Federal Housing Budget Trends

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Federal Housing Budget Trends

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1. 1 Federal Housing Budget Trends Jeffrey Lubell Center for Housing Policy April 25, 2006

2. 2 Federal Spending vs. Revenues as a Percent of GDP (FY 1980-2005)

3. 3 Tax Cuts Cost More Than Most Agency Budgets (’06 estimates) This chart compares the size of the tax cuts to the cost of other parts of the federal government. It shows that by 2010, when the tax cuts in 2001 and 2010 will be fully in effect, the annual cost of the tax cut just for the top one percent of U.S. households will equal everything the federal government spends on education at elementary, secondary, and post-secondary levels combined, and be about eight times greater than everything the federal government spends on environmental protection. Furthermore, by 2010, the annual cost of the entire tax cut (for households at all income levels) will equal everything the federal government spends on all of the following program areas combined: housing and urban development, food assistance, national parks, environmental protection, transportation, veterans’ programs, agriculture, the State Department, and the Department of Homeland Security.This chart compares the size of the tax cuts to the cost of other parts of the federal government. It shows that by 2010, when the tax cuts in 2001 and 2010 will be fully in effect, the annual cost of the tax cut just for the top one percent of U.S. households will equal everything the federal government spends on education at elementary, secondary, and post-secondary levels combined, and be about eight times greater than everything the federal government spends on environmental protection. Furthermore, by 2010, the annual cost of the entire tax cut (for households at all income levels) will equal everything the federal government spends on all of the following program areas combined: housing and urban development, food assistance, national parks, environmental protection, transportation, veterans’ programs, agriculture, the State Department, and the Department of Homeland Security.

4. 4 Supporters of large cuts in domestic discretionary programs claim that this part of the budget bears a substantial share of the responsibility for growing budget deficits. In fact, domestic discretionary funding (outside of homeland security) has now fallen as a share of the economy below its 2001 level. Under the President’s budget proposals, by 2011, funding for domestic discretionary programs would be at its lowest level as a share of the economy since 1962 (the earliest date for which these calculations exist).Supporters of large cuts in domestic discretionary programs claim that this part of the budget bears a substantial share of the responsibility for growing budget deficits. In fact, domestic discretionary funding (outside of homeland security) has now fallen as a share of the economy below its 2001 level. Under the President’s budget proposals, by 2011, funding for domestic discretionary programs would be at its lowest level as a share of the economy since 1962 (the earliest date for which these calculations exist).

5. 5 The Administration’s 2007 budget would reduce funding for domestic discretionary (i.e., non-entitlement) programs in each of the next five years, compared to the existing 2006 funding levels adjusted for inflation.  The reductions would grow from $16 billion (an average of 4 percent) in 2007 to $57 billion (an average of 13 percent) in 2011. Note: these calculations are based on data from the Office of Management and Budget and reflect cuts below OMB’s “baseline” (that is, the 2006 funding levels adjusted for inflation).The Administration’s 2007 budget would reduce funding for domestic discretionary (i.e., non-entitlement) programs in each of the next five years, compared to the existing 2006 funding levels adjusted for inflation.  The reductions would grow from $16 billion (an average of 4 percent) in 2007 to $57 billion (an average of 13 percent) in 2011. Note: these calculations are based on data from the Office of Management and Budget and reflect cuts below OMB’s “baseline” (that is, the 2006 funding levels adjusted for inflation).

6. 6 By 2011, these cuts would reduce domestic discretionary spending in every broad program area except the science, space, and technology category. Virtually all other areas, including education, the environment, medical care for veterans, medical research, child care, and low-income housing, to name a few, would be cut significantly. By 2011, these cuts would reduce domestic discretionary spending in every broad program area except the science, space, and technology category. Virtually all other areas, including education, the environment, medical care for veterans, medical research, child care, and low-income housing, to name a few, would be cut significantly.

7. 7 HUD FUNDING DECLINING SINCE 2002 HUD Gross and Net Discretionary Budget Authority, 2000-2007 (2006 dollars)

8. 8 FY 2007 Budget (millions)

9. 9 About 100,000 Vouchers Lost Since April 2004 Decline of 64,000 4/04 – 9/05, at same time as TP increase of about 40,000 for these agencies.Decline of 64,000 4/04 – 9/05, at same time as TP increase of about 40,000 for these agencies.

10. 10 Implications for Cities/States Proposed cuts in CDBG would have immediate impact Administration’s budget projects deeper cuts in HUD budget in future Proposal to block-grant housing vouchers could pave way for long-term cuts, similar to in CDBG States/cities need to improve subsidy retention strategies and look for other sources of revenue

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