Little Political Downside in Ending CDBG

  • Vanessa Brown Calder

President Trump’s annual budget is slated for release March 11th. Although there are many decisions to make, the most challenging choices will likely be regarding what to cut.

Last year, the White House proposed a variety of cuts, as well as some spending increases. Notably, the White House proposed eliminating Community Development Block Grants (CDBG) along with a variety of other small Department of Housing and Urban Development (HUD) programs. Perhaps unsurprisingly, the mere suggestion of cuts generated spirited resistance from state and local policymakers and nonprofit groups that benefit from the program, as well as certain policy shops in D.C.

CDBG is a modern urban renewal program under which HUD allocates funding and state and local politicians decide the specific projects to spend on. The program allows state and local politicians to divide federal funds among so-called community development projects. The various businesses and politicians that benefit form an informal CDBG lobby, which has little interest in the efficacy of the program, but a lot of interest in the program enduring from year to year.

Ultimately, Congress passed on the White House’s suggestion to eliminate the program last year. If, at any point, members of Congress did consider cutting it, they must have decided that any negative attention they may have received was not politically worth it.

However, congressional Republicans may have little to lose politically in eliminating the CDBG program. CDBG spending is mainly not targeted to Republican districts. Some CDBG spending is located throughout the United States, but the big dollar spends tend to be concentrated in urban, coastal areas that don’t vote Republican.

Figure 1. CDBG spending by location, 2013-2018

CDBG spending by location, 2013-2018Data Source: U.S. Department of Housing and Urban Development

As evidenced by the map, CDBG spending is by far heaviest in coastal areas. In fact, 19 of the top 20 largest-value project grants between 2013 and 2018 were targeted to politically liberal areas including New York City, Detroit, Washington D.C., Houston, Chicago, Los Angeles, Oregon, and California.

This outcome is by design. HUD allocates CDBG money using formulas and rules which prioritize funding to locations with higher city, county, and state populations, older housing, and lags in population growth, among other things. These characteristics line up well with urban coastal areas that vote blue.

Given recent Republican reforms to the mortgage interest deduction and state and local tax deduction (SALT) – tax breaks that had disproportionately benefited politically liberal areas on the coasts – there may be an appetite to make changes to the CDBG program, which also benefits the coasts. CDBG is a spending program rather than a tax break, but in the past Republicans have signaled opposition to federal spending on properly local activities as a way to reduce federal budget deficits.

If Republicans want to aid moderate-income Americans, then there are more effective ways than the CDBG program. Federal CDBG funds could be repurposed accordingly.

Research assistance provided by Robert Orr.

Little Political Downside in Ending CDBG