Rent Increases and Work Requirements for the Poor, Mortgage-Interest Deductions for the Rich

AP Photo/Pablo Martinez Monsivais, File

Housing and Urban Development Secretary Ben Carson takes his seat before testifying before a House Committee on Appropriation subcommittee hearing on Capitol Hill

The Trump administration’s proposal to reform housing programs for the poor, unveiled last week, is just one among its many plans to gut anti-poverty programs, even as its authors bleat platitudes about getting people “back to work.” 

The proposal from the Department of Housing and Urban Development (HUD), outlined in the 2019 president’s budget, would raise rents on around four million families who receive federal rental assistance. HUD proposes increasing recipients’ rent payments from 30 percent of gross income to 35 percent, and also triples the minimum required rent payment from a $50 cap to about $150. On average, people would see their rents raised by about 44 percent.

In addition to forcing people living in poverty to hand over money that’s probably already earmarked for other basic necessities, the administration is moving to allow public housing agencies—as well as landlords—to implement work requirements on those receiving housing assistance. (That’s right: Landlords would hold the power to decide if their poor tenants are working hard enough to remain in their homes.) Most people who receive federal rental assistance either already work, have disabilities, or are elderly. Work requirements and their accompanying red tape will merely increase the complexity of assistance, and for those who aren’t working, such requirements will only increase hardship, threatening the stable housing that facilitates getting and keeping a job. 

The plan also eliminates rental deductions like those that go to parents who need child-care assistance as well as to people with high medical bills. It seems as if this proposal is HUD’s response to Trump’s recent executive order demanding welfare reform part II. Fortunately, the plan would need congressional approval.

According to HUD secretary Ben Carson, these changes are needed to push people into work—and also to save the government money. (Indeed, these rent increases may simply be a way to compensate for cuts to HUD.) Work requirements, which are generally ineffective, really only serve to push people off of anti-poverty programs. 

Such requirements coupled with rent increases will likely lead to an increase in homelessness and evictions among the poorest beneficiaries, those who pay the minimum rent, who total about 1.7 million people, including about one million children. According to the Center on Budget and Policy Priorities, the average family that would be affected by the tripling of the minimum rent payment is a single mother with two children who takes home about $2,400 per year. For households currently paying the $50 minimum, the 300 percent increase in the minimum rent payment would amount, approximately, to an extra $1,200 going to rent annually.

Nonetheless, Carson blithely pronounced in an interview this week with The Daily Signal (an outlet of the Heritage Foundation) that, “I would first of all say nobody’s going to be put on the streets.” 

What proposal did Carson read? 

HUD has also claimed that renters with disabilities and elderly people would not be affected, but that is also not true. “What pretends to be a hand up is really a foot in the back,” said Shamus Roller, executive director of the National Housing Law Project, in a statement.

Viewing this proposal alongside the mortgage-interest tax deduction, one can see how the Trump administration hopes to widen the divide between rich and poor to an even more unbridgeable chasm.

The mortgage-interest tax deduction is a perfect example of welfare for the wealthy. It’s meant to encourage homeownership—it doesn’t—instead, it mostly encourages the wealthiest among us to buy fancier homes, since the value of the deduction increases with the cost of a mortgage. In recent years, the mortgage-interest deduction and other property tax deductions have cost almost twice the cost to the government of rental assistance for the poor.

Because the GOP’s tax reform doubled the standard deduction, fewer people will claim the mortgage-interest deduction next year, as Jordan Weissmann writes in Slate. But while that means that the mortgage interest deduction will cost the government less, it also means that the deduction’s benefits will instead be even moreregressive, heavily tilted toward the very wealthiest—24 percent of the deduction’s benefits will go to households earning more than $500,000.

And so it goes in Donald Trump’s America: The poor get more regulation and more sanctions, while the rich get tax breaks. 

Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.

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