During the 2008 presidential campaign, Barack Obama promised to create an Affordable Housing Trust Fund to spur the development of affordable housing. After nearly eight years of false starts, the fund finally began operating in 2016, though the needs are so great that the fund won't get very far in ameliorating them.
As we've previously noted, Obama's idea was to pay for the new affordable housing by using a portion of the annual profits of two government-sponsored housing enterprises, Fannie Mae and Freddie Mac. President George W. Bush signed a law in July 2008 that would have done exactly that. However, the housing crash in 2008 and 2009 revealed large debts held by Fannie and Freddie. Profits disappeared, and both were forced into conservatorships.
Fannie Mae and Freddie Mac were finally allowed to provide dollars to the trust fund after Obama appointed Mel Watt to head the Federal Housing Finance Authority. In December 2014, Watt directed the two entities to begin setting aside the funds in 2015 and to make these funds available by March 2016.
In April 2016, Julián Castro, Obama's secretary of Housing and Urban Development, announced the first $174 million in allocations for the fund. A second portion of the fund, the Capital Magnet Fund, was given an additional $91.5 million.
These funds would be used for "creating new and permanently affordable housing for very-low-income and extremely-low-income residents—people who are at great risk of falling through the cracks," the website CityLab reported,
A 2015 HUD report to Congress estimated that the class of Americans in "worst-case" housing scenarios in 2013 included 2.8 million families with children, 1.5 million elderly households without children and 2.7 million other 'nonfamily' households."
That means that the money allotted won't go very far.
In the meantime, despite the long wait to set up the fund, its future is in doubt. Rep. Jeb Hensarling, R-Texas, and Rep. Ed Royce, R-Calif., tried but failed to prevent the trust fund from starting up in the first place in 2014, arguing that taxpayers should be fully repaid for Fannie and Freddie's losses before any proceeds are spent on other federal programs. Royce even called the trust fund a "slush fund."
With a new Republican administration, they or other critics would have an opportunity to target the fund again.
As for the other part of Obama's original promise -- to "restore cuts to public housing operating subsidies" -- the Obama administration has fared less well.
According to the National Low Income Housing Coalition, public housing operating subsidies have been cut from $4.78 billion in fiscal year 2010 to $4.5 billion in fiscal year 2016. The group says those cuts are a result of budget spending caps known as sequestration.
Ultimately, the Obama administration did start the flow of money into an affordable housing trust fund. However, the amount is smaller and it began arriving later than originally anticipated, Meanwhile, public housing operating subsidies have actually fallen rather than remained steady or increased. We rate this a Compromise.