Debt Limit Deal Raises Importance of Advocacy for Housing Programs

Housing programs will be impacted by a deal to raise the debt limit, but your advocacy could help lessen the negative impact to HUD.

Over the weekend, Congressional leadership and the White House announced that they had reached an agreement in principle to raise the debt ceiling until 2025 in exchange for a combination of spending cuts, COVID-era funding rescissions, and policy changes. It is expected to receive bipartisan support.

• The House approved the bill on Wednesday, May 31 by robust bipartisan vote of 314-117.
• The Senate is expected to take up the legislation on Thursday, June 1. The bill is expected to be approved without amendment and sent to the President for his signature in advance of the estimated default date of Monday, June 5.

The “Fiscal Responsibility Act of 2023” sets spending caps for FY 2024 and FY 2025 and makes unenforceable recommendations on limits through FY 2029. The spending cap for FY 2024 essentially freezes current spending levels, using a combination of lowered budget authority and savings from COVID-era spending rescissions. Spending in FY 2025 will only increase by 1%.

The legislation includes an automatic 1% across the board spending cut if lawmakers fail to pass all 12 appropriations bills in FY 2024 and FY 2025. This cut goes into effect on January 1, 2025 and January 1, 2026 if a continuing resolution is in place on those dates.

Either scenario is likely to present significant challenges to the HUD budget next year. Recent estimates suggest that HUD may need an additional $13 billion in funding just to maintain current service levels, due to a combination of factors such as rent inflation and decreases in revenue from the Federal Housing Administration (FHA). Similar challenges are likely in FY 2025.
Also included in the deal are a number of rescissions of COVID spending, including some HUD funding. The legislation rescinds CARES Act funding from Tenant-Based Rental Assistance programs, native programs, and 202/811. These programs are unlikely to have significant amounts of unobligated spending. It also pulls back funding from fair housing in the American Rescue Plan.

The bill makes changes to work requirements for the Supplemental Nutrition Assistant Program (SNAP) and the Temporary Assistance for Needy Families (TANF) program, but for the first time it exempts those experiencing homelessness and youth aging out of the foster care program up to age 24.

The debt limit deal has the potential to do serious harm to HUD programs and those who rely upon them, but it is not guaranteed. Appropriators will have significant power over how these cuts are applied- NAHRO will lead the fight to ensure that housing programs are preserved and your voice will be critical to this conversation.