The Debt Ceiling Deal’s Impact on Homelessness

Congress has passed (and the President signed) what has become known as the “debt deal,” legislation that suspends the law limiting the amount of total debt the federal government is allowed to accrue. The specifics of the new law will have an impact on the Alliance’s work to end homelessness, and this blog post summarizes some of those impacts.

First, the basics of the issue. For many years, a law has existed limiting the amount of federal debt. In almost each of the past 50 years federal spending has been greater than federal revenue, the debt ceiling has needed to be raised, and Congress usually does this with little fuss. This year, however, the Republican House majority threatened to refuse to agree to an increase of the debt ceiling unless other changes in law were passed – reducing spending, reducing taxes, and enacting other policy changes. After intensive negotiations between the House Republicans and the White House, a bill emerged that suspended the debt ceiling until early 2025, and enacted other changes that the Republican House leadership wanted.

Here are some of the specific things in the law, and how they may impact homelessness policy:

Domestic discretionary spending caps. The law limited overall nondefense discretionary spending for Fiscal Year (FY) 2024 (beginning October 1, 2023) to the same amount as it is for 2023, and allowed only a one percent increase over 2023 for FY 2025. “Discretionary” spending is the share of federal spending that is set each year through the appropriations process. The nondefense portion provided by Congress for FY23 was approximately $772 billion, including nearly all U.S. Department of Housing and Urban Development (HUD) programs, as well as grant programs from the U.S. Department of Health and Human Services HHS and the U.S. Department of Labor. Medicaid spending, on the other hand, is “mandatory” spending, not discretionary, as is SSI, Social Security and Medicare. None of these programs were directly affected by the debt deal.

The spending caps for the next two years are not as tight for defense and veterans’ programs. The Alliance is still researching whether the veterans’ programs include only funding appropriated to the U.S. Department of Veterans Affairs, or whether it may also include HUD spending for HUD-VASH vouchers.

The spending caps will mean difficult decisions throughout the appropriations process. Costs are going up for nearly everything the federal government funds, including rents paid for housing programs. During a time when it’s clearer than ever that ending homelessness will require more money, not less, it will take every bit of advocacy to convince Members of Congress to support better spending for our priorities, when the overall amount available is not keeping up with inflation.

Recapture of emergency and one-time funds. The debt deal legislation includes a long list of unspent funds that were distributed from emergency COVID-19 legislation and will be recaptured. Those that are most important to homelessness, however, are not on the list, such as Emergency Housing Vouchers and HOME ARP funding. Because these funds are being held for future rent payments for tenants who had been rehoused or prevented from losing their housing, Congress recognized that they needed to remain in place. Many other smaller programs will be affected.
Changes to work requirements. The debt deal changed work requirements, mainly in the Supplemental Nutrition Assistance Program (SNAP), but also in the Temporary Assistance for Needy Families (TANF) program. The SNAP program already has requirements: a general work requirement and the ABAWD (Able-Bodied Adults Without Dependents) rule that people aged 18-49 without custody of children and without a disability may only receive benefits for three months each three years unless they are working or participating in a work program for 80 hours each month. The debt deal raises the SNAP ABAWD work requirement to age 55, stepped in over a number of years; but also ends the requirements in 2030, and ends them immediately for people experiencing homelessness, for people under 24 who were in the custody of a state child welfare system at age 18, or who are military veterans. For TANF, the debt deal makes fewer states eligible for the “caseload reduction credit,” which allows states to be excused from operating work programs if their TANF caseload has gone down over time.

The main problem with work requirements is that they are often complicated and confusing. People who are currently experiencing homelessness will be exempt from these SNAP requirements, but their ability to document their exemption will require cooperation with shelters and homeless outreach workers. Work at the federal and state levels to minimize documentation requirements will be important. People who move from homelessness into housing will need to be informed of the requirements for receiving SNAP benefits.

Student loans. The debt deal ends the moratorium on student loan repayments. It does not address the President’s loan forgiveness initiative, which is tied up in court. Many people working in homelessness services, as well as people who are now experiencing homelessness, will be affected.

Impacts on the Future

The details on many of these items remain to be worked out, and the impact it will have on federal funding for homelessness programs and for rent subsidies remains to be determined through the appropriations process. The impact of the work requirement changes will largely be determined by state and county governments. The Alliance will continue to take action on these issues throughout the year.