Budget Wars

Can the Housing and Urban Development Department Survive a Romney Administration?

Mitt Romney talks of abolishing the Department of Housing and Urban Development, an agency once run by his father.

Chip Somodevilla / Getty Images

The Housing and Urban Development Department will never be one of Washington’s best-loved agencies, in part because its constituency is primarily poor people.

But the gargantuan department, while assailed for scandals and big spending, has not had its basic existence threatened—until now.

Mitt Romney’s comment at a private fundraiser that HUD “might not be around later” if he is elected raises a fundamental question: is the department’s $48 billion budget justified in a time of economic austerity? And how hard would it be to get rid of, anyway?

Turns out Congress would have to undo a number of major laws and would get pushback from state and local officials who rely on the nearly one quarter of the department’s budget doled out to cities and counties for a wide array of projects.

“There are mayors and governors across the country who can speak to the value of Community Development Block Grants funds,” says HUD spokesman Derrick Plummer. “Millions of Americans depend on HUD to ensure they have shelter, their community is thriving, and their neighborhoods are safe and growing.” Secretary Shaun Donovan and other top officials declined to be interviewed.

The department has its critics, of course. “If Mitt Romney were to ask me what I thought of HUD, at least in the area I have focused on, I would say that the agency needs to be changed in substantial ways,” says Peter Wallison, a co-director at the American Enterprise Institute.

Wallison studied HUD’s relationship with mortgage lenders Fannie Mae and Freddie Mac at the beginning of the financial crisis in 2008. He largely blames HUD for the lenders’ defaults, saying the department placed pressure on them to increase the amount of loans given to people who lived in affordable housing.

“The people higher up didn’t realize that what they were doing was requiring many poor-quality mortgages to be made. But home ownership increased substantially during that period, and that’s what people up top were looking at,” Wallison says.

Romney’s trial balloon would represent a radical step, considering that no Republican on Capitol Hill has mounted a serious effort to kill HUD. Its grants and programs reach every congressional district.

At the same time, some members of Congress have criticized HUD. A bipartisan group led by Senate Banking chairman Tim Johnson (D-S.D.) called for an investigation last year into the management of its HOME program, which gave $2 billion annually to local housing agencies, accusing the department of stalling projects and tying up money.

But despite his qualms about HUD, Johnson remains a supporter, calling Donovan “a remarkable and committed public servant.”

HUD, naturally, maintains that its spending is justified. “We recognize that we are living in tough economic times and we’ve had to make tough decisions about programs we care about,” Plummer says. “And we’ve fought tooth and nail to have Congress restore funding to programs like housing counseling, which we know increases the likelihood of a family being able to keep their home.”

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Advocacy groups say low-income residents in public and subsidized housing would suffer if HUD disappeared. Nearly three quarters of the department’s budget goes to various forms of rental assistance, including housing vouchers.

“If HUD were to be eliminated, that would be putting another nail in the coffin of U.S. housing policy, which is already in fairly dire straits,” says Maria Foscarinis, founder and executive director of the National Law Center on Homelessness and Poverty. “Already we are in a time where many Americans are not able to afford housing and a significant number are homeless. So what we need to do is boost the efforts of HUD, not eliminate it.”

The Department of Veterans Affairs is also dependent on HUD. Through a joint program, numerous homeless and at-risk veterans are supplied with housing vouchers that allow them to stay off the streets. Since 2008, the program has given veterans 37,975 vouchers.

“I know and understand the importance of having to balance a budget, keep spending under control, and be as efficient as possible,” Newton, Mass., Mayor Setti Warren, a former veteran, told a press conference called to respond to Romney. “But proposing that we get rid of HUD and the work it’s doing to cut veteran homelessness while maintaining tax cuts for millionaires’ spending is not just wrong, but something many Americans might find offensive.”

These advocates say there is a common misconception about programs that fight poverty, and that it’s cheaper to help individuals become self-sufficient than to continually support them when they are homeless.

“It just doesn’t make sense what Governor Romney is trying to do … It saves us more money [to aid veterans] than to leave these veterans on the street,” says Tammy Duckworth, a former assistant secretary at the V.A. “It costs more than twice as much to care for someone who is homeless than for someone who has housing.”

Others argue the biggest misunderstanding of HUD is how many people it aids. This year alone the department projects it will help subsidize housing for almost 2.5 million families.

“The programs provided by HUD are vastly underappreciated by people who have never been touched by the benefits,” says Linda Couch, senior vice president of the National Low Income Housing Coalition in a comment that appeared aimed at Romney. “If you live in a world where you know no one who has needed housing assistance, I can see why these programs may not be very meaningful to you.”

Several Republican presidents have strongly supported HUD dating back to the Nixon administration, when the agency was run by Romney’s father.