Housing Cuts for the Poor, Tax Cuts for
March 29, 2006
By Gene C. Gerard
Bush's 2007 budget that was released last month includes significant
cuts in housing assistance. The new budget for the Housing Choice
Voucher Program underfunds 70 percent of the state and municipal
housing agencies that oversee the program, according to a study
by the Center on Budget and Policy Priorities. Although the Republican
Congress has debated the cuts affecting the Department of Housing
and Urban Development (HUD), it appears unlikely that Mr. Bush's
cuts will be opposed. Ironically, Congress is also considering yet
another tax cut for the wealthy.
The voucher program is the country's largest low-income housing
program. It provides poor households with vouchers they can use
to rent housing in the private sector. Since 2004 voucher assistance
for over 100,000 families have been cut because HUD doesn't allocate
the vouchers based on current needs. Mr. Bush's 2007 budget relies
on the same funding formula that has caused the shortages in the
past few years.
Under the administration's formula, every housing agency's funding
level is based on the dollar amount it was eligible to receive the
previous year. The level is adjusted by an inflation factor determined
by HUD based on data that is two-years old. But this formula doesn't
consider the actual number of vouchers the agency distributed the
previous year or changes in local voucher costs. As a result, many
agencies are left with inadequate funds to continue all of the vouchers
currently being used.
In reality, HUD's voucher assistance program has never been fully
funded. Since the formula was first adopted in 2005, the Bush administration
has failed to request enough funding to give agencies the total
amounts they are eligible for under the formula. Consequently, HUD
was forced to impose funding cuts on housing agencies in 2005 and
2006 that were well below the formula amount. The new budget continues
this pattern, requiring even larger cuts next year, which will force
agencies that are already strapped to reduce vouchers even more.
Mr. Bush's budget for 2007 also cuts tenant protection vouchers
by $30 million. These vouchers replace other types of federal housing
assistance that are eliminated, such as public-housing units in
New Orleans that have been demolished. As a result of all the cuts,
state and municipal agencies won't be able to fund more than 40
percent of their authorized vouchers next year. In the nation's
capital, for example, the local housing authority is helping 610
fewer families this year than last, and it will have to eliminate
assistance to 145 more families next year.
Although the federal government began to address homelessness
under President Johnson in the 1960s, the problem remains real and
pervasive. According to the National Law Center on Homelessness
and Poverty, the annual homeless population is approximately 3.5
million people, or 1.3 percent of the U.S. population. And 40 percent
of the homeless population is comprised of families with children.
In fact, 39 percent of the homeless are children, almost half of
who are under the age of five. In 2004, the demand for housing by
the homeless increased by 14 percent.
Ironically, at the same time that the Republican Congress is debating
these housing cuts for the poor, it's considering a tax cut for
the wealthy. Presently, only individuals who earn less than $100,000
a year can convert their tax-deductible I.R.A. into the newer Roth
I.R.A. The Roth is much better than the traditional I.R.A., because
no taxes are paid when money is withdrawn. In effect, these tax-free
withdrawals are a government handout.
The current tax code doesn't allow those earning over $100,000
to convert their original I.R.A. into the Roth version. And that's
as it should be. The wealthy already enjoy numerous tax cuts and
subsidies. But the Republican Congress is considering amending the
law to allow those earning more than $100,000 to enjoy the tax-free
benefits of the Roth I.R.A. Yet Congress is not willing to oppose
President Bush's housing assistance cuts.
Given the number of those left homeless in the wake of Hurricanes
Katrina and Wilma, the housing voucher cuts are particularly offensive.
Mr. Bush should fully fund HUD, such that it can meet at least the
current voucher needs. Failing that, Congress should take it upon
itself to do so. It's the least it can do, especially if more tax
cuts are going to be given to the wealthy.