Budget Control Act of 2011: Impact on Ending Homelessness

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Federal Policy Brief | September 22, 2011

Files: PDF | 140 kb | 2 pages

Although the federal government’s effort to end homelessness represents a very small part of the federal budget, it is vital to the wellbeing of some of the most vulnerable Americans. There has been strong bipartisan consensus over the past decade that ending homelessness is an appropriate, high-priority area of activity for the federal government. Recent increases in concern about federal deficits and/or spending levels have not changed this – Republicans and Democrats alike continue to understand that leaving homeless people on the street does not save taxpayers money.

The Budget Control Act of 2011 establishes a Joint Select Committee whose work could greatly impact the federal government’s work to end homelessness in the United States. This short paper will provide recommendations for how the Select Committee can assist in the work to end homelessness and identify decisions that would make the work more difficult and that should be avoided. It will also cover the impact that sequestration would have on nearly all key federal programs to end homelessness, should the Select Committee fail to identify sufficient reductions in the deficit.

Recommendations for the Select Committee

As the Select Committee makes its recommendations for deficit reduction, the most important general principle for reducing the deficit while protecting the most vulnerable Americans has been well expressed by a group of national faith-based leaders who have met with the President and key members of Congress on the issue: “[F]orm a Circle of Protection around programs that meet the essential needs of hungry and poor people at home and abroad” (www.circleofprotection.us/pdf/Circle-of-Protection-Statement.pdf). This would include, of course, housing for those who are homeless, and support for work to reduce and end homelessness.

To abide by this principle, the Select Committee should:

-Prevent further cuts in discretionary spending. Programs that help make housing more affordable for the poorest Americans – particularly those who are at imminent risk of homelessness – and programs that help homeless people get quickly back into stable housing are mostly on the discretionary side of the budget, which has already endured substantial reductions in the FY 2011 Appropriations Act and under the discretionary caps established in Title I of the Budget Control Act.

  • The Select Committee must protect these critical, discretionary affordable housing and homeless assistance programs from undergoing further cuts.
  • In addition, the Select Committee should reexamine policies already in place that cut discretionary spending and threaten to cut it more and institute policies to ensure that these reductions do not negatively impact the access of people living below poverty to programs providing assistance with basic needs like housing.

-Protect Medicaid access, which is essential to allowing homeless people with the most severe disabilities to get off the streets and stabilize their lives in housing. The expansion of Medicaid eligibility to all low-income people, scheduled for early 2014, is essential and cost effective, and it will allow completion of the work begun by the George W. Bush Administration to end chronic homelessness. There is no doubt that projected Medicaid expenditures can be reduced over time with reductions in health care costs overall. However, trying to reduce costs in the short run by leaving more low-income people uninsured is unlikely to be effective.

-Protect TANF and SSI. These two programs provide income and, in the case of TANF, employment services, as well as other help to Americans with the lowest incomes. They have been essential tools to communities working to end homelessness.

Examine closely the impact of its proposals on jobs for Americans, especially those who are having the hardest time becoming and staying employed. Joblessness is a primary cause of increased homelessness, as well as a profound contributor to the federal deficit. While in the long run there is no doubt that policy changes must be put in place to reduce the deficit, job creation must be the top priority until the economy recovers.

Ensure that at least a portion of any savings generated by reducing the Mortgage Interest Deduction are directed toward more efficient means to help Americans who need help affording their housing, such as through the incredibly important National Housing Trust Fund.

The key low-income housing programs at HUD, targeted homelessness programs in HUD and other agencies, TANF, and SSI together account for only about 3 percent of federal expenditures. Putting these programs off limits for cuts would not seriously hamper work to reduce federal debt.

Effect of Sequestration on Homelessness

In the event the Select Committee process does not produce $1.2 trillion in deficit reduction, a great many programs for impoverished Americans would not be exempt from sequestration, despite beliefs to the contrary. While important mandatory programs such as SSI, Medicaid, TANF, and the Supplemental Nutrition Assistance Program are exempt, the list of exemptions leaves out virtually all housing programs for impoverished Americans, as well as all programs that provide services specifically for homeless people (HUD’s Continuum of Care and Emergency Solutions Grants programs, HHS’ Health Care for the Homeless and grant programs for substance abuse treatment and mental health care for homeless people, DoE’s Education for Homeless Children and Youth program, and others).

Because of these shortcomings in the exemption provisions, if all $1.2 trillion in savings is achieved through the sequestration procedure under Section 302 of the Budget Control Act, hundreds of thousands of extremely vulnerable low-income families would lose their housing, and hundreds of thousands more would lose their chance to escape homelessness.

If it becomes apparent that the Select Committee process will not produce $1.2 trillion in deficit reduction, it would be useful to add modestly to the list of exemptions, with the goal of protecting programs that are most important to preventing and ending homelessness.

Conclusion

The Select Committee should avoid further cuts to discretionary programs that provide affordable housing and homelessness assistance for the most vulnerable Americans, as well as protect key safety net programs like Medicaid, SSI, and TANF that are critical to the effort to end homelessness in the United States. Should the Select Committee process not produce the necessary savings, sequestration would have an extremely negative impact on the federal government’s work to end homelessness, and it would be useful to modestly expand the list of exempted programs to include those most critical for preventing and ending homelessness.