FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 13 September 2015

Federal Housing Assistance For Low-Income Households, And How It Has Changed Since 2000.

from the Congressional Budget Office

In 2014, the federal government provided about $50 billion in housing assistance specifically designated for low-income households. That assistance - which is made available both through spending programs and preferential tax treatment - increased by about 15 percent in real (inflation-adjusted) terms between 2000 and 2003. Since that time, such assistance has remained relatively stable at about $50 billion annually (measured in 2014 dollars), with the exception of a temporary boost, mostly in 2010 and 2011, associated with the American Recovery and Reinvestment Act of 2009 (ARRA).

Unlike some means-tested programs (such as the Supplemental Nutrition Assistance Program, or SNAP) that are intended to assist all eligible people who apply, means-tested housing assistance has not been made available to all applicants who are eligible. Currently, only about one-quarter of the eligible low-income population receives housing assistance through federal spending programs. Households that receive assistance are generally required to pay 30 percent of their income toward their housing expenses, a threshold widely described as affordable.

This CBO report discusses the ways in which the federal government provides housing assistance to low-income households, examines how
that assistance has changed since 2000, and provides information about the households that receive assistance. In addition, the report assesses policy options for altering that assistance. Some options would provide substantial budgetary savings over the 2016 - 2025 period considered in CBO's analysis and others would involve substantial costs.

What Housing Assistance Does the 
Federal Government Provide?

Three spending programs account for the majority of the assistance provided directly to low-income households:

  • The Housing Choice Voucher (HCV) program - with $18 billion in spending in 2014 - provides federally funded, portable vouchers that recipients use to help pay for housing they choose in the private market.
  • Project-based rental assistance (PBRA) - with
$12 billion in spending in 2014 - provides for federally contracted and subsidized rent in designated buildings that are privately owned and operated.
  • Public housing - at a cost of $7 billion in 2014 - provides for federally subsidized rent in buildings that are publicly owned and operated.

In addition, the federal government provided about $8 billion in 2014 for other housing programs. Most of that was in the form of grants to state and local governments.

One tax credit, the Low-Income Housing Tax Credit (LIHTC), accounts for most of the assistance provided indirectly to low-income households. It is available to developers of low-income housing and, according to an estimate by the staff of the Joint Committee on Taxation (JCT), accounted for $7 billion in tax expenditures in 2014. Tax expenditures resemble government spending programs in that they provide financial assistance to specific entities or groups of people or for designated activities.

The federal government provided much more support through the tax code, about $130 billion in 2014, for housing not targeted at low-income households - mostly through the tax deductions for mortgage interest payments and for property taxes. Although beyond the scope of this report, that and other types of assistance not focused on low-income households are described in the appendix.

How Has Federal Assistance for
 Low-Income Housing Changed?

In 2014, federal housing assistance for low-income households was 15 percent greater in real terms than in 2000. Most of that growth had occurred by 2003. Since then, support has consistently been about $50 billion annually (in 2014 dollars), although federal assistance was temporarily higher, mainly in 2010 and 2011, because of funds provided through ARRA. ARRA spending aside, discretionary spending on federal housing assistance declined in real terms by about 6 percent between 2011 and 2014. (Discretionary spending is decided upon annually by lawmakers in the appropriation process and constitutes about 90 percent of federal support for low-income housing.) That decline followed enactment of the Budget Control Act of 2011, which capped total nondefense discretionary spending.

Over time, the composition of federal assistance has changed as lawmakers have relied more on the private sector to provide low-income housing. Since 2000, measured in real terms, spending on the voucher program and project-based assistance has grown by about one-third, spending on public housing has declined by the same fraction, and tax expenditures for the LIHTC have increased.

Whom Do Federal Low-Income
 Housing Programs Assist?

The federal government's three main spending programs for low-income housing provide assistance to 4.8 million low-income households. Initial eligibility for federal housing programs is limited to households with no more than 50 percent of area median income (AMI), and roughly three-quarters of the assisted households have income of no more than 30 percent of AMI. The house-holds that receive assistance comprise 9.8 million people, or roughly 3 percent of the U.S. population.

Of those households, almost one-half are headed by people who are neither elderly (defined by the Department of Housing and Urban Development as age 62 or older) nor disabled - yet work is the largest source of income for only about half of households headed by such people.

Housing assistance, like many programs that provide support to low-income populations, provides some incentives that may support employment and others that may discourage employment. Recent studies find that the assistance reduces employment by about 5 percent and earnings (an indicator of hours worked) by about 10 percent.

Households that receive assistance are generally required to pay 30 percent of their income toward their housing expenses. In contrast, of the eligible population that does not receive housing assistance - roughly 14 million households - about six out of seven pay more than 30 percent of their income toward housing expenses. Well over half pay more than 50 percent of their income in rent.

How Could Policymakers Change 
Federal Low-Income Housing Assistance?

With the federal government facing ongoing fiscal challenges and families facing ongoing economic challenges, the Congress may wish to consider options to restructure programs and tax policies that provide housing assistance for low-income households. This report considers four sets of such options. Most of the options affect discretionary spending - the part of the federal budget that lawmakers control through annual appropriation acts. To achieve the budgetary effects estimated for those options, lawmakers would need to enact changes to housing laws and adjust appropriations accordingly. Two options affect tax credits: Lawmakers could achieve budgetary effects for those options solely by enacting the changes to tax law. (Estimates of budgetary effects of all options are expressed in nominal dollars and encompass the 10-year period from 2016 through 2025.)

The options that CBO considered include the following:

  • Changing the size or composition of the assisted population.
    • Reducing the number of HCVs by 10 percent starting in 2016 would save $18 billion over the next 10 years, and gradually eliminating all HCVs would save $118 billion, CBO estimates. Increasing the number of HCVs by 10 percent would cost $18 billion, and offering assistance to all of the currently eligible population would cost $410 billion.
    • Requiring tenants who are neither elderly nor disabled to work toward leaving assisted housing by participating in a self-sufficiency program would cost roughly $10 billion if the number of assisted households was held constant.
  • Modifying tenants' contributions to rent.
    • Increasing or decreasing the share of income that tenants contributed toward rent by 5 percentage points would save or cost $22 billion over the 10-year period, by CBO's estimates. Savings would result if tenants were required to pay 35 percent of their income toward rent; costs would result if tenants were required to pay 25 percent of their income toward rent.
  • Changing the resources available to the local public housing agencies (PHAs) that administer the programs.
    • Enhancing the ability of PHAs to borrow money from private sources - for example, by allowing them to commit future appropriations to repay those loans - could enable them to obtain capital for the improvement of public housing properties sooner. This option would not affect the federal budget, but whether funds would be forthcoming would depend on the private sector's willingness to make such loans.
    • Requiring the consolidation of PHAs to lower the costs of performing administrative tasks and decreasing funding for the administration of housing assistance could reduce federal spending. CBO does not have sufficient information to estimate the associated effect on the budget.
    • Fully funding PHAs' administrative responsibilities according to the formula amounts outlined in appropriation acts and federal regulations would cost $4 billion over the 10-year period compared with maintaining funding in real terms at the 2014 level, CBO estimates.
  • Changing the ways in which housing assistance is provided. 

    • Replacing PBRA contracts with HCVs might produce budgetary savings, but CBO does not have sufficient information to estimate the associated effect on the budget.
    • Providing money for the Housing Trust Fund established by the Housing and Economic Recovery Act of 2008 would lead to an increase in federal spending commensurate with the decision made by lawmakers.
    • Repealing the LIHTC would increase revenues by $42 billion from 2016 to 2025, according to an estimate by JCT.
    • Introducing a renter's tax credit for low-income households, designed to cost the same as the LIHTC, would reduce revenues by $42 billion from 2016 to 2025.

[read the entire document]

[Data Underlying Figures]

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, using Livefyre just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.

You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
A Short Note on a Connection Between Marginalist Economics and Folk Medicine
Run A High Pressure Economy? Janet Yellen Does Not Understand the Problem
News Blog
What We Read Today 28 October 2016
Ten Ways To Live A Happier Life According To Animals
21 October 2016: ECRI's WLI Growth Index Again Declines
Advance Estimate 3Q2016 GDP Quarter-over-Quarter Growth at 2.9 Percent.
Rail Week Ending 22 October 2016 Better Than The Previous Week
What Happens After The Islamic State Loses Mosul
Infographic Of The Day: The History Of Women's Ice Hockey In Canada
Early Headlines: Asia Stocks Mixed, Huge Antarctic Marine Park, Can Trump Get To 270?, US Workers Gaining, UK Inflation, France GDP, India Savings Lag And More
Why Amazon Gives So Many Perks To Prime Members
Where Workplace Trust Is Strongest
How A Lack Of Sleep Affects Your Brain - And Personality
How Accurate Are Final US Election Polls
What We Read Today 27 October 2016
Investing Blog
Technical Thoughts: Looking For The Rebounds
Gold That Pays Dividends
Opinion Blog
Global Debt Investors: The Silence Of The Lambs
A Hard Brexit And Reduced Migration Won't Benefit UK Workers
Precious Metals Blog
Inflation Surging As Platinum Signals Stock Market Decline
Live Markets
28Oct2016 Market Close: US Stock Markets Close Fractionally Lower After FBI Opens Probe Into Hillary's Emails Over Shadows Positive GDP Report, Indicators Fractionally Bearish
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

Crowdfunding ....



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved