President Donald Trump has promised to “make America great again.” But housing advocates are worried that the president’s proposed budget for 2018, which aims to cut $4.3 trillion in government spending over 10 years, might do the opposite for the millions of Americans struggling to keep a roof over their heads.
The $4.1 trillion budget, titled “A New Foundation for American Greatness,” was formally released on Tuesday. It would boost military spending by 10% while decreasing funding for many programs that serve the poor, ranging from food stamps and health care to rental assistance and programs that help low-income Americans become homeowners.
The plan must be approved by Congress, which is unlikely to approve many of the cuts.
“This budget’s defining ambition is to unleash the dreams of the American people,” Trump wrote in a letter to Congress in the budget. “To unleash the power of American work and creativity—and drive opportunity and faster economic growth—we must reprioritize Federal spending so that it advances the safety and security of the American people.”
The plan proposes to lop $6.2 billion off the U.S. Department of Housing and Urban Development budget. This would bring HUD’s funding to $40.68 billion next year.
“This budget reflects this administration’s commitment to fiscal responsibility while continuing HUD’s core support of our most vulnerable households,” HUD Secretary Ben Carson said in a statement.
However, affordable housing advocates criticized the proposal for cutting funding for the economically vulnerable at a time when rents and home prices are rising faster than wages.
“These are devastating cuts,” says Mary Cunningham, who focuses on housing affordability at the Urban Institute, a nonpartisan research institute based in Washington, DC. “This is going to result in huge increases in homelessness and people who are struggling to stay in housing.”
Which housing programs are fully on the chopping block?
Programs geared toward providing more affordable housing and improving the nation’s lowest-income communities were most likely to wind up on the chopping block under the proposed budget.
Those up for elimination include the following:
- Community Development Block Grant program: The nearly $3 billion state and local program helps poorer and lower-middle-class neighborhoods by providing things such as housing rehabilitation, new and improved roads and other infrastructure, and economic development projects.
- Home Investment Partnerships Program: The nearly $950 million program helps about 600 states and local governments create more affordable housing for the low-income Americans.
- Self-Help and Assisted Homeownership Opportunity Account: This provides $56 million in grants to nonprofit groups that help poor Americans buy a home by allowing them to contribute sweat equity during construction, and supporting affordable housing and community development in rural areas.
- Housing Trust Fund: The program, funded with Fannie Mae and Freddie Mac profits, keeps housing affordable for poor Americans by building new homes and rehabilitating existing ones.
- Single Family Housing Direct Loans program: The $61 million Department of Agriculture program guarantees loans for rural buyers.
“The budget proposes complete elimination of federal help that communities big and small rely on,” Chris Estes, head of the National Housing Conference, a Washington, DC–based group that supports affordable housing, said in a statement.
However, some other housing advocates say the cuts aren’t as catastrophic as these critics are making them out to be.
“The most important thing [the administration is] trying to do is continue to provide assistance to those who most need it,” says John Weicher, director of the Center for Housing and Financial Markets at the Hudson Institute, a conservative-leaning think tank in Washington, DC. The fact that the worst off will still receive help is “positive,” he says.
Which housing programs could see funding cuts?
Under the new budget, tenants would receive less rental assistance and many would be required to kick in more toward their rents. There would be some exceptions to the higher rent bills, in cases of hardship.
Overall, more than $1.9 billion would be cut from Housing Choice Vouchers, which are used by the poor to afford homes in the private market; public housing; rental assistance; and housing for the elderly and those with disabilities.
“This exacerbates a housing crisis that’s out of control for poor families,” says Stefanie DeLuca, a sociology professor at Johns Hopkins University and one of the authors of “Coming of Age in the Other America.” “When these vouchers are used in low-income neighborhoods, it increases children’s earning and college attendance as adults.”
The administration plans to continue to support the 4.5 million households that rely on these assistance programs. But just 1 in 4 of those qualifying for housing assistance from the government currently receives it, due to funding shortages, say affordable housing advocates.
“Due to rent and utility inflation, program costs increase every year just to assist roughly the same number of households,” says the budget, in the justification for the cuts. “Given the significant size of the Federal commitment, the Budget proposes a set of policies that would reduce costs and serve as a starting point for a more comprehensive package of rental assistance reforms.”
HUD is also seeking larger contributions from state and local governments as well as the private sector to fill in the gaps.
Which housing programs would see increased investment?
The budget wasn’t all doom and gloom. HUD is asking Congress to approve an additional $20 million to remediate lead paint hazards in housing, particularly in the homes of children under the age of 6. This would bring the total for the programs, one of Carson’s priorities, to $130 million.
The administration would also like to expand HUD’s Rental Assistance Demonstration program. It helps fund repairs and maintenance in public housing by permitting the mortgaging of the land and buildings to private capital. The companies then receive tax credits to offer tenants subsidized rent through Section 8.
HUD also plans to strengthen the Federal Housing Administration’s reverse mortgage program for older Americans.
In addition, the budget plans to upgrade aging technology and risk-management systems. This will be achieved by charging new fees to mortgage lenders who sell loans through the FHA.