Expanding Housing/HUD FY 2022 Budget

WM Oversight: Expanding Housing Access to All Americans , July 14 2021

HBUD: HUD FY 2022 Budget, June 23, 2021 

President’s Budget: Increase the supply, quality, and affordability of rental housing. Extend key tax benefits for lower- and middle-income workers and families. Deliver nutrition security to America’s vulnerable families. 

The best housing and nutrition programs are an adequate income. We support the President’s proposal to make the American Rescue Plan Act provisions for a Child Tax Credit that is both refundable and more adequate, as we detailed in our comments earlier this month. 

We propose directing this credit through existing government income support programs, including Social Security Old Age, Survivors and Disability, Supplemental Security Assistance, Veteran’s Benefits, Temporary Disability and Unemployment Insurance. A major problem with our social welfare programs is the multiplicity of programs. 

Distributing CTC payments through existing income support programs ends the need to apply for multiple income streams and changes how the credit is perceived. It must be a part of regular income, not part of an end of the year bonus. 

Workers and paid participants in workforce development, recovery and remedial education programs will receive their CTC with payroll, either through a subtraction VAT (as described in the second attachment) or as an offset to the employer's quarterly income tax payments.

The CTC can be increased (and paid for) through higher subtraction VAT or income tax rates, as well as by decreasing funding for other aid programs and tax expenditures, including the mortgage interest deduction. The latter rewards upper middle class borrowers and lenders, rather than those who need the aid most. The President’s resolve to not increase taxes on income under $400,000 is a perilous resolve, especially if it gets in the way of directing money to those most in need.

The other essential element in removing families from poverty, as well as singles, is an increased minimum wage. The Minority’s proposal for a $10 per hour wage is acceptable, for now, as long as it is the first step (meaning with no phas- in) as part of a process to strengthen wages on a track to $18 per hour with a shorter work-week. Workers have not shared in compensation for higher productivity. The best way to turn this around is to reward them for working smarter by cutting the work week.

Some populations, such as the aged, survivors and the disabled who cannot work will still require public programs to provide both housing and rent support. Benefit levels for these programs must be increased. As I state in the appendix, current benefits are below what is required for 80% of households. When the minimum wage is increased, benefits must be recalculated. 

In the interim, we need a Cost of Living Increase - not at the end of the year, but as a supplemental appropriation. Without such aid, many of us will have to chose between housing and food. 

Higher benefits also mean that landlords will receive higher rents, which is necessary post-pandemic. Things are tough all over, especially for housing providers.

Attachment three addresses housing discrimination, which is a fact of life in America, even fifty years after the Fair Housing Act was passed. Efforts must be redoubled and penalties increased. Fighting discrimination civilly has not worked well. Criminal penalties are needed. I am interested to see who opposes such a thing. I would only ask them one thing. WHY?

President’s Budget: Support workforce development; provide four additional years of free education. Make historic investments in education. 

The specifics of our proposals in this area are included in the President’s Budget attachment and our tax reform attachment. These programs should compensate for the opportunity costs for participation at the minimum wage.

Local housing agencies will still be necessary to guide and provide funding for vulnerable renters with deficient life skills. Remedial education programs, which are addressed below and in the President’s Budget attachment are also an avenue for such training and assistance. Case management would be handled by training providers, who would arrange for housing life skill training. 

Training should include the need to pay rent on time, even during a moratorium. The blanket moratorium has been ill-used by many households to fund spending on unmet needs. They now face eviction because the money is gone.

Veterans should be specifically targeted for workforce development programs as well.

President's Budget: Fulfill the sacred obligation to our veterans. 

The mental health and housing needs of veterans, both recent and lingering, are endemic. My great-grandmother’s second husband, Frank Squibb, was a World War One veteran who suffered from PTSD (as we now know it) and died young. I do not have all the details, but I assume alcohol was also involved. For whatever reason, he was disowned by the family and I write this testimony in subsidized housing rather than a family estate. I know many recent veterans and I assure you that we have learned little in the century since then.

This is an area where coordination between HUD, DVA and DoD is essential. This help must go beyond management and computer systems and include the human element of soldiers, veterans using services and those who need services can interact on a less formal, but not unprogrammed basis. 

HUD, the DVA, and DoD must both actively facilitate this program and join state and local governments in reaching out to those who suffer, from active duty soldiers to veterans both receiving and in need of services. 

For those mentally ill or addicted veterans who do not trust the system, less restrictive systems should be developed - including providing camping supplies and a place to camp and a more permissive attitude to active drinking and drug use until help is sought. Such systems do not encourage use. No addict needs encouragement. They build the trust that makes recovery possible.

This is a project that can start small and, if successful, scale up quickly. At present, it takes courage more than money, especially the courage for bureaucracy to try solutions that are outside of the box. Some amount of money would be useful to start the ball rolling, although there are likely excess supplies in Materiel Command inventories to provide necessary equipment, including clean needles. An amount in the tens of millions, which is pocket change, is all that is needed.

President's Budget: Build and retrofit buildings across the country for energy efficiency and expanded housing options. 

Partnership between IRS, HUD, DOE and EPA will increase resources for local housing agencies and approved building contractors. There are many contractors who are less than honest, so a program to pre-screen them is necessary.

A starting point in creating such a list is to convert public housing and offer rental housing assistance in planning and installing energy efficiency retrofits. A cheap and easy way to help offset the carbon emissions and better manage stormwater is planting roofs with grass, as well as any roof decks in covered highways described in our Budget Proposals (but not attached due to space restrictions.

Smart Growth must also be encouraged in urban planning.

Responding to the upcoming depression 

Attachment three includes the experience of my family with the 2008 recession and its effect on our housing (which was purchased through federal low income housing programs). When things got tough, the support that got us into housing did not help us keep it.

Attachment four details why we are headed for a second Depression in a bit more than two decades. A hint, nothing has changed, there was no accountability and houses which were lost turned into single-family rentals whose mortgages have been securitized. 

In 2009, home values plummeted. Even borrowers (such as my family) who did everything right (except buying at the top of the market), found themselves unable to sell our homes. In my family’s case the Federal Reserve or the Virginia Housing Development Agency marked these properties to market, what can only be called an Economic Depression would not have occured.  

Why use the term depression rather than recession? Because recessions are a slowing of economic growth. When real estate, especially housing values, decline below their financing, the entire economy is depressed in a way that simply restoring output will not cure.

The Dodd-Frank Act provides for liquidity when crashes, such as the upcoming disaster, occur. However, neither the law nor the Federal Reserve provide any relief to the renters, homeowners and credit card customers whose debts are being purchased by the Federal Reserve and remarketed. 

When the Fed marks bonds to market, M3 is reduced. The money vanishes in the same way it was created, with a keystroke. This also deflates the financial markets. Experience has shown that simply throwing money out of the window of the Central Banks did nothing to improve the economy. Forgiving debt would have.

Let us not repeat (or rather continue to repeat) the bad practices that left the economy in the doldrums. During the pandemic, the Federal Reserve has purchased bad paper, but without benefit to those whose debts are held in those bonds.

This time around, credit card balances and back rent should be forgiven when the Federal Reserve buys the bonds that hold the debt. Loans could also be written down, which would stop bondholders from benefiting from issuing bonds that should never have been issued in the first place. Renters of both commercial and residential property should be offered the chance to purchase their locations and homes, with assistance from Government Sponsored Enterprises, with their paper replacing the debt paper that has been securitized in Exchange Traded Funds.

ETFs may take a hit, but what was falsely sold as AAA paper would actually become what was sold. Bad landlords, and Glantz demonstrates that Mr. Mnuchin and Mr. Ross truly are bad landlords, degrade properties so that the bonds that were issued for them to cash out are nowhere near the value at issue.

In 2009, the United States aided and abetted those who created the crisis. We are currently repeating the mistake. When the inevitable crisis occurs again, doing the right thing will also be the right medicine for the economy.

I mention this issue here so that and General Provisions for this industry include these actions and because part of any bailout will require appropriated funds. In 2008, the bill passed with the promise that borrowers would be helped. Mr. Paulson lied. Let us act truthfully this time around. 

Attachment: FY2022 President's Budget

Attachment: Tax Reform

Attachment: Federal Housing Assistance Programs

Attachment: Depression 2021