The House reconciliation bill, narrowly passed by Republicans, claims to promote affordable housing by reforming the Low-Income Housing Tax Credit (LIHTC). At first glance, it appears to offer practical solutions: a temporary 12.5% increase in allocations, relaxed financing thresholds for developers, and better access to credits in rural and tribal areas.
Unfortunately this is not a housing bill, but an austerity weapon.
While the LIHTC provisions appear technical and even promising, they are dwarfed by the catastrophic social damage inflicted by the rest of the package—billions in cuts to Medicaid and SNAP, the gutting of tax credits for working families, and an aggressive expansion of immigration enforcement.
For California, a state with the highest poverty-adjusted housing costs in the country, this is a direct assault on both the housing stability and economic survival of millions.
It’s a bait-and-switch on a national scale: pitch a bill as pro-housing, then strip away every lifeline that makes housing sustainable in the first place.
California’s housing crisis is well-documented. The state needs over 1 million new affordable units to meet current demand, and every level of government faces pressure to build. But the assumption that housing insecurity can be solved simply through tax credits and developer incentives is profoundly mistaken.
What keeps people in housing is not just supply—it’s stability. It’s the ability to afford rent after paying for health care, child care, food, and transportation. When that stability is ripped away, families don’t just struggle—they fall into homelessness. The House reconciliation bill does exactly that: it dismantles the economic supports that keep people housed while pretending to advance affordability through one narrow tool.
Consider this: the same bill that modestly boosts LIHTC allocation slashes over $800 billion in Medicaid funding, with California bearing a massive portion of the fallout. More than 15 million Californians are covered by Medi-Cal, and nearly 5 million of them are low-income adults who gained coverage through the Affordable Care Act expansion. These are people who often work low-wage jobs, live paycheck to paycheck, and are one medical emergency away from eviction. Under the House proposal, many of them would be required to meet new work reporting mandates or lose coverage altogether.
These work requirements do not promote work—they promote disenrollment. California estimates that between 2.3 and 3.4 million adults could lose Medi-Cal coverage under the new red tape. These individuals wouldn’t be getting better jobs—they’d be getting sicker, poorer, and more likely to fall into homelessness.
The damage doesn’t stop at health care. The bill includes a nearly 30% cut to the Supplemental Nutrition Assistance Program (SNAP), known in California as CalFresh. Over 5.5 million Californians rely on CalFresh to put food on the table, including children, seniors, and working adults in low-wage sectors like agriculture, caregiving, and service work.
Under the bill, these Californians would face harsher time limits, new work requirements, and major benefit reductions. If enacted, California would be forced to come up with $3.7 billion per year in new funds just to maintain existing CalFresh benefit levels. That’s nearly $4 billion pulled from a state budget already facing shortfalls—money that would otherwise go toward affordable housing, homelessness programs, or renter protections.
Food insecurity and housing instability go hand-in-hand. When people have to spend more on groceries, they fall behind on rent. When families can no longer count on basic nutrition supports, they are pushed toward shelters, encampments, or car dwelling. And when children go hungry, their education and long-term economic mobility suffer, deepening the very cycles of poverty the bill claims to solve.
The House bill also escalates its attack on immigrants—especially undocumented Californians and mixed-status families who are essential to the state’s workforce and economy. In one particularly cruel provision, the bill penalizes states like California for providing health coverage to immigrants through Medi-Cal, effectively coercing the state into ending this life-saving program or swallowing a staggering $27.5 billion funding shortfall over six years.
If California chooses to keep its promise of coverage, the additional cost—$3.2 billion in the first year alone—will come at the expense of other services, including housing and homelessness programs. If it capitulates, over 1.6 million Californians, including 218,000 children, could lose access to basic health care.
The bill also eliminates access to subsidies in Covered California for thousands of immigrants, including DACA recipients, refugees, and survivors of domestic violence. At a time when the state is trying to expand care, the federal government is pulling the rug out from under entire communities.
And the crackdown doesn’t stop at benefits. The bill allocates $150 billion in discretionary enforcement funds to supercharge Trump-era immigration raids, detention, and deportation efforts—targeting the very same workers who build our homes, care for our children, and grow our food. These enforcement measures have a chilling effect: they drive immigrants underground, away from government services and community support, leading to greater exploitation, instability, and homelessness.
Even the housing provision at the heart of the bill—the reforms to LIHTC—comes with a catch. LIHTC operates on the premise that corporations and banks will invest in affordable housing projects in exchange for tax credits to offset their federal tax liability. But if that liability is slashed—as this bill proposes to do—those tax credits lose value. That means less investor demand, lower tax credit pricing, and fewer affordable housing projects getting off the ground.
In other words, the same corporate tax cuts that are being touted as pro-growth could undercut the very mechanism being used to finance affordable housing. It’s a classic example of one hand giving while the other hand takes away—and in this case, the taking far outweighs the giving.
Moreover, these LIHTC adjustments are temporary, while the social service cuts and tax breaks are structural and long-term. What happens when the three-year boost to allocations expires but the damage to Medicaid, SNAP, and the tax code remains?
This isn’t accidental—it’s austerity by design. The House bill reflects a broader political agenda: shrink the welfare state, reward the wealthy, and pit working people against one another under the guise of fiscal responsibility. But austerity doesn’t balance budgets—it shifts costs downward, onto states, cities, and ultimately families already living at the edge.
For California, a state already battling a surge in homelessness, mental health crises, and rising housing costs, the consequences will be catastrophic. More people without food. More people without care. More people without homes.
There’s a saying in housing policy: you can’t build your way out of poverty. Yet this bill pretends you can—while tearing apart every safety net that keeps poverty at bay.
Yes, we need LIHTC reform. Yes, we need more affordable housing production. But if that comes bundled with cuts to food, health care, education, and immigrant protections, it’s not reform—it’s a Trojan horse. It’s a policy framework that pays lip service to housing while driving more Californians into tents, shelters, and the streets.
If we’re serious about addressing California’s housing crisis, we need federal partners who understand that housing is not a siloed issue. It’s connected to everything—wages, health, family stability, immigration status, and access to basic needs.
