How Debt Ceiling Negotiations Threaten Homelessness Funding

As many Americans know, the White House and Congress are currently in a showdown over decisions to raise the government’s debt ceiling. What most do not realize is the impact of these decisions on federally funded housing and homelessness programs.

Recent Developments

On April 26, Alliance CEO Ann Oliva sent a letter to lawmakers in the U.S. House of Representatives. The letter expressed grave concerns about the adverse impact the House Republicans’ proposed debt ceiling legislation would have on people experiencing homelessness and our nation’s efforts to end homelessness. The bill, which was ultimately passed by the House later that week, would inflict a decade of deep spending cuts on almost all domestic programs and impose work requirements on important benefits programs. In exchange, the debt limit – the total amount of money the federal government is authorized to borrow to fulfill its legal obligations – would be lifted.

What is the Debt Limit, Anyway?

Raising the debt limit does not cause the federal government to spend more money. It simply allows the federal government to meet the obligations incurred by current and past Presidents and Congresses — from paying military personnel and defense contractors, to providing for Social Security and Medicaid benefits, to paying landlords for rents subsidized by the U.S. Department of Housing and Urban Development (HUD) vouchers and grants to non-profits providing homelessness services.

Failure to increase the debt limit, according to the Treasury Department, would have “catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.”

How Does This Usually Work?

Congress has passed routine legislation to increase the debt limit dozens of times. Not until 1994 did it become a political tool to insist on extraordinary reductions in federal spending which could not be achieved through the regular legislative process. Although that effort ultimately failed, a 2011 effort was successful: in exchange for raising the debt ceiling, then-President Barack Obama agreed to sign into law the Budget Control Act, which imposed arbitrary spending caps on discretionary spending (including affordable housing and homeless programs) for each of the years from 2012 through 2021.

This decision in essence created a “lost decade” for the nation’s efforts to end homelessness. Although providers and systems leaders continued their life saving work each day, they were forced to do so without resources scaled to the growing need across this nation. We live with the consequences of this lack of investment to this very day.

What Happens Next?

In exchange for lifting the debt ceiling until March 2024 — when it will need to be raised again — the House passed legislation on April 26 that would drastically reduce spending on almost all non-defense programs, including affordable housing and homelessness programs. Specifically, spending for 2024 would be arbitrarily capped at 2022 levels and then allow for annual increases of just 1 percent for each of the next ten years, without regard to inflation.

The Republicans called the legislation the Limit, Save, Grow Act, while Democrats called it the Default on America Act. The measure passed the House by a vote of 217-215. All Democrats who voted were in opposition and all Republicans who voted were in support of the legislation — except for four GOP lawmakers who reportedly believed that it wasn’t tough enough. (House vote link:

Senate Democratic leaders insist that they will not take up the legislation and are instead demanding a clean increase in the debt limit, one without controversial pay cuts and policy riders. The Treasury Department reported on May 1 that the debt limit must be raised by early June to prevent the United States from defaulting on its obligations.

The Alliance’s Position

The Alliance strongly opposes the debt ceiling legislation passed by the House because it would impose across-the-board cuts on almost all non-defense programs in FY24, including affordable housing and homelessness programs. Cuts would be anywhere from 9 to 13 percent, rising to 22 percent or even higher by 2033. As a result, these programs would be funded at least 15 percent below their current levels at the end of ten years. Cuts would rise much higher if efforts are successful by many of the legislation’s supporters to shield defense and veterans’ health care from cuts.

Such cuts would be devastating for the nation’s most vulnerable households and would likely result in many more households entering homelessness. According to HUD, cuts to the Emergency Solutions Grants program “would result in less emergency shelter, homelessness prevention, and rapid rehousing. A funding cut of 22 percent would result in over 24,000 fewer people receiving assistance, likely leading to large increases in the number of people sleeping on the streets.”

Moreover, “providing funding at the 2022 level for (Continuum of Care) renewals would result in at least 54,000 fewer homeless people and domestic violence survivors receiving assistance than in 2023, and a 22 percent cut from 2023 levels would result in nearly 95,000 fewer people receiving assistance.”

The popular (but already under-resourced) Housing Choice Voucher (HCV) program currently can serve only one-quarter of the eligible households. HCV would lose funding for 350,000 families if funding reverted to the 2022 level; in the event of a 22 percent cut to 2023 funding, the program would lose funding for 640,000 families.

Moreover, the debt ceiling package would impose work requirements on Medicaid and even stricter work requirements on Supplemental Nutrition Assistance Program and Temporary Assistance for Needy Families. Work requirements have negligible impact on employment. They are costly to implement and cumbersome to administer. Worst of all, they result in poor people who are otherwise eligible for these vital health care, nutrition, and income supplement programs to lose their benefits because they are unable to surmount bureaucratic obstacles, and often for very trivial reasons. The imposition of work requirements specifically on people experiencing homelessness — who are engaged every day in a truly existential struggle — is wrong.

For more details on the House-passed debt limit legislation, please see this Congressional correspondence from Alliance CEO Ann Oliva: