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The proposed budget from the White House suggests reducing Housing and Urban Development (HUD) rental aid and reallocating the reduced funding to states to create customized rental assistance programs. This plan also includes a two-year limit on rental assistance for able-bodied adults.
President Trump has committed to “making America affordable again.” However, the administration’s budget plan aims to significantly decrease federal rental aid, which currently supports millions in staying housed. Within HUD’s budget request, the White House criticized the federal rental assistance system as “dysfunctional” and proposed discontinuing Section 8 and other housing voucher programs, reducing rental aid by around 40%, and allowing states to manage their own programs.
The budget proposal includes a provision to prioritize elderly and disabled individuals by imposing a two-year cap on rental assistance for able-bodied adults. Additionally, it allocates $25 million for housing grants aimed at young individuals transitioning out of foster care.
HUD Secretary Scott Turner described the budget request as a “bold” reimagining of aid programs that have become “bloated and bureaucratic.”
This proposal arises at a time when nearly half of all renters are considered cost-burdened, and homelessness has reached a record high. Advocates warn that a reduction or elimination of rental aid could severely impact low-income individuals, potentially leading to increased homelessness.
Federal rental aid is currently insufficient, reaching only a quarter of those eligible. Ann Oliva, CEO of the National Alliance to End Homelessness, cautioned that reducing aid would be deeply harmful.
While the president’s budget is advisory, with Congress holding spending authority, lawmakers face pressure to implement substantial savings to support Trump’s broader agenda, including significant tax cuts. Kevin Corinth from the American Enterprise Institute expressed doubt that Congress would enact significant cuts to housing programs, suggesting the White House might propose ambitious cuts that are unlikely to materialize.
The proposed budget allows states increased control and responsibility for HUD aid, offering more flexibility through block grants. However, this approach has led to misallocation of welfare funding in the past. Critics express concern that these changes could disrupt both tenants and landlords dependent on federal rental aid.
The budget further suggests reducing HUD funding for homelessness by 12% and altering the allocation process to bypass local nonprofits, which has raised concerns among advocates who emphasize the local nature of homelessness issues.
The implementation of these proposed cuts could result in broad community impacts, with experts warning of increased stress on services such as emergency healthcare and food aid. Economic disruptions are anticipated due to imminent loss of HUD funding initially allocated to the COVID-era American Rescue Plan Act.
Corinth argues for a reevaluation of federal housing programs to ensure fairness, suggesting time limits on aid to better distribute resources.
The proposed reductions extend beyond rental aid cuts and include the elimination of programs creating affordable housing and those funding fair housing law enforcement. Community development grants are also at risk, with the administration asserting that funds were used for inappropriate projects.
Advocates highlight potential contradictions between budget cuts and promised housing developments on federal lands. Reductions in HUD’s antipoverty programs are part of broader administrative changes, including staff reductions and contract cancellations.
A recent report by the National Association of Affordable Housing Lenders underscores potential widespread economic consequences from these disruptions, warning of declining construction activity, job creation, and potential destabilization of housing finance markets reliant on federal programs.
