Off the Charts Blog | Center on Budget and Policy Priorities

For low-income families that need affordable rental housing, the news from Washington in recent years has been bleak.  Yet, while President Obama’s new budget has shortcomings, it achieves the important goal of holding the ground on housing assistance in a very difficult budget environment.

For starters, the President and Congress agreed to deep cuts in federal housing assistance and community development programs in 2011 and 2012, and sequestration will slash more than another $2 billion from these programs this year.  Because of sequestration, the Housing Choice Voucher program alone will assist as many as 140,000 fewer low-income families by early 2014, we estimate, exacerbating homelessness even as funding for homelessness prevention and re-housing homeless families also shrinks.  This represents the largest shortfall in the program’s nearly 40-year history (see chart).

The cuts come at a time when the number of low-income families that need housing assistance has been rising substantially, there are long waiting lists for rental assistance in almost every community, and homelessness remains a persistent problem.

While sequestration is broadly unpopular, cancelling it will require the President and Congress to agree on deficit-reduction measures with which to replace it — an option that carries risks for safety net programs such as Medicaid and food stamps.

Meanwhile, President Obama has released his 2014 budget.  The budget achieves the important goal of holding the ground on housing assistance and other safety net programs in this strained budget environment.  It does this in three ways:

1. It would replace sequestration with a more balanced package of revenue increases and spending cuts that largely protects safety net programs. An approach that relies solely on cuts would devastate housing assistance over time.
2. It would prioritize low-income programs, including housing, for scarce discretionary resources. The President would increase funding for Housing and Urban Development (HUD) programs by $4.3 billion, or 10 percent, above the pre-sequestration funding levels of 2012, and his proposal also prioritizes rental assistance renewals and homeless assistance — areas that have the most significant and immediate impact on low-income families.
3. It would adopt program reforms that reduce HUD program costs without harming low-income families. The President’s budget proposes important reforms to streamline rental assistance programs, while largely protecting low-income households.  Such reforms are essential to stretching HUD dollars further over the next decade.  The budget also funds initiatives that could help to preserve and improve a substantial share of the public housing stock.

While the President’s budget is a vast improvement over the status quo of the sequester (and the House budget resolution), it falls short in some areas.  Notably, it appears to lock in the deep cuts already made in programs such as HOME (a block grant that supports rental housing and homeownership), and its deficit-reduction package would cut another $100 billion from non-defense discretionary programs, including housing, over the next decade.

And, it offers little to meet the enormous challenge of helping the millions of unassisted families with “worst-case” housing needs.  To meet this challenge, we must look for opportunities that lie outside the traditional box of discretionary housing programs, such as reforming the tax code — including the host of special tax breaks called “tax expenditures” — as well as restructuring Fannie Mae and Freddie Mac and, more broadly, federal housing finance.

For instance, as policymakers consider reforming tax expenditures, it makes sense to pursue a renters’ credit.  If capped at $5 billion, such a credit could reduce rents by an average of $400 per month for 1.2 million of the lowest-income renter households, lifting four of five of the poorest families it assists out of deep poverty.

The sequestration budget cuts will likely force state and local housing agencies to cut the number of low-income families using Housing Choice Vouchers to afford housing by roughly 140,000 by early 2014, as we explain in a new paper.  This represents a sharp break from Congress’ bipartisan commitment — which it has met for most of the voucher program’s nearly 40-year history — to renew assistance for at least the same number of families from year to year.  Meanwhile, thousands of other low-income families using vouchers could face sharp rent increases.

These cuts, which housing agencies have already begun to implement, will fall heavily on vulnerable people:

• In Los Angeles, hundreds of families at the top of the waiting list will not receive vouchers, the city housing authority may soon raise rents for 45,000 low-income families by $100 – $200 per month, and, by October, the county housing authority may terminate as many as 1,800 vouchers;
• The city of Marlborough, Massachusetts, expects to increase rent by an average of 45 percent for Section 8 voucher recipients; and
• In Muskogee, Oklahoma, the housing authority lacks the funds to issue more vouchers — which means that 45 fewer families will be assisted this year — and it may be forced to cut the vouchers of some families that are now using them.

The cuts come at a time when the number of low-income families that need housing assistance has been rising substantially, there are long waiting lists for vouchers in almost every community, and homelessness remains a persistent problem.

Overall, sequestration will cut more than $2 billion in 2013 from the housing assistance and community-development programs of the Department of Housing and Urban Development.  While cuts in housing vouchers and homeless assistance will probably affect low-income families the most in the near term, sequestration will also contribute to further losses of public housing, impede the development of affordable housing for low-income seniors and people with disabilities, cause more low-income children to be exposed to lead-based paint in older rental housing, and cut counseling services for families at risk of foreclosure.

Click here to read the full paper.

With President Obama and lawmakers of both parties vowing to achieve further deficit reduction, the stakes are high for low- and moderate-income Americans.  Moreover, as we explain in a new paper, if deficit reduction targets programs that provide supports and foster opportunity for low-income families, the adverse effects could be felt for decades — and not just by the low-income families and individuals who receive this assistance.

The economy’s future strength will depend in part on tapping the talents of as many Americans as possible.  If we shortchange investments that expand opportunity, the nation and our economy will be weaker than otherwise.  As recent data and research show, various key federal programs both ameliorate poverty in the short run and have important positive impacts over the long run.

Census data show that, as a group, programs that help families struggling to afford the basics are effective at substantially reducing the number of poor and uninsured Americans.

Overall, public programs lifted 40 million people out of poverty in 2011, including almost 9 million children (see chart).  While Social Security lifted the largest number of people overall out of poverty, the Earned Income Tax Credit (EITC) lifted the largest number of children.  Together, the EITC and Child Tax Credit (CTC) lifted 9.4 million people — including nearly 5 million children — out of poverty in 2011.

In addition, Medicaid provided access to affordable health care to more than 60 million people in 2009; thanks to Medicaid and the Children’s Health Insurance Program (CHIP), children are much less likely to be uninsured than adults.

Some leading researchers in the field have conducted a comprehensive review of the available research and data on how safety net programs affect poverty.  They found that the safety net lowers the poverty rate by about 14 percentage points (even after accounting for any potential negative effects on work incentives, which the research finds to be small).  In other words, one of every seven Americans would be poor without the safety net.  That translates into more than 40 million people.

Policymakers can make some money-saving changes in programs for low- and moderate-income individuals or families without unduly burdening those populations.  But the achievable savings through greater efficiencies in means-tested programs are modest.  In particular, the largest means-tested program — Medicaid — already provides health care coverage at a substantially lower cost per beneficiary than private coverage.

A more balanced approach to deficit reduction that includes adequate new revenues to complement additional spending cuts can further reduce deficits while maintaining the resources to invest in key building blocks of future prosperity, including effective services and supports for poor families and children.

We’ll take a closer look at how the safety net supports work and its positive long-term effects in future posts.

Click here to read the full paper.

In a new guest post for the Open Society Foundations,  Doug Rice points out that the “sequestration” budget cuts will harm many low-income families — and explains how the Senate can mitigate the damage somewhat by adopting an updated 2013 budget for the Department of Housing and Urban Development.  Here are the key points:

Last Friday, the White House Office of Management and Budget released details of the across-the-board budget cuts known as sequestration, including the fact that funding for the Housing Choice Voucher (HCV) program will be cut by $938 million this year. We estimate that this cut will cause more than 100,000 low-income families to lose rental assistance over the next 12 months – and that the figure could be as high as 140,000.

These cuts will fall on highly vulnerable families. Half of the 2.1 million households that the HCV program serves are seniors or people with disabilities; most of the rest are families with children. On average, these households have incomes of about $12,500 per year, well below the poverty line. Without rental assistance, housing would be unaffordable for these families, placing them at heightened risk of becoming homeless and sharply reducing the resources they can use to buy food, medicine, and other essentials. . . .

What should be done to protect vulnerable people — and the general public — from the increased hardships that sequestration will bring? First and foremost, policymakers should replace sequestration with a balanced package of tax and spending measures that do not increase poverty or inequality.

But that’s not likely to happen soon – and the effects of the cuts on low-income families in communities across the country will be growing. Meanwhile, Congress must enact, by March 27, legislation to fund the federal government for the remainder of the year. While this legislation will likely leave sequestration untouched, it offers the opportunity to reapportion funding among the various areas of the federal budget in ways that would mitigate some of the harmful effects of sequestration.

This week, the House of Representatives approved legislation that does this — but only for the Department of Defense and the Veterans’ Administration. Funding for other federal agencies is continued at the 2012 level (with exceptions for a few programs), with sequestration’s cuts then applied against those amounts.  Senator Barbara Mikulski, chair of the Senate Appropriations Committee, is spearheading a bipartisan effort to add updated budgets for some of the other federal agencies.  It is essential that the Department of Housing and Urban Development be included in this effort.  An updated HUD budget could, for example, sharply reduce the expected shortfall in funding for public housing operations, and also lessen the number of families losing voucher assistance.  Such action would be a step in the right direction in support of low-income families.

Click here for the full post.

Housing vouchers can give families access to better opportunities.  Using a voucher to move out of an extreme-poverty neighborhood sharply reduces deaths from disease or accidents among girls. And where housing policies have allowed low-income children to attend high-performing, economically integrated schools over the long term, the students scored significantly higher on math and reading tests than comparable children who attended higher-poverty schools.  These types of positive results have helped the voucher program generate broad bipartisan support.

But evidence shows that a core feature of the Section 8 Housing Choice Voucher Program —  families’ ability to choose where to live — often hasn’t had the hoped-for results.  Families with vouchers live in only slightly less poor neighborhoods than similar tenants without housing assistance, although neighborhood outcomes are somewhat better for black voucher households and significantly better than for the public housing and project-based Section 8 programs.  Moreover, a recent analysis shows that a smaller share of voucher households with children live near schools ranked in the top 50 percent than poor households generally.

As I explained last week on the National Housing Institute’s Shelterforce blog, it’s critical to give those helping Housing Choice Voucher families the tools they need to help these families move to more opportunity-rich neighborhoods — especially as policymakers consider cuts to housing programs as part of the current budget debate.

A new toolkit from the Poverty & Race Research Action Council and the Urban Institute (to which I contributed) is a starting point for public housing agencies, state and local governments, and non-profits that are working with these families.

The guide shows how to:

• Set goals in light of local markets and priorities;
• Identify opportunity-rich neighborhoods;
• Reach out to landlords effectively;
• Recruit and assist target families;
• Use existing discretion under the Department of Housing and Urban Development (HUD) policies — or get waivers of HUD rules — to expand families’ search time, set adequate subsidy levels, and provide security deposits; and
• Fund a local or regional program.

The toolkit is a good start, but HUD can do more to help the voucher program achieve its full potential.  Modifications of some of HUD’s policies — such as the “portability” and “consortia” rules that affect families seeking to use their vouchers in other cities or counties and the measures used to assess agency performance — could make it easier for agencies and families to succeed, and would encourage agencies to adopt policies to achieve better results.