The failure to offer assistance to all individuals of the types who become homeless is a major defect of the current system of low-income housing assistance. Fundamental reforms of the system that are justified on other grounds would eliminate this defect. Plausible assumptions about taxpayer preferences argue strongly for replacing the current patchwork of non-entitlement low-income housing programs with an entitlement housing assistance program for the poorest individuals. Evidence on the excessive costs of all forms of project-based housing assistance argues for exclusive reliance on tenant-based assistance. Replacing the current system with an equally-costly entitlement housing voucher program would insure that housing assistance is available to all individuals who would otherwise be homeless.

This chapter describes the rationales for major reforms of low-income housing assistance in more detail and a politically feasible set of transitional reforms that would disproportionately benefit individuals who would otherwise be homeless. The key to understanding the benefits of the proposed reforms to homeless people is to recognize that almost all homeless individuals have extremely low incomes. Their median is less than half of the relevant poverty threshold. Reforms of mainstream programs that concentrate more assistance on the poorest individuals will disproportionately benefit individuals who would otherwise be homeless. Adopting all of the transitional reforms would provide the long-term housing assistance needed to serve all homeless households without any increase in spending and leave more of the budgets of programs for the homeless for solving their other problems.