Housing investments at risk as Build Back Better withers

The path forward for the critical housing investments Democrats sought to protect in the Build Back Better Act is getting murky, as uncertainty hangs over the party’s chances of passing its partisan package amid resistance from Sen. Joe Manchin (D-W.Va.).

Democrats garnered a wave of headlines last year after unveiling proposals for $300 billion in historic affordable housing investments seen by advocates as potentially transformative in combating the housing crisis, including boosting funding for rental assistance and public housing construction. 

But as intraparty disagreements arose over the size of the plan, an essential component of President Biden’s agenda, the price tag for housing investments began to fall sharply, just as in other areas of the far-reaching package. Funding set aside for housing was cut by almost half in the House-passed version of the climate and social spending plan last year. 

And it remains to be seen whether the same scope of housing investments will be in any other effort the party makes this year at a package passed via budget reconciliation, a complicated procedure that will allow Democrats to bypass a GOP filibuster in the evenly split Senate.

“I think that the realistic pathway for a budget resolution is something more narrow, and we have to start telling the truth about that,” Sen. Brian Schatz (D-Hawaii), the chairman of the Senate Appropriations housing subcommittee, told The Hill.

“I know nobody wants to be the bad guy and say ‘It ain’t happening,’ but if we’re going to do a reconciliation vehicle, it’s going to be skinny,” he said.

Pressed about potential talks on housing action through reconciliation, Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking, Housing and Urban Affairs Committee, said he and others are “continuing to push” for those investments but wouldn’t divulge further where they fit in the current state of play.

“We’re always trying to pass good legislation and that’s not changed, and we’ll see what happens,” Brown told The Hill on Wednesday, after expressing hesitancy in confirming “negotiations or discussions” happening around reconciliation.

“I’m not going to set it up so that there are negotiations and then we fall short and you can all write that — failed again. I’m not going to say that. So we’re continuing, we’re always trying to move the country forward,” Brown said.

The comments underscore the challenges Democrats face in setting another bar they could fail to meet, particularly in an election year where the party’s slim control of the House and Senate are up for grabs in a matter of months.

While there have been rumblings among Democrats of another run at a reconciliation package that can fetch the support of key moderate holdouts like Manchin or Sen. Kyrsten Sinema (D-Ariz.), those privy to discussions have sought to make clear that they are just that: talks.

Emerging from a meeting with Senate Majority Leader Charles Schumer (D-N.Y.) earlier this week, Manchin said any plan for a reconciliation package should be “about getting inflation under control, paying down this debt, getting a handle on what’s going on.”

That includes, Manchin said, measures aimed at changing the tax code to make “sure everyone pays their fair share,” such as party-backed proposals to change the corporate rate through budget reconciliation. Manchin added that half of revenue should be put toward deficit reduction, calling it the “only way you’re going to fight inflation.” 

But when asked about where previously proposed housing investments would fit into such a vehicle, Manchin told The Hill on Thursday that “there’s no formal talks.”

Schumer also described his and Manchin’s recent discussions as “preliminary” in remarks to reporters earlier this week and said they’re “going to continue to keep talking,” while also focusing on decades-high inflation rates.

“If you want to get rid of inflation, the only way to do it is to undo a lot of the Trump tax cuts and raise rates,” Schumer said.  

Advocates warn the stakes are too high for Democrats not to take significant action on housing through reconciliation. Not doing so would ignore a crisis they say is putting serious strain on American families as the gap widens between housing costs and wages amid supply shortages.

Sarah Saadian, senior vice president of public policy for the National Low Income Housing Coalition, called the proposed $150 billion in housing investments laid out in the $2.2 trillion version of Build Back Better that passed the House last fall a once-in-a-generation opportunity.

“I can’t imagine that we’ll have another opportunity like this for a generation, and it’ll be extremely disappointing if Democrats don’t use it to address the biggest crisis that is facing extremely low-income households, which is the extreme housing affordability crisis,” Saadian told The Hill.

According to a report from the Center on Budget Policy and Priorities (CBPP) updated in January, more than 10 million people in the United States rely on federal rental assistance to help cover housing costs. For every 10 low-income people, four “are homeless or pay over half their income for rent,” the group said, while adding “most don’t receive federal rental assistance due to limited funding.”

At the same time, the cost of buying a home has soared during the ongoing COVID-19 pandemic, and mortgage rates have also begun to rise as the Federal Reserve raises interest rates to address rising inflation. 

“Families need Congress to act now to help them save on skyrocketing housing costs,” Nikitra Bailey, senior vice president of public policy at the National Fair Housing Alliance, told The Hill. “Housing costs in our nation are out of control at this point, and the average family is now spending 33.8 percent of their monthly budget on housing costs.”

Though Democrats failed to meet party goals to pass the proposed housing investments last year, lawmakers were able to secure more than $65.6 billion in budget authority in appropriations bills for fiscal 2022 for the Department of Housing and Urban Development (HUD), up $5.32 billion from the previous year.

In a summary breaking down the funding, Democrats said more than half of that increase was “necessary to preserve rental assistance for the more than 5 million HUD-assisted, low-income households to meet market rate rent increases.” Additionally, the legislation offered $280 million for 32,800 housing vouchers, $1.5 billion for new affordable housing production via the HOME program, $4.8 billion for community and economic development and more than $1 billion for Native American community housing programs.

In an interview, Will Fischer, senior director for housing policy and research at the CBPP, said he thinks lawmakers could lean more into the annual appropriations process as a vehicle for “substantial” action on housing in certain areas this year, noting “bipartisan support in the past for expanding the housing voucher program.”

“I think it’ll be important that that be a priority for appropriators. But I would also think the economic package is another opportunity to do that as well,” he said, calling it “encouraging” that lawmakers included more than 30,000 additional vouchers in their latest appropriations bills.

Still, he said more action is needed.

“There’s a need for, certainly, hundreds of thousands of additional vouchers. So what happened in the appropriations bills last year was a step forward, but it’s not nearly enough,” Fischer added.

Rep. David Price (D-N.C.), the chairman of the House Appropriations housing subcommittee, also acknowledged the limitations negotiators have in securing the housing funding needed in annual appropriations bills, which he noted “are almost by definition incremental improvements.”

“Build Back Better envisions a $150 billion one-time boost for housing. That would be a good thing to have,” he told The Hill this week. “And if we don’t get it, it will probably influence the way we route our appropriations bills, but I’m not going to pretend that we could make up for it failing by just appropriating more.”

Jordain Carney, Mike Lillis and Emily Brooks contributed.