The administration has proposed an about-face in the nation's low-income housing policy, calling for an abrupt halt to virtually all government-assisted rental housing construction and proposing that the poor pay substantially more of their own housing costs.
It also plans to cut back substantially on credit programs that for decades have helped the middle class buy their own homes--the Government National Mortgage Association, which supports FHA- and VA-insured mortgages, and the Farmers Home Administration (FmHA).
The budget would continue community development programs at current levels, $3.5 billion for community development block grants and $440 million for urban development action grants. It also mentions a new administration proposal for urban enterprise zones--involving tax incentives to businesses that locate in depressed areas--to cost $100 million in fiscal 1984.
The fiscal 1983 budget announced yesterday would put 106,000 low-income families on a rent "voucher" system--grants from the government directly to the families, who could use it to pay for any rental housing they could find. Under the current so-called Section 8 construction program, the government subsidizes new low-income apartment buildings for 30 years.
And as the form of the subsidy changes, so does the amount. Currently, families pay up to 25 percent of their income for federally assisted housing. Under new proposed rules, they would get a grant based on their income level, but could pay any percentage of their income for housing. The average subsidy would be about $2,000 a year, the Housing and Urban Development Department said.
Most of the vouchers would go to families that already receive federal housing assistance of some kind, rather than increasing the number of assisted persons. This would reverse a trend of past years when housing subsidies rose rapidly, with hundreds of thousands of assisted units added each year.
There now are about 3.4 million units of subsidized housing, and HUD expects this to rise to 3.8 million units by 1985, mainly because of projects already in the pipeline.
The administration is planning on major rescissions of funds appropriated for new housing; it, in fact, would rescind more than enough to pay for all its proposed subsidized housing for fiscal 1983. The budget would rescind $9.4 billion of the $27.6 billion for fiscal 1982 subsidized housing programs, canceling out about 145,000 units of planned new construction. The total to be spent for subsidized housing in fiscal 1983 is estimated at $7.5 billion.
The commitment level for the Government National Mortgage Association, Ginnie Mae, would be cut to $38.4 billion in fiscal 1983, from $64 billion in 1981 and $48 billion in 1982. HUD Secretary Samuel R. Pierce Jr. said at a press briefing that the administration does not plan to phase out the Ginnie Mae program, although the Office of Management and Budget clearly wants to do that. Ginnie Mae turns FHA- and VA-insured loans into securities, providing backing for the government credit programs.
The FHA commitment level would be cut to $35 billion from $40 billion and would be targeted to first-time home buyers, inner cities and condominiums. Interest ceilings on FHA-insured mortgages would be eliminated, and interest rates would float with the market rather than being set by HUD.
Farmers Home Administration credit programs for rural housing would be slashed to $1.1 billion, less than a third of their fiscal 1982 level of $3.7 billion.
Asked what presidential counselor Edwin Meese III was referring to Thursday when he said the administration planned to propose a major housing initiative within the next two or three weeks, Pierce replied, "You've got me."