Congress Passes and President Biden Signs into Law Debt Ceiling Agreement Capping Federal Spending Programs for Two Years

Congress passed and President Joe Biden signed into law the “Fiscal Responsibility Act,” an agreement to lift the federal debt ceiling until 2025 in exchange for capping federal spending programs at fiscal year (FY) 2023 levels in FY2024 and allowing an only 1% increase in spending in FY2025. The bill also rescinds unspent COVID-19 relief funds, imposes more burdensome work requirements on Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) recipients, and reallocates funding previously provided to help the IRS audit higher-income households for other purposes.

The agreement comes after months of on-and-off negotiations between the White House and Congressional leaders. U.S. Department of the Treasury (Treasury) Secretary Janet Yellen warned that, without Congressional action, the U.S. government was likely to default on its debt obligations as soon as June 5, which would cause a potentially catastrophic economic fallout across the country and around the world. Under the leadership of House Speaker Kevin McCarthy (R-CA), House Republicans were pushing to exact drastic funding cuts to domestic spending programs in exchange for raising the federal debt ceiling for less than one year. Their proposed “Limit, Save, and Grow Act” would have resulted in estimated cuts to HUD’s affordable housing and homelessness assistance programs of between 22% and 30%, and while the agreement ultimately spared domestic programs from these deep cuts, capping funding at FY2023 levels still poses a serious threat to these vital programs.

Implications for HUD Affordable Housing and Homelessness Assistance Programs

It is crucial that HUD’s rental assistance programs – including Housing Choice Vouchers, Project-Based Rental Assistance, and other programs that help people with the lowest incomes afford rent – receive increased funding every year to sustain assistance. Because the cost of housing rises every year, flat funding acts as a cut, reducing the number of people served by these essential programs. The dramatic increase in the cost of rent over the last year means that voucher renewal costs will be significantly higher: it is estimated that voucher renewals will require an extra $7 billion over FY2023 funding just to maintain the number of households currently being served by the program.

HUD’s budget is under additional strain in FY2024 because of lower receipts from the Federal Housing Administration (FHA). FHA receipts are reinvested into HUD, helping to “cushion” HUD’s budget by providing extra money outside of what is allocated through the regular appropriations process. This year, FHA receipts are expected to be about $6 billion lower than in FY2023; in total and without taking into account the newly instated budget caps, HUD’s budget is facing a potential shortfall of an estimated $13 billion compared to FY2023 funding.

Take Action!

It is thanks to the hard work and tenacity of advocates around the country that debt ceiling negotiators backed away from House Republicans’ demand to cap FY2024 spending at FY2022 levels. In order to ensure the debt ceiling proposal does not strip funding away from HUD’s affordable housing and homelessness assistance programs, we must continue this urgent work.

Failure to increase appropriations for HUD’s vital affordable housing and homelessness assistance programs would result in devastating impacts on the people served by these programs. Even with recent funding increases to federal programs, many are still being impacted by the austere spending caps put in place by the “Budget Control Act of 2011.” HUD’s cumulative appropriations since FY2010 are still slightly lower than if annual appropriations had remained at FY2010 levels and been adjusted only for inflation.

We cannot afford to take a step backwards. Advocates can continue to take action by:

  • Signing your organization on to the Campaign for Housing and Community Development Funding’s (CHCDF) 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 FY2024.
  • Emailing your members of Congress today and urging them to increase – not cut – resources for affordable housing and homelessness in FY2024 and to support NLIHC’s top appropriations priorities:
    • $32.7 billion for the TBRA program to renew existing vouchers and to expand the program to an additional 200,000 households.
    • $5.4 billion for public housing operations and $5 billion for public housing repairs.
    • $3.8 billion for HUD’s Homeless Assistance Grants program.
    • $100 million for legal assistance to prevent evictions.
    • $3 billion for a permanent Emergency Rental Assistance program.
    • $300 million for the competitive tribal housing grants, targeted to tribes with the greatest needs.
  • Checking out NLIHC’s advocacy toolkit, “Oppose Dramatic Cuts to Federal Investments in Affordable Housing,” for talking points, sample social media messages, and more!