rolling up food and housing assistance—including entitlements—into a kind of block grant that has proven vulnerable to cuts over the years. But maybe he doesn’t do that.
Maybe Congress lifts the spending caps on non-defense discretionary funding before or by 2021. And maybe Congress recommits itself to funding the social safety net in a sustainable way and providing new tax-based incentives to the private market to build more and more deeply affordable housing.
But if those things don’t happen—if 2017 comes around and the Freedom Caucus demands strict adherence to spending cuts and obstruction—then austerity could return housing assistance to levels not seen since before the Reagan administration.
Beyond stopping the bleeding, Congress could consider taking radical action to alleviate the affordable-housing crisis. Ending the home mortgage interest deduction and directing that subsidy toward worst-case housing instead of homeowners, might be the federal policy that would do the most. But that’s about as likely as a breakthrough in the stalemate in Congress.
“There’s a lot of money in the federal budget that goes toward tax credits for housing,” Rice notes. “But the vast majority of it goes to homeowners, the vast majority of which have relatively high incomes and frankly would be homeowners even without these tax benefits.”