US Federal housing expenditures
Cut dramatically since 1980 and President Reagan? Not according to many analyses, but there are different ways of looking at it.
It is often said that United States Federal spending on low-income housing was cut dramatically, by 2/3 or more, in the early 1980s as part of President Ronald Reagan's general scaleback of social-services spending. This has long and influentially been asserted, for example, by the National Low Income Housing Coalition, and the Western Regional Advocacy Project (WRAP) in their "Without Housing" campaign: see "Without Housing: Decades of Federal Housing Cutbacks, Massive Homelessness, and Policy Failures" [WRAP 2010]. This view is widely expressed by housing advocates and major media; and also often given as the primary explanation for the rise in US homelessness in the 1980s: see., e.g. [Yentel (LIHC), 2018] and [Emily Badger, New York Times, 2019].
However, the claim of large spending cuts is at least misleading, often unsourced, and is strongly disputed by many analyses. It appears to be usually based on a big early-1980s drop in the budget authority of HUD (US Department of Housing and Urban Development), the main Federal direct funder of housing programs. However, budget authority is a Federal budget-accounting metric that is quite different than what an agency spends or expects to spend in a given year, i.e. what people typically mean by 'budget' or 'spending'. It is an estimate of the agency's total new future spending obligations, which depend greatly on what type of programs are planned and for how long in advance they are contracted and accounted for.
In this article we will review various discussions of these point, and what evidence or viewpoints may support the conclusion that low-income funding housing was or was not greatly reduced.
(1) Total direct spending outlays, and also tax expenditures, have risen mostly steadily and at least 100% since 1980.
US Federal expenditures on low-income housing have increased substantially, in absolute and inflation-adjusted dollar terms, from the 1970s through Reagan's presidency, and to 2019. They have increased substantially in direct expenditures (spending outlays, mostly through US Department of Housing and Urban Development), and additionally via tax expenditures with the Low Income Housing Tax Credit (LIHTC) program established in 1986. Also, the number of households receiving some type of low-income housing support has increased significantly [citation needed].
Congresssional Research Service 2019 report on HUD
According to 2019 report by Congress' Congressional Research Service, there was a 108% increase in direct expenditures affordable housing programs (mainly HUD) between 1980-2018, in inflation adjusted, absolute dollar terms. Number of housing vouchers and households served have also increased substantially.
Also, this does not include the LIHTC tax credit introduced in 1986, that has become the primary source of new affordable-housing creation, building about 2.4M homes since then. https://crsreports.congress.gov/product/pdf/RL/RL34591.
expenditures have mostly shifted away from creating publicly-owned housing, the net number of which has decreased since the 1990s, and have shifted towards tenant vouchers (Housing Choice Vouchers) mostly used in private housing, and privately-developed, dedicated affordable housing supported by LIHTC. LIHTC has subsidized most of the new dedicated affordable housing built in the US since 1986, around 2.4M homes, but unlike older public housing and vouchers, it typically does not provide "deep affordability" i.e. for the poorest households, but rather offers housing at rents up to to 60% of MFI (Median Family Income).
It is often said that Federal funding of affordable housing has been sharply cut since 1980 -- to only 1/3 of pre-1980 levels, or cut 75% or 80%. However, upon inspection, these claims usually appear to refer to one of several views:
a) cuts in HUD Budget Authority, which is the sum of all future contracted spending. This dropped sharply at several points starting in early 1980s, as Reagan and other administrations sought to scale back HUD expansion. This meant that, or was handled by, slowing the rate of issuance of new housing vouchers (which automatically renew so require large future budget authority), and by steadily reducing the lengths of HUD contracts. Actual spending outlays, however, on average have continued to rise. See HUD Budget Outlays vs Budget Authority section below for further discussion.
b) reductions in spending specifically on public housing, and in the total remaining number of public housing units.
c) a view is that the Federal government has effectively withdrawn or disinvested from regulated-affordable housing because it has not nearly met the much-increased need, which it pledged to do for example with the 1949 Housing Act.
(2) 2006- "Without Housing" report from Western Regional Advocacy Center
A key proponent of the argument that US post-1980s homelessness is caused by reduced Federal spending has been WRAP.
"In 2006, WRAP published a Without Housing report that clearly showed the world why America’s 'approach' to ending homelessness has been overwhelmingly ineffective. In 2010, we updated the report, now available in both English and Spanish.
"the historical policy decision made under the Reagan administration to defund the federal production and subsidization of affordable housing is the primary cause of contemporary mass homelessness."
WRAP's argument appears to be based once again on Budget Authority figures for HUD. See section "HUD Budget Outlays vs Budget Authority" further below on why this is a misleading measure of 'funding'.
source: Western Regional Advocacy Project - WRAP. (2010). "Without Housing: Decades of Federal Housing Cutbacks, Massive Homelessness, and Policy Failures." San Francisco: WRAP, 2010. https://wraphome.org//wp-content/uploads/2008/09/2010%20Update%20Without%20Housing.pdf.
"In the beginning of 2012 WRAP created a Organizers’ Toolkit, we offer it here to any community based organizing effort, be it Rural or Urban. We offer it in order to preserve and build on what we already know to be fact and we will add to it as we move forward in the work we are doing."
https://wraphome.org/organizing/organizingtoolkit/
(3) NLIHC (2002) study
1Founder and Chair Emeritus, National Low Income Housing Coalition
2President, National Low Income Housing Coalition.
(4) Center for Budget and Policy Priorities - 2016 report
Rice, Douglas. "Chart Book: Cuts in Federal Assistance Have Exacerbated Families’ Struggles to Afford Housing." Center on Budget and Policy Priorities, April 12, 2016.
https://www.cbpp.org/research/housing/chart-book-cuts-in-federal-assistance-have-exacerbated-families-struggles-to-afford.
(5) 2019 HUD funding increases
from Center on Budget and Policy Priorities [Bell 2019]:
"The 2019 government funding bill that President Trump signed into law today sustains most of the substantial funding increases of 2018 for Department of Housing and Urban Development (HUD) programs, and it includes funding to further expand the number of new housing vouchers and other rental assistance.
"Overall, the bill provides $53.8 billion for HUD programs, a $1 billion (nearly 2 percent) increase over the 2018 funding level. It provides enough funding, $20.3 billion, to renew all housing vouchers that low-income families are now using. The bill also creates an innovative new mobility demonstration that will enable housing agencies to provide robust support for low-income families with children seeking to use their vouchers to move to neighborhoods with quality schools and other opportunities. In addition, it funds about 19,000 new vouchers for low-income people with disabilities, homeless veterans, and families with children
"Congress also increased funds for public housing. Capital funds, which agencies use to update and maintain their housing stock, received a modest boost of $25 million over the 2018 funding level. However, there remains a capital backlog of over $26 billion throughout the public housing portfolio. The bill raised funding for the Public Housing Operating Fund, which provides funds to housing agencies for ongoing operational and utility costs, by $103 million.
"The Section 8 Project-Based Rental Assistance program received a $232 million increase over its 2018 levels."
(6) Funding vs growth in need, population, Federal budget
Of course, rather than considering absolute dollars spent, we might ask what was the need, given growing population and housing costs; or consider that increasing portions of spending have gone into merely maintaining old public housing rather than creating new housing. Or, we could note that Federal spending in general has increased greatly since 1980, so this housing spending is declining as portion of budget. Also, post-1980 saw major cuts and reforms in other welfare programs, which may have helped push/keep many more people into poverty and housing insecurity or homelessness. Finally, we could compare to Federal tax expenditures on Mortgage Interest Deduction and other homeownership subsidies, which have increased tremendously since 1980 and now is much larger than HUD and LIHTC expenditures combined, and go mostly to high-income households.
However, given HUD budget figures and LIHTC, it seems inaccurate to say that US Federal affordable-housing support was substantially cut after 1980.
(7) HUD Budget Outlays vs Budget Authority
• Budget authority. Authorized amount of obligations each year regardless of when the spending occurs.
• Outlays. Actual spending each year
from [NLIHC 2002] report:
"The much lower level of HUD budget authority that has persisted since 1985 reflects cuts to programs and changes in the way subsidized housing has been financed. In the 1960s and 70s, subsidy contracts ran for 30 years (or 40 for public housing), so a high level of budget authority was required to finance the developments. The calculation of budget authority was the maximum subsidy commitment multiplied by the length of the commitment. This had the effect of making low income housing appear to be outrageously expensive. So contract lengths were shortened, to 15 years, then 10, then 5, then 1, bringing budget authority and outlays more closely into line.
"In the early 1990s, these subsidy contracts of varying lengths started expiring. Again to cope with the amount of budget authority generated, the renewal terms were shortened."
see discussion in:
Rubin, Irene S. (2002). Balancing the Federal Budget: Trimming the Herds or Eating the Seed Corn? NY: Seven Bridges Press, 2002.
Ch.8: Department of Housing and Urban Development.
https://books.google.com/books?id=owemAwAAQBAJ&lpg=PA223&ots=52rFl1YuQ0&dq=HUD%20budget%20authority%20vs%20outlays&pg=PA220#v=onepage&q&f=false
"The disconnect between budget authority and outlays represented a strategy on HUD's part of keep up spending levels, pushing obligations off into the future in hopes that the overall budget situation would be better and the need so acute that Congress and the president would come through later with more funds. In the earlier years the primary technique was to change the length of contracts for housing...Later, HUD began borrowing from the future through advance funding, using some of the next year's budget in the present year."
(8) Other discussions of funding cuts post-1980
1981 NYT article by Andre Shashaty
This article is often cited in discussions of post-1980 housing budgets:
Shashaty, Andre. "U.S. Cuts Back and Shifts Course on Housing Aid." The New York Times, Oct. 18, 1981. https://www.nytimes.com/1981/10/18/realestate/us-cuts-back-and-shifts-course-on-housing-aid.html.
"When Congress passed the Housing Act of 1968, it committed the nation to the goal of producing 2.6 million units of housing a year, including 600,000 annually for low-income families. Now, if the Reagan Administration has its way, the direct Federal subsidy programs enacted by Congress to help meet that goal will be drastically curtailed." "
The Department of Housing and Urban Development is proposing deep cuts in the two main subsidy programs - Section 8 rental housing assistance and public housing - for fiscal year 1983, which begins in a year. Not only are the programs too expensive in light of the President's plans to balance the budget, H.U.D. officials say, but they just do not fit in the Administration's new approach to housing."
"In the last year of the Carter Administration, Housing and Urban Development and Congress, alarmed by reports of a growing shortage of rental housing, frantically searched for a new way to use Federal subsidies to produce more apartments. Now, the department contends, there is no nationwide shortage of rental housing."
"For fiscal year 1983, H.U.D. is proposing a 142,000-unit program. But, in a complete shift from prior years, when most of the subsidized units were newly constructed or totally rehabilitated, H.U.D. is proposing only 10,000 units of new construction. The remaining funds would be used to help low-income tenants pay rent in 132,000 existing housing units through the current Section 8 existing housing program and a modified version called housing vouchers."
"The department is proposing no new production under the public housing program." [..]
"The philosophical underpinning for this approach comes from two studies of the rental housing supply that question the conclusion of a 1979 report by the General Accounting Office. The G.A.O. report found that prompt Federal action was required to deal with a worsening shortage of rental housing. The new reports seem to be having as much influence on Federal policymakers now as the G.A.O. report had on the Carter Administration."
" I am unable to find persuasive evidence of a (general) shortage of rental housing, said Ira S. Lowry in a report first delivered at a Housing and Urban Development rental housing conference in 1980 and soon to be published by the Rand Corporation, a Santa Monica, Calif., consultant."
News coverage and advocacy materials often state variations of this statement:
- the US Federal government spent three times as much on housing programs in before 1980 compared to now [i.e. late 2010s]; or
- Federal housing funding has been cut 75% [sometimes 80%] since 1980, or since Reagan presidency.
It appears this claim is based on HUD Budget Authority Figures, which were much higher before the early 1980s largely because of change in how they were calculated (see HUD Budget Outlays vs Budget Authority section above. Also, it is not including funding via tax expenditure: the Low-Income Housing Tax Credit, which since the mid-1980s has been the primary way US government has supported new affordable housing, funding 2.4M new homes since it began in 1986.
Diane Yentel (NLIHC) testimony to Congress, 2018
Diane Yentel, president of the National Low Income Housing Coalition, presented testimony to the Financial Services Committee, US House of Representatives, December 21, 2018. [Yentel 2018]:
"The shortage of affordable rental homes is caused by market failure and chronic underfunding of solutions..."
"Today’s modern phenomenon of homelessness did not exist in the late-1970s because our country housed almost everyone, including the lowest-income and most vulnerable families. At that time, our country had a modest surplus of homes affordable and available to the lowest income people. The primary difference between then and now: federal subsidies. Funding for affordable housing solutions has been declining for decades. Adjusting for inflation, the federal budget authority for housing assistance programs in the 1970s was nearly three times more than it is today,18despite the significant growth in the number of low-income renters eligible for housing assistance (see figure 3).19"
Figure 3 from Yentel's testimony is below:
Emily Badger 2019 NYT article
One key dissemination of the statement about major Federal cuts was the New York Times article of January 18, 2019, "Microsoft’s Leap Into Housing Illuminates Government’s Retreat," by Emily Badger:
"The government spent about three times as much on housing programs in the 1970s as it does today, according to the National Low Income Housing Coalition. "
“Diane Yentel, the president of the National Low Income Housing Coalition, said she would welcome a trend in which more major tech companies put up money to address housing. But she warned of the risk of further letting the government off the hook.
'Today’s modern phenomenon of homelessness didn’t exist in the late 1970s because our country housed almost everyone, including the lowest-income and most vulnerable families,' Ms. Yentel said in an email. 'The key difference between then and now is declining federal subsidies.'"
For the "spent about three times as much" figure, the article cites Yentel's testimony, see above.
@MKushel Margot Kushel Jul 23, 2019
Living in encampments is NOT a choice but a [consequence] of our collective choices. (Fed $s for affordable housing ⬇️ by >50% since 1980). Eric Tars @NLCHPhomeless #NAEH2019
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References
Badger, Emily. "Microsoft’s Leap Into Housing Illuminates Government’s Retreat." The New York Times, Jan. 18, 2019. https://www.nytimes.com/2019/01/18/upshot/microsoft-seattle-affordable-housing-plan.html.
Bell, Allison. "2019 Bill Largely Sustains 2018 HUD Funding Gains." Center on Budget and Policy Priorities, February 15 2019. https://www.cbpp.org/blog/2019-bill-largely-sustains-2018-hud-funding-gains.
Congressional Research Service. "Overview of Federal Housing Assistance Programs and Policy." March 27, 2019. https://crsreports.congress.gov/product/pdf/RL/RL34591.
Dolbeare, Cushing N1., and Sheila Crowley2 (2002). "Changing Priorities: The Federal Budget and Housing Assistance 1976-2007." National Low Income Housing Coalition, August 2002. https://nlihc.org/sites/default/files/Changing-Priorities-Report_August-2002.pdf.
1Founder and Chair Emeritus, National Low Income Housing Coalition
2President, National Low Income Housing Coalition.
Kimura, Donna. "Fiscal 2019 HUD Budget Approved: A spending package funds HUD at $44.2 billion, an increase from 2018." Affordable Housing Finance, February 20, 2019. https://www.housingfinance.com/news/fiscal-2019-hud-budget-approved_o.
NLIHC (2002): see [Dolbeare & Crowley, 2002].
Rice, Douglas. "Chart Book: Cuts in Federal Assistance Have Exacerbated Families’ Struggles to Afford Housing." Center on Budget and Policy Priorities, April 12, 2016. https://www.cbpp.org/research/housing/chart-book-cuts-in-federal-assistance-have-exacerbated-families-struggles-to-afford.
Rubin, Irene S. (2002). Balancing the Federal Budget: Trimming the Herds or Eating the Seed Corn? NY: Seven Bridges Press, 2002.
Ch.8: Department of Housing and Urban Development.
https://books.google.com/books?id=owemAwAAQBAJ&lpg=PA223&ots=52rFl1YuQ0&dq=HUD%20budget%20authority%20vs%20outlays&pg=PA220#v=onepage&q&f=false
Shashaty, Andre. "U.S. Cuts Back and Shifts Course on Housing Aid." The New York Times, Oct. 18, 1981. https://www.nytimes.com/1981/10/18/realestate/us-cuts-back-and-shifts-course-on-housing-aid.html.
Thompson, Lawrence L. (2006). "A History of HUD." Self-published, by 25-year employee of HUD. http://monarchhousing.org/wp-content/uploads/2007/03/hud-history.pdf.
Tucker, William.1 (1990). "The Source of America's Housing Problem: Look in Your Own Back Yard." Policy Review (The Cato Institute), February 6, 1990. https://www.cato.org/sites/cato.org/files/pubs/pdf/pa127.pdf. 1William Tucker is a former media fellow at the Hoover Institution and the author of The Excluded Americans: Homelessness and Housing Policies, Regnery Gateway 1990).
Western Regional Advocacy Project - WRAP. (2010). "Without Housing: Decades of Federal Housing Cutbacks, Massive Homelessness, and Policy Failures." San Francisco: WRAP, 2010. https://wraphome.org//wp-content/uploads/2010/10/Without-Housing.pdf.
Yentel, Diane (2018). "Testimony of Diane Yentel, President and CEO, National Low Income Housing Coalition Presented to the Financial Services Committee, United States House of Representatives. " December 21, 2018. https://financialservices.house.gov/uploadedfiles/12.21.201_diane_yentel_testimony.pdf.