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Why the White House-Congressional Debt Deal will Increase Homelessness

PLANNING WATCH LA

PLANNING WATCH - When the mainstream media and elected officials fail to draw connections between the macro-level policies they adopt (especially tax cuts for the wealthy and massive military budgets) and local trends, it is not easy to figure out these hidden relationships. 

But they are there, and in the case of the recent White House-Congressional deficit deal, the local consequences are there for those who care to look.  The plight of the homeless, including college students, like the above, will get worse.   While this is not a deliberate outcome of the recent deficit negotiations, it nevertheless makes an existing crisis, mass homelessness, even worse.  In fact, you need to go back a century to the 1929 crash to find a comparable homeless crisis

Then, like now, the main causes were economic, not the convenient scapegoats of drug addiction and mental illness.  According to LA-Fox 11’s history of homelessness in Los Angeles,  during the Great Depression (1929-1941) 25 percent of whites and 50 percent of blacks lost their jobs.  Since then, “Similar themes emerged throughout the subsequent decades — economic downturns, mass migrations, and a lack of affordable housing -- led to more and more homelessness.” 

To help readers make these connections, here is my guide to the links between the recent White House-Congressional deficit deal and the housing crisis. 

1)  Consumer advocate Ralph Nader explained how the deficit agreement increases a critical driver of the housing crisis, economic inequality, “Most of the cuts will slash the domestic programs that protect the health, safety, and economic well-being of the American people.  Cuts will also be made to the starved Internal Revenue Service (IRS) budget, further weaking its capacity to pursue super-rich tax cheats and giant corporate tax escapees… Biden also agreed to not restore any of Trump’s tax cuts on these same plutocrats and corporatists who refuse to pay for the undeclared wars of Empire from which they massively profit.”

Mr. Nader also identified the local fallout from this deal. “Back home schools crumble, existing public transit is dangerously antiquated and in need of repair, as are bridges, roads, clinics, ports, airports, public drinking water systems, and waste management facilities.  . . Funding to deal with land erosion, toxic water and air pollution is in short supply. The failure of Congress to provide support for desperately needed programs such as Head Start and other programs to reduce child hunger, homelessness and poverty involving 80 million people, either without health insurance or under-insured, is beyond shameful.”

2)  Is the housing crisis an exception to the appalling trends Ralph Nader identified?  The LA Times carefully explored this possibility in a recent in depth story, Will Congress deliver L.A. funding for the homelessness? Bass asks U.S. leaders for aid; not all agree.  The good news is that a small amount of Federal money is again flowing to LA for several homeless projects.  The bad news is that these funds are earmarks requested by Mayor Karen Bass through local members of Congress.  This is not a restoration of HUD public housing programs, which would cost $2.5 trillion over the next decade but limited one-year funding for specific local projects.  The Times other bad news is that this year’s earmark requests could be reduced by as much as 70 percent because: “The recently announced deal to allow the Federal government to continue to borrow money includes caps of spending for domestic programs, like the ones that would fund homelessness.” 

3)  In addition to the local impacts of unlimited military spending, such as the $115 billion so far devoted to weapons and aid for the Ukraine, cities will be hurt by the end of Federal Pandemic programs and inflation, which reduces domestic programs, including housing, by about 6 percent per year.

Other cutbacks will also increase economic inequality and price even more people out of housing.  These include the Federal Housing Administration (FHA), which lowered mortgage insurance premiums to counteract rising interest rates.  If these funds are not restored, the FHA’s shortfall will be $13 billion.  Other housing programs not likely to survive the deficit deal include $2 billion for Pandemic rent vouchers and $3 billion for emergency rental assistance.

4)  New work requirements to receive Supplemental Nutrition Assistance Program (SNAP) food stamps, Medicaid, and TANF (Temporary Assistance for Needy Families) will also force many recipients into homelessness.  According to CNN, of the 42,000,000 million people who receive food stamps, new work requirements will adversely affect 900,000 of them.  Of the 42,000,000 Medicaid recipients, up to 10,000,000 could potentially lose benefits.  TANF support for about 540,000 families, most of whom have children, is also in jeopardy.

5) Another group that will be harmed by the deficit deal are the 43,000,000 Americans with outstanding student loans.  They owe over $1 trillion, and their loan payments will resume in September 2023 after a three year Pandemic-related hiatus.  These payments will siphon money out of the pockets of working and middle class families, already suffering from inflation and a half-century of stagnant wages.  As for their older children, an increasing percentage of them will live in cars or gyms (photo below) in order to attend college.

Some of those who forced out of these programs will sink deeper into poverty and join the ranks of the already 600,000 unhoused people in the United States.  This is why the White House – Congressional deficit deal will increase the number of homeless, overcrowded, and rent-gouged people.

This guide should make it easier for readers to understand how Washington’s latest austerity budget impacts the nation’s housing crisis, including in Los Angeles.

(Dick Platkin is a retired Los Angeles city planner who analyzes local planning issues for CityWatchLA.  He is a board member of United Neighborhoods for Los Angeles (UN4LA).  Previous Planning Watch columns are available at the CityWatchLA archives.  Please send any questions to [email protected].)