Background
On June 25, 2007, Financial Services Chairman Barney Frank introduced H. R. 2895, the National Housing Trust Fund Act,
to establish the production of new housing and the preservation or
rehabilitation of existing housing for low-income people. Democrats
claim that such a Trust Fund is necessary to satisfy the nation's unmet
housing needs, and to help people who lost their homes in the wake of
Hurricanes Katrina and Rita.
The legislation would allocate $800 to $1 billion annually to states
and localities to produce and preserve 1.5 million low income housing
units over 10 years.
Monies for the Trust Fund would be derived from funding mechanisms
established by H. R. 1427 (Government-Sponsored Enterprise reform
legislation passed by the full House in May), H. R. 1852 (Federal
Housing Administration reform legislation passed by the full House in
September), and from any other funding sources that can be subsequently
identified.
H. R. 2895 passed the House Financial Services Committee on July 31,
2007. Chairman Frank has stated that this legislation will result in,
"the largest expansion in federal housing programs in decades."
Talking Points
- Democrats are asking citizens of limited means - the kind of people who benefit from Fannie Mae, Freddie Mac, or FHA - to fund new government spending.
- It
is fiscally irresponsible to create "the largest expansion in federal
housing programs in decades" while ignoring the pending crisis in
Social Security. During debate on the FHA reform bill,
Republicans offered an amendment to disallow use of excess funds
generated by the FHA program for the proposed Trust Fund until the
federal government ceases tapping the Social Security surplus. It
failed on a party-line vote.
- Instead of creating another housing bureaucracy, our focus should be on making existing programs work better.
HUD already administers over 30 separate Federal programs designed to
promote affordable housing opportunities for lower-income Americans.
One such program, the HOME Investment Partnership Program, is already
up and running, with 50 states, 585 local governments, and 4 insular
areas presently administering the program. Rather than
creating a new program, a better approach would be to take this
opportunity to make an already successful federal program like HOME
work better.
The Bottom Line
Expanding our nation's affordable housing stock is a laudable goal,
but we should not ask homeowners of modest means to pay for it. Rather
than create a new federal housing bureaucracy while important programs
like Social Security are facing a crisis, we need to make existing
housing programs operate more efficiently.