The $50 billion failure: How federal homeless policy betrays Americans
If Elon Musk’s Department of Government Efficiency is seeking additional targets in the fight against waste, fraud and abuse, he should look no further than to the federal government’s sprawling network of failed homeless programs, riddled with inefficiencies and pouring billions into a crisis that only gets worse.
Newly appointed HUD Secretary Scott Turner wasted no time identifying $260 million in savings at HUD, a crucial first step in streamlining an agency long plagued by inefficiencies. But this is just the tip of the iceberg.
DOGE has an opportunity to go much further, exposing the vast waste in the federal homelessness-industrial complex and redirecting billions toward policies that will actually deliver results.
For more than a decade, our nation has been locked into a single, federally mandated approach to homelessness known as "Housing First." This model, which promises “in perpetuity” housing with no requirements — for sobriety, for participation in treatment, or for seeking work — was championed by former President Barack Obama as the solution that would end homelessness within 10 years.
Instead, homelessness has exploded to record levels. Overdose deaths have surged, and public disorder has reached a breaking point.
The federal government is the largest single funder of homelessness programs, distributing most of its funds through local governments. Since most cities and counties rely heavily on these federal dollars — often contributing less of their own funding in comparison — their mandate effectively not only dictates how these funds are spent but also shapes local homelessness policy. Thus, communities are left with little choice but to adhere to the Housing First model, even if it proves ineffective or misaligned with their specific needs.
The 2013 mandate of Housing First as universal policy stripped government funding from programs that required sobriety, workforce participation or mental health treatment, as well as from shelters and transitional housing, to increase the number of private housing unit subsidies — also known as vouchers — for the homeless.
The catastrophe we’re witnessing should come as no surprise. We gutted the nation’s homeless system, stripped away accountability, and then acted shocked when homelessness skyrocketed.
In the name of “compassion,” we institutionalized dependency, telling those battling addiction and mental illness — who make up nearly 80 percent of the homeless population — that they never need to seek treatment, never need to work and never need to regain independence. Then, as the crisis deepened, we doubled down on the very policies that created it.
The financial burden of this failed system is staggering, but the true cost extends far beyond the billions spent.
The U.S. now funnels more than $50 billion annually into homelessness programs. Local governments are spending upwards of $700,000 per unit to build permanent housing — often exceeding the cost of single-family homes. This figure doesn’t account for the annual operating expenses for this housing, nor the lifetime costs of housing a single individual, which can reach into the millions.
Meanwhile, encampments proliferate, businesses shutter and taxpayers are left shouldering an ever-expanding financial burden for a system that fails to deliver lasting solutions.
Worse still, this approach is costing lives. Drug overdoses have become the leading cause of death among the homeless, with rates skyrocketing year after year. Yet Housing First refuses to acknowledge that addiction treatment must be a requirement, not an afterthought. Instead, the current system enables substance abuse, allowing people to deteriorate behind closed doors rather than addressing the root causes of their homelessness.
The toll on communities has added to mass devastation. Parks, transit stations and sidewalks have become encampments, undermining public safety and livability. Law enforcement and emergency services are overwhelmed, reacting to crises instead of preventing them. Once-thriving cities are losing businesses as customers and employees no longer feel safe.
San Francisco, under then-Mayor Gavin Newsom, is a good example. It embraced "no-requirements housing" for its homeless and addicted population. Two decades and billions later, the city has housed 13,000 addicts, with 7,000 still on the streets. Businesses are fleeing due to the rampant crime and public disorder.
We cannot afford another decade or two of such costly failure.
The federal government must instead champion a “Human First” approach — one that restores dignity, demands accountability, and helps people rebuild their lives rather than just trapping them in a cycle of despair. This shift will save billions in taxpayer dollars and deliver real, lasting results.
Michele Steeb is the founder of Free Up Foundation and author of “Answers Behind the RED DOOR: Battling the Homeless Epidemic” based on her 13 years as CEO of northern California’s largest program for homeless women and children.
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