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The Homeless Grapevine: Issue 9
Housing Policies Benefit Wealthy Americans Too
by Jean Taddie
The United States federal government spent $17.5 billion in 1990 on
housing for people with limited incomes, according to a report in the 1993
Statistical Abstracts of the U.S. This
figure seems very large and many
people have the impression that
our government spends a lot (too much?) on housing for low-income people.
Since housing funds must be approved annureduced or cut from the federal
budget. With a new conservative
congress and pressure for welfare reforms, this year may be critical to the
shape of our national housing policy. Before
any decisions are made about our nation’s housing policies, we should first
examine the situation from a broader perspective.
To people who manage the budget of a household, $17.5 billion seems like
a huge amount of money. But when
compared to the federal government’s 1990 outlays of $1,252.7 billion, the
housing benefits paid to low-income households account for less than 1.5% of the
total. Let’s take a look at what
this money paid for.
The federal government spends much of its lower-income housing funds on
rental subsidies through the Department of Housing and Urban Development (HUD).
Funds were divided into categories:
Section 8 lower-income housing assistance ($10.6 billion), low-rent
public housing ($4 billion), and other benefits (rural housing loans, rural
rental housing loans, and interest reduction payments for a combined amount of
$2.5 billion).
Section 8 benefits help low-income tenants pay their rent in privately
owned buildings. Recipients pay 30%
of their income to the landlord and the government pays the difference.
Low-rent housing includes funds that the federal government pays to local
housing authorities who are responsible for managing the low-rent units.
Unfortunately, these programs do not reach many who are needy.
For example, according to a 1993 Congressional Quarterly Researcher
report on public housing, while 4.3 million Americans lived in low-rent public
housing in 1990, 13 million more families meet federal guidelines for housing
assistance but do not receive housing aid.
Federal subsidies for low-income housing assistance is only one piece of
the federal housing structure. The
government also provides tax deductions for homeowners who pay mortgage interest
and property taxes. The amount of
this tax break is even more significant to the federal budget than are benefits
for low-income rent subsidies. Whereas
payment of low-income housing benefits increases federal expenditures, tax
deductions decrease federal income. Either
way, their is less money to be spent on other things.
The American public
continues
to subsidize wealthy homeowners.
A 1993 report compiled by the Low Income Housing Information Service
shows that upper-income homeowners get much more subsidy from our housing
policies than do lower-income homeowners or renters.
While renters in 1989 (all figures are stated in 1992 dollars) received
about $14.8 billion (in 1992 dollars) in aid, homeowners received $64.7 billion
(in 1992 dollars) worth of benefits through tax deductions.
When these figures are analyzed by household income, the upper-income
brackets received substantially more subsidy than did lower-income households.
Rental households with less than $20,000 income received about 92% ($13.6
billion) of the direct housing subsidies. This
$13.6 billion only helped 31% of the rental households with very low income
(less than $10,000) and 12% of the rental households with income between $10,000
and $20,000. Homeowner households with less than $20,000 received less than 1%
($600 million) of the benefits from income tax deductions and fewer than 10% of
these households received any benefit from the deductions.
On the other hand, upper-income households with income over $65,000
received the lion’s share — about 63% or $41 billion —of the tax benefit.
More than 80% of the upper-income homeowner households benefited from
these tax deductions. Thus, households with income over $65,000 receive more
benefits from our housing policies. Furthermore,
the percentage of households benefiting from subsidies was substantially greater
in upper-income brackets than in lower-income brackets, according to the Low
Income Housing report.
All in all, Americans subsidize housing in several ways, including direct
subsidies and tax deductions. Direct
subsidies accounted for much less money than did tax deductions.
This is unfortunate for the low-income households because they receive
most of the benefit from direct subsidies like Section 8 and public housing.
On the other hand, upper-income groups receive most of their benefits
from tax deductions. While pressure
is building to reduce the amount invested in direct subsidies to the poor,
little discussion is given to changing our tax deduction system so that it is
more equitable for lower-income and rental households.
The American public continues to subsidize wealthy homeowners.
Any change to housing policies should consider all of these factors.
When debating our housing policies, we must decide:
Should we cut direct subsidies to the poor or should we limit tax
benefits to the wealthy?
Changes
Imminent at the Department of Housing
By Max Johnson
The election of a Republican majority is expected to bring gale-force
winds of change to entitlement programs in the United States, and at the eye of
this storm is the Department of Housing and Urban Development (HUD).
In 1993, Henry Cisneros, Secretary of HUD, and Assistant Secretary Andrew
Cuomo brought a broad vision to the department of reform and expansion.
They brought a plan of working closer with local communities to promote
programs that were viewed as successful and pruning those viewed as wasteful.
After the death of a homeless individual in 1994 outside the HUD
headquarters in Washington, Cuomo said in a press release, “The Secretary’s
number one priority is fighting homelessness.”
And, in fact, the fiscal year 1995 HUD homeless budget proposal was
doubled to more than $1.7 billion.
HUD has always had a significant impact on the Cleveland community,
according to Lucy Loughead of the Cleveland HUD office.
The Cuyahoga Metropolitan Housing Administration, public housing
facilities, and 28 agencies that attempt to find housing are all overseen by
HUD. Comprehensive Management
empowerment money is funded through HUD. Mortgage insurance and the Federal
Housing Authority for low income housing is a HUD program.
In addition, homes are acquired and sold back in the market through HUD.
Many homeless service organizations receive partial funding from HUD.
Last year a slick package was put together called “Continuum of
Care," which outlines a reorganization of McKinney Homeless Assistance
Funds to better serve the needs of the community.
States and localities would be given a lump sum of money and the
guidelines of providing a safety net, or Continuum of Care, specifically for the
homeless. Included would be
outreach programs, emergency shelter, transitional housing, and supportive and
permanent housing in conjunction with job training, education and substance
abuse programs. The plan was
hailed by homeless advocates as innovative and resourceful, according to Bill
Faith, Director of the Coalition on Homelessness and Housing in Ohio (COHHIO).
“In November, the whole playing field changed.
The Clinton administration is now on the defensive,” said Jim Cain,
Assistant Director of COHHIO.
The press release for the 1996 HUD budget was 18
pages long. Only seven lines
mentioned the homeless. With
the change in the 104th Congress, Cisneros relegated homelessness from top
priority to seven lines of text.
The plan “fundamentally changes federal housing policy and the
department’s structure,” said Cisneros.
HUD proposes to consolidate 60 separate programs into three broad
performance funds or block grants.
Fred Karnas, Executive Director of the National Coalition for the
Homeless (NCH), said, “The President’s budget sets back several years of
steady progress in focusing federal attention on the needs of the growing number
of homeless, men, women and children in this country.”
NCH claims that three block grants will harm the homeless population by
making it harder for the homeless to access housing.
“In too many cities, NIMBY (not-in-my-backyard) and mean-spirited
policies have made life unbearable for homeless people.
By giving decision-making regarding homeless funds to state and local
elected officials with few, if any, strings attached, the President’s budget
feeds into this thinking and ultimately will increase homelessness and
misery,” said Karnas.
Various Republican congressional representatives and the Office of
Management and Budget have suggested dismantling the Department of HUD.
According to Faith, it
appears that this block granting proposal may be a
preemptive step to stave off HUD's total annihilation.
Faith added, “I’m concerned about restructuring the McKinney targeted
services for homeless people. When
[funds for homeless services] are thrown into bigger block grants then they
won’t be targeted to help the homeless.”
If the administration’s proposal for HUD reorganization passes, housing
development projects will have to compete with shelters and transitional housing
providers for a share of the federal pie. This
is similar to the lion, the boa constrictor, and the alligator all sitting down
at the table to calmly share the prized young antelope. “The
real problem is not HUD or the reorganization,” said Faith. “We need to
focus on the appropriations process.” During
the week of February 27th, the
Congressional appropriations committee proposed a recission of fiscal year 1995
funds of $7.3 billion of already committed money. Faith said, “It is unprecedented move. It scares me. HUD
is taking the lion's share of the budget cuts.”
“This is much worse than we thought it would be,” commented Faith.
This means that no one on the Section 8 low income housing waiting list will get
housing this year, and funds already committed to projects could be terminated.
Faith claims that Cleveland could do well with local control of federal
block grants in comparison to other cities, while in conservative or
entitlement-hostile states and communities “we might not be in such great
shape.” The volatility of the
local political climate could make homeless services change dramatically and
quickly. Instead of doing battle
with one organization (HUD) for social change, if the HUD reinvention plan
passes, the battle for services will take place in hundreds of communities
around the country.
The president of the NCH board of directors, Anita Beaty, said, “We are
already seeing experiments with moving federal decision-making from Washington
to local governments and the result is not often good." The local governments have refused to adequately address the
needs of those who are poor or without political clout.
Beaty adds, “Without strong targeting language, and protection for fair
housing and civil rights, the Administration’s proposals will further widen
the gap between haves and have-nots in American society.”
“By reducing HUD’s 60 programs to three, HUD has essentially drawn a
huge bull’s-eye on its building for Congressional budget cutters to shoot
at,” said a NCH press release. Cisneros
said, “HUD’s survival is
critical to America’s future. The country needs a federal commitment to
communities, to its cities, to affordable housing, and to the housing needs of
the poorest and most vulnerable citizens.”
The HUD wagon train seems to running scared after being spooked by the
Republicans. Many will fall off
before the reigns are again brought under control and calm heads prevail.