Biden Gets Mixed Response to Affordable Housing Stimulus Plan
WASHINGTON — A Biden administration plan to increase affordable housing drew sharp warnings from Republicans about adding to the U.S. budget deficit during a congressional hearing Wednesday.
Meanwhile, Democrats said the $213 billion plan for affordable housing more equitably distributes wealth. They largely disagreed it would overwhelm the economy with debt.
Housing is only one component of President Joe Biden’s $2.3 trillion stimulus plan, which emphasizes infrastructure to propel economic development.
“Housing must be a major component of any infrastructure package,” said Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee.
Other parts of Biden’s plan include $70 billion for public housing, $45 billion for a national housing trust fund to leverage private sector investment, $10 billion for targeted rental assistance and $5 billion for fair housing enforcement.
“Here’s the truth: We all will do better when we all do well,” Biden said when he introduced his American Jobs Plan last month in Pittsburgh.
He said the COVID-19 pandemic revealed longstanding inequalities that could be addressed through his plan.
“It’s time to build our economy from the bottom up and from the middle up, not the top down,” Biden said.
Housing shortages have been exacerbated in the past year by record low mortgage rates and the pandemic, which compelled some urban residents to sell their smaller homes for bigger ones in the suburbs. As prices rise amid brisk sales, low and middle-income persons are priced out of the market.
Republicans and their witnesses at the hearing Wednesday said Biden’s plan would create short-term solutions but potentially devastating long-term consequences.
“It’s a liberal wish list,” said Rep. Patrick McHenry, R-N.C.
Brian Reidl, senior fellow at the conservative public policy foundation Manhattan Institute for Policy Research, said Biden’s plan could triple the national budget deficit, forcing the government to raise taxes to pay off the debt.
The current deficit stands at $1.7 trillion. It exceeds the federal budget, which is proposed at $1.52 trillion for fiscal 2022.
The spiral of a rising deficit and higher taxes could depress the national economy for generations, Reidl said.
“Washington should focus on paying for our current escalating commitments before undertaking the most expensive non-emergency spending bill in half a century,” Reidl said.
He agreed infrastructure spending that includes housing could be a good idea to stimulate the economy but added, “A better infrastructure package could be a lot leaner.”
If interest rates rise above 4%, “simple math shows that combining rising interest rates with a debt approaching 200 or 300% of GDP risks a catastrophic debt crisis,” Reidl said in his testimony.
Democrats and their witnesses argued that stable housing and the jobs in Biden’s plan would eradicate much of the predicted debt.
“Housing stabilizes families,” said Rep. Emanuel Cleaver, D-Mo. “We must fund housing in proportion to its importance to the future of our country.”
Some witnesses warned of disaster later this year, when the emergency ban on evictions announced by the Centers for Disease Control and Prevention at the height of the pandemic expires at the end of June.
About 20% of adult renters did not pay last month’s rent, according to a survey published in March by the U.S. Census Bureau. Nearly 33% of Black renters reported they did not pay last month’s rent.
Together, about nine million renters owe roughly $50 billion in unpaid rent.
“They face eviction and homelessness when the eviction moratorium is lifted in July,” said Michael McAfee, president of PolicyLink, a nonprofit research institute dedicated to advancing economic and social equity.
He called the part of Biden’s infrastructure plan that would increase the supply of affordable housing “an unprecedented opportunity.”
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