The Real Battle Begins

Living through the dog days of August 2011 entails more than enduring heat and humidity. This is the period of congressional recess where advocates have a full month to lobby Members of Congress on issues of importance to them.

With the focus on the Super Committee’s mandate to tackle entitlements and tax reform per the debt ceiling agreement, local community groups will need to bring their “A” game to preserve funding for their priority programs. It will not be easy. Now that the committee has been named, the focus will be on the individuals appointed to the panel. There will be tremendous pressure for them to reach consensus on a deal.

Because of what is at stake, they will ultimately reach a deal. Neither side wants to trigger the across the board cuts which will occur if an agreement isn’t reached. At the end of this process neither side is going to be completely happy with the results.

To help maximize your lobbying efforts, here are suggestions to consider:

• A new, more personal message has to be crafted to resonate with voters. The decision by Republicans to propose cuts to Medicare backfired because it affected people, both Republicans and Democrats, personally. In these tough economic times, your message has to resonate with the self-interest of the voter.

• Go outside of the box to deliver your message. The use of Twitter, Facebook, and the other social media outlets are important; however, programs like Ellen, The View, etc., have audiences that respond to emotional messages. Their producers look for stories for their principals to discuss and occasionally invite a guest to appear on a show. For example, seek stories which highlight individuals in various communities are being helped by programs which are in jeopardy of being eliminated by Congress.

• Be realistic in your expectations. Know what you want, but be realistic about what you can get. Cuts are unavoidable. It is ridiculous to think otherwise.

• Use the House budget numbers as the baseline in determining potential cuts. The House numbers are driving the debate. The administration and Senate Democrats have failed to coalesce around an alternative to the House budget proposal. Consequently, use these numbers in calculating potential cuts to your program to help with your advocacy efforts. It will also help prepare you for the programmatic and administrative changes you may face in the near future.

• Accurately assess the current political environment. The anti-Washington, DC sentiment throughout the United States is very intense across the political spectrum but that does not necessarily mean widespread dissatisfaction with specific programs. The uproar over potential cuts to Medicare and Social Security reminded everyone how sensitive the voting public can be when faced with specific options. However, budget changes will drive how Washington functions in the future. There will be changes in the way Washington funds and administers programs.

• Think of ways to be proactive with the coming changes. Be proactive in embracing the change to the benefit of the programs you support. Is this an opportunity to pursue programmatic, administrative or regulatory changes? This is always an opportunity in the midst of a challenge.

• Embrace tax reform. This is a bipartisan initiative which can raise revenue and create a more equitable tax structure for all income groups. It may also protect some programs from deep cuts or elimination.

Interesting Read

Whole Foods versus Cracker Barrel: How Americans Are Self-Sorting
By Charlie Cook
The Cook Report

Republicans Set Sights on Balanced Budget Amendment
By Jennifer Steinhauer
The New York Times

Panetta Warns Against ‘Doomsday’ Cuts of $600 Billion in Defense Spending
By Jason Ukman
The Washington Post

Debt-limit Deal Triggers Lobbying Campaign from Health-Care and Defense Industries
By Dan Eggen
The Washington Post

Two Parties Pray to the Same God, But Different Economists
By Michael Gerson
The Washington Post

End Political Gridlock: Put a Millennial in Charge
By Laura Sessions Stepp
Special to CNN

Are Millennials Cut Out for this Job Market?
By Ruben Navarrette, Jr.
CNN Contributor

Origins of the Debt Showdown
By Brady Dennis, Alec MacGillis and Lori Montgomery
The Washington Post

Fewer Dinners Mean Meaner Politics
By Lea Berman
The Washington Post

In Economic Turmoil, U.S. Needs a Leader Like Churchill
By David Gergen
CNN Senior Political Analyst

The American Dream hangs in the balance
By Joe Scarborough
Politico

We Can't Even Cut Programs That Don't Work
By Steven Malanga
Real Clear Politics

Postal Service proposes cutting 120,000 jobs, pulling out of health-care plan
By Joe Davidson
The Washington Post

Read more »

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Navigating the Presidential Politics of 2012 Begins Now!

The race for the presidency has begun. The debt ceiling agreement and its plan to reduce federal spending was the first salvo in the battle to claim the White House. Presidential politics is the order of the day between now and next November.

While many media outlets have identified winners and losers in the debt ceiling debate, it is more important to understand the lessons learned from the last few months. In this post, we will look at lessons we should have learned from this debate (or debacle depending on your perspective):

The nation’s fiscal situation has changed the nation’s political dynamics and community groups must adjust to this new reality. The new reality is more complicated than simply choosing between a more conservative Republican versus liberal Democratic approach to governance. The unwillingness to compromise at all costs by factions in both parties will make it difficult to find solutions to the pressing issues facing the nation.

The country needs to get its financial house in order, the international consequences are enormous. We simply cannot continue to carry the debt we currently hold and must reach some consensus on the escalating costs for entitlements, domestic and defense spending. Throughout the deficit reduction discussion the members of the president’s deficit commission were the only individuals made an honest, non-partisan, non-judgmental attempt to address those concerns. Their deliberations should be the model used for future discussions.

Balancing our nation’s budget is more complicated than solving a family’s finances. Comparing how our nation handles its finances to a family’s attempt to balance its budget is a good sound bite but that’s all. It is apples and oranges. Republicans discovered this immediately when they attempted to reform Medicare. The public, including Republican supporters, expressed opposition to entitlement reform. Republicans paid a political price and backed away.

Ideology, not practical governance, is driving politics. It is refreshing to see elected officials, the so-called Tea Party group, who are unconcerned with winning their next election. However, their desire to complete their mission at all cost could have crippled the world. That is frightening; however, their success and frustration during this debate will drive the debates between now and next November. What is obvious to one is a revelation to others. The ideological quandary afflicts both parties. Republicans placed theirs on full display in this debate.

Washington is now more about ideology and politics than governance. Governance issues get addressed as a byproduct of politics and ideology. There was a time when ideological differences did not prevent political leaders from bridging differences to reach a compromise on major issues facing the country. Even when the scion of conservatives, Ronald Reagan, was in office politics and ideology met in the middle. Those days are over in the foreseeable future.

Of all of the political leaders involved in the negotiations Vice President Joe Biden and Senate Minority Leader Mitch McConnell (R-KY) emerged stronger politically while Senate Majority Leader Harry Reid (D-NV), House Majority Leader John Boehner (R-OH) and Minority Whip Eric Cantor (R-VA) saw their credibility weaken. Cantor brazenly took every opportunity to undermine Boehner at different times during negotiations displaying an ugly rift within the party. It helped to create the impression that Republicans are unfit to govern.

President Obama is still learning how to use the bully pulpit of the presidency. He appeared weak at times during these negotiations. The contempt and disrespect some Republicans have for him were on full display during these negotiations. He seems more comfortable as the candidate than as the president which will serve him well going into next year. He will have to reassert himself next year. It is hard to view the president favorably during these discussions. He did not use his bully pulpit as effectively as he could have. He capitulated to Republican demands that an increase in the debt limit must include corresponding cuts to the federal budget and no new taxes. This made him appear weak at times but the Republicans – in the House in particular – helped him appear to be more reasonable than they appeared. There are some report that the scheduled expiration of the Bush era tax cuts in 2012 will give him the leverage needed to extract revenue increases and was one consideration for agreeing to this deal.

Local advocates relying on public funds need to understand things are going to get worse before they get better. There will probably be no further extensions for unemployment insurance, some changes in Medicare and Medicaid payments, cuts to defense, housing, education, etc. Simply taxing the rich will not get us out of this financial mess.

We need tax reform. Simply opposing tax increases or insisting on taxing the wealthy is a simplistic approach to addressing a fundamental problem: we live in a country which tends to punish individuals and families for the income they earn. A more reasonable tax code which closes some loopholes and balances out the tax rates – along the lines of the deficit commission – will help tremendously.

Poll after poll has indicated the American public was disgusted with the actions of its elected officials in Washington. The focus of blame was slanted based on the respondent’s ideology. However, the public must accept it share of blame for the gridlock in Washington. For the most part, Members of Congress’s actions reflected the desires of the people who elected them to office. It is far too easy to point fingers at Congress or the President and forget who put them there.

Interesting Read

Spending Cuts: Here Comes the Hard Part
By Charles Riley
CNN Money

In Debt Deal, The Triumph of the Old Washington
By David A. Fahrenthold, Lori Montgomery and Paul Kane
The Washington Post

Eric Cantor: Obama 'in over his head'
By Jennifer Epstein
Politico

GOP Ponders a Rick Perry 2012 Candidacy
By Alexander Burns & Maggie Haberman
Politico

Read more »

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Obama Should Leave the Table

President Barack Obama needs to end negotiations immediately. The time for talk is over. It is time to get a deal done and it is clear these individuals can’t get agree on anything. We are at a point where saving face is as important as getting a credible deal done. It is time to move on.

When everyone convenes Thursday, the president should tell all in attendance that he appreciates their effort, but there is not enough time to put together a deal that addresses the deficit and inflicts the least amount of pain on Americans. He should say he will only accept an unconditional increase in the debt ceiling.

He should say after he receives this authority, he will submit the findings of his deficit commission to Congress in legislative form. The recommendations provide for a balanced approach to the deficit everyone seeks. The recommendations enjoyed bipartisan support and will then be the starting point for new negotiations

He should then publicly announce his decision and instruct his staff to prepare for the United States to default if Republicans reject him.

It is not the perfect solution but everybody wins in the end.

Interesting Read

Top Republicans Clash over Debt-Limit Plan
By Paul Kane and Lori Montgomery
The Washington Post

With no Debt Deal, Obama Would Face Tough Choices Aug. 3 About What Bills to Pay
By Zachary A. Goldfarb
The Washington Post

Warning to Washington: Don’t Mess with the Debt Ceiling
By Bill Gross
The Washington Post

Debt talks blow up: The August debt ceiling showdown breaks along two fronts: the political forces of 2010 vs. 2012.
By: David Rogers
Politico

GOP lacks a lead Messenger : Republicans are searching for a national figure who can go toe to toe with Barack Obama.
By: Jake Sherman
Politico

Cantor risks overplaying hand: He faces consequences both if debt negotiations fail or if he cuts a soft deal with the president.
By: Jonathan Allen
Politico

Read more »

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Danger Lurking as Deficit Drama Continues

The drama surrounding the deficit reduction talks is not a good sign for domestic programs. With Republicans dug against tax increases the underlying question in the current stalemate is: who will blink first?

For supporters of domestic spending it doesn’t matter. In the end, domestic programs, including housing, will take it on the chin. How serious a blow these programs will receive won’t be resolved until the deficit discussion is completed. Until an agreement is reached, all discussions on a FY 2012 budget are in hold.

Therefore, it is not a surprise that the House Transportation-HUD Appropriations Subcommittee cancelled this week’s mark-up of a FY 2012 appropriations bill. After the deficit reduction numbers are agreed to, the real budget will be determined. While the devil is in the details, the parameters of deficit deal are unlikely to favor domestic programs.

By standing firm in their commitment to no new taxes Republicans have put themselves in a no-win situation. They seem to believe they have the leverage and that President Barack Obama is going to blink and accede to their demands before the deadline arrives.

The substance of a potential deal and its political subplot will one day make a writer rich! House Speaker John Boehner (R-OH) is clearly not in charge of the House Republicans. Majority Leader Eric Cantor (R-VA) has positioned himself as the real power in the House. His actions are reminding the Speaker his hold on the speaker’s chair is a tenuous one. Cantor is a fiscal hawk who is championing efforts to reduce federal spending.

The president has looked weak at times appearing to bow to Republican demands. He has made extraordinary concessions by offering to reduce federal domestic spending and making significant cuts and changes to Medicare and Social Security. While these concessions are fiscally necessary, they seem to have strengthened the resolve of Republicans. He has become more assertive with Republicans accept some tax increases; however, it may be too little too late.

For housing providers, regulatory relief provides the only reasonable course of action to weather this fiscal storm. However, if it occurs, it will happen too late to have a reasonable impact on day-to-day operations. Public housing organizations are seeking both regulatory relief from Department of Housing and Urban Development (HUD) regulations and increased flexibility in the structure and use of housing vouchers. While there is some support in Congress for these measures, the pace is not happening quickly enough.

Additionally, the Department of Housing and Urban Development (HUD) is using it administrative authority to reduce the reserve accounts of PHAs. PHAs use these reserve funds for operating expenses and, in some cases, to offset debt on capital expenditure. As much as agencies and their representative may disagree with HUD’s action, as long as they are dependent on the Federal government for funding, they have little recourse available to them.

These tough fiscal times should force all federally dependent groups to reevaluate what they are doing and how they are funded. Innovation will be the key in determining who survives in the future.

Chamber of Commerce Releases Survey Results

The United States Chamber of Commerce released the results of its second quarterly Small Business Survey which found that small business owners rank economic uncertainty as their number one concern.

Over 1,400 business owners were asked to identify their most pressing challenges and economic uncertainty topped the list followed by debt and deficit reduction, the health care law which was passed and over-regulation. A copy of the report can be found here.

Survey Points to Some Good/Bad Signs in Local Communities

The National League of Cities released a survey which shows progress in some sectors of local communities during the recession although residential property values continue to fall.

NLC recently released the responses to the Local Economic Conditions survey which tracks the impact of the recession on local communities. The survey is the first in a multi-year tracking effort on how the recession has affected local communities and to identify areas which mirror national indicators. The purpose of the survey series is to provide a parallel track to NLC’s 25-year survey on City Fiscal Conditions.

Among the findings:

• 45 percent of the respondents report the retail sector improving.
• 28 percent report that business permits and licenses are improving.
• 35 percent report increased investments in infrastructure and capital projects in the last six months.
• 51 percent report that residential property values have worsened.
• 44 percent report commercial property values have fallen.
• 41 percent report demand for survival services such as food banks and shelters has worsened.

The following areas were identified as most important to generate economic growth:

• small business development (54 percent);
• transportation infrastructure (49 percent);
• education/workforce training (31 percent); and,
• Housing and neighborhood development (25 percent).

A copy of the report can be found here.

HUD Releases Study of Fair Housing Initiative

The Department of Housing and Urban Development (HUD) released the findings of a study of its Fair Housing Initiative Program (FHIP). The study, the first of its kind in the 15 years of the program, found that the program is successful in reducing the burden of governments at all levels in investigating complaints and that complaints filtered through the program are more likely to result in a binding legal resolution, conciliation or cause finding. The study can be found here.

Interesting Read

House GOP Not Ready to Blink on Debt
Quite Simply There is No Deficit-Reduction Proposal on the Table That Will Satisfy House Republicans.
By: Jake Sherman and Jonathan Allen
Politico

Obama Exploits Boehner-Cantor Rift
The President Has Managed to Exploit the Fragile Relationship that Exists Between the Two GOPers.
By: Jonathan Allen and Jake Sherman
Politico

In Senate, politics trump substance
By: Manu Raju
Politico

Why Obama's pushing for a mega-deal
By David Gergen
CNN

As Easy as ABC
Moving on from Mitch McConnell.
By William Kristol
The Weekly Standard

Debt-Limit Harakiri
Mitch McConnell isn't selling out Republicans
The Wall Street Journal

The President's Jobs Plan (Not)
By Robert Reich
The Huffington Post

Waiting for the Enemy to Blink on the Debt Limit
By Wesley Pruden
The Washington Times

Small Business Needs Big Boost
By Scott Brown
The Boston Herald

How Kevin McCarthy Wrangles the Tea Party in Washington
By Robert Draper
The New York Times

Read more »

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Pressure Heating Up on Deficit Talks

Now that President Barack Obama is more directly involved in the discussions to negotiate an agreement on deficit reduction, the pressure is building on all sides to bend before the nation’s debt ceiling needs to be lifted more than a month from now.

House Majority Leader Eric Cantor’s (R-VA) decision to abruptly pull out of the talks in objection to potential tax increases does more to absolve him of any responsibility for an agreement he and his conservative allies oppose than it does to bring both parties closer together. Cantor can read the writing on the wall. House and Senate Republicans have expressed a willingness to explore the elimination of corporate tax loopholes and cuts to defense spending in order to reach a compromise with the president and Democrats.

Cantor fancies himself as a leader of the House conservative movement. As the point person for the House in these talks, he cannot be perceived as compromising on the no tax increase pledge. By agreeing, or even the perception he has agreed to, anything which looks like a tax increase could damage his credibility among conservatives. Cantor certainly has aspirations to become Speaker of the House one day and would prefer to have the current Speaker, John Boehner (R-OH), take the fall.

While there are many Republicans who would be happy to allow the federal government to default, they cannot afford to be seen as the cause for the failure to reach an agreement. Republicans are more concerned about scoring political points than reaching a reasonable compromise. Such a position is selfish and irresponsible. A reasonable deficit reduction plan cannot be achieved by simply reducing domestic programs and making adjustments to Medicare and Social Security. A balanced approach is required.

Senate Minority Leader Mitch McConnell (R-KY) must also be careful. He can ill afford to lose any Republican votes in the Senate. Reasonable minds will eventually prevail. It is hard to believe anyone will actually allow the government to default on its obligations.

Those seeking to preserve domestic spending should be encouraged by the inclusion of defense cuts in the mix. Cuts to the defense budget may limit the depth of reductions to domestic programs and could pave the way for an agreement. However, it doesn’t lessen the impact cuts will have on domestic programs. It does, however, illustrate how serious both sides of the aisle are in finding ways to reduce the federal deficit.

States Seek Ways to Respond to Stagnant Economy and Reduce Federal Aid

The United State Chamber of Commerce released its second study looking at ways in which states are seeking to create policies and practices which help businesses, stimulates job growth and increase state revenue.

Enterprising States 2011 Recovery and Renewal for the 21st Century, looks at ways in which states are responding to the new economic environment. While the specific actions vary from state-to-state, the report finds that states are redesigning themselves, reducing spending, and revising their tax codes and policies. The report also pointed out that have fared best have fostered a “business-friendly” environment. These states also invested in new infrastructure and in education and training.

Mayors Release Report on U.S. Metro Economies

The United States Conference of Mayors and the Council for the New American City released a report during their recently completed conference in Baltimore, MD which highlighted the bleak economic forecast within the nation’s urban settings. The report, U.S. Metro Economies Report: 2011, was completed by Global Insight. The key findings to mayor's report covers a range of issues. The mayors are hoping the reduction in military operations in Afghanistan will translate into increased spending for local economies.

Interesting Read

Obama enters debt talks
By Paul Kane and and Rosalind S. Helderman
The Washington Post

The Politics of the Debt Ceiling Are Too Tempting
By Stuart Rothenberg
Roll Call Contributing Writer

Debt ceiling talks turn to taxes - higher taxes!
By Charles Riley
CNNMoney

Revenue vs. cuts in debt debate
By: David Rogers
Politico

GOP compromise on debt: Cut military spending?
By Lori Montgomery and Paul Kane,
The Washington Post

Debt ceiling deal's ticking clock creates pessimism
By David Rogers
Politico

GOP boosts push for balanced-budget amendment
By Sean Lengell
The Washington Times

House GOP living up to 'Pledge to America'
By Jake Sherman
Politico

Politics

Obama’s 2012 Game Plan
How can the president rev up and mobilize his demoralized liberal base?
by Michael Tomasky
Newsweek Magazine

Hispanics' Ascent Drives Early Moves in 2012 Race
The Wall Street Journal

Why Michele Bachmann is no Sarah Palin
By Chris Cillizza
The Washington Post

Michele Bachmann, evangelical feminist?
By Dan Gilgoff
CNN.com Religion Editor

Housing and Community Development

In Many Cities, Jobs Recovery Could be a Decade Away
By Stephen Gandel

If baby boomers stay in suburbia, analysts predict cultural shift
By Carol Morello
The Washington Post

In California's Rich Farm Country, How the Poor May Get Poorer
By Jens Erik Gould
Time Magazine

Read more »

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Deficit Drama Continues, Impact on Budget Still Uncertain

House Majority Leader Eric Cantor’s decision to abruptly leave the deficit reduction talks throws another wrench into bipartisan efforts to reach a compromise on reducing federal spending. Republicans hard line on any tax increases or elimination of tax loopholes will make it extremely difficult to reach an agreement before the deadline to raise the nation’s debt limit.

If the Republicans are successful, domestic programs, including affordable housing programs are at risk of deep reductions over the next several years. Talks seemed to be progressing to the point where budget parameters for the next few years were coming into sharper focus. However, Cantor’s action and the Republican’s insistence on receiving a pledge from the president pretty much ensures an agreement will not be reached by the deadline.

The fact that some Members of Congress have expressed an interest in passing a temporary extension is an indication both parties realize while there is some progress being made, and that more time is needed. As budget pressures build, don’t be surprised if fewer groups express a reasonable position on deficit reduction like the American Association of Retired Persons (AARP). AARP stated they would accept reductions in benefits for future retirees until they received push back from Democrats and others.

There simply are too many competing and powerful interests groups yielding too much influence on negotiators. The pressure is squarely on the president. He is feeling the heat from Republicans and Democrats to submit a deficit reduction plan as a condition to having the ceiling raised. He needs to take the lead but not appear to be to pressure from Republic ans.

Republicans are operating from a position of strength For affordable housing programs, this is not a good sign for a number of reasons:

First, federal affordable housing programs have broad but shallow support in Congress and very little support among the general public. Public housing and the Section 8 voucher programs are not popular in local communities. In this political and economic environment, unpopular government programs will be the first targets of budget hawks. Even within the affordable housing community, it will be hard for broad coalitions to stick together when decisions are made about cutting programmatic budgets. At some point, self-interest will take over and the least popular programs will suffer.

Second, any efforts to spruce up the housing market will be targeted to homeownership. While it is becoming harder to own a home with tightening purchasing requirements, homeownership is still a strong indicator of economic progress. If the economy falters, housing production falters, if housing production falters fewer jobs and less upward mobility. In the eyes of too many important people, homeownership is more important to the overall economy than rental housing. When decisions are made about funding housing initiatives, homeownership initiatives will receive priority.

Third, the traditional message which said programs such as the Public Housing Capital Fund, HOME or CDBG are job creators, while technically correct, does not carry the same weight as it did in the past. Local governments are so overwhelmed job creation is only one concern. Cities and counties are getting squeezed top to bottom. From the top they are losing federal funds to address specific concerns. The economy has had negative consequences on families which means local politicians risk losing elections if they raise local taxes. There is not enough revenue to preserve existing jobs, create new ones and meet an array of fiscal obligations. At the United States Conference of Mayors (USCM) meeting in Baltimore, the mayors called for an end to the wars and a redistribution of those resources to local governments. It is not going to happen. Local governments will be squeezed further and in most communities public housing will suffer the most.

The message needs to change dramatically. In 1995, the National Association of Housing and Redevelopment Officials (NAHRO) did, in fact, change the discussion on affordable housing in a dramatic way. The organization called for block granting housing programs and eliminating the Brooke Amendment. NAHRO’s bold step jolted the affordable housing community. By taking the position and calling for the restructuring of housing programs, the decision broadened NAHRO’s political support across both sides of the aisle while forcing legislators, administrators and advocates to rethink how these programs are structured and administered.

NAHRO’s proposals were controversial but the subsequent discussion led to the passage of the Quality Housing and Work Responsibility Act of 1998. Unfortunately, the Clinton Administration used its regulatory powers to neuter some of the flexibility provided housing administrators that was in the legislation. Nevertheless, NAHRO’s action is an example of the kind of initiative needed to reshape debate on public housing and do so in a constructive way.

Affordable housing groups need to hire a public relations firm that has the pulse on what Americans will support. Housing programs are slow, expensive and in no-win situations. If the property looks too nice, citizens feel it is a waste of taxpayer dollars on “undeserving” families. If it is not properly maintained, it is a waste of taxpayer dollars. The message must be about people not places. Many years ago NAHRO had ads in its magazine which highlighted the people served in public housing. A variation of that message needs to be the foundation of advocacy efforts.

Without a change in message, affordable housing is facing deep cuts from which some programs may never recover. Look at the groups screaming the loudest: farmer subsidy supporters, defense hawks, protectors of food and children nutritional and food programs. Housing groups cannot compete with them without a compelling argument which puts them, at minimum, at the table when decisions are made.


Interesting Read

Debt talks: Democrat Kent Conrad, Senate budget chair, says $2 trillion not enough
By Lori Montgomery and Rosalind S. Helderman
The Washington Post

Deficit talks in danger as Eric Cantor bails
By David Rogers
Politico

GOP's bold gamble on deficit talks
By David Rogers
Politico

Can Boehner play dealmaker on debt talks?
By Jake Sherman and John Bresnahan
Politico

Obama’s dilemma on the debt-limit talks
The Washington Post
By Michael Gerson

Democrats fret over White House dealmaking
By Jake Sherman and John Bresnahan
Politico

CBO: Debt could grow to double GDP
By David Rogers
Politico

AARP expects Social Security benefit cuts
By Jeanne Sahad
CNN Money

AARP Move on Social Security Could Help Avoid a Train Wreck
By David Gergen
CNN

Conservatives’ spending pledge
By Emily Miller
The Washington Times

Housing and Community Development

White House’s Daley seeks balance in outreach meeting with manufacturers
By Peter Wallsten and and Jia Lynn Yang
The Washington Post

The Indiana Exception? Yes, but...
By Michael Powell and Monica Davey
The New York Times

Eclipsed
Why the white working class is the most alienated and pessimistic group in American society.
by Ronald Brownstein
The National Journal

Read more »

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Interesting Reading to Start Your Week

Housing and Community Development

Housing Market Suffers Biggest Decline in 16 Months
By Ben Terris
The National Journal

What, Me Worry? (Part 1)
Main Street: We’ve Got Bigger Problems
By Jim Tankersley
The National Journal

EDITORIAL: Unemployment reform
House to vote on easing 99-week benefit requirement
The Washington Times

Pro-Obama Media Always Shocked by Bad Economic News
By Michael Barone
Washington Examiner

Politics

NY-26: Big impact on deficit fights
By David Gergen
CNN

How the GOP could rescue Medicare reform
By Michael Gerson
The Washington Post

Republicans brace for tough 2012 fight against Obama in unlikely place — N.C.
By Amy Gardner
The Washington Post

Just who is Herman Cain? And what does his presidential run mean for the GOP?
By Jason Horowitz
The Washington Post

The 2012 Republican Battle Test
Why it's a good thing there's no obvious GOP front-runner.
The Wall Street Journal

For the real GOP field, wait until after Labor Day
By Roland Martin
CNN

The Cook Report: Room for One More
Watch for Michele Bachmann or Rick Perry to try to fill a void in the GOP presidential race.
By Charlie Cook
National Journal

Read more »

The Road to Reelection Got Smoother for Obama

Indiana Governor Mitch Daniels’ decision to forego a White House bid has increased the likelihood President Barack Obama will be reelected for a second term. Recognizing a lot can occur between now and November 2012, it appears the only thing that can truly sink the president’s reelection bid is a down economy.

Each of the remaining high-profile candidates mentioned - New Jersey Governor Chris Christie, Texas Governor Rick Perry and former Florida Governor Jeb Bush - may attract Republican support but will have a difficult time unseating the president if the economy is on the upswing. None of the current candidates or prospective candidates generates excitement among the party faithful. If they have difficulty energizing their own party faithful, it is hard to imagine they will win the hearts and mind of independents and other voters.

The president must take advantage of the mistake made by Republicans who proposed cuts to Medicare without fully vetting the public’s appetite for such reductions. The cuts to Medicare proposed by House Budget Chair Paul Ryan (R-WI) have not been well received and have put Republicans on the defensive. Now is the time for the president to push aggressively for a budget which preserves his priority programs while painting the Republicans as out of step with everyday Americans.

By not offering the recommendations of the deficit commission, the president has allowed himself to enter the partisan fray. He must step back and appear “presidential” as he did during the lame duck session last year. The pressure is not on Obama but on Republicans to come up with a reasonable number for a budget agreement.

Republicans will continue to paint the president as a “big-spending, socialist”; however, they realize how vulnerable they will be in 2012 with an uninspiring candidate, a proposal to radically change Medicare (which even Tea Party faithful do not want to see cut) and possibly being held responsible for the nation defaulting on its obligations if an agreement is not reached in extending the debt limit.

The budget discussions are the foundation for next year’s elections. A bi-partisan budget agreement does not help Republicans next year. Republicans need issues like the economy and Federal spending to be the focus of voter’s attention not the president himself. Focusing on specific issues versus the president will eliminate any risk of appearing overtly or covertly racist. Donald Trump’s unsuccessful attempt to question the president’s academic credentials is a prime example of how attacks on the president can quickly deteriorate.

If a reasonable budget agreement is reached, the president stays above the political fray, the economy shows signs of life and all other things being equal, Obama will be hard to defeat.

NLC Releases Financial Tool Kit for Elected Officials

The National League of Cities released a tool kit for municipal officials to assist families which are “unbanked” and “underbanked” to access traditional financial institutions. The toolkit is part of NLC’s Bank On Cities Campaign which is designed to help local leaders connect low- and moderate-income residents to mainstream financial services to avoid high-cost check-cashers, predatory lenders and other costly alternative financial services.

Interesting Read

Parties are still $1T apart on domestic spending
By David Rogers
Politico

Have Democrats cracked the code for 2012?
By Alexander Burns
Politico

Gang of 5/6 tries to salvage work
By Meredith Shiner
Politico

Will Republicans learn the lesson of NY-26 loss?
By Dan Balz
The Washington Post

The Wish List: Taking a Hard Look at Republicans Not in the Presidential Scrum
By Alex Roarty
National Journal

Stimulus price tag once again lurches higher
By Stephen Dinan
The Washington Times

Stimulus recipients found to be tax cheats
By Stephen Dinan
The Washington Times

The Elephant in the Green Room
By Gabriel Sherman
New York Magazine

If I Take Down Fox, Is All Forgiven?
By Jason Zengerle
New York Magazine

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Deficit Talks Not Good for Housing

Sen. Tom Coburn’s decision to withdraw from talks by the “Gang of Six” does not bode well for advocates hoping to stall cuts to federal housing programs. Coburn was part of a group of senators hoping to reach bipartisan agreement on a deficit reduction plan that could win broad congressional approval. Coburn’s decision to remove himself from those discussions makes reaching an agreement harder. As a result, the politics of deficit reduction will overshadow any substantive discussion that could occur.

President Barack Obama’s decision not to accept the recommendations of the deficit commission he empaneled as the starting point for these discussions has led to a more complicated, highly political process leaving Federal programs ripe for attacks. The deficit commission recommendations were easily approved in a bipartisan fashion after sparing no program from assuming a portion of the responsibility to reduce the federal deficit. This gave every politician in Washington the political version of a flak jacket when approaching sensitive issues like tax increases, cuts to entitlement programs and the defense budget. The commission members understood the need for broad action to reign in Federal spending. Their support for a series of hard choices demonstrated a bipartisan consensus on difficult issues could be reached.

Obama unwisely went in a different direction. The result was a contentious debate on the FY 2011 budget that went down to the wire and a more difficult set of negotiations with catastrophic consequences if an agreement is not reached. The more contentious these discussions the more likely “poorly administered” agencies will bear the brunt of cuts.

Anticipating cuts to its programs as a result of the discussions, the Department of Housing and Urban Development (HUD) is beginning to distance itself from some of the local decision-making within local agencies. First, it is going make the salaries of housing agency directors more accessible to the public. These records are already a matter of public record but highlighting these salaries only adds fuel to the public’s discontent with government workers. It will lead to calls to reduce spending and salaries for public officials.

Second, HUD’s response to a series of articles in The Washington Post which questioned the management of funds administered through the HOME Investment Partnership program was to blame local decision-making. HUD said it has no control over how funds are administered. Mercedes Marquez, HUD’s assistant secretary for community planning and development, told The Washington Post, “this is what comes with having the flexibility of a block grant, where you respect local decisions.”

Now Members of Congress are calling for a review of HUD’s program. It does not come at a good time. The House Appropriations Committee releases its funding parameters for FY 2012 and housing programs are facing an overall reduction of 14 percent. Denial is the safest card for the department to play. If Republicans target HUD for deeper cuts, department officials can point to poor programmatic local decision-making as the culprit.

Republicans have aggressively argued additional cuts must accompany any increase to the nation’s debt limit. While no one truly expects Congress to allow the U.S. government to default on its obligations, the hard-line tactics worked effectively before an agreement on a FY 2011 budget was reached and a government shutdown was averted. The stakes are much greater now and the consequences too catastrophic for some to contemplate; however, there is a segment within congressional Republicans who would be happy to allow the deadline to pass without an agreement.

The seriousness posed by defaulting gives the president the slight edge in these negotiations. As long as he submits modest cuts during these negotiations, he places the burden on Republicans to move from their hardline stance or cause calamity. The increased scrutiny of HUD and the local officials will continue to put housing agencies on the defensive.

Interesting Read

Members of Congress call for probe of HUD’s HOME affordable-housing program
By Debbie Cenziper
The Washington Post

A trail of stalled or abandoned HUD projects
By Debbie Cenziper and Jonathan Mummolo
The Washington Post

Speculators score, District loses in affordable-housing deal
By Debbie Cenziper
The Washington Post

US: Philly housing agency overpaid for shoddy work; audit questions $127M in stimulus spending
By Associated Press
The Washington Post

Budget surplus to deficit: How we got here
By David Rogers
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Can loan modification fix housing?
By Christipher Papagianis
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Neo-Voodoo Economics
By Jim Tankersley and Michael Hirsh
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New Strategy Required

Congress returns from its spring recess to begin further discussions on a FY 2012 budget that includes concrete provisions to reduce Federal spending. In exchange for support for increasing the debt limit, Members of Congress from both parties are pressuring the White House and congressional leadership to agree to a spending plan that addresses deficit reduction in a real way.

For local housing providers receiving Federal funds, both the politics and the economics of the deficit reduction discussions means fewer funds in spite of efforts to garner congressional support for Federal programs. During the congressional recess, national groups have galvanized their members to express dismay over the cuts approved in the FY 2011 budget agreement and their opposition to further cuts in the FY 2012 budget. While these efforts are necessary they will prove fruitless and frustrating.

The White House and the congressional leadership of both parties have already conceptually agreed Federal spending should be reduced. Vice President Joe Biden has begun the first of a series of meetings with congressional Republicans and Democrats designed to reach an accord on deficit spending prior to the deadline to raise the debt limit. The decision by the House Republican leadership not to pursue changes to Medicare increases the likelihood that the framework of an agreement can be reached.

Meeting parallel to the Biden group is the “Gang of Six” – a bipartisan collection of senators committed to reaching an agreement on deficit reduction that could serve as a template for all parties to support. This group comprises Democrats Dick Durbin of Illinois, Kent Conrad of North Dakota, and Mark Warner of Virginia and Republicans Tom Coburn of Oklahoma, Saxby Chambliss of Georgia, and Mike Crapo of Idaho.

Why does this matter? The bipartisan effort to reduce spending leaves housing advocates with few “back room” supporters to champion their concerns. The cuts to programs are inevitable. There are two fundamental questions housing providers need to determine: how deep will the cuts be? How to respond to these cuts?

It is difficult to answer for certainty the first question; however, one can look to the cuts agreed to in the FY 2011 budget to get an idea of what programs will be targeted. For example, public housing was cut more deeply than other programs within the Department of Housing and Urban Development (HUD) while tenant-based vouchers received an increase. Vouchers have received strong support because it gives the recipient an opportunity to “choose” where to live. As discussions for next year’s budget proceed, it is safe to estimate public housing funds will remain static at best or bear the brunt of further reductions.

This leads to the second question: how to respond to these cuts? It is in the industry’s best interest to more aggressively pursue regulatory and legislative changes to fundamentally change how public housing is funding and administered. There are efforts to reduce the administrative and regulatory burden of small agencies (those with less than 500 units) being pursued by the Public Housing Authorities Directors Association (PHADA) and the National Association of Housing and Redevelopment Officials (NAHRO). They are joined by the Council of Large Public Housing Agencies (CLPHA) to expand the Moving-to-work program which allows housing authorities to combine their funding allocation and dispense the resources in a way which meets local need. These groups are also in discussion with HUD to identify regulatory and administrative changes to ease the burden on local agencies.

All of these efforts are important but they will only succeed if advocates for these program confront the political and economic reality – cuts combined with spending freezes means there must be out-of-the-box thinking if these programs are going to continue to provide a service to those in need.

Multigenerational Housing Increasing

The American Association of Retired People (AARP) Public Policy Institute recently released a report which showed an increase in the number of multigenerational households residing in the United States. The number increased from 6.2 million in 2008 to 7.1 million in 2010. There were 5 million multigenerational households in 2000.

The report cites an analysis by the Pew Research Center which states that one in five adults between the ages of 25 to 34 live in multigenerational households. Hispanics, African-Americans and Asians are more likely to live in multigenerational households than whites.


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Medicare fight exposes House GOP’s internal rifts
By David Rogers
Politico

Lawmaker Proposes Federal Hiring Freeze
By Emily Long
GovExec.com

Waiting Game
By Charlie Cook
National Journal

The Cook Report: Taking On Obama
By Charlie Cook
National Journal

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Failure to Lead

President Barack Obama and congressional leaders have demonstrated a failure to lead in their respective approaches to tackling the budget. Both the president and the Republican leadership are more concerned with positioning themselves favorably with the public than they are in reaching a bipartisan solution to our mounting deficit.

The president’s decision to present a deficit reduction plan was opportunistic, simply to distinguish himself from the proposal presented by Rep. Paul Ryan (R-WI). Ryan’s plan was approved by the House of Representatives along party lines. While a clever move it only occurred because Obama has an eye on reelection which would be in jeopardy if he appears disinterested in tackling such a thorny issue.

He passed on a leadership moment when he decided not to endorse the recommendations submitted by the Deficit Reduction Commission which he created. The bipartisan commission members demonstrated tremendous leadership by submitting a set of recommendations which left nothing off of the table: cuts to politically popular programs affecting all segments of society and even proposing tax increases.

Ryan’s plan avoids serious discussion about defense spending and tax increases. Republicans insist that the cure to our problems is to eliminate domestic spending and let the free market reign. Since it didn’t work in the housing market why should anyone expect it to cure our budget problem. Republicans need to be honest and admit their decisions to enact tax cuts, Medicare Part D, and pay for two wars with no regard for the deficit helped create the problem we are facing. Like it or not, they need to recognize that tax reform, even if it means tax increases, must be part of the deficit reduction plan.

Republicans today are acting like the Democrats did before welfare reform was enacted. Democrats knew the problems inherit in the welfare programs and did nothing about them when given the opportunity. They could not accept that the program created a level of dependency that was ruining communities. Republicans took control of Congress and passed legislation changing the program as it had been structured for generations.

The deficit is the Republican version of welfare reform. They (Republicans) know it needs to be addressed but are unwilling to sacrifice ideology (no tax increases) to agree to part of the solution (tax increases) most experts agree must occur.

The politics of the Federal budget tends to force our elected officials to shy away from making hard decisions. The thought of reducing benefits to the elderly, the poor and the ill or cutting defense spending is not pleasant. The truth is the 800 pound gorilla called the trillion dollar deficit needs to be cut down to size. It will be bloody and leave behind many wounded. Leadership isn’t made, it is found. Hopefully, the nation will become stronger because of the debate and we find the leaders we are lacking.

Interesting Read

GOP escalates debt-limit demands
By Jake Sherman & Jonathan Allen
Politico

Tax the rich! OK, but then what, Mr. President?
CNN Money

Sorry, GOP: Tax revenue needs to go up
CNN Money

Death Wish? Republicans pushing to revamp Medicare could find themselves voted out of office in the next election.
By Charlie Cook
National Journal

Obama’s Young Mother Abroad
By Janny Scott
New York Times Magazine

The Crystal Ball’s First 2011 Take on 2012’s Electoral College
By Larry Sabato
Crystal Ball

Florida may be do-or-die for 2012ers
By Alexander Burns
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Time to Rethink Federal Housing Programs

Now that a deal appears to be in place for the balance of FY 2011, the discussion will now turn to FY 2012. As President Obama prepares to outline his deficit reduction plan, further cuts to Federal housing programs are to be expected. As a result, families will have to find a way to pay more of their housing costs as local providers struggle to offset budget losses with lay-offs, reduced services and deferred maintenance.

The budget agreement reached last week is expected to receive bipartisan support and is expected to pass. The cuts included in this agreement will be a precursor for what is expected to be deeper cuts in FY 2012. House Republicans released a deficit reduction plan for FY 2012which is expected to reduce funding for the public housing and voucher programs.

To offset these reductions, the structure and funding for federal housing programs need to change in order to survive. Public housing has proven to be a vehicle which has provided low-income families to have a “decent, safe and affordable home.” Former President Jimmy Carter, Supreme Court Justice Sonia Sotomayor, Starbucks founder Howard Schultz, and comedienne Whoopi Goldberg are among the millions who spent part of their lives growing up in the “projects”.

To preserve this resource for poor families dramatic changes must occur:

HUD needs to be Re-evaluated

Serious consideration needs to be given to restructure the Department of Housing and Urban Development (HUD). First, its mission needs to be re-evaluated. The department was created in 1965 as part of the Great Society programs founded by President Lyndon Johnson’s administration. According to its website, the department’s mission “…is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.”

It is time to reconsider the department’s role in meeting local needs. As the department approaches 50-years old in 2015, the current budget situation provides an opportune time to look how best to identify the strengths and weaknesses of the department and act accordingly.

Second, the federal entity overseeing housing should have a governing structure modeled after the Federal Reserve Board. Each member of the Board receives a 14-appointment after going through a vetting process. The chairman is appointed by the president to a four year term. This type of governing structure allows for long-term planning, minimizes policy changes which create havoc locally, and minimizes the politics of board appointments. This approach has tremendous political, practical and policy implications and should be carefully thought out. There are many competing forces pulling the department in different directions. A “tenured” HUD secretary can be more effective in bringing these various actors together to work on a sustainable housing agenda.

Change the Narrative

Federal housing programs have an image problem. The public housing and Section 8 programs are considered poorly run programs of little value to the surrounding community. These programs are considered housing of last resort. According to HUD, there are more than 3,000 housing authorities and less than 200 are considered troubled. The vast majority are providing appropriate services to the poor. Unfortunately, perception is reality. The narrative must change.

Public housing has a rich history of providing working families with an affordable dwelling while in pursuit of the American Dream. Advocates have failed to put a “face” to these programs which demonstrate the role it plays in the socioeconomic fabric in society. Supreme Court Justice Sonia Sotomayor is the latest of thousands of former public housing residents who are making significant contributions to society. Their stories need to be the message of public housing.

New Media Strategy

In the age of 24-hour cable and internet the media strategy is different, difficult and complicated. Traditional forms of media to influence policy-makers, i.e., editorial pages and policy television programs have given way to Glenn Beck, Sean Hannity, Rachael Maddow, Steve Colbert and Oprah Winfrey. In order to survive organizations need to understand which news forms are influencing policy and adjust accordingly. While organizations are using various forms of the new media to reach their members and supporters, it is unclear how effective they are in influencing.

Now is the time for the competing housing advocacy organizations to unite behind a single media initiative-- share the costs of an integrated campaign, broadcast nationally via traditional network television, cable television and the Internet. The effort should choose an individual or group of individuals to speak on behalf of public housing. This person should be recognizable and appreciated by both Republicans and Democrats. To be sure that the message resonates with the public, the campaign must be centered on a short catchy slogan that captures the key realities of what public housing means to America.

Read more »

Lessons Learned from the Budget Debate

Now that the House has approved a continuing resolution for the balance of FY2011, here is one writer’s take on seven lessons learned from the debate which will influence future funding discussions:

1. While unorthodox by Washington standards, the decision by the Speaker to open the floor to amendments allowed Members of Congress to actually do the work expected of them: propose, debate and vote on issues affecting the nation. It is encouraging to see Congressmen and women actually voting on legislation versus sniping at each other. Look for this free flowing form of debate to continue.

2. To both of the political parties’ credit, members took votes that did not fall along party line. There were Republicans and Democrats uniting to defeat spending measures deemed unnecessary. There were odd mixes of liberals, moderates and conservatives teaming up on legislation, which offers a glimmer of hope that bipartisanship can occur in some instances this year.

3. The Tea Party deserves credit for ushering in a group of individuals who are not toting the party line on issues. They are actually forcing the leadership, and the House as a whole, to make hard, substantive, and politically risky decisions.

4. Even Democrats realize the need to rein in government spending. While it is easy to paint Republicans as heartless, the truth is no reasonably intelligent person could believe the country can sustain its current level of Federal government spending.

5. For the remainder of this fiscal year and the next, the president’s proposed FY2012 budget is the ceiling and the House version of FY 2011 funding bill is now the floor for Federal programs. Constituencies from both parties will feel the effects of cuts regardless of the outcome in the Senate.

6. Constituencies will have to devise new, creative strategies to preserve funding for their programs. It will not be enough to indicate the impact on individuals, families and communities. No one will be immune; therefore, the message must be distinct, simple and compelling.

7. Give credit where credit is due: the president’s deficit commission had the guts to call for cuts to ALL programs in order to seriously address the bulging deficit. Not including entitlement programs and defense in the list of cuts demonstrated a lack of leadership in Congress and the White House. The commission members were the only individuals willing to recognize the seriousness of our nation’s fiscal problem and offer a tangible, albeit unpopular, solution.


Interesting Read


How a government shutdown could happen
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Republicans float $2 billion a week in cuts
By Jonathan Allen
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Town hall 'rage' over spending
By Marin Cogan
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House GOP spares no pet projects in trimming budget
By Philip Rucker
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Budget deadlock points to government shutdown
By Kara Rowland
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Lawmakers Play Down Shutdown, But Solution Is Elusive
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What might happen if federal government shuts down again
By Ed O'Keefe
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The Wrong Fight
By Ronald Brownstein
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The Cook Report: Hang On Tight
By Charlie Cook
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Senate Momentum Builds for a Deficit-Cutting Deal
By Steven T. Dennis
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Republican governors strike at heart of Democratic Party
By Jonathan Martin & Ben Smith
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Economy poll: African Americans, Hispanics were hit hardest but are most optimistic
By Michael A. Fletcher and Jon Cohen
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Wisconsin Gov. Scott Walker has history of going up against unions
By Brady Dennis
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GOP lawmaker probes HUD’s non-disclose pact
By Chris Frates
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Bingaman Exit Gives GOP an Opening in a Toss-Up Race
By Jennifer Duffy
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Incumbents, Beware
By Charlie Cook
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The End of Fannie and Freddie?
Closing the troubled housing agencies is not the only mortgage market fix we need.
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Deep Cuts to Housing Programs on the Way

Housing programs will join the list of other Federal programs subject to reductions when the president submits his FY 2012 budget Valentine’s Day. While President Barack Obama is proposing “painful” cuts to key programs in the next fiscal year in an effort to reduce the deficit, his proposal pales in comparison to the cuts proposed by House Republicans for the balance of the current fiscal year. Their proposal calls for close to $6 billion in cuts to housing programs as part of $100 billion in cuts to Federal programs.

Anticipating negative reaction to the Obama budget proposal, the president’s staff has contacted supporters of various programs to provide them with a heads up to pending cuts. In a New York Times editorial Jack Lew, Director of the Office of Management and Budget (OMB), stated the president is proposing a budget which reflects the need to reduce the deficit and the fact that hard choices will need to be made. Included in the Obama proposal will be a cut to the community development block grant (CDBG) program by seven and one half percent or $300 million. To administrators of the program, this is a significant to communities which count on these funds to provide local services but it is less than total elimination of the program as proposed by the Republican Study Committee.

According to Housing Affairs Letters, which provides daily coverage of housing and community development news, public housing will take hits to its key programs including $1.1 billion in cuts to the public housing operating fund; funding for tenant-based vouchers for the remaining seven months of FY 2011; and, a $300 million cut to the public housing capital fund. The administration seems to want to use some of the housing programs to help pay for a passenger rail plan.

While the administration will argue their proposed cuts across the board are part of the shared pain all must endure, their budget proposal is sure to set off anguish cries from the various interest groups with a claim to federal funds. It will not cause the same consternation as the cuts proposed by Republicans. In fact, Democrats and the Administration should be thankful that Republicans were offering such drastic cuts. To the general public, Obama’s FY 2012 proposal will seem modest in comparison.

The defense industry, homeland security and programs benefiting veterans have been deemed untouchable. While Social Security, Medicare and Medicaid are considered sacred cows, there will be attempts to curb spending for those programs at another point in time in the process. For now, non-entitlement domestic programs will bear the brunt of the proposed cuts this year. It is safe to assume the president’s proposed budget is the best case scenario for funding for FY2012 given the disparity between the president and Republicans on how to achieve deficit reduction.

The president’s 2012 budget proposal will come three weeks before the continuing resolution for FY2011 expires March 4. As reported in last week’s post, it is not unreasonable to expect a temporary shutdown of the government. Republicans on the House side are seeking significant cuts to Federal programs Democrats and the administration will simply not agree to. Senate Republicans are supportive of their House counterparts and can apply enough pressure to slow the appropriations process in their chamber increasing the likelihood of a temporary shutdown.

Republicans Seek Cuts Now

As the president released his FY2012 budget, Republicans were calling for deep cuts to housing programs for the remainder of FY2011 including the virtual elimination of the CDBG program, $1.5 billion in cuts to housing vouchers, $616 million in cuts to the capital fund, $340 million to HOPE VI (essentially gutting the program), and $203 million to the public housing operating fund. The Republican proposal includes $350million in cuts to the Transforming Rental Assistance initiative which is designed to replace HOPE VI.

President’s Budget Likely Dead on Arrival

Expect the president’s FY 2012 budget to be dead on arrival to Republicans when it is released on Valentine’s Day. Republicans will simply dismiss it as they pursue the more dramatic cuts for the remainder of this fiscal year. History may repeat itself. In the mid-nineties Republicans swept into office believing they had a mandate from the American people to cut spending and forced a government shutdown. The level of cuts proposed by Republicans is so deep it is difficult to see them reaching a compromise with the president before the current continuing resolution expires in early March.

Democrats should feel ecstatic about the Republican proposal. A recent poll has shown that Americans are concerned about increased federal spending but are less supportive of reducing these funds when specific programs are identified. Democrats would prefer to extend the current CR for the balance of the fiscal year. Now they can paint Republicans as being out of touch with the American people which may strengthen their hand in the ensuing negotiations. However, the Republican proposed cuts are so deep the likelihood of a government shutdown has increased.

MacArthur Foundation Announces Housing Research Grants

The John D. and Catherine T. MacArthur Foundation announced February 7 the awarding of nine grants totaling $5.6 million for research to explore the role housing plays in the long-term health and well-being of children, families, and communities.

The nine projects, selected through a competitive process from a pool of 150, were awarded as part of the Foundation's $25 million initiative on How Housing Matters to Families and Communities. The initiative is based on the premise that stable, affordable housing is an essential platform that promotes positive outcomes in education, employment, and physical health by helping to ensure a greater return from other social and public investments. The goal is to help policy makers better direct increasingly scarce public resources to enhance housing outcomes and to achieve broader goals of healthier, better educated, and more successful families and communities.

The nine grant recipients are a mix of studies on the relationship between housing and a series of social and economic concerns including education, health, and economic opportunity:

* Mayor's Fund to Advance New York City -- $1 million to study the role subsidized housing plays in the education and financial and physical health of children and families;

* Boston College -- $900,000 to study the impact of low-income families' housing decisions on children's well-being;

* New York University -- $800,000 to study the impact of housing instability due to foreclosure on school performance;

* The University of Maryland -- $700,000 to model the impact of housing subsidies on children's future participation in the labor force;

* RAND Corporation -- $600,000 to study whether social networks are a key pathway through which low-income residents realize the social and economic benefits of living in mixed-income housing or neighborhoods;

* University of Wisconsin-Madison -- $600,000 to study the effects of federal and state income support policies on homeownership stability and child maltreatment;

* Brown University -- $500,000 to support a study on the relationship between compulsory savings and homeownership in Mexico and on the effects of homeownership on formal labor market participation;

* Harvard University -- $300,000 to study the long-term social, psychological, and economic implications of eviction; and

* University of Chicago -- $200,000 for a study on the impact of childhood housing instability on long-term health and education outcomes.

Interesting Read

Fewer Want Spending to Grow but Most Cuts Remain Unpopular
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Pew Research Center for the People & the Press

Obama to propose spending cuts in budget plan aimed at countering conservatives
By Shailagh Murray and Lori Montgomery
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Senate Democrats, House GOP clash over shutdown threat
By Sean Lengell
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The fierce urgency of David Plouffe
By Glenn Thrush
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Is the GOP overreaching on budget?
By David Rogers
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After hard week, GOP has 'group hug'
By Jake Sherman
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Obama report on Fannie, Freddie plan may boost mortgage rates
By Zachary A. Goldfarb and Brady Dennis
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Brace for a Government Shutdown

The likelihood of a government shutdown increased when House Republicans passed a resolution calling for approximately $60 billion in cuts to non-defense spending for the balance of the FY 2011. Approved primarily along party lines just before the president delivered his State of the Union address, the resolution underscores the commitment of House Republicans to reduce federal spending.

The resolution (H. Res. 38) establishes the starting point for Republican negotiations with the White House and Democrats in funding the federal government for the remainder of the current fiscal year. Given the two other fiscal issues to be debated this year – increasing the federal debt limit and passage of a FY 2012 budget – how funding for FY2011 is resolved will impact the debate on the other two issues.

FY 2011

During the lame-duck session, Congress averted a shutdown of the Federal government by passing a short-term continuing resolution (CR) to keep the government functioning until March 4. The short-term CR was a victory for Republicans who wanted to pursue a strategy to reduce non-defense discretionary spending immediately. Republicans are going to insist that funding for the remainder of this fiscal must include deep cuts to programs. Analysts estimate the $60 billion cut proposed in the resolution could mean a 20 percent cut to programs.

Democrats will be hard pressed to prevent the Republicans from approving an appropriations bill with significant cuts to federal spending. Some version of House Republicans’ bill will be approved by that chamber. In the House, it is easier for the majority to approve bills it favors; therefore, a proposed budget for the balance of FY 2011 emanating from that chamber will include deep cuts. However, Senate Democrats will not allow the cuts to be approved in their chamber. They will probably prefer a continuation of the current CR. Once the Senate passes a measure they must negotiate a compromise with the House on a final spending bill for 2011.

The political maneuvering that accompanies this effort to reach a compromise will cause a likely government shutdown. There are too many activists within the Republican Party calling for an aggressive, and if necessary, protracted fight with the president. They are prepared to risk the fall out of a shutdown to leverage deep cuts. There could be another CR passed with modest reductions in funding or a hard commitment to ensure there are deeper cuts in the FY2012 budget. Given the desire to hold the line on spending, there is a real possibility the Federal government will be shut down for a short period of time

FY 2012

When the president submits his FY2012 budget next week it will be dead on arrival in the House before the last copy is submitted to Congress. While the President Barack Obama’s State of the Union speech called for “investments” in infrastructure and education to keep America competitive, Republicans believe he is simply seeking another opportunity to increase federal spending. They, in turn, are determined to prevent that from happening.

The political dynamics of the FY2011 bill will repeat itself for the FY2012 bill. Republicans in the House will simply pass a version of the FY2012 appropriations bill with cuts totaling as much as $100 billion. In that scenario, the Senate will once again need to approve a spending bill that does not include such large cuts. Expect Republicans to become more aggressive in pursuing cuts in FY2012. Another shutdown in October is not out of the question. Anger and frustration over the outcome of negotiations with the White House and Democrats over funding levels could cause Republicans to be willing to risk another shutdown.

Debt Ceiling

The debt ceiling is the biggest issue. Sandwiched between the two funding discussions will be a vote to raise the debt ceiling to allow the government to borrow to pay for its obligations. The limit has been raised every year without fanfare; however, this year Republicans hope to use it as leverage for deep spending cuts. Some Republicans are willing to risk the US defaulting on its’ obligations (which can have dramatic world-wide implications, according to some experts) and shutting down the government.

As bad as a government shut-down would be, it pales in comparison to a national default. The impact on the value of the dollar and other considerations would be spectacular. It is absolutely unthinkable that new members of Congress would play around with this issue. If they want to truly wreck the economy, not just America's but that of much of the western world, failing to increase the U.S. debt limit would do it.

The Seeds of a Shutdown Exist

The seeds of a shutdown are in place. The presidential election of 2012 is the 800 pound gorilla driving everything that goes on in Washington. The desire to win the election at all cost is strong. Each party’s strategic decisions are being weighed with the presidential election in mind. Some events, such as the situation in Egypt, complicate decision-making as it relates to the next election. However, one misstep could damage an individual’s and party’s presidential aspirations.

This group of Republicans is very different from the one which swept into office after the historic election of 1994. That group was unified by a Contract with America which was drafted by the Republican leadership. Its subsequent strategy was orchestrated by the same people. Republicans voted into office in November do not have the allegiance to the leadership but to the Tea Party activists. Some of them have pledged to shut the government down if necessary as part of their campaign and are committed to fulfilling that pledge.

These seeds could germinate and be the cause, individually or in some form of combination, of a shutdown:

1. The recession has heightened fear, anger and frustration causing people to lose faith in the prospects of a secure future. This resulted in voters lashing out at anything that appears to be the cause of these emotions. The current target is the “government”.
2. The Tea Party has created a structure to some of the voices expressing frustration and feelings of being ostracized and unappreciated. This structure is separate from the established Republican Party making it less likely Members of Congress with allegiance to this group will be easily co-opted by the party elders.
3. The Republican victories on the congressional and state levels have deepened the resolve of fiscal conservatives to draw a line in the sand on federal spending.
4. The internet has allowed people to express themselves free from filters and accountability. Coupled with the 24 hour cable news cycle, issues never die a natural death and individuals can be mobilized quickly.
5. It is naïve to think that racism doesn’t play a role in some of the discontent with President Obama. Some of it is masked, some of it is out in the open but the president has been demonized, painted as a Muslim extremist, and viewed as a socialist. The residual effects of ensuring his failure due to his race will play some role in what takes place this year.

Who to watch

As the year progresses, keep an eye on how these individuals react to budget proposals. They could decide what types of funding cuts are approved this year:

Tea Party Faithful: There are many Tea Party faithful who rely on Social Security, Medicaid and Medicare. If Republicans like Ryan are serious and proposed cuts to the benefits of these three programs, it will be interesting to see who among the Tea Party are adversely affected by the cuts and how they react to it.

The business community: Specifically, those who are dependent on government contracts and those who receive subsidies. It is hard to believe they will sit on the sideline and allow their source of money to dry up.

State and local government officials: State and local governments rely on federal funds for a variety of projects meeting a variety of needs from infrastructure to education. They will be the first to bear the brunt of any cuts and will be forced to make harder decisions within their own budgets without federal assistance.


Interesting Read

Senate Dems give in on earmark ban
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Poll: GOP should listen to tea party
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With 2012 looming, Obama focuses on economy
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The Washington Post

Mitch McConnell: A Senate obstructionist could turn into a man of action
By Karen Tumulty
The Washington Post

Obama challenges the nation - and Republicans
By Dan Balz
The Washington Post

Fact Checking Ryan and Bachmann: the stimulus
By Glenn Kessler
The Washington Post

Analysis: President, GOP lawmakers agree on austerity, but will it create jobs?
By Lori Montgomery
The Washington Post

Against the Grain
By Josh Kraushaar
The National Journal

The Right Direction
By Charlie Cook
The National Journal

The Senate vs. the future
By Ezra Klein
The Washington Post

Orrin Hatch plays ball with tea party
By Manu Raju
Politico

Conservatives lay out $2.5 trillion in cuts
By Richard E. Cohen & Simmi Aujla
Politico

Campaign 2012

Political Blogs Ready to Flood Campaign Trail
By Jeremy W. Peters
The New York Times

The early-state scramble: It's on!
By Molly Ball
Politico

2012 kickoff could come as early as February
By Alexander Burns
Politico

A big warning sign for Romney
By: Jonathan Martin
Politico

Obama could survive some bumps on road to 2012 reelection
By Chris Cillizza
The Washington Post

New Lines Complicate 2012 House Campaigns
By Tricia Miller
Roll Call

Housing and Community Development

Governors, unions brace for battle
By Melissa Maynard
Stateline

Health-care law: Arizona tries new approach to get by federal Medicaid rules
By N.C. Aizenman
The Washington Post

The West Wing, Season II
By John Heilemann
New York Magazine

When Talk Radio Talks, Congress Listens
By Christina Bellantoni
Roll Call

Retailers offer financial services to 'unbanked'
By Ylan Q. Mui
The Washington Post

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