Discretionary Spending

Function 600 - Income Security

Increase Payments by Tenants in Federally Assisted Housing

CBO periodically issues a compendium of policy options (called Options for Reducing the Deficit) covering a broad range of issues, as well as separate reports that include options for changing federal tax and spending policies in particular areas. This option appears in one of those publications. The options are derived from many sources and reflect a range of possibilities. For each option, CBO presents an estimate of its effects on the budget but makes no recommendations. Inclusion or exclusion of any particular option does not imply an endorsement or rejection by CBO.

Billions of Dollars 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
Change in Spending                        
  Budget authority 0 -0.5 -1.0 -1.6 -2.1 -2.7 -2.8 -2.9 -3.0 -3.0 -5.2 -19.7
  Outlays 0 -0.3 -0.8 -1.3 -1.9 -2.5 -2.8 -2.9 -2.9 -3.0 -4.2 -18.3

This option would take effect in October 2017.

The federal government provides housing assistance directly to low-income tenants through the Housing Choice Voucher program (sometimes called Section 8), public housing, and project-based rental assistance. Those three types of assistance are funded by the Department of Housing and Urban Development (HUD) and generally require tenants to pay 30 percent of their household income (after certain adjustments) toward housing expenses; the federal government covers the balance of the tenants’ rent, up to established limits. In 2015, by the Congressional Budget Office’s estimate, expenditures for all three programs came to roughly $7,800 per recipient household. That amount includes rent subsidies as well as payments to the local public housing agencies and contractors that administer the programs.

Under this option, tenants’ rental contribution would, starting in 2018, gradually increase from 30 percent of adjusted household income to 35 percent in 2022 and then remain at that higher rate. Those higher rent contributions would reduce outlays by a total of $18 billion from 2018 through 2026 ($9 billion for the Housing Choice Voucher program, $5 billion for public housing, and $4 billion for project-based rental assistance), CBO estimates.

One argument for this option is that renters who are eligible for housing assistance but who do not currently receive it usually spend more than 30 percent of their income on rent. That is the case for at least four-fifths of such unassisted renters—a population that outnumbers assisted renters 3 to 1. Thus, even if the required contribution for assisted renters was increased to 35 percent of their income, it may still be less than the percentage of income that most unassisted renters pay toward rent. Furthermore, whereas unassisted renters are vulnerable to increases in housing costs relative to income, households that receive assistance would continue to benefit from paying a fixed percentage of their income toward housing under this option.

An argument against implementing this option is that assisted renters would have fewer resources to purchase other necessary goods and services, such as food, health care, and transportation. In addition, by increasing the proportion of income that tenants are required to pay in rent, the option would reduce the incentive for some participants to boost their income.