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Could a Freedom Caucus victory benefit affordable housing?

Could affordable housing benefit from the chaotic election of Kevin McCarthy (R-Calif.) as Speaker of the House of Representatives? While not likely, passage of a rules package supported by the ultra-conservative House Freedom Caucus could actually open the door to bipartisan housing legislation. Unfortunately, the toxic partisan relationships that dominate politics in the House of Representatives are most likely to create a toxic policy environment that negatively impacts housers.

I believe we must prepare for the worst but hope for the best. The worst is at least one, and possibly a series of, protracted government shutdowns and a default on the debt obligations of the United States. We know what a month-long shutdown looks like. We suffered through one in 2018-2019. But we have no idea how bad a default on our debt would be. It’s safe to say that catastrophic is not an exaggeration. Unfortunately, I believe a default on U.S. debt obligations and the vast impact that comes with it is more likely than at any time in history.

Yet it is also possible the rules changes agreed to by McCarthy could have the unintended effect of making it easier to enact bipartisan housing legislation. Housing has been burdened with lots of warm rhetorical support from Democratic leaders, but never enough to actually get our most needed provisions into must-pass legislation. The explanations are increasingly sounding like excuses. We should prepare for the possibility that narrowly written, targeted housing legislation with bipartisan support could be possible. Let’s look at the variety of ways this could play out over the next hours, days, and months, under the new House rules being considered by the House this week.

The opportunity is predicated on the weak speaker model. In fact, McCarthy will be the weakest speaker in over a century. His role will be largely akin to the role of Senate Majority Leader before Lyndon Johnson created the role of the modern Majority Leader in the 1950s. Prior to Johnson, the Senate was weak and ineffective, capable of catering only to the lowest common denominator of political agreement. The Senate agenda was easily dominated by powerful House Leaders like Speaker Joe Cannon (R-Ill.) and Sam Rayburn (D-Tex.), and popular, powerful presidents like Woodrow Wilson and Franklin Roosevelt.

Enacting any legislation of consequence, including budget legislation or an extension of the debt limit, will be nearly impossible. As a result, we are likely to see a Fiscal Year 2024 government operations paid through a “full year Continuing Resolution” or CR. This means that all of the funding levels agreed to for this year would be continued without change into next year. Given recent limited victories in some funding areas, this is not the worst outcome for housers.

Unfortunately, we are most likely to see this outcome following extended government shutdowns and a possible default of the obligations of the US government as the result of a failure to extend the federal debt limit in time. This will cause major disruptions for affordable housing providers dependent on federal support as well as a significant increase in interest rates, which will further hurt housing production.

Housing leaders should dust off their notes from the 2018 government shutdown, which lasted 34 days from December 22 to January 25. It was the longest government shutdown in US history. The shutdown directly affected 1,175 rental contracts that were not renewed due to the shutdown, impacting 41,980 affordable housing units – about half of which were occupied by low-income seniors. While no one was evicted as a direct result of the shutdown, had the crisis drawn out an additional few weeks, another 500 contracts would have gone unpaid and some evictions could have occurred while hundreds of thousands of federal workers also struggled to make their mortgage payments.

However, there are opportunities in the rules changes demanded by the rebel caucus and supported more broadly by the House Freedom Caucus. They include:

  • A one-member “motion to vacate”. Under this change, the threshold needed to force a vote ousting a speaker falls to just one member. While this sounds like a recipe for chaos, it is actually a rule that has existed since Thomas Jefferson wrote Jefferson’s Manual of parliamentary rules when he was Vice President and President of the Senate from 1797 to 1801. Congress adopted the manual as its official rule book in 1837 and it is still used today. As Richard and Lynn Cheney described in their book Kings of the Hill, the motion to vacate was most recently used in 1910 following a move by Democrats, who were in the minority, and insurgent Republicans to limit the powers of the Speaker (sound familiar)? The Cheney’s called Cannon “the most powerful Speaker the House had ever known,” but he came out of the fight weakened and stripped of his power to solely appoint the members of the Rules Committee. More recently, a motion to vacate was filed by Rep. Mark Meadows against Speaker John Boehner in 2015. Though it was never voted upon, Boehner ultimately resigned. McCarthy can’t be any weaker and the Freedom Caucus already has the ability to remove him whether one member or ten have to offer the motion. This change will change nothing.
  • More seats on the Rules Committee. In another echo of great House battles from history, the rebels are demanding more seats on the powerful Rules Committee for the House Freedom Caucus. Politico first reported McCarthy is prepared to give the Freedom Caucus two seats on the Rules Committee, which oversees bringing bills to the floor. Some members are demanding four seats. Given the power of the Freedom Caucus membership, either representation is unlikely to change their influence over policy and floor scheduling.
  • An open rule for Appropriations bills. The rebels want a requirement that Appropriations bills come to the floor under an “open rule,” meaning that any member could offer any germane amendment to a bill on the floor. This is the biggest and most important change, and where the highest level of opportunity for housers resides. These changes would make House committee chairs much more powerful and could restore what is known as “regular order,” where bills are debated and amended in the relevant committee and sent to the floor where a rule governing procedure allows for amendments germane to that rule. Under an open rule, bipartisan housing legislation could be offered as an amendment to the House Transportation and HUD Appropriations bill. A broader open rule would also open tax bills to bipartisan amendments. While this scenario is a longshot, it is important to recall it is how the House has been run for most of its existence.
  • Earmark transparency. Under the proposed rules, earmarks for specific spending will require a stand-alone vote to ensure that pork-barrel spending isn’t hidden in Appropriations bills. Earmarks are often derided as “pork barrel” spending and were banned during much of the 21st century. However, earmarks are also the grease that makes the gears of government work. While earmarks won’t be buried in must-pass legislation, they could still win bipartisan support on the floor if tied to other provisions that together add up to a winning combination.

The 118th Congress will be one of the most exciting, chaotic and toxic sessions of Congress in over a century. But it could also present more opportunity for housers as well. Two very different things can be true at once, and we will soon learn if this will be true for bipartisan housing policy.

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