The Roundtable’s Director of Policy Research Jack Salmon testified before the U.S. Senate Budget Committee this week on the housing affordability crisis. Testifying in front of Chairman Sheldon Whitehouse (D-RI), at the invitation of Ranking Member Charles Grassley (R-IA), Salmon addressed head-on arguments that more government spending is the way to handle the housing crisis.
Rather than adding to federal debt and fueling inflation in the housing market, Salmon said generous Americans are coming together through philanthropy to address our pressing social problems. Unlike the federal government, philanthropy is creative, nimble and active in our unique, vibrant communities throughout the country. Most importantly, Salmon said the housing crisis is complex, and philanthropy is positioned to tackle the multiple factors behind the issues.
KEY EXCHANGE:
Sen. Ron Johnson (R-WI) asked Salmon to discuss the different approach philanthropy takes when tackling homelessness like addressing workforce development, drug addiction recovery and mental health counseling.
“Government often takes a top-down approach to these sorts of issues and so it’s not as effective in tackling the underlying issues,” answered Salmon. “When it comes to issues like homelessness … these things are often driven by different types of other issues whether it’s detachment from the labor market, they can’t find a stable job, or they have addiction problems or mental health issues. Philanthropy is better at specifically targeting these issues and helping these people get back on their feet, get stable jobs, to live independently to have that self-responsibility and that pride and that dignity.”
As Congress prepares for a major tax reform debate in the coming year, the Roundtable will continue to speak out on protecting philanthropy and donor freedoms because we believe private, voluntary action is the most effective approach to addressing our complex problems. To defend this unique American value, heading into 2025, we must also defend what makes generous philanthropy possible: capitalism, free markets and entrepreneurship.
Watch the entire hearing here.
Read Salmon’s full testimony here.
Salmon’s full testimony as prepared for the record:
Chairman Whitehouse, Ranking Member Grassley, and distinguished members of the Committee, thank you for the opportunity to testify before you today.
My name is Jack Salmon, and I am the Director of Policy Research at the Philanthropy Roundtable. Philanthropy Roundtable is a mission-driven organization which believes that a strong private sector, supported by a free enterprise system, is the bedrock for the creation of the private wealth that makes philanthropy possible.
In my remarks today I will talk about the bigger picture, considering our nations fiscal condition, and why worsening this condition through yet more spending would be harmful to the long-term well-being of all Americans. I will also highlight the fact that the often-overlooked charitable sector is rising to the challenge of addressing homelessness and housing affordability.
Proposals from the Harris campaign include plans such as a $25,000 down payment for first time home buyers, which will add $224 billion in new deficit spending. Attempts to address housing affordability by further subsidizing demand will be counterproductive and make housing affordability worse. But more than this, such policies ignore the broader economic challenges we face, particularly the nation’s deteriorating fiscal situation.
The nation’s fiscal situation has never been worse. Debt held by the public is now more than $28 trillion, while total public debt outstanding is over $35 trillion. If economic growth is slower or interest rates are higher than baseline models forecast, then public debt could reach 217% of GDP over the coming 30 years.
As our debt burden has continued to grow unabated, rising interest rates have spiked the cost of servicing the debt. This means that policymakers have less fiscal space to commit spending toward their policy priorities.
But more than public spending crowd out, a higher public debt burden diminishes the economic growth potential of our broader economy. This should be especially concerning for those who care most about Americans at the lower end of the income distribution. Lower rates of economic growth mean less revenue potential for governments to support those who need it most, but it also means less job creation, lower wage growth and diminished living standards.
Another way in which our spiraling debt burden diminishes living standards is through inducing spikes in inflation. In recent years we experienced the largest spike in inflation in four decades. Prices today are 20% higher than at the start of 2021, while the cost of shelter is 23% higher.
An academic article published last year found that the ARP fiscal stimulus was primarily responsible for the spike in inflation we witnessed in recent years. The authors noted that due to unfunded spending, it may take until 2025 for inflation to retrench to 2% target.
As economists at the Federal Reserve Bank of Dallas pointed out in research published last year, high inflation disproportionally hurts low-income households the most. Proposals by policymakers to further induce demand will only worsen the cost-of-living crisis that American families are already dealing with.
It’s not all doom and gloom. While most people know someone who has been impacted by either the homeless crisis or who struggles to find affordable housing, charities around the country have been doing inspiring work alleviating homelessness by addressing the underlying causes such as mental health, unemployment and addiction recovery.
Take for example, Texas based organization, Mobile Loaves and Fishes, which helps the homeless by providing meals, housing, and income opportunities to help those in crisis get back on their feet. Residents in the Community First! Village have an opportunity to earn income via different onsite programs, instead of getting stuck in the never-ending cycle of poverty and homelessness.
Another example is Step Denver, a Colorado-based organization that works men through a Steps for Success program which helps them end the cycle of addiction and become productive members of society. The program appears to be working—82% of alumni are currently employed and 89% live in stable housing. The program has done so well, they have plans to expand to Colorado Springs, Phoenix, Albuquerque and other cities.
Finding a solution isn’t simply about providing affordable housing. It’s about adequately addressing what created the problem in the first place.
Private philanthropy is already rising to the challenge of alleviating homelessness and affordable housing crises, but their work is undermined when government pursues anti-growth policies. Rather than subsidizing demand through increased government spending and redistribution, policymakers should focus on policies that induce economic growth, not more public debt.
Thank you and I look forward to answering any questions you might have.
Read Salmon’s full testimony here.
