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.

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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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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.

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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.

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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.


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