Trump Housing Assistance Cuts Would Hurt People And The Economy

Forbes

07-05-2025

Demonstrators outside the US Department of Housing and Urban Development (HUD) headquarters in ... More Washington, DC, US, on Monday, March 3, 2025. The Housing Choice Voucher program, which provides rental assistance to 2.3 million low-income households, faces uncertainty due to proposed workforce cuts at HUD and funding discussions on Capitol Hill. Photographer: Daniel Heuer/Bloomberg © 2025 Bloomberg Finance LP
The Trump administration looks to cut Department of Housing and Urban Development funding by 43.6%. The largest suggested cut is to housing assistance — just under $26.72 billion from the State Rental Assistance Block Grant, according to the White House discretionary budget request for fiscal year 2026. (The federal fiscal year runs from October through September.)
The document claims that states would be 'empowered' by using a state-based formula for grants. States could then 'design their own rental assistance programs based on their unique needs and preferences.' There would be a two-year gap on rental assistance for 'able-bodied adults,' ensuring that a majority of aid would go to the elderly and disabled.
To better understand what this would mean if adopted — realistically, presidential budgets aren't passed wholesale — it's important to understand federal housing policy.
Interestingly, search for 'State Rental Assistance Block Grant' on HUD.gov or on the site using Google and nothing comes up. Search grants.gov, which is the suggestion on the HUD site, and you can find a page for HUD grants. It mentions two grants and then offers a link called 'Click here to read about other HUD grant programs'. If you click it, you briefly land on a 403 page not found error message and then land on HUD.gov.
Block grants are typically amounts of money that go to states or sometimes local governments or organizations so they can do with it what they will inside given parameters. American Banker reports that the funds are intended to support rental assistance, public housing, and elderly and disability housing. A state-based formula doesn't replace the cut funding, and given that federal labor is only 5% of government spending, the vast bulk of the cut funds represent money that could have been used for housing programs. It's that much less available to help people with housing. Who Uses Housing Assistance
These block grants help many, according to the National Low Income Housing Coalition. The money goes to many rental assistance programs, including Housing Choice Vouchers (HCVs, more commonly known as Section 8), Public Housing, Project-Based Rental Assistance (PBRA), Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities.
Five million low-income households are recipients of assistance programs that allow them to rent housing at affordable costs, according to the Center on Budget and Policy Priorities. Half of the households live in urban areas, 31% in suburbs, and a little under 20% in rural areas. In 2022, more than 4.6 million families received various forms of rental assistance, according to HUD. Even at that, HUD rental assistance reaches only about 25% of eligible families. And in 2024, 77% of those receiving help had incomes less than 30% of the local area median income. Another 22% had between 30% and 50% of the median income, while 1% were between 50% and 80%, according to HUD documents from 2024.
The growth of median family incomes has been stifled as corporate profits expressed as a percentage of national income have continued to grow. To at least some degree, this seems like an upward redistribution of wealth. Where did those extra profits go? About 76% were increases in dividends that rewarded shareholders. Another 15% were retained profits. And then 9% went to increased corporate income taxes.
Are some of these people without jobs? Certainly. Many aren't but are in households that have earnings well below local median levels that grow far below the rate of inflation. They pay a portion of the rent they can afford by official calculations and policies. The support isn't close to luxurious, to which anyone who has seen Section 8 apartments or public housing developments can attest. Housing Assistance Implications For The Economy
If only one in four families had access to help before, what would it be with the cuts? Many families might find themselves unable to afford decent shelter, increasing homelessness at a time when other programs like those funding shelters are falling short, widening homelessness without additional funding to help alleviate it. State and local governments will find themselves having to backstop the problems, essentially undertaking an unfunded mandate.
If people are homeless, where will they be? How can they retain the jobs they have? That will have a significant impact on the economy. So will the sudden loss of income to the many property owners who rent to lower- and low-income people. Will the people who could easily afford those rentals move down from where they are? It doesn't seem likely. Severely cutting back housing assistance, with the assumption that restructuring how aid is delivered makes up for the huge cut in funding, could upend how a significant part of the housing market works, with negative economic shocks spreading outward across the country.