The Senate Budget Committee Lays Foundation for Reform of Federal Housing Programs

At this time there may still be uncertainty regarding who will occupy the White House next year, but there is no doubt about the state of the bureaucracy the President will oversee: It is a convoluted, overlapping mess. Under the leadership of Senator Mike Enzi (R-WY), the Senate Budget Committee (SBC) staff released a report highlighting duplicative federal housing programs throughout multiple departments and agencies providing $50 billion per year for housing assistance and putting taxpayers on the hook for guaranteeing $2 trillion in home loans. The report assesses the problems of waste and overlap among these programs and suggests a process for reform to consolidate and to ensure that taxpayer dollars are well-targeted.

At the last comprehensive inventory conducted by the Government Accountability Office (GAO) in 2012, there were 20 different governmental entities overseeing 160 housing assistance programs and activities. Among the duplication, GAO identified thirty-nine programs helped with buying, selling, or financing a home and twenty-five programs provided assistance for financing the construction of affordable rental housing or subsidizing rental payments for low-income households.

The labyrinthine system was gradually built out through legislative efforts since 1913 when the newly created federal income tax included a deduction for mortgage interest and property taxes. Then, of course, the Great Depression led to federal involvement in housing assistance. Over time, priorities shifted and new benefit programs were added with little effort to comprehensively review existing programs to see what worked and what did not.

The SBC report finds that “within the federal housing assistance system, no one program serves a clear majority of low-income recipients, with some of the poorest households not being served at all.” This is not to say there should be a one size fits all program, but we have to ask whether this overly complex system is the best way to target aid and ensure that taxpayer funds are being used wisely and efficiently. For example, the SBC report points out big overlaps in function and goals of housing programs run by the Department of Housing and Urban Development (HUD) and those run by the Department of Agriculture (USDA) with each administering loan guarantee and rental assistance programs. 

Even within HUD there are overlapping programs. The Department has three primary rental assistance programs that all serve very similar populations:

  • The Public Housing program, established in 1937 for low-income families, the elderly, and the disabled;

  • Project-Based Section 8 Housing, established in 1974 to support owners of multifamily housing providing subsidized rent; and

  • The Housing Choice Voucher program, also established in 1974, provides vouchers that are administered by local housing agencies to provide rental assistance for low-income families.

As the programs were established and shaped over time, political considerations often overrode policy and program performance considerations. Reports on dilapidated conditions of public housing projects raises serious questions about the service provided to beneficiaries of these programs.

The system needs to be assessed in a coherent fashion, but it is difficult to do so. There is a lack of transparency of basic budget information including administrative costs and the number of full-time employees working on a program. These are necessary data points to evaluate the effectiveness of any program. 

SBC recommends that several specific programs should be consolidated, such as the Housing Trust Fund and the HOME Investment Partnerships Program, two overlapping block grant programs.  Streamlining the system and merging overlapping programs would ease administration, reduce bureaucratic overhead, and save taxpayer dollars by reducing waste.

It isn’t just housing programs afflicted by duplication and lack of basic budget transparency. The problem exists throughout the government. An inventory of all federal programs would go a long way to help lawmakers and taxpayers identify overlapping efforts and gauge their effectiveness. Unfortunately, for ten years now, the federal bureaucracy has failed to comply with a statutory mandate to publish an inventory. Federal agencies need to perform better to meet this requirement and improve budget transparency. Congressional committees also need to do a better job of identifying and eliminating duplicative programs and services under their purview.