Reforming HUD - US Department of Housing and Urban Development

HUD last year estimated that it may need $10.3 billion to cover the claims against FHA insurance for multifamily housing over the next five years. The potential exposure if HUD is abolished -- the entire portfolio of mortgages for project-based housing for the poor -- could be as high as $32 billion.

Thus, the fact that the Republican leadership's plan to abolish HUD does not lose money in the short term ($17 billion will be saved in the first five years, according to Representative Brownback) is a considerable accomplishment. The HUD proposal could, nevertheless, use a little more of what Jack Kemp calls ``empowerment.'' Congress should provide funds to implement tenant management and ownership, or encourage the states to do so. This would preserve salvageable housing that might otherwise default. As Kemp suggests, Congress could also promote enterprise zones in neighborhoods where public housing is dominant, thereby bringing in business activity and jobs. Thus, while taxpayers would also gain from this plan, its prime beneficiaries would be those currently trapped in poverty in the projects.

COPYRIGHT 1995 National Review, Inc.
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