How the GOP Plans to Cut Affordable Housing (Again)

(Photo: AP/Bloomington Herald-Times/Jeremy Hogan)

Seekers of Section 8 housing line up in Bloomington, Indiana, in 2011. The National Housing Trust Fund, created in 2008, is set to finally be funded in 2016, but House Appropriations Committee Republicans just last month passed a housing and transportation bill that strips the fund to cover cuts in other housing programs, and prohibits any funding in the future.

In almost every part of the country, families struggling to pay rent and seek help find themselves at the end of a very long line. In California, I spoke to a woman who told me she was assigned a number higher than 57,000 on the waiting list when she applied for a subsidized apartment. In the suburbs of Denver, Colorado, where the lottery opens every few years for Section 8, which gives recipients money to pay rent and is the biggest of the programs, only 30 or 40 of about 2,500 applicants will receive vouchers.

And that’s just when local agencies are even accepting applications. In many years, local housing authorities close their lists because there’s no real way of pulling people off them. There’s no national waiting list where we count, for certain, the amount of very low-income families who need help but aren’t getting it. “The waiting lists are basically lists of desperation,” says Sheila Crowley, president of the National Low Income Housing Coalition, a nonprofit that advocates for more affordable housing. “Only one in four people who are eligible for federal housing for those programs get it, because they’re grossly underfunded.”

A big part of the problem is the fact that there aren’t enough units set aside for low-income families to afford. The coalition estimates that there’s a shortage of 7.1 million rental units that are affordable for very low-income families. There are untold numbers of families paying way too much of their income toward rent, doubling up with relative’s households, sleeping on friend’s floors, stuck in unsuitable and unofficial housing, or sleeping in their cars or in hotels. They are ashamed of their situation and, thus, are not reporting it. Many of these families are working and have a modest income but they can’t stretch it to include rent, and we might not even know they exist.

Units that are affordable for families with low and very low incomes aren’t the types of units that are profitable for private developers and so their construction and maintenance depends on government subsidies. As it happens, there’s a program that could help. The National Housing Trust Fund, which was created during the subprime mortgage crisis, is set to provide federal funds to local communities to build, preserve, and rehabilitate affordable rental housing, beginning in 2016. And, like most programs that help the poor and working classes, Republicans want to kill it.

How did we get here in the first place? It’s a combination of the crazy housing markets and lackluster federal policy. The story of why affordable housing is underfunded begins, as do many tales of government-program woe, with President Ronald Reagan. Before his election, the Section 8 program had devoted about $12 billion to new construction. Reagan cut this in his 1983 budget, immediately halting plans for 50,000 new units planned for that fiscal year. His 1986 tax reforms got rid of many subsidies that promoted the construction of moderately priced housing. (Congress later restored a tax credit program for affordable apartment construction, which is one of the biggest sources of money for affordable construction, but it doesn’t match the funding that came before.) 

This construction, subsidized by the government, had at least kept pace with the loss of cheap housing many cities were already experiencing, and continued to experience in the following decades. In some markets (i.e., New York City) housing that was cheap and therefore affordable made way for more lucrative development as the city’s real estate gained value. In markets where real estate investments were less profitable (i.e., Baltimore), maintaining the quality of units wasn’t a good investment for landlords, and buildings slowly became abandoned. While deindustrialized cities like Baltimore still have cheap housing, very little of it is of good quality and much of it is surrounded by vacant buildings.

At the same time, federal policies pushed people into homeownership, which was often good for families but meant there was less investment in rental stock in both the private and publicly subsidized housing market. When capital dried up in the Great Recession, there was less still. By now, most experts agree that there isn’t enough affordable housing, that there’s a dramatic shortage when it comes to affordability for the poorest households, and that the way to solve this problem is through government investment. “We have a broken market that doesn’t work to produce housing that extremely low-income people can afford to rent, period,” says Barbara Sard, a vice president of the Center on Budget Policy and Priorities. “It just does not happen without subsidies of some sort.”

Funding the National Housing Trust Fund was put on hold throughout the crisis, because the funding mechanism was meant to come through the semi-governmental lending agencies Freddie Mac and Fannie Mae, who were deeply shaken by the crash. But now they’re profitable again, and were due to begin making the required contributions in the coming fiscal year and to begin making contributions to agencies that apply for funds in 2016. By some estimates, the funding would be around $133 million.

Then, last month, the Republican-led House Appropriations Committee raided the fund’s future revenues to cover cuts in other housing programs. (Indeed, the committee also cut transportation funding in the same bill just hours after a deadly Amtrak crash north of Philadelphia.) The Republicans on the committee blame the tight limits set on spending by measures like the Budget Control Act, but the truth is they have the decision-making power, and could fund these programs if they needed to.

The full House is expected to vote this week or next on the bill the House committee passed. As it stands, the default is that the trust fund will be financed next year unless the House and Senate pass these cuts and the president signs the bill. It seems unlikely that enough Democrats and President Obama would go along with the cuts to the trust fund, but the reality is that in the past, during the desperate last days of past budget fights, with government shutdowns looming, they’ve cut needed programs. The housing trust fund will likely take years to start eradicating some of the needs seen in cities across the country, and the longer it’s delayed, the more misery we’ll see.

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