The Center's work on 'Congressional Action' Issues


Why the Ryan Plan Should Worry Those Who Are Concerned About the Affordable Housing Crisis, Part 1

July 31, 2014 at 12:33 pm

A centerpiece of House Budget Committee Chairman Paul Ryan’s poverty plan is the proposal to consolidate 11 safety net programs — including four housing assistance programs — into a single, flexible block grant to states.  Among its downsides, this proposal threatens to lead to reductions in funding that provides housing assistance to millions of low-income families and individuals.

My colleagues have already set out some of the reasons to be concerned by Chairman Ryan’s proposal:

  • Block grants have proven to be easy targets for funding cuts, in part because their inherent flexibility makes it difficult to demonstrate how cuts would affect needy families and communities.
  • Total funding to assist low-income families — from federal, state, and local sources combined — likely would also decline, because broad block grants afford states opportunities to use block grant funds to replace state and local funds now going for similar services.

Because housing assistance and SNAP make up more than 80 percent of Ryan’s Opportunity Grant, any cuts in block grant funding would very likely reduce families’ access to these programs, as my colleague LaDonna Pavetti has explained.

The history of housing and community development program funding shows the risk of funding cuts that rental assistance programs face under Ryan’s plan.  Funding for flexible block grant programs such as the Community Development Block Grant (CDBG), HOME (which helps states and localities develop and preserve affordable homes for owners and renters), and the Native American Housing Block Grant has fallen sharply over time.  Meanwhile, programs that provide more narrowly prescribed forms of assistance to low-income families and that Congress funds separately each year — a category that includes housing vouchers, rural rental assistance, Section 8 Project-Based Rental Assistance, and Public Housing, the four rental assistance programs that Ryan’s proposal targets — have generally avoided reductions (sequestration in 2013 notwithstanding). (See chart.)

The reasons are easy to understand.  For example, HUD provides Congress every year with precise estimates of the cost of renewing the Housing Choice Vouchers that assist more than 2 million low-income families.  If Congress fails to provide sufficient funding to renew the vouchers, some of those families will lose assistance (and possibly their homes).  In contrast, policymakers can justify cutting a block grant by claiming that local agencies can avoid cutting direct assistance to families by using their flexibility to shift funds from other activities.

Cuts in rental assistance would fall mainly on low-income people who are elderly or have disabilities and working-poor families with children.  More than 80 percent of households with rental assistance in 2010 were elderly, had a disability, worked, or had recently worked.  (2010 is the most recent year for which these data are available to us.)

Rising rents and stagnant incomes have left increasingly more low-income Americans unable to afford decent, stable housing without cutting back on other basic needs.  Already fewer than one in four eligible low-income families receive rental assistance due to funding limitations, and waiting lists are long.  The cuts that would likely result from the Ryan plan would make this shortfall more severe and thus leave more families struggling to pay the rent and keep their homes.

Ryan’s “Opportunity Grant” Would Likely Force Cuts in Food and Housing Assistance

July 29, 2014 at 11:59 am

House Budget Committee Chairman Paul Ryan maintains that consolidating 11 safety-net and related programs into a single “Opportunity Grant” would give states the flexibility to provide specialized services to low-income people.  But providing these additional services would require cutting assistance funded through the Opportunity Grant to other needy people.  And because SNAP (formerly food stamps) and housing assistance together make up more than 80 percent of the Opportunity Grant, the cuts would almost certainly reduce families’ access to these programs, which are effective at reducing poverty — particularly deep poverty.

SNAP is an entitlement, which means that anyone who qualifies under program rules can receive benefits, and is heavily focused on the poor.  Over 91 percent of SNAP benefits go to households with incomes below the poverty line, and 55 percent goes to households in deep poverty — that is, households with cash incomes below half of the poverty line (about $9,800 for a family of three in 2013).

As a result, SNAP kept 4.9 million people out of poverty in 2012, including 2.2 million children.  It also lifted 1.4 million children out of deep poverty, more than any other benefit program.

Similarly, housing vouchers and other rental assistance lifted 2.8 million people — including 1 million children — out of poverty in 2012.

Chairman Ryan’s proposal to add new work requirements and provide individualized services to recipients of Opportunity Grant-funded assistance would surely require new staff and significantly raise administrative costs.  States would likely turn to SNAP for at least some offsetting savings:  it alone makes up more than half of the resources in the Opportunity Grant, and the Ryan proposal ends SNAP as an entitlement, eliminating eligible families’ guarantee to food assistance.  Rental assistance, which makes up nearly a quarter of the Opportunity Grant, is another likely target of cuts — though even today it serves only one in four eligible low-income families due to limited funding.

Whatever merit Chairman Ryan’s proposal for personalized services has, his Opportunity Grant could not possibly reach as many families as these existing programs serve.

Cutting food and housing assistance that lifts millions of people out of poverty and is effective at reducing hunger and homelessness in order to provide additional services to a smaller number of poor households isn’t a sound way to reduce poverty.

History Suggests Ryan Block Grant Would Be Susceptible to Cuts

July 28, 2014 at 2:47 pm

At the heart of House Budget Committee Chairman Paul Ryan’s new poverty plan is a block grant — called the “Opportunity Grant” — that would consolidate 11 disparate low-income programs, the largest being SNAP (formerly food stamps).  Ryan says that the block grant would maintain the same overall funding as the current programs.  But even if one thought that current-law funding levels were adequate, they likely wouldn’t be sustained over time under the Ryan proposal:  history shows that block grants that consolidate a number of programs or may be used for a wide array of purposes typically shrink — often very substantially — over time.

The table below shows 11 major block grant programs created in recent decades.  Eight of them have shrunk since their inception, in some cases sharply.  (Our analysis accounts for the effect of inflation.)

Block grants’ very structure makes them vulnerable to cuts.  Block grants generally give state and local governments more flexibility in how to use funds, leading to varied approaches for achieving program goals.  But this variety makes it hard to see how changes in funding levels affect beneficiaries, or even to be sure how the money is being used.  That, in turn, makes it easier for policymakers looking for savings to target block grants rather than other benefit programs for long-term freezes or cuts.  Block grants in general have fared poorly in the competition for resources.

Chairman Camp’s Troubling Stand on Tax Compliance

July 18, 2014 at 9:00 am

The House voted this week to wipe out one quarter of the Internal Revenue Service’s (IRS) enforcement budget.  This cut, which would dramatically worsen the hit that the IRS budget has taken since 2010, will further undermine the IRS’s ability to collect taxes that are owed. As we’ve described, this helps tax evaders and hurts honest taxpayers, and ultimately increases the deficit.

A less-noticed attack on tax compliance came last week from House Ways and Means Committee Chairman Dave Camp (R-MI), who characterized as tax increases — and therefore unacceptable — provisions in the Senate highway funding bill that are designed to better enable the IRS to enforce tax laws already on the books.

In a press release, Chairman Camp said:

I do not support, and the House will not support, billions of dollars in higher taxes to pay for more spending.  And, I certainly do not support permanent tax increases to pay for just 10 months of highway programs.  Furthermore, it is inconceivable that the House would, as the Senate proposes to do, grant the IRS additional authority to audit and investigate taxpayers simply so Washington can spend more money.

The so-called “permanent tax increases” that Camp condemned include ensuring adequate disclosure of mortgage transactions and clarifying what constitutes a “substantial omission of income” on a tax return.  They are tax compliance provisions, meant to enable the IRS to collect the revenues that taxpayers owe.

As Senate Finance Committee Chairman Ron Wyden (D-OR) told Politico, “these are taxes owed” and “this is enforcing existing law.”  Underscoring the bipartisan nature of this interpretation of the Senate bill, Sen. John Thune (R-SD) added “those are taxes that are owed, and to me, that’s simply a function of making sure that we’re getting paid.”

Camp’s attack was particularly stunning, coming from the chairman of the very committee that writes the nation’s tax laws.  He deemed it “inconceivable” that the House would give the IRS the ability to enforce the tax laws — one of its core functions.  In fact, it should be inconceivable that Congress does not routinely make modest technical adjustments to ensure that people pay taxes as the law intends.  Honest taxpayers deserve no less.

Camp’s position, coupled with the House action to slash the IRS enforcement budget, reflect a fundamental shift in the tax debate, from policymakers supporting appropriate enforcement of the nation’s tax laws to actively seeking to undermine what should be bipartisan compliance efforts.

A Constitutional Convention Poses Grave Risks

July 16, 2014 at 4:33 pm

The idea of convening a constitutional convention to propose a balanced budget amendment or similar amendments raises grave problems, as we explain in a new paper.  A number of states have passed resolutions calling for such a convention, and proponents of a constitutional convention are targeting more states in an effort to obtain the 34 states needed to call one (see map).

A balanced budget amendment poses serious risks in and of itself.  But, as a number of legal experts across the political spectrum have warned, a convention could open up the Constitution to broader radical and harmful changes.  Such serious concerns are justified, for several reasons:

  • A convention could write its own rules.  No constitutional convention has been called since the 1787 meeting that wrote the Constitution, and the Constitution provides no guidance whatsoever on what a convention’s ground rules would be.  This leaves wide open to political considerations and pressures such fundamental questions as how delegates would be chosen, how many delegates each state would have, and whether a supermajority vote would be required to approve amendments.  To show the importance of these issues, consider that if every state had one vote in a convention and the convention could approve amendments with a simple majority vote, the 26 least populous states, with less than 18 percent of the nation’s people, could approve constitutional amendments for ratification. 
  • A convention could set its own agenda, possibly influenced by powerful interest groups.  The 1787 meeting went far beyond its mandate.  Charged with amending the Articles of Confederation to promote trade among the states, the convention instead wrote an entirely new governing document.  A convention held today could set its own agenda, too.  There is no guarantee that a convention could be limited to a given set of issues, such as balancing the budget.  
  • A convention could choose a new ratification process.  The 1787 convention ignored the ratification process under which it was established and created a new process, reducing the number of states needed to approve the new Constitution and removing Congress from the approval process.  The country then ignored the pre-existing ratification procedures and adopted the Constitution under the new ratification procedures that the convention proposed.  Given these facts, it would be unwise to assume that ratification of the convention’s proposals would require the subsequent approval of 38 states, as the Constitution specifies.  For example, a convention might remove the states from the approval process and propose a national referendum instead, or approval by a simple majority of states. 
  • No other body, including the courts, has clear authority over a convention.  The Constitution provides for no authority above a constitutional convention, so it isn’t clear that the courts, Congress, state legislatures, or a President could intervene if a convention went beyond the language of the state resolutions calling for a convention or the congressional resolution establishing it.  Likewise, there may be no recourse if the convention altered the process for ratifying its own proposed amendments.  The Constitution has virtually no restrictions on the operations of a constitutional convention or the scope of the amendments that it could produce, and the courts would likely regard legal challenges to a convention as “political questions” that the judiciary does not wade into. 

States should avoid these risks and reject resolutions calling for a constitutional convention, and those that have already approved such resolutions should rescind them.

Click here to read the full paper.