Impact of spending cuts on affordable housing

Mercy Housing’s Policy staff recently met with Senate members of the Gang of 8, an ad-hoc Senate committee seeking to create a bipartisan deficit reduction package to replace sequestration, the devastating $1.1 trillion package of spending cuts scheduled to go into effect January 1st, 2013 unless Congress agrees to a more balanced deficit reduction package. Our message is that housing has already sustained harsh cuts and the further cuts without revenue would mean that low income people would lose their housing. We provided estimates of how Mercy Housing tenants would be affected by the cuts.

All staffers indicated that a “framework” deal was being hammered out at the highest level of leadership, with the President and House Speaker Boehner calling the shots. The “framework” will not include all details but will “kick the can” a few months down the road. The framework is likely to include domestic and defense program cuts, revenues from higher taxes on the highest income and from eliminating selected tax expenditures, and entitlement reform savings with the highest income earners targeted for effective tax increases. Sequestration, on the other hand, only includes across-the-board program cuts. As dire as sequestration cuts are, they impose equal pain on Defense and non-Defense Discretionary ( of which housing is a part). Mercy Housing therefore advocates the following in regards to sequestration:

  • Sequestration should be cancelled and replaced with a balanced package to reduce projected deficits through responsible mandatory savings and significant revenue increases.
  • Funding for discretionary non-defense programs should not be cut below the levels adopted under the Budget Control Act of 2011.
  • Low-income families and individuals should not be made worse off by deficit reduction actions; low-income households should not experience increased housing or other cost burdens from deficit reduction or tax reform efforts.