Build Back Better’s Housing Investments at Risk

The housing part of the reconciliation bill is transformative. All factions of the party support it. Will it survive the cut-down?

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At $330 billion, housing makes up one-tenth of the $3.5 trillion Build Back Better plan, though you’d never know it given the public messaging on the package. While congressional Democrats have focused on everything from climate-related provisions to universal pre-K to child care to paid family leave to drug pricing, little has been mentioned nationally about one of the largest individual parts of the reconciliation bill.

Just because it hasn’t grabbed headlines doesn’t mean it isn’t transformative. The proposals in the housing package run the gamut from down payment assistance to a huge infusion of cash for Section 8 housing vouchers to filling the funding gaps in the country’s largest and most aggressively underfunded public-housing authorities. There is money for new construction, for climate-oriented retrofitting, for community land trusts, and more. The proposal meaningfully grapples with the most inflationary expense for American families, and would remedy decades of under- and disinvestment in the American housing sector.

In many ways, it represents the crowning achievement in the political career of Rep. Maxine Waters (D-CA), chairwoman of the House Financial Services Committee, which authored the proposal. Perhaps because of its comprehensiveness and willingness to experiment with left and liberal solutions, it has enjoyed stunningly broad support from Democrats, who have split into fractious camps on just about everything else in the bill. Earlier this month, every single Democrat on Financial Services signed a letter sent to Joe Biden, Senate Majority Leader Chuck Schumer, and House Speaker Nancy Pelosi insisting on its passage. Squad members Ayanna Pressley, Rashida Tlaib, and Alexandria Ocasio-Cortez joined Democratic wrench-thrower Josh Gottheimer, who has been willing to jam up the entire Build Back Better Act, as signers. You would be hard-pressed to find another element of the Biden agenda with this level of congressional unanimity.

And yet housing finds itself squarely in the crosshairs of both the White House and knife-wielding Democrats in Congress, who are looking for things to cut. According to a source with knowledge of negotiations, at least one senior adviser to the president has suggested sacrificing the housing package in its entirety to secure passage of everything else. Politico reported that the $330 billion pot finds itself extremely imperiled as industry groups also oppose its passage. “It’s going to be rough,” Waters told the publication.

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How those cuts might be enacted, if they are, is now one of the most consequential subplots of the negotiations. But so far, Financial Services Democrats have been holding fast, disinclined to give ground, or even to prioritize one set of policies over another, at least at the moment.

“The most important feature is the topline number of $330 billion,” said Rep. Jake Auchincloss (D-MA), vice chair of the Financial Services Committee, in an interview with the Prospect. “Since the founding of the Housing and Urban Development Department, it’s been undercapitalized.”

For decades, housing, especially public housing, has been perilously underfunded, which has contributed to skyrocketing prices and increased homelessness nationwide. As Auchincloss pointed out, the housing package would close a funding gap that has indeed existed since HUD was founded in 1965. It would also mark a heel turn away from recent policy priorities on housing, especially those sought by Democrats under President Clinton, which instated the Faircloth Amendment that made it impossible for public-housing authorities to build new units. The housing package would tacitly repeal Faircloth, marking a sea change in Democratic policy toward housing since President Clinton’s welfare reform agenda.

Barack Obama made no effort to reverse Faircloth, and faced with his own housing crisis, instituted the much-maligned Home Affordable Modification Program (HAMP), which allowed mortgage companies to trap homeowners and kick them out of their homes, under the guise of protecting them. Meanwhile, Obama did little as rents spiked nationwide, and outside of a totally failed rental relief program and a temporary eviction moratorium during some percentage of the coronavirus pandemic, President Biden has yet to address the issue. But this bill would take a massive swing at the problem.

“This is not an alphabet soup of new programs that are untried and untested. We know these work, they just need money,” said Rep. Auchincloss. “Lowering costs for working families? If we’re really going to do that, housing is 30 to 40 percent of people’s income. You’ve gotta do housing.”

That messaging would be expected from the left edge of the caucus; it’s more striking coming from someone like Rep. Auchincloss, who is not a member of the Congressional Progressive Caucus, and is, in fact, a onetime Republican. That shows the broad appeal of these programs, despite the fact that they break dramatically with moderate Democratic orthodoxy on housing.

Speaker Pelosi routinely emphasizes the Build Back Better Act’s initiatives toward children, from the child care, pre-K, and Child Tax Credit stuff on the front end, to the climate measures over the long term. But the housing provisions should represent a major component of this. It’s well and broadly known that housing stability is a massive predictor of outcomes for children, beyond even some of the educational and care proposals that feature so prominently in this package. And while moderates like Joe Manchin pretend to care about inflation, the inflationary realities of the housing market are taken squarely on in this proposal, which works substantially to address supply issues in the housing stock.

If, indeed, the top priority is the number itself, this could prove to be a fierce fight over a pot of money some Democrats are envisioning as easy to slim. “The number represents a meaningful attempt to fund housing at the level that is necessary,” said Rep. Auchincloss. Paring back now would be a “false choice. I’m not going to negotiate against myself.”

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