The Office of Management and Budget (OMB) on behalf of the White House recently released a report which details the potential effects sequestration, or across-the-board cuts to the budget, could have on both defense and non-defense programs. In August 2011, both the U.S. House of Representatives and Senate voted for the threat of sequestration as a mechanism to force Congress to act on reducing the deficit by $1.2 trillion as required by the Budget Control Act of 2011 (BCA). The OMB report provides preliminary estimates of the sequestration’s impact on more than 1,200 budget items.

In the report, OMB describes sequestration as “a blunt and indiscriminate instrument” that would result in an 8.2% cut to “critical housing programs” for low income families and individuals. More specifically, the report estimates cuts to the following HUD programs:

  • Project-Based Rental Assistance, $772,000,000
  • Tenant-Based Rental Assistance, $1,530,000,000
  • Public Housing Capital Fund, $154,000,000
  • Public Housing Operating Fund, $325,000,000
  • HOME Investment Partnerships, $82,000,000
  • HOPE VI/Choice Neighborhoods, $10,000,000
  • Supportive Housing for the Elderly (Section 202), $31,000,000
  • Supportive Housing for Persons With Disabilities (Section 811), $14,000,000
  • Community Development Fund, $279,000,000
  • Native America Housing Block Grants, $53,000,000
  • Homeless Assistance Grants, $156,000,000

Note: Because the FY 2013 budget has not been passed, the OMB report assumes that discretionary appropriations are funded at the same rate of operations as in FY 2012.

The National Low-Income Housing Coalition (NLIHC) has demonstrated what these cuts could mean for low-income housing programs and the households they serve. Over 185,000 households would lose Tenant-Based Rental Assistance vouchers and 92,400 households would lose Project-Based Rental Assistance housing. What’s more, more than 145,900 homeless persons would lose the chance for housing under the Homeless Assistance Grants program. In addition, more than 140,000 households currently housed in units funded by Section 202 Housing for the Elderly or Section 811 Housing for People with Disabilities would receive reduced unit maintenance and less supportive services. Further, in addition to the loss of housing assistance, HUD estimates that 53,000 jobs would be lost due to sequestration cuts to the agency.

While the OMB report does not offer specific policy recommendations, the agency does point out the efforts the Obama Administration has made to responsibly avoid the arbitrary sequestration cuts. First, in the President’s Plan for Economic Growth and Deficit Reduction that was presented to the Joint Committee in September 2011, and second, in the President’s fiscal year FY 2013 Budget. The President’s FY 2013 Budget proposes $2.50 in spending cuts for every $1 in new revenue and both plans include over $4 trillion in deficit reduction. What’s more, the President’s proposals would ensure that deficit reduction is achieved in a way that asks the top two percent of Americans to shoulder a fair share of the burden.

Click here to read the OMB report.