Reduce Funding for the Housing Choice Voucher Program or Eliminate the Program

Background

The Housing Choice Voucher program (sometimes called Section 8) provides federally funded vouchers that recipients can use to help pay the rent on units that they find in the private housing market. (Property owners choose whether to participate in the program.) To receive assistance, a household must have income that is below a specified level, and it must wait for a voucher to become available. Although roughly 20 million households qualify for federal rental assistance on the basis of their income, only about one-quarter of those households receive it because funding for the three discretionary spending programs that provide it is limited.

Recipients usually pay 30 percent of their household income, after certain deductions, toward their rent. The value of the voucher is the difference between a household's rental payment and the limit on rent for the area. That limit, which is determined annually by the Department of Housing and Urban Development, is based on the benchmark rent charged for standard rental housing in the area. In some areas, the benchmark rent is set at the 40th percentile (meaning that it is less than 60 percent of rents in the area) and in others, at the 50th percentile. Recipients can continue to use their vouchers even if they move within the same area or out of the area.

Each year, households leave the program for various reasons—some because of the dissolution of their family, others because of a violation of the program's rules, and still others because of increases in income which cause them to no longer be eligible for a voucher. The vouchers that had been used by those households are reissued, to the extent that funding is available, to eligible households on waiting lists for federal housing subsidies. The Congressional Budget Office estimates that the projected amount of budget authority in the baseline for the program would support 2.3 million households in 2020 and 2.1 million households in 2028.

Option

This option includes two alternatives for reducing spending on vouchers. Lawmakers could reduce funding for the voucher program by 5 percent starting in 2020, mainly by not reissuing vouchers when households leave the program. Alternatively, lawmakers could eliminate the program gradually by reducing the baseline budget authority by about $3 billion in 2020 and by an additional $3 billion (cumulatively) in each year from 2021 through 2028, at which point the budget authority would be zero.

Effects on the Budget

Reducing funding for the voucher program by 5 percent each year starting in 2020 would decrease federal spending by $9 billion from 2020 through 2028, and eliminating the program altogether would decrease spending by $125 billion over that period, CBO estimates. (The federal government will spend $9,400 per year, on average, for each household that receives a voucher in 2019, CBO estimates.) Reducing funding for the program by 5 percent in 2020 would result in about 115,000 fewer households receiving housing assistance from the federal government, in CBO's estimation. Eliminating the program would leave about 2.2 million households, corresponding to about 5 million people, without housing assistance from the federal government in 2028.

Decreases in federal outlays associated with reducing funding for the voucher program by 5 percent starting in 2020 reflect CBO's assumption that spending would decline in accordance with historical patterns. The Congress generally provides a portion of the funding for the program a year in advance; consequently, CBO assumes that some of the reduction in budget authority would not result in lower outlays until the following year. Decreases in federal outlays associated with eliminating the housing choice voucher program reflect CBO's assumption that budget authority for the program would be eliminated over nine years and that spending would fall accordingly.

Uncertainty about the budgetary effects of reducing funding for or eliminating the housing choice voucher program stems from uncertainty about whether actual appropriations would match CBO's baseline projections. The budget authority for the option is based on CBO's baseline projection of discretionary budget authority, which starts with the most recently appropriated amount and then grows with inflation.

Other Effects

An argument in support of reducing funding for the voucher program by 5 percent is that no one would lose assistance as a direct result of such a reduction. That is because the reduction in the number of vouchers that it would require would be less than the number of households that CBO expects to leave the program in a given year. In 2017, for example, about 190,000 voucher-subsidized households (or about 8 percent of participating households) left the program.

One argument in support of eliminating the voucher program entirely is that providing assistance to some households through the program is unfair to other households that qualify for federally assisted rental housing but do not receive assistance. (That number is three times as large as the number of households that receive assistance from those programs.) Unassisted households must pay their own rent in full, and at least four-fifths of those households spend more than 30 percent of their income on rent.

An argument against reducing funding for the program is that doing so would lengthen the time that eligible but unassisted households would have to wait to receive assistance. In 2017, the households that were added to the voucher program had been waiting for 32 months, on average. That number probably understates the amount of time that households have to wait for assistance because many waiting lists are periodically closed to new applicants.

An argument against eliminating the voucher program entirely is that doing so would probably increase overcrowding and homelessness. Under that alternative, about 2 million households that would receive vouchers in 2028 under current law would no longer receive housing assistance.