The Bipartisan Policy Center (BPC) released an analysis on February 22 finding that, absent congressional action, the federal government will likely default on its loans during the summer or early fall of 2023. In January, U.S. Department of the Treasury (Treasury) Secretary Janet Yellen announced that the federal government had reached its $31.4 trillion debt limit and that the department would begin deploying “extraordinary measures” to continue funding the federal government (see Memo, 1/23).
The BPC report notes that the exact timing of a potential default will depend on 2022 tax collections but that the BPC “is providing estimates…roughly five months from the start of the [date range] to maximize the time policymakers have to act.” A default by the federal government on its debts would be unprecedented and would likely bring about financial chaos in the U.S. and the rest of the world.
U.S. House of Representatives Speaker Kevin McCarthy (R-CA) has repeatedly called for steep budget cuts as a prerequisite for raising the country’s debt limit, proposing to cap fiscal year (FY) 2024 spending at FY22 levels. However, the House Speaker has also pledged not to cut defense spending, or funding for Medicare and Social Security, leaving non-defense discretionary spending – including funding for vital affordable housing and homelessness programs – squarely on the chopping block. House Republicans are expected to release a topline preview of proposed budget cuts in April, after the President releases his FY24 budget request on March 9.
According to a report from the Senate Democratic Policy and Communications Committee (DPCC), capping FY24 spending at FY22 levels would result in a funding decrease of between 12% and 30%, depending on how cuts are distributed. A recent analysis from the Center on Budget and Policy Priorities (CBPP) estimates that capping spending at FY22 levels could result in an average cut of 24% across non-defense programs, depending on which programs are prioritized.
The DPCC report notes that spending cuts would further exacerbate the nation’s already critical affordable housing crisis and reduce vital assistance to households that would struggle to keep roofs over their heads without assistance. For example, the proposed cuts would:
- Reduce HUD rental assistance and homelessness assistance by $6.6 billion, putting the hundreds of thousands of people who rely on this assistance at risk of housing instability, eviction, and in the worst cases, homelessness. Public housing authorities (PHAs), which are charged with administering housing vouchers, would be forced to “pull existing vouchers from families searching for units or sever assistance altogether.”
- Reduce funding to programs like the HOME Investment Partnership Program, resulting in 1,700 fewer affordable housing units constructed and 1,300 households losing rental assistance.
- Increase children’s risk of lead-based paint exposure by cutting $48 million in funding to address lead and other health hazards in low-income housing, impacting an estimated 3,000 households.
- Exacerbate the affordable housing shortage in native territories by cutting $120 million from Native American housing programs.
- Reduce funding for the Low-Income Home Energy Assistance Program (LIHEAP) by $472 million, leaving many families with low incomes unable to heat or cool their homes, even in dangerous weather conditions.
It is unacceptable to balance the federal budget by demanding cuts to programs that help the lowest-income households survive. There is a national shortage of approximately 7 million affordable, available homes for people with the lowest incomes, and only one in four households who qualify for federal housing assistance receives the help it needs. Without adequate funding for vital federal affordable housing and homeless assistance programs, households with the lowest incomes will continue to live precariously, only one missed paycheck or unexpected emergency away from housing instability, eviction, and, in the worst cases, homelessness.
- Sign your organization on to the Campaign for Housing and Community Development Funding’s (CHCDF’s) annual budget letter, calling on Congress to reject spending cuts and instead provide the highest possible allocation for HUD’s and USDA’s affordable housing, homelessness, and community development programs in FY24.
- Email your members of Congress today and urge them to increase – not cut – resources for affordable housing and homelessness in FY24 and to support NLIHC’s top appropriations priorities:
- Full funding for the TBRA program to renew existing vouchers and to expand the program to an additional 200,000 households.
- Full funding for public housing operations and repairs.
- Full funding for HUD’s Homeless Assistance Grants program.
- $100 million for legal assistance to prevent evictions.
- $3 billion for a permanent Emergency Rental Assistance program.
- Increased funding for the competitive tribal housing grants, targeted to tribes with the greatest needs.
- Check out NLIHC’s advocacy toolkit, “Oppose Dramatic Cuts to Federal Investments in Affordable Housing,” for talking points, sample social media messages, and more!
Visit our Take Action page to learn about more ways you can get involved!