FY 12 Federal Budget Cuts Proposed

There are substantial cuts proposed in the USDA budget fy 2012 (from NRHC)

  • The Budget proposes a reduction in section 502 from $1.12 billon to $200 million;
  • The budget indicates that the section 502 guarantee can pick up the slack. There is not any evidence that the guarantee, which does not include an interest subsidy, can reach very low income borrowers. The guarantee’s limited utility for low income borrowers is likely to be further diminished in a climate of rising interest rates;
  • There is substantial evidence from USDA’s own Economic Research Service that the guarantee does not work in more rural,  poorer communities and is the least available to economically distressed and lower income communities and is the ‘worst-targeted’ of all USDA guarantees;
  • With interest rates on the rise, the guarantee will continue to only reach those in higher income communities with higher incomes; and
  • The essence of budget proposal is to bring to an end the most cost effective affordable housing program in the federal government. The section 502 direct program provides 10,000 loans to families with very limited means so that they may acquire or build their own home.   The budget does not provide a plausible alternative to the section 502 direct loans.

NLIHC reports cuts of

  • 10% from the HOME program.
  • 66% from the Community Development Block Grant program (CDBG)

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