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Reforming HUD - US Department of Housing and Urban Development

National Review, July 31, 1995 by Robert Stowe England

THE Department of Housing and Urban Development is not just part of the welfare state; it is an engine that intensifies the social pathologies engendered and sustained by the failed welfare system.

HUD does this by concentrating households headed by non-working single mothers in tight geographic locations where the moral norms of society are observed mostly in the breach and where the rule of law is an oxymoron. This maelstrom of social decay can infect surrounding neighborhoods, creating what one Democratic senator has aptly called ``zip codes of pathology.'' The congressional Republican leadership realizes that broad welfare reform must address the role of subsidized housing, and in late June it added the abolition of HUD to its welfare-reform agenda. HUD, the quintessential Great Society department, was created in 1965 with the best of intentions: to create decent housing for the poor.

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Exactly the opposite has happened. Except for housing for the elderly and handicapped, subsidized housing is often the worst housing available. Subsidized housing has failed for several reasons. HUD's policies have increasingly segregated the poorest of the poor from working families and enhanced the financial benefits of not working. In fact, rental subsidies are often worth more than direct welfare payments. Furthermore, developers often fail to maintain their property so that they can eventually collect large subsidies for repairs. While the failures of public housing and subsidized housing have been recognized for decades, HUD's programs have gone forward unabated primarily because they have served Washington's entrenched political interests. The status quo has been vigorously supported by housing activists, private developers, and local public-housing officials. Liberals in Congress, like Barney Frank (D., Mass.), have led the battle to preserve all existing subsidized units, regardless of cost. This so-called ``preservation program'' pays developers huge sums to cover the difference between the property value in the free market and its value as subsidized housing restricted to very-low-income tenants -- a program the HUD inspector general has rightly called ``a ripoff.'' BUT the political climate has finally started to turn against HUD. Last summer, the National Academy of Public Administration, commissioned by the old Democratic Congress to study HUD's problems, recommended that HUD be radically reformed, and that if the reforms did not turn the department around within five years, it should be disbanded. After the Republican landslide in November, the Clinton Administration actually floated the idea of abolishing HUD entirely. But HUD Secretary Henry Cisneros, taking a cue from Al Gore's reinventing government initiative, persuaded the White House to support a plan to reinvent HUD instead. Cisneros's Reinvention Blueprint calls for the termination of all project-based subsidies (except those for the elderly and the disabled) and the conversion of these subsidies to tenant vouchers and certificates. This is a big step in the right direction. Tenants, free to live anywhere, could choose whether to stay in the project or move elsewhere. This would end the segregation of the poorest welfare families from the working poor, and help integrate them into the American mainstream, where social pressures could influence their behavior in a positive way. It would also force project developers to compete for tenants, thereby improving living conditions at the surviving projects. Housing activists have maintained for years that vouchers are too expensive. Yet, the most complete study of housing costs, done by the Office of Management and Budget in 1988, found that household-based assistance given to the tenants cost less than half what project-based assistance given to the landlords cost.

Vouchers, for example, cost $27,892 per household. Section 8 Housing, which gives subsidies to the developers based on the incomes of the tenants, costs $58,575 per household. Public housing, built and managed by public-housing authorities, cost $69,863 per household. While Cisneros's Reinvention Blueprint recognizes the major flaws in HUD, it falls short of what is really needed to reform public housing. As former HUD Secretary Jack Kemp puts it, ``The American people do not want to reinvent government, they want to reduce the role of government.'' The Republican plan incorporates Cisneros's idea of vouchers but places a five-year limit on their use. It gives states the option to run the voucher program and converts all other HUD programs into block grants. The proposal is sponsored in the House by Sam Brownback (Kan.) and Sue Myrick (N.C.). In the Senate, the key sponsors are Lauch Faircloth (N.C.) and Spence Abraham (Mich.). The plan recognizes that housing is first and foremost a local issue. As Representative Myrick, a former mayor of Charlotte, N.C., puts it, ``The age of centralized bureaucracies solving all problems for all the people is over.''

Reforming HUD - US Department of Housing and Urban Development

National Review, July 31, 1995 by Robert Stowe England

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