The Super-Committee’s Inaction: Implications for Ending Homelessness

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Federal Policy Brief | November 29, 2011

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The August 2011 Budget Control Act (BCA) has critical implications for efforts to prevent and end homelessness. Federal resources in the short- and medium-term will be much scarcer, and it will be important to work together to maximize available resources for affordable housing and targeted homelessness programs and to increase coordination with mainstream programs like TANF, SSI, Medicaid, and SNAP (formerly food stamps). It will also require homeless assistance systems to get the best possible results from limited resources. This paper attempts to summarize the impact of the BCA on efforts to prevent and end homelessness in the United States.

The BCA makes deep cuts to federal “discretionary” spending over the next decade. Discretionary spending (as opposed to mandatory spending like Medicaid) is determined each year through the congressional appropriations process. It includes virtually all affordable housing and targeted homelessness programs within the Department of Housing and Urban Development (HUD) and other federal agencies.

The BCA contained two major provisions to reduce federal debt:

  • 1. An overall cap on federal discretionary spending, starting in fiscal year (FY) 2012. These caps generally keep increases in spending below the expected rate of inflation for the next ten years.
  • 2. Deeper spending cuts over nine years, beginning in FY 2013, totaling an additional $1.2 trillion in spending reductions. This second step could have been avoided had the Super-Committee process succeeded in reducing the projected federal debt by $1.2 trillion through other mechanisms.

Because the Super-Committee process did not produce an alternative, the additional $1.2 trillion in spending cuts is scheduled to occur, beginning in January 2013. These cuts will be split evenly between defense and non-defense programs. They will come from some mandatory programs, but most mandatory programs that affect low-income people are exempt, including Medicaid, SSI, Social Security, TANF, and SNAP. All Department of Veterans Affairs (VA) programs are exempt as well. However, HUD programs, as well as Health Care for the Homeless, Substance Abuse and Mental Health Services Administration homelessness grants, and other targeted homelessness programs, are not exempt.

Because FY 2013 will have already begun prior to January 2013, these cuts will be implemented differently in the first year than in subsequent years. For FY 2013, the BCA requires a “sequester”: an across-the-board cut to all non-exempt programs below the level that Congress appropriates for FY 2013. Between FY 2012 and FY 2013, non-defense discretionary spending is expected to be cut by about 9.1 percent. Congress will draft FY 2013 appropriations bills in calendar year 2012 under the caps set by Step 1 outlined above. Then, in January 2013, this across-the-board sequestration will go into effect, resulting in about a 9 percent cut to non-exempt, non-defense discretionary programs, including nearly all affordable housing and homelessness programs.

For subsequent years (FYs 2014 through 2021), appropriators will base their work from the very beginning on the lower discretionary caps. After FY 2013, discretionary spending will rise by approximately 2 percent per year for the next eight years —less than the projected rate of inflation.

Congress has the authority to reverse, suspend, or alter the BCA spending caps in any way it sees fit. This could happen before or immediately after the 2012 election. However, there is no way to know if Congress will decide to reverse or limit these cuts, or even if Congress will make cuts for low-income programs even worse. For some time to come, competition for limited federal discretionary resources is likely to be extreme. It will be important for Congress to prioritize these limited resources toward programs serving the most vulnerable Americans. Work to end homelessness should increasingly look to mandatory programs for low-income people, including Medicaid, TANF, SNAP, and SSI. Homeless assistance systems will be under increased pressure to get the best possible results from limited resources.