HUD Likely to Lose Funding in Debt Ceiling Deal

12 member super committee to cut $1.5 trillion

What Is Driving the Large Projected Deficits?HUD’s future funding levels will likely face cuts after President Barack Obama signed the Budget Control Act of 2011 into law on Aug. 2, establishing discretionary spending limits for each of the next 10 fiscal years. The act, part of a bipartisan deal to raise the federal debt ceiling, is expected to reduce the federal deficit by $917 billion over the decade.

According to the Center on Budget and Policy Priorities, the debt limit deal calls for close to $1 trillion in cuts in discretionary programs over the next decade and would impose automatic, across-the-board spending cuts in many programs if Congress fails to enact an additional $1.2 trillion in deficit-reduction measures by January 15, 2012.

Those across-the-board cuts would take effect in January 2013, a year later than many people have mistakenly believed, and would represent approximately a 9 percent annual cut in affected non-defense programs, along with roughly a 9 percent cut in defense programs. Reports that the percentage cut would be significantly higher in defense than in affected non-defense programs also are mistaken.

All of the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) low-income housing programs are on the discretionary side of the federal budget, which is likely to result in large cuts to their programs across the board for low-income housing, according to the National Low Income Housing Coalition (NLICH).

The House’s T-HUD subcommittee allocation, referred to as the 302b allocation, was 36% below the President’s FY12 request and 14% below the total FY11 appropriation, according to NLIHC. The discretionary spending caps in the deficit deal for FY12 are expected to result in significant further cuts compared to FY11 levels.

The new law also creates a “super committee” of 12 members of Congress, equally divided between majority and minority parties, which is tasked with reducing the federal deficit by an additional $1.5 trillion over the next ten fiscal years, with a series of timelines and dollar requirements, which, if not met, would set in motion a series of corresponding triggers that would automatically cut the federal budget further.

Protected from cuts in the current agreement are “entitlement” programs,” which spares several programs relevant to affordable housing and homelessness from cuts, such as Social Security, Medicaid, Children’s Health Insurance program, SNAP (food stamps), child nutrition programs, Supplemental Security Income, refundable tax credits such as the Earned Income Tax Credit, veterans’ benefits, and Temporary Assistance for Needy Families (TANF), according to NLIHC.

Click here to read the Memo to Members from the National Low Income Housing Coalition (NLIHC).

And click here to read an update from the Center on Budget and Policy Priorities