REUTERS/Tom Brenner
- Democrats are shrinking Biden's $3.5 trillion spending plan, and housing aid is at risk of being removed.
- The $300 billion for housing would create more than 2 million homes and fight the nationwide shortage.
- Some Democrats are fighting to keep the aid intact, arguing housing is just as important as traditional infrastructure.
The Biden administration has a plan to counter the US's dire home shortage, but it's now on the chopping block.
The White House hoped to fight the housing crisis with its $3.5 trillion social-spending package, but opposition from Sens. Joe Manchin and Kyrsten Sinema have forced Democrats to shrink the plan. The final proposal is expected to cost roughly $2 trillion, meaning it'll have to be slimmed down substantially from its current size.
And as party leaders prep a revised package, $300 billion set aside for housing aid is under siege. The Biden administration and congressional leaders are considering cuts to the housing funds, Politico reported Thursday. The $300 billion is among the larger programs in the overall package, and slashing it could allow other sections to go untouched.
The sum includes $100 billion in housing-based tax credits, $70 billion for repairing and upgrading public housing, and $45 billion for the construction of homes for low-income Americans. Overall, the funds could create more than 2 million new homes, according to estimates from the Department of Housing and Urban Development. That would join the 100,000 new homes already set to be created through Biden's recent regulatory changes.
But where party leaders are prepping to slash the housing funds, other Democrats are vehemently defending the plan. Democrats on the House Financial Services Committee led by Chairwoman Maxine Waters urged Biden and congressional leadership to keep the housing aid in the reconciliation package. Just as lawmakers need to invest in traditional infrastructure, they also need to support Americans' needs for affordable housing, the representatives said in a Wednesday letter.
"Housing is health care, it is stability for children, it is climate justice, and it is racial justice," the Democrats added. "This is an investment that simply cannot wait and must be included at robust levels in the budget reconciliation package."
Waters told Politico the cuts should be even across the various programs in the spending package instead of focusing on specific portions. Committee chairs could then decide how to shrink their respective proposals.
Other Democrats are trying to at least save funds targeting first-time homebuyers. Rep. Waters and Sen. Raphael Warnock both have plans to give first-time and first-generation buyers as much as $2,500 in aid for buying a home. Separately, Sen. Ron Wyden has proposed a $15,000 tax credit for first-time buyers.
Buyer aid would only address part of the problem. The country simply doesn't have enough homes to go around. Decades of underbuilding have left the US with a 6.8-million-home deficit, and builders aren't rushing to fill the hole. The shortage has helped prices soar at a record pace and threatens to keep housing out of reach for an entire generation.
An increase in home supply would come at a critical time for prospective buyers. Millennials are in their peak homebuying years and are expected to bring a once-in-a-lifetime wave of demand. But the generation's finances were already pummeled by the Great Recession, and the pandemic-era housing frenzy has left them even less equipped to buy their first homes.
More broadly, Americans are sick and tired of the white-hot housing market. Just 29% of Americans said in September that it was a good time to buy a home, according to the University of Michigan's Surveys of Consumers. That's the lowest reading since 1982 and down from 62% at the start of the year.
It's clear that buyers need a break. But as Democrats ready their shrunken spending plan, it's less likely that break will come from the government.