More Grim News About The Affordable Housing Crunch

September 26, 2010

Shortly before the Census Bureau issued its new poverty/income report, the Bureau and the U.S. Department of Housing and Urban Development released figures from their latest housing survey. Bad news about the affordability of rental housing, especially for households below the federal poverty line.

In 2009, about 18.6 million renter households paid 30% or more of their current income for rent,* i.e., at or above the HUD cutoff for affordability. That’s 52.6% of all renter households. Close to a third paid at least half their current income for rent, aptly characterized by HUD as a “severe rent burden.”

As we’d expect, housing costs were a greater challenge for low-income households. About 73% of them — 6.8 million households — paid at least 30% of their current income for rent. Rent consumed half or more of all current income for 5.6 million households — just under 60%.

The Center on Budget and Policy Priorities reports that the severe rent burden figure for low-income households represents a 17% increase since 2007 — 800,000 more households in just two years. Compared to 2003, the increase is a whopping 45% or 1.7 million more households.

These figures reflect at least four converging factors.

One is the continuing shrinkage of affordable housing stock. Earlier this year, the National Low Income Housing Coalition reported that 6.3% of affordable units had been lost between 2001 and 2007.

Shrinkage in the District of Columbia has been more dramatic — more than a third of low-cost rental units lost during about the same time period.

Two other factors are both impacts of the recession. One, of course, is the prodigious number of jobs losses, which have left many households with less or no current income. What might have been affordable for them a couple of years ago now leaves them without enough ready cash for basic needs.

The other, related impact is foreclosures, which have increased competition for the limited number of moderate and low-cost rental units available. CBPP reports a nationwide 11.3% increase in rental costs since 2006. The old law of supply and demand at work.

A fourth major factor is government housing policies. At the federal level, rental assistance for low-income families has failed to keep pace with rising needs. Last year, CBPP reported that total funding for low-income housing programs in 2008 was $2 billion (5%) less than in 2004.

For 2009, Congress appropriated several hundred million dollars less for housing vouchers than agencies would have been eligible for if allocations been based on use and costs — this notwithstanding enormous waiting lists and rising rents.

CBPP estimates that funding for the current fiscal year is just about enough to renew all the vouchers families were using in 2009. The same is true for the President’s proposed Fiscal Year 2011 budget, though it would also provide funding for about 10,000 new vouchers for people with disabilities and families who are homeless or at risk of homelessness.

So we’re looking here at about 2.2 million vouchers, assuming (as we shouldn’t) that Congress goes along. That would leave an enormous gap between families in need of housing assistance and the help the federal government will provide.

Here in the District, the waiting list for affordable housing has reportedly grown to more than 26,000 households. The Fiscal Year 2011 budget will provide local funding for about 80 more units. Not a penny more for the tenant-based vouchers that allow households to live in apartments with market-based rents.

Even in better times, the District never came close to the targets or funding levels recommended by the Comprehensive Housing Task Force — a diverse group of experts commissioned to produce a long-range housing strategy for “an inclusive city.”

So the Census/HUD figures aren’t just a recession-caused blip. They’re the cumulative results of long-standing failures to give affordable housing the priority it deserves.

* The survey figures include households that reported paying 100% or more of current income for rent. The spreadsheets note that these may reflect a temporary situation, living off savings or a response error. I have followed CBPP in including them in my calculations.

Will Deficit Reduction Trump Investments In Economic Recovery?

May 19, 2010

It seems that conservatives have scored a big win. They’ve got the federal deficit in the bull’s eye. The debt we’re supposedly leaving to our children has become the unimpeachable reason for curtailing, if not altogether ditching, further investments to cushion the impacts of this prolonged recession and jump-start growth in the labor market.

Consider that Congress still hasn’t extended the expanded unemployment benefits and COBRA subsidies created by the economic recovery act beyond early June.

Nor has it acted on the looming crises resulting from the shortfalls in state and local budgets. The House is scheduled to vote on an extension of the enhanced federal match for state Medicaid programs tomorrow, but the outcome is uncertain because Members are queasy about the cost. ThisĀ  is also the case with key provisions in Congressman George Miller’s Local Jobs for America bill.

The Center on Budget and Policy Priorities reports that at least 45 states and the District of Columbia have cut back spending in core areas like public health, elementary and secondary education and services for elderly and disabled people.

Virtually all these will cause further job losses–not only in the programs themselves, but in businesses that supply the programs with goods and services. Thirty states and the District have also instituted hiring freezes and/or layoffs in their own workforces.

All these and a host of other cuts will feed a vicious cycle. More unemployed people exerting pressures on the safety net, spending less and, of course, paying less in taxes. Perhaps, in fact, eligible for more in refundable tax credits than they pay into the states’ coffers. Retailers buying less from their suppliers, and all of them paying less in taxes too.

But, we’re told, the federal government has to address the rising deficit and related level of federal debt. No doubt about that. If we just keep on keepin’ on, spending will outpace revenues, even after the economy fully recovers.

So we’ll borrow more. The Congressional Budget Office says that the ratio of federal debt to the nation’s gross domestic product (the total value of all goods and services produced) will rise from somewhat below 60% during the coming decade to 79% by 2035. Looking ahead to 2050, CBPP projects a debt level in excess of 300% of GDP.

The consensus view is that sustained high levels of government borrowing drive up inflation and interest rates, making borrowing more expensive for individuals and businesses, as well as the government itself. And revenues that could otherwise be spent on domestic investments must be diverted to paying interest on the debt.

Economic growth slows. And ultimately, some say, investors will lose confidence and shift their funds out of investments based on the U.S. dollar. Today Greece. Tomorrow America.

But that tomorrow is a hypothetical long way off. Right now, we’ve got a jobs crisis and a lot of collateral damage. So it’s very disturbing to see concerns about the long-term, structural deficit override concerns about the here and now.

In February, Lawrence Mishel, president of the left-leaning Economic Policy Institute, and David Walker, CEO of the fiscally-conservative Peterson Foundation, co-authored an answer to the President’s quandary on the deficit. Address jobs now and the deficit later, they said.

CBPP seems to come from the same place. It recommends that Congress allow the 2001/3 tax cuts for high-income filers to expire and, in the short term, use the revenues generated to fund policies that will stimulate economic growth and job creation.

But any proposed tax increases, even those that would affect only the top 2% of the wealthiest households, stir up a maelstrom of opposition–as, in fact, has the President’s entire Fiscal Year 2011 budget, notwithstanding its selective freeze on discretionary domestic spending.

Perhaps the President’s new fiscal commission will come up with a balanced plan to control the long-term deficit. But the need for that shouldn’t be used to block spending needed now to keep the devastating impacts of this recession from getting worse.

WIC Works

April 9, 2009

Last Thursday, Children’s HealthWatch hosted a policy briefing on WIC, aka the Special Supplemental Nutrition Program for Women Infants and Children. What a ray of sunshine in the midst of so much gloomy news! Because here’s a cost-effective program that’s been shown to work.

WIC provides coupons for food purchases tailored to the individual nutrition needs of eligible pregnant women and children up to the age of five. Eligibility here means at or below 185% of the federal poverty level, plus a determination of “nutrition risk.” Many conditions qualify as nutrition risks, including being underweight, overweight, anemic or just plain “food insecure,” i.e., not having ongoing access to enough of the right kinds of foods for a healthy life.

WIC also provides various kinds of nutrition education and, very importantly, links to local health services. It helps ensure prenatal care, childhood immunizations and regular checkups. So it’s a linchpin among our safety net programs.

And a cost-saver. According to a report by the Partnership for America’s Economic Success, every $1.00 spent on WIC saves as much as $3.13 in Medicaid costs, plus significant other costs linked to the impacts of food insecurity.

WIC has a 34-year track record of improving the health, growth and development of poor children in their critical early years. And it will soon–in some states already does–offer a much improved food package. Many more choices, including (finally!) fruits and vegetables, whole grain and soy products and other foods that reflect up-to-date research on healthy eating.

WIC is up for reauthorization this year. That’s what occasioned the briefing. Panelists had some recommendations for additional improvements. Most of these would preserve and strengthen the program’s capacity to do what it’s already authorized to do.

But there’s also a need to require some further improvements in the food package–notably an increase in the allotment for fruits and vegetables. USDA doesn’t need authorization to do this. It needs a mandate that will supersede an arbitrary cost-control decision made during the last Administration.

A bigger issue is funding because, like most federal programs, WIC depends on annual appropriations. The Obama administration has proposed a $1 billion per year increase for child nutrition programs, including WIC. This, the budget says, would enable WIC to serve more than 9.8 million mothers and young children. That’s about 1.1 million more than the program served in 2008.

Would the increase be enough to serve the growing number of pregnant women and young children who are at risk of malnutrition due to the depression? Would it enable states to offer a wide variety of healthful, culturally-appropriate food choices, as federal regulations now permit? That’s hard to say.

But what’s clear is that investments in WIC pay off in healthier children and, ultimately, healthier, more productive adults. Among other things, as one briefing panelist said, WIC is “the best obesity prevention program we have.”

What’s also clear is that poor children can’t wait until our economy improves or until we get better control of the projected budget deficit. The first three years of life are the most critical period for brain development. That’s when the neural connections related to hearing, vision and language are made. So we can’t decide to save money now and save at-risk children later.

Something for Congress to bear in mind as it looks for ways to trim spending.