Debt Limit Talks Dim Prospects for Addressing Nation’s Housing Crisis

Even as cities deal with more than 500,000 homeless people on their streets, the talks over avoiding a default on the nation’s debt are making the prospects grim for getting more help from the federal government. 

Billions of dollars for housing agencies to help people pay their rent and avoid being evicted is in danger after President Joe Biden said he is open to Republican demands to possibly claw back unspent Covid-19 relief funds in return for agreeing to raise the nation’s debt limit. Billions for public health and transit could also be at risk.

“It’s on the table,” he told reporters earlier this month of taking back the unspent funds.

Perhaps more significant, Biden, in an attempt to reach a deal with Republicans, has proposed keeping spending at this year’s levels. Republican House Speaker Kevin McCarthy has repeatedly insisted that for a deal to be struck, there must be less federal spending.

Rep. Hakeem Jeffries of New York, and the House’s top Democrat, endorsed the idea of a freeze, calling it a “common ground, middle-of-the-road proposal."

While the details of the negotiations between Biden and McCarthy are being kept secret, an analysis by the Congressional Budget Office last week laid out what the federal government could potentially claw back.

The analysis included $2 billion for vouchers Congress approved to pay people’s rents during the pandemic and another $3 billion for emergency rental assistance to keep people from being evicted. Additionally, $3.5 billion in funding to help public transit agencies deal with the revenue they lost when ridership declined could also go away, as well as more than $17 million in Department of Health and Human Services funding for public health. 

The possibility of losing the money couldn’t come at a worse time, according to housing advocates. 

“We're seeing that rents have increased, eviction filings and homelessness is increasing in many communities. Now is exactly the time where we need Congress to be investing more resources into affordable housing, not less,” said Sarah Saadian, senior vice president of public policy for the National Low Income Housing Coalition, in an interview.

Housing advocates like Saadian have acknowledged in interviews that even if Republicans fall short in getting their demands, Biden’s proposal to keep overall spending at this year’s levels will lower the chances of getting more federal funding to deal with the housing crisis, such as building affordable housing. Keeping spending the same next year as this year would actually be a decrease, Saadian said.

Rents are rising, Steve Berg, chief policy officer for the National Alliance to End Homelessness, told Route Fifty. “So if you fund these programs at the same level you funded it last year, you're not going to be able to help the same number of people.”

In addition to losing ground to rising rents, part of the Department of Housing and Urban Development’s funding for housing programs comes from the revenue the Federal Housing Administration gets from providing mortgage insurance. However, the FHA lost $13 billion when it lowered insurance premiums to help homebuyers deal with rising interest rates so it would need at least that much of an increase to keep revenue the same. 

“We're really concerned about these budget negotiations,” Saadian said. “The latest that we have heard is that the president had offered level funding for housing programs and Republicans rejected that. I think that that is a really clear sign that housing programs are at risk.” 

Rep. Jamal Bowman, a progressive New York Democrat, acknowledged in an interview that Biden’s proposal to keep spending the same could hurt the nation’s ability to deal with its housing crisis.

“Absolutely. 100%,” he said. “That's why I'm against freezing spending at current levels because we still have a lot to invest in to make sure the American people are safe and secure and have access to an opportunity to the American dream. Housing is a big part of that.”

But asked what he’d do if faced with a choice of voting to freeze federal spending or allowing the nation to go into default, Bowman said, “I don’t know. I’m going to have to talk to my team to figure out what to do. But we’re not going to default.”

Biden and McCarthy are still far apart over a number of issues including Republican demands that a deal increase work requirements on people receiving food stamps and Medicaid. Many mayors oppose such a proposal, which would still allow states to waive up to 12% of able-bodied people from the requirement to work to receive Supplemental Nutrition Assistance Program benefits for more than three months. However, it would no longer let them continue to grant the waivers for more than a year.

McCarthy, at the press conference, defended the push saying it would benefit those on Medicaid and food stamps by pushing them to improve their lives by finding work and would also help reduce the nation’s debt.

“I don’t think it's right to borrow more money from China to allow an able-bodied citizen to sit on a couch,” McCarthy said.

Public health leaders are also alarmed at the prospect of losing funds that were promised. Biden may have declared an end to the national public health emergency, but those in public health argue the work is far from over. 

“While the public health emergency is over,” ​​Chrissie Juliano, executive director of the Big Cities Health Coalition, wrote in an email, “this only means the acute response phase of the pandemic has ended. We need to continue to ensure people are up to date with vaccinations and use common-sense prevention efforts to protect those at highest risk. If we don’t, we risk sliding back into another acute phase, losing important gains we have made in the last few years.”

Local health departments also need the money to modernize their data collection systems to “help us monitor and catch threats early,” said Adriane Casalotti, chief of government and public affairs for the National Association of County and City Health Officials, in an interview. “Certainly something we want to make sure is that Covid or another virus doesn't come back without us knowing what's going on.”

Acknowledging that Biden’s proposal to freeze spending would hamper hopes of getting more funding, Juliano, whose group is made up of the health departments or larger cities, complained that It wouldn’t be the first time Congress has limited public health spending when a crisis seemed over.

“Congress has a deeply problematic habit of funding [and then defunding] public health one crisis and one disease at a time in a boom-and-bust cycle. We saw this in 2016, for example, when Congress redirected Ebola supplemental funds toward Zika, even though the Ebola threat had not ended. This is no way to run a system to protect public health, where the needs are complex, interrelated, ongoing, and never limited to an isolated infectious disease,” she said.

The American Public Transit Association also balked at having the remaining unspent Covid funds taken away. The money is needed, the association said in a statement, “to address ongoing Covid impacts, such as restoring ridership and farebox revenues. These emergency funds remain critically important to helping our communities recover from the pandemic."

The group has also been urging Congress to fully fund the bipartisan infrastructure law on capital projects and find a way in the negotiations to provide the money. “These infrastructure investments are a downpayment on our nation’s future," the group said.

One positive note for cities is that Republicans, as first reported by Route Fifty, did not include clawing back unspent Coronavirus State and Local Fiscal Recovery Funds in the American Rescue Plan Act in the budget proposal passed by the House in April. The possibility had been a top concern for mayors, with Republicans arguing that unspent dollars would have been spent by now if it was really needed.

“Do you think it's right we spend money and leave out there billions of dollars for Covid that we appropriated for two years and never spent?” McCarthy said. “What about bringing that money back?”