As posted here on the National Low Income Housing Coalition website
February 15, 2013
St. Valentine’s Day, February 14, was packed with Congressional activity on sequestration, but a solution has yet to emerge. Members from both sides of the aisle were eager to critique what the sequestration portends.
The Administration is required to implement sequestration, across-the-board cuts to discretionary spending, on March 1 (see Memo, 2/1). These indiscriminate cuts would reduce HUD and USDA housing programs by 5.1%, according to the Center for Budget and Policy Priorities (see Memo, 2/8).
Nonetheless, both chambers took their scheduled President’s Day break. The Senate is due back on February 25 and the House on February 26, leaving few legislative days left to break the impasse.
“Impact of Sequestration” was the title of the first hearing on in the 113th Congress for the Senate Committee on Appropriations. It was also the first hearing with the new Committee Chair, Senator Barbara Mikulski (D-MD). Nearly all members of the Committee attended the hearing.
HUD Secretary Shaun Donovan testified that the sequester would affect hundreds of thousands of Americans who benefit from HUD programs. “Should sequestration go into effect on March 1,” said Secretary Donovan, “cuts would be deeply destructive.”
Secretary Donovan cited specific impacts of the sequester, including that 125,000 households would lose their housing choice vouchers, over half of which include at least one member who is elderly or who has a disability. He said that another 100,000 formerly homeless people, the majority of whom are people with disabilities, would lose their housing or shelter and be back on the streets, and that 7,300 households served by the Housing Opportunities for Persons with AIDS Program (HOPWA) would lose assistance and be at risk of homelessness. Public housing agencies would be forced to defer maintenance and repairs of deteriorating units and add to the $26 billion backlog of public housing capital repairs.
Additionally, 3,000 of the most vulnerable children would be less safe if healthy homes and lead hazard control funds were cut. Seventy-five thousand fewer households would receive foreclosure or pre-purchase housing counseling. A cut to the Community Development Block Grant would result in a loss of leveraged funds, causing loss of tens of thousands of jobs.
Super Storm Sandy recovery would also be slowed by cuts of $3 billion from the supplemental appropriations package just passed by Congress. This would eliminate assistance for 10,000 homes and small businesses in the affected region.
The sequester would also halt the housing market “at a critical recovery point,” said the Secretary. He said that HUD’s ability to support the recovery would be severely hampered because of staff furloughs that would affect department operations, including administration of Federal Housing Administration (FHA) loans.
When fielding questions from committee members, Secretary Donovan said that because “housing has become one of the leading factors that is driving our economy,” the ripple effect of housing cuts will affect the jobs of bricklayers, plumbers, carpenters, window manufacturers, and others. Chair Mikulski said that she understood that HUD cuts would affect new housing starts, rehabilitation of existing housing, and modernization of housing, impacting the jobs of people “from the lumber yard” to those employed at large construction companies.
Secretary Donovan said the FHA is central to the housing and economic recovery and that currently almost of half of homebuyers use an FHA loan to purchase a house. FHA is responsible for 25% of multifamily construction and even a hiring freeze or furlough would cause a $3 billion loss in financing that would feed the ripple effect of job loss.
Daniel Werfel of the Office of Management and Budget testified that the Administration believes that “sequestration is bad policy,” and that Congress should pass a bipartisan deficit reduction bill to avert sequestration. Mr. Werfel said that the cuts would affect “middle-class families, seniors and the most vulnerable,” and that this is “not the way to address our collective goals of deficit reduction.” Mr. Werfel said that sequestration would result in fewer teachers; less funding for children with disabilities in schools; fewer mental health programs; fewer nutrition programs; fewer food, air, and water inspections; less secure borders; less cyber security and an increase in crime on streets. The Administration is planning for the sequester, Mr. Werfel said, but there is “no amount of planning that can avoid these impacts.”
Department of Education Secretary Arne Duncan, Department of Homeland Security Secretary Janet Napolitano, and Department of Defense Deputy Secretary Ashton Carter also testified on the impacts that the sequester would have on the operations of their departments, and on all Americans.
Each committee member who spoke denounced the sequester, calling it “bad policy,” a “blunt tool,” or “dumb.” Senators Mikulski, Tom Harkin (D-IA), Jeff Merkley (D-OR), Patty Murray (D-WA), Jack Reed (D-RI), Jean Shaheen (D-NH), and Tom Udall (D-NM) all raised the impacts of the sequester on housing or homelessness during the question period.
Senator Murray entered a letter into the record that urges Congress to protect non-defense discretionary (NDD) funded programs (see Memo, 2/8). The letter, signed by 3,200 groups, appeared in a full-page ad in Politico on February 14. NLIHC joined these groups in urging Members to only implement “deficit reduction that does not include further cuts to discretionary programs.”
Also on February 14, Senate Democrats released the sequestration replacement plan they developed over the last several weeks. The plan would replace the $85 billion sequester and $25 billion in additional cuts with a $110 billion package evenly split between raising revenue and targeted spending reductions. Half of the spending reductions would come from defense spending and half would come from farm subsidies. Revenues would come from a tax increase on households earning from $1 million to $2 million annually, an oil tax, and from eliminating certain corporate tax deductions. Senate Majority Leader Harry Reid (D-NV) plans to bring the bill to the Senate floor the week of February 25.
Earlier on the same day, Majority Leader Reid met with House Speaker John Boehner (R-OH), who asked that the Senate a sequestration bill that the House could consider. Speaker Boehner added a new Republican criterion for such a bill, saying that in addition to reaching the bipartisan deficit reduction goals, it would have to balance the federal budget in ten years for the House to consider the bill.
Also on February 14, Representative Chris Van Hollen (D-MD) introduced a $120 billion sequester replacement bill, H.R. 699, in the House that is consistent with the Senate proposal.
In total, eight bills to modify or replace the sequester or address spending in relation to the federal deficit were introduced in the House or the Senate during the week of February 11.
There do not seem to be a sufficient number of legislative days remaining to stop the sequester, and most Congress watchers expect it to take effect on March 1, even while efforts to replace it continue. The continuing resolution (CR) that is keeping the federal government operating expires 0n March 27. Congress must agree on FY13 spending levels by that date in order to avert a government shutdown. Congress may try to include an agreement on replacing the sequester into the legislation that provides funding for federal agencies for the rest of FY13.
