Federal Budget Outlook and Low-Income Housing

Transcription

1 Federal Budget Outlook and Low-Income Housing Douglas Rice January 19, 2012

2 Today s Topics Who is served by major federal rental assistance programs? Federal budget problems and their impact on funding for rental assistance programs? What can be done to protect these programs during forthcoming budget battles?

3 Federal rental assistance has failed to keep pace with growing needs Source: HUD analysis of Census data; CBPP analysis of HUD data.

4 Who is served by major federal rental assistance programs? Elderly/ Disabled Non-Elderly/ Non-Disabled Program Number of households No children With children No children With children Housing Vouchers 2,097, % 10.3% 10.3% 41.2% Public Housing 1,033, % 6.5% 13.5% 33.7% Section 8 PBRA 1,191, % 3.0% 8.5% 27.1% Total 4,322, % 7.4% 10.6% 35.5% Source: CBPP analysis of HUD administrative data for 2010.

5 52% of voucher households are families with kids, down from 61% in 2000 Source: CBPP analysis of HUD administrative data (2010 data); Jeffrey M. Lubell, Mark Shroder, and Barry Steffen, Work Participation and Length of Stay in HUD- Assisted Housing, Cityscape, 6:2, 2003, pp. 208 (2000 data).

6 Discretionary Housing/CD Programs Are Less than 2% of Total Spending *Chart represents actual FY 2010 outlays

7 Overview of the Federal Budget Challenges The budget deficit is large, but Increased spending has helped the economy to recover and promoting economic recovery is more important than deficit reduction right now. Over the next decade, projected federal budget deficits are caused primarily by the Bush-era tax cuts extended in 2010, the recession, and war spending. Over the long term, there are serious fiscal problems caused largely by the imbalance between revenues and rising costs in the health care system. The Budget Control Act will reduce deficits, but additional measures will be required to bring the budget into balance.

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10 The Major Deficit Reduction Components of Budget Control Act 1. Cuts discretionary spending by nearly $1 trillion over ten years, enforced by binding annual spending caps. 2. Tasked a bipartisan, bicameral committee to identify at least $1.2 trillion more in deficit reduction. 3. Because the Super Committee failed, requires: Automatic, across-the-board cuts in many programs in 2013; Cut of about 9% below cap for nondefense, discretionary programs Reductions in each year from in the annual caps on discretionary programs, as well as automatic cuts in non-exempt some entitlement programs These cuts total an additional $1.2 trillion in deficit reduction over the decade

11 Potential Cuts in Funding for Nondefense Discretionary Programs under BCA, % -2% -4% -6% -8% -10% -12% -14% -16% HUD Final Across-the-Board BCA caps prior to sequestration BCA caps after full sequestration Note: CBPP estimate. Cuts relative to 2011 level, adjusted for inflation.

12 The Road Ahead Deal to extend payroll tax cut/ui/doc fix threat of more discretionary cuts. BCA only gets us half way there additional deficit reduction required to balance budget. Expiration of Bush-era/2010 tax cuts at end of 2012 and possible BCA-mandated sequester in January 2013 means major action by Securing substantial additional revenues is the only way to avoid deep cuts elsewhere in budget.

13 Principles of Deficit Reduction Goal is to balance primary budget, stabilize debt/gdp. Congress should adopt a balanced approach that includes substantial revenues, as well as savings from security programs and other areas of spending. With nearly $2 trillion in discretionary spending cuts already required, further deficit reduction should focus on revenues, mandatory program savings. Deficit reduction should not increase poverty or economic inequality. Important to boost economy in short run.

14 Policies for Deficit Reduction Let Bush/2010 tax cuts expire, or pay for any extensions Target inefficient tax subsidies Avoid further cuts in non-defense discretionary programs but don t eliminate the sequester unless as part of broad, balanced package Over long term, control growth in system-wide health costs

15 What Is to Be Done? Important to show value of programs and impact of cuts. But defense alone on impacts will not avoid harmful cuts. Time for policy changes that leverage additional funds, serve additional families or save costs without harming intended beneficiaries. E.g.: Meet public housing capital backlog with private capital SEVRA/SESA/AHSSI reforms would save $700M - $1 billion over 5 years Administrative streamlining Use non-hud funds for service costs; focus work- and health enhancing services on assisted residents Engage in deficit reduction and budget debates make case for additional revenues.

16 Resources Primer on the Federal Budget Process Timely analysis on budget debates (twitter) Housing analyses and updates Main: Fact sheets on federal rental assistance programs: E-list sign-up: