June 7, 2017
Senate Appropriations Committee – HUD Subcommittee: Review of the FY2018 Budget Request for the U.S. Department
Key Topics & Takeaways
- Community Development Block Grants (CDBG): HUD’s FY18 budget eliminated funding for the CDBG program, which Carson defended as necessary to ensure fiscal responsibility in the department. Carson also said the CDBG program had developed “mission creep” and was funding projects outside the purview of its ostensible goals. Carson’s written testimony said that CDBG is not well-targeted to help the poorest Americans and has not had a demonstrable impact on improving economic opportunity for those people. Republican and Democratic Senators defended the program throughout the hearing, saying it is an invaluable community development tool.
- Housing: Carson fielded several questions about housing finance. In response to questions, Carson said that he viewed the federal government’s role in the housing finance industry as that of a facilitator for private purchases of homes. Carson also defended the FY18 budget’s proposed levels of spending on mortgage insurance, as well as loan and secondary market guarantee programs.
- The Honorable Ben Carson, Secretary, Department of Housing and Urban Development
In her opening statement, Subcommittee Chair Susan Collins (R-Maine) noted that the Trump administration proposed budget cuts to the Department of Housing and Urban Development (HUD), as well as cuts to discretionary spending generally, before Ben Carson became Secretary of HUD. Collins then outlined the different programs whose funding would be cut under the proposed FY18 budget, focusing on the cuts to the Community Development Block Grant (CDBG) program, which is quite popular with states and municipalities. The FY18 HUD budget also cut rental assistance programs.
In his opening statement, Subcommittee Ranking Member Jack Reed (D-R.I.) noted that the FY18 budget would cut approximately 15 percent of HUD’s budget and eliminate the CDBG, the HOME Investment Partnerships Program, the Section 4 program, and the Veterans Affairs Supportive Housing (HUD_VASH) program. Reed argued that these cuts would harm low income Americans and lessen the availability of affordable housing nationwide. Reed also noted cuts to rental assistance programs as particularly problematic for low-income Americans.
In his opening statement, the full Appropriations Committee Ranking Member Senator Pat Leahy (D-Vt.) expressed concern about the FY18 budget’s cuts to HUD, reiterating Reed’s points that the budget would harm elderly and low-income Americans. Leahy described the $6.2 billion in cuts to HUD proposed by the Administration as indefensible.
The Honorable Ben Carson, Secretary, Department of Housing and Urban Development
In his testimony, Secretary Carson defended HUD’s proposed FY18 budget. Carson said the budget would still provide rental assistance to 4.6 million households while shifting some of the cost of rental assistance (as well as the costs of other forms of assistance) to state and local governments. Carson said the budget was “compassionate, yet wise,” and included an increase in funding for lead paint removal programs as well as $2.25 billion for programs targeting homelessness. Carson also discussed the budget’s impact on the Federal Housing Administration’s (FHA) mortgage insurance programs. The budget provided $400 billion for loan guarantee programs and $500 million for Ginnie Mae security secondary market guarantees. Carson closed by saying that the “budget is fiscally responsible and meets the requirements of the department,” and defended the budget for its fiscal discipline throughout his testimony.
Question and Answer
Community Development Block Grant (CDBG) Program
By far the most frequent topic discussed during the hearing was the FY18 budget’s proposed zeroing out of the CDBG program. Republican and Democratic Senators defended the program, which allocates funding on a formula basis to 1209 units of local government, including the 50 states. The funding is to provide decent housing, a suitable living environment, and funding for economic development programs that benefit low- and moderate-income Americans.
Collins led off the questioning regarding the proposed elimination of CDBG funding, saying it was an effective community development tool. Carson defended the elimination of CDBG funding, saying the program had developed serious “mission creep” and was providing many funds to projects that did not advance the ostensible goals of the program. Carson also said that it was a priority of the administration and the Department to put all discretionary spending on a “fiscally responsible” basis.
Reed questioned the idea that funds cut from CDBG could be made up from private sector sources, but Carson said that the federal government needed to find alternatives to handing out “buckets of money,” such as providing incentives for private sector involvement.
Numerous other Senators, including Brian Schatz (D-Hawaii), John Boozman (R-Ark.), Chris Coons (D-Del.) and John Hoeven (R-N.D.), asked about the rationale and impact of the cuts to CDBG, and defended what they viewed as the good work of that program. Carson justified the cuts by saying that fiscal responsibility was a priority of the administration and that the government needed to shift funding for community development projects to the states.
Sen. Shelley Moore Capito (R-W.Va.) asked Carson for the capital level of the Federal Housing Finance Agency (FHFA). Carson said the capital reserve level as at 2.3 percent, which is above the statutorily required 2 percent level. Carson also defended the level as a “stable” one.
Capito then pivoted to ask Carson about his plans to improve HUD’s relationship with smaller housing authorities in the United States. Carson said that during his listening tour, he heard from smaller housing authorities that there were “too many regulations” surrounding HUD programs that hurt the participation of those authorities. Carson said he would be exploring ways to increase the participation of smaller housing authorities in HUD programs.
Sen. Steve Daines (R-S.D.) noted that as Secretary of HUD, Carson now has oversight over FHA and Ginnie Mae. Daines asked Carson for his view on the proper role of the federal government in the housing finance industry. Carson said the government should “facilitate the ability” of people to purchase safe and affordable homes.
For more information on this hearing, please click here.