Republicans dismiss fears that their debt ceiling bill would make the housing crisis worse for 1 million families as 'scaremongering'

• House Republicans' debt ceiling bill would cut significant funding from federal housing services. 
• HUD is warning that the most vulnerable Americans would be adversely impacted by the cuts. 
• But a half dozen Republican senators who spoke with Insider dismissed those concerns. 

The Department of Housing and Urban Development is warning that if Congress passes the House's debt ceiling legislation, more than 900,000 low-income households would lose housing assistance.

The House's Limit, Save, Grow Act of 2023, which squeezed by with a 217-215 vote largely along party lines last week, would cap federal spending at 2022 levels by cutting deep into programs, including federal housing assistance. 

The administration is warning that it would have particularly severe impacts on the nation's most vulnerable. HUD Secretary Marcia Fudge said the agency would suffer "the most devastating impacts in HUD's history" if the funding cuts in the bill are made law. Fudge said funding increases in 2023 are needed to maintain assistance to families who already receive it and are facing major housing cost increases amid the affordability crisis. 

By capping the federal budget at 2022 spending levels, 350,000 households would lose their housing choice vouchers, 87,000 families would lose rental assistance funds, and 54,000 unhoused people and domestic violence survivors would lose housing assistance, among a slew of other impacts, Fudge said in a letter to Rep. Rosa DeLauro, a Connecticut Democrat and the House Appropriations Committee ranking member. More than 400,000 other households could be affected by the cuts. 

Pro-housing groups have condemned the bill's cuts to housing programs.

"There is already tremendous work needed to address the systemic barriers that prevent equal access to housing and financial services and create a fairer and more equitable society," Nikitra Bailey, the executive vice president of the National Fair Housing Alliance, said in a statement after the bill's passage. "The House GOP bill just adds a flame to the burning ember of inequity." 

The National Association of Homebuilders also voiced concern with cuts to funding for affordable housing. 

"Significant reductions to discretionary spending may also weaken federal investments in workforce and housing programs, which are critical to our nation's ability to produce affordable housing," the group said in a statement last week. "These investments would be jeopardized under the spending freeze and growth limits imposed by the legislation."

But half a dozen Republican senators told Insider that those concerns are misplaced. 

Sen. JD Vance, an Ohio Republican and member of the Senate Banking, Housing, and Urban Affairs Committee, insisted that HUD is bloated and that spending reductions are necessary to control inflation, which contributes to the increased cost of housing. 

"A large share of the HUD budget I think actually could be cut and could be cut in a way that preserves housing assistance for needy families," he told Insider.

He went on, "It's being positioned as congressional Republicans are heartless because they want to pass these spending cuts. Well, I think the more heartless thing to do would be to do nothing, to allow the inflation to continue to spiral out of control, higher interest rates, higher rent payments, higher mortgage payments for American families."

Republican lawmakers insisted that Democrats have overblown the adverse impacts of funding cuts, despite rising costs. Sen. Ted Cruz, a Texas Republican, accused Democrats and administration officials of "scaremongering."

"The House bill reduces spending to the levels we had in 2022. The last I checked, 2022 was not a horrid apocalypse sweeping across our country," Cruz told Insider on Wednesday. "The astonishing proposition the Democrats want everyone to believe is that if we don't keep spending like it's a pandemic, there will be suffering and misery and cats and dogs will live together in sin." 

Sen. Shelley Moore Capito, a West Virginia Republican, told Insider that Biden administration officials "have been instructed to paint a dire picture of what would happen" under the House bill. She added that "certainly, there's housing shortages," but that she didn't want to delve into specifics. 

The House debt ceiling legislation almost certainly won't pass the Democratic-controlled Senate, and Biden has already vowed to veto it even if it does. Biden has scheduled a meeting with the top members of both parties in the House and Senate for May 9 to continue negotiations over raising the debt ceiling.

Sen. Ron Johnson, a Wisconsin Republican, told Insider the House bill's cuts are "the minimum of what we need to do to get our fiscal house in order."

A group of Senate Republicans held a press conference on Wednesday to praise the House debt ceiling legislation and demand that the Senate pass the bill or a very similar version of it.

Sen. Rick Scott, a Florida Republican, said there was "nothing unreasonable" in the House bill and insisted the Senate "oughta pass all of it." Scott dismissed concerns about one of the bill's most controversial components — stricter work requirements for those who rely on Medicaid and food stamps. 

"It's not unreasonable to say that, if you're able bodied, you've gotta work. What's unreasonable about that?" Scott said. "It all made sense to every American."