Housing Issues in the 111th Congress

Maggie McCarty, Coordinator
Specialist in Housing Policy

Libby Perl, Coordinator
Specialist in Housing Policy

Housing issues related to the recent turmoil in U.S. housing markets, as well as perennial issues related to the housing needs of low-income individuals and families, were prominent in the 111th Congress. The recent recession that was, in part, both a cause and a result of issues in the housing finance system put legislation designed to address current foreclosures and prevent a future crisis on the congressional agenda. At the same time, the 111th Congress faced questions about how best to meet the affordable housing needs of low-income and vulnerable populations, particularly as unemployment climbed and the economy worsened. While the recession officially ended during the first session of the 111th Congress, housing markets in many parts of the country continued to experience the effects of an economic downturn. The 111th Congress considered a number of measures to shore up housing markets and to address issues related to both housing finance and housing assistance for low-income populations. While a number of measures were enacted, other issues were left unresolved at the end of the 111th Congress.

This report summarizes housing issues that were considered in the 111th Congress. The report divides issues into three main sections: “Housing Finance and Homeownership,” “Housing for Low-Income Individuals and Families,” and “Other Issues.”

Within the realm of housing finance and homeownership, the 111th Congress enacted the Dodd- Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act, P.L. 111-203). While not exclusively focused on housing, the Dodd-Frank Act did include foreclosure preventionrelated provisions and changes to mortgage origination standards and practices. Notably absent from the Dodd-Frank Act were changes to the way in which the Government Sponsored Enterprises (GSEs)—Fannie Mae and Freddie Mac—are structured and their role in the mortgage market, although the 111th Congress did feature discussions regarding reform of the GSEs. The 111th Congress also enacted tax provisions meant to bolster housing markets by providing a tax credit for first-time homebuyers. Foreclosure issues and FHA reform were other issues considered by the 111th Congress.

Congress also enacted laws that made changes to existing programs that provide housing assistance to low-income individuals and families. The Homeless Assistance Grants, administered by the Department of Housing and Urban Development (HUD) were amended to give communities greater flexibility in providing housing and services to homeless individuals (P.L. 111-22). The programs that fund housing for low-income seniors and individuals with disabilities (Section 202 and Section 811, respectively) also were changed to allow greater integration of funding from non-HUD sources in housing developments (P.L. 111-372 and P.L. 111-374). The 111th Congress also considered legislation related to housing assistance programs that was not ultimately enacted, including reform to HUD’s largest assistance programs: public housing and the Section 8 Housing Choice Voucher program.

In addition to these activities, the 111th Congress enacted the American Recovery and Reinvestment Act (P.L. 111-5). This legislation, aimed at stimulating the economy, provided additional appropriations to several HUD programs


Date of Report: January 10, 2012
Number of Pages: 21
Order Number: R41616
Price: $29.95

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Pension Benefit Guaranty Corporation (PBGC): A Fact Sheet

John J. Topoleski
Analyst in Income Security

The Pension Benefit Guaranty Corporation (PBGC) is a federal government agency established in 1974 by the Employee Retirement Income Security Act (ERISA; P.L. 93-406). It was created to protect the pensions of participants and beneficiaries covered by private sector, defined benefit (DB) plans. These pension plans provide a specified monthly benefit at retirement, usually either a percentage of salary or a flat dollar amount multiplied by years of service. Defined contribution plans, such as §401(k) plans, are not insured. The PBGC is chaired by the Secretary of Labor, with the Secretaries of Treasury and Commerce serving as board members.

The PBGC runs two distinct insurance programs: single-employer and multiemployer plans. Multiemployer plans are collectively bargained plans to which more than one company makes contributions. The PBGC maintains separate reserve funds for each program. In FY2011, the PBGC insured about 27,066 DB pension plans covering 44.2 million people. It paid or owed benefits to 1.5 million people and took in 152 newly terminated pension plans. A firm must be in financial distress to end an underfunded plan. Most workers in single-employer plans taken over by the PBGC receive the full benefit earned at the time of termination, but the ceiling on multiemployer plan benefits that could be guaranteed has left almost all of these retirees without full benefit protection.


Date of Report: January 30, 2012
Number of Pages: 7
Order Number: 95-118
Price: $19.95

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Fund for “Gifts to the United States for Reduction of the Public Debt”: Current Law and Proposed Legislation

James M. Bickley
Specialist in Public Finance

The reduction of the federal public debt is regarded as an important goal by many taxpayers. The Congressional Budget Office (CBO) presents the long-term budget outlook under two scenarios.1 First, the extended-baseline scenario adheres closely to current law and assumes that “many adjustments that law-makers have routinely made in the past—such as changes to the AMT [alternative minimum tax] and to the Medicare program’s payments to physicians—will be made again.”2 Under this extended-baseline scenario, federal debt held by the public would rise from 69% of GDP (gross domestic product) in FY2011 to 84% of GDP in FY2035.3 Second, the “alternative fiscal scenario embodies several changes to current law that would continue certain tax and spending policies that people have grown accustomed to.”4 Under this scenario, federal debt held by the public would rise from 69% of GDP in FY2011, to more than 100% of GDP in FY2021, and nearly 190% of GDP in FY2035.5

Under current law, an individual may make a contribution to reduce the national debt either online or by check payable to the Bureau of the Public Debt.6 Contributions may be taken as a charitable contribution deduction by taxpayers who itemize. These contributions are deposited in a Treasury fund titled “Gifts to the United States for Reduction of the Public Debt,” subsequently referred to in this report as the “Public Debt Reduction Fund.”7

Five bills have been introduced in the 112th Congress to add another method of making a contribution to reduce the national debt. These bills would permit taxpayers to designate a donation on their tax returns or their Form W-4. An employee completes Form W-4 in order for the employer to withhold the correct federal income tax from the employee’s pay.

In order to evaluate these bills, this report describes current law for the Public Debt Reduction Fund and discusses proposed legislation. The amounts of contributions by fiscal year to the Public Debt Reduction Fund are listed in an Appendix.


Date of Report: January 23, 2012
Number of Pages: 7
Order Number: R42088
Price: $19.95

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The Small Business Lending Fund

Robert Jay Dilger
Senior Specialist in American National Government

Congressional interest in small business access to capital reflects, in part, concerns about economic growth and unemployment. Small businesses, defined as having fewer than 500 employees, have played an important role in net employment growth during previous economic recoveries. However, recent data show that net employment growth at small businesses is not increasing at the same rate as in previous economic recoveries.

Some, including President Obama, have argued that current economic conditions make it imperative that the federal government provide additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small businesses and create jobs.

Several laws were enacted during the 111th Congress to enhance small business access to capital. For example, P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA), provided the Small Business Administration (SBA) an additional $730 million, including funding to temporarily subsidize SBA fees and increase the 7(a) loan guaranty program’s maximum loan guaranty percentage to 90%. P.L. 111-240, the Small Business Jobs Act of 2010, authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund (SBLF) ($4.0 billion was issued) to encourage community banks with less than $10 billion in assets to increase their lending to small businesses, a $1.5 billion State Small Business Credit Initiative to provide funding to participating states with small business capital access programs, numerous changes to the SBA’s loan guaranty and contracting programs, funding to continue the SBA’s fee subsidies and the 7(a) program’s 90% maximum loan guaranty percentage through December 31, 2010, and about $12 billion in tax relief for small businesses. P.L. 111-322, the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to continue its fee subsidies and the 7(a) program’s 90% maximum loan guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3, 2011.

This report focuses on the SBLF. It opens with a discussion of the supply and demand for small business loans. The SBLF’s advocates argued that the SBLF was needed to enhance the supply of small business loans. The report then examines other arguments which were presented both for and against the program. Advocates argued that the SBLF would increase lending to small businesses and, in turn, create jobs. Opponents argued that the SBLF could lose money, lacked sufficient oversight provisions, did not require lenders to increase their lending to small businesses, could serve as a vehicle for TARP recipients to effectively refinance their TARP loans on more favorable terms with little or any resulting benefit for small businesses, and could encourage a failing lender to make even riskier loans to avoid higher dividend payments.

The report concludes with an examination of the program’s implementation and a discussion of bills introduced during the 112th Congress to amend the SBLF. For example, S. 681, the Greater Accountability in the Lending Fund Act of 2011, would limit the program’s authority to 15 years from enactment and prohibit TARP recipients from participating in the program. H.R. 2807, the Small Business Leg-Up Act of 2011, would transfer any unobligated and repaid funds from the SBLF to the Community Development Financial Institutions Fund “to increase the availability of credit for small businesses.” H.R. 3147, the Small Business Lending Extension Act, would extend the Treasury Department’s investment authority from one year to two years.


Date of Report: January 27, 2012
Number of Pages: 30
Order Number: R42045
Price: $29.95

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Small Business Set-Aside Programs: An Overview and Recent Developments in the Law

Kate M. Manuel
Legislative Attorney

Erika K. Lunder
Legislative Attorney

In government contracting law, a “set-aside” is a procurement in which only certain businesses may compete. Set-asides can be total or partial, depending upon whether the entire procurement, or just a severable segment of it, is so restricted. Eligibility for set-asides is typically based on business size, as well as demographic characteristics of the business owners. Currently, under the Small Business Act, there are set-aside programs for (1) small disadvantaged businesses participating in the 8(a) Minority Small Business and Capital Ownership Development Program (8(a) small businesses); (2) Historically Underutilized Business Zone (HUBZone) small businesses; (3) women-owned small businesses; (4) service-disabled veteran-owned small businesses; and (5) small businesses not belonging to any of the prior four categories.

These programs are all government-wide and could potentially be used by any agency. However, the programs differ in their eligibility requirements and the types of contracting preferences they provide for participating small businesses. For example, there are some significant differences among the programs as to when set-asides may be used (e.g., the value of qualifying contracts). Additionally, while the Small Business Act provides special authority for agencies to make solesource awards to 8(a), HUBZone, and service-disabled veteran-owned small businesses, solesource awards to women-owned or other small businesses are generally possible only under the authority of the Competition in Contracting Act (CICA). CICA authorizes noncompetitive awards, or awards made after soliciting and negotiating with only one source, to any size firm when certain conditions exist (e.g., single source; urgent and compelling circumstances). Moreover, only HUBZone small businesses qualify for “price evaluation preferences” in unrestricted competitions.

In addition, the Veterans Benefits, Health Care, and Information Technology Act of 2006 (P.L. 109-461) provides the Department of Veterans Affairs (VA) with additional authority to award set-aside or sole-source contracts to veteran-owned and service-disabled veteran-owned small businesses. Contracts with a value of less than $150,000 may be awarded on a set-aside or solesource basis at the contracting officer’s discretion. Contracts valued in excess of $150,000 must generally be awarded via a set-aside, although sole-source awards of up to $5 million may be made in certain circumstances.

The 111th Congress enacted legislation (P.L. 111-240) amending the statutory language that the Government Accountability Office (GAO) and U.S. Court of Federal Claims had construed, in a series of decisions issued in 2008-2010, as requiring agencies to give set-asides for HUBZone small businesses “precedence” over those for 8(a) and service-disabled veteran-owned small businesses. However, in 2010-2011, GAO and the Court of Federal Claims issued several other decisions interpreting the statutes and regulations governing the set-aside programs that could also affect the number of awards to such businesses. For example, in Aldevra, GAO found that, in certain circumstances, the VA must use set-asides for veteran-owned small businesses, instead of procuring goods or services through the Federal Supply Schedules. Other decisions have similarly found that procurements of architect-engineer services by the VA are subject to set-asides for veteran-owned small businesses, and that procurements from such businesses take precedence over procurements from the AbilityOne Program for blind individuals and individuals with severe disabilities.


Date of Report: January 24, 2012
Number of Pages: 31
Order Number: R41945
Price: $29.95

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