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Reconciliation without BBB – new housing legislation may still be possible

As inflation continues to grow, eating away at family finances, and the political prospects for Democrats in the midterm election shrink, chances of inflation fighting housing legislation are modestly improving. President Biden’s recent messaging is that addressing housing supply issues are an important part of his inflation-fighting strategy. As a result, the prospect for affordable housing legislation and important regulatory reform are more realistic than at any time this year.

Last week, President Biden addressed inflation in a Wall Street Journal op-ed, where he called for Congressional action on his Housing Supply Action Plan, which he said “will make housing more affordable by building more than a million more units, closing the housing shortfall in the next five years.” Two weeks earlier, President Biden’s director of the National Economic Council, Brian Deese, joined the U.S. Chamber of Commerce CEO Suzanne Clark in a joint op-ed in the Wall Street Journal on housing’s impact on the economy. They recommended several key policy recommendations long advocated by the National Housing Conference and many of its members.

“The shortfall of affordable housing hurts America’s businesses and the broader economy by preventing workers from living in areas with economic opportunities but high housing costs,” they wrote. They noted that high housing prices cost $400 billion a year in lost economic output and plays a major role in inflation. Deese and Clark called for Congressional passage of bipartisan tax credits, like the Affordable Housing Credit Improvement Act and Neighborhood Homes Investment Act, which they said “are projected to enable the construction or rehabilitation of nearly one million affordable homes.”

These statements are important for two reasons. First, they raise housing to the top tier of the President’s economic agenda for the first time. Housing is no longer a nice to have item – it is now clear need to have priority. Second, the administration was joined in this call by the powerful and conservative business lobby, the U.S. Chamber of Commerce.

The principal vehicle for passing this legislation remains the Reconciliation bill passed by both houses of Congress last November. The House passed its version of the Build Back Better Act on this vehicle last Fall, but the Senate has been unable to find 50 votes to move it forward. Rising inflation may create an opportunity for the Senate to write an entirely new bill, much smaller than the nearly $2 trillion behemoth passed in the House, by replacing the entire bill with a new inflation fighting bill, which would be much smaller and more targeted. By striking “all but the enacting clause” the Senate can insert entirely new legislation and send it back to the House, as long as it remains within the Reconciliation rules. This would allow funding for the housing tax credit provisions, as well as funding for fair housing enforcement and the Housing Trust Fund, which also contributes to increased housing production for those most in need.

Agreement among housing leaders from the right, center and left will be essential to ensure the legislation can pass. The alternative is nothing. Including fair housing funding ensures that critically important racial equity issues will not be ignored, and funding for the Housing Trust Fund, supported by the National Low-Income Housing Coalition, as well as NHC, will be critical to earning the support of progressives. No one will be fully satisfied, but this approach will make a significant down payment on additional investments should affordable housing supporters gain more seats, and some conservatives feel better able to vote for housing legislation they already support. For now, only the most direct support of legislation that increases production is possible, and even that remains a big stretch.

Working together, housing leaders can succeed in getting this important legislation enacted. Failure to do so, will ensure that we fail.

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