Abolish HUD?

When faced with a serious and persistent problem, it is often tempting to propose dramatic ideas, like blowing up existing programs and starting from scratch. Occasionally that might be useful, […]

When faced with a serious and persistent problem, it is often tempting to propose dramatic ideas, like blowing up existing programs and starting from scratch. Occasionally that might be useful, but more often it is simply overzealousness. It is more useful, though less headline-grabbing, to figure out what are the key causes of the problems and to identify what lessons policymakers can learn from past successes and failures.

In a New York Times Op-Ed column headlined, To Fight Poverty, Tear Down HUD on Friday, July 25, Columbia University sociologist Sudhir Venkatesh argued that the U.S. Department of Housing and Urban Development (HUD) is not effective in dealing either with national housing policy, the problems facing cities and their struggling suburbs, or reducing poverty. He recommended redistributing its responsibilities to other agencies, as well as creating a new, more focused agency for the core mission of fighting poverty.

From a policy perspective, the problems Venkatesh discusses are easy to solve. Other affluent nations have much lower levels of poverty and inequality, much less homelessness, fewer slums, more public transit and less use of pollution-generating cars, less economic segregation in terms of where people live, and a more rational link between where people live and where people work. Despite America’s vast wealth, no other major industrial nation has allowed the level of sheer destitution that exists in the United States. Americans accept as “normal” levels of poverty, hunger, crime, and homelessness that would cause national alarm in Canada, Western Europe, or Australia.

In the last two decades, the lines between cities and suburbs have blurred. The mayors and residents of many suburbs, like their city counterparts, are dealing with similar problems — not only poverty, homelessness, crime, and underfunded schools, but also rising gas prices, traffic congestion and pollution, accelerating foreclosures and abandoned homes, crumbling infrastructure, widening wage inequality, escalating health care and food costs, a wave a new immigrants, and the export of jobs to China and Mexico.

Suburbanites are not immune to the mega-trends and policy disasters that challenge the country. We face a new Gilded Age — a frenzy of corporate mergers, widening economic disparities, and deteriorating social conditions. America today has the biggest concentration of income and wealth since 1928. Meanwhile, the American Dream — the ability to buy a home, pay for college tuition and health insurance, take a yearly vacation, and save for retirement — has become increasingly elusive. A growing number of working families are in debt, while the number facing foreclosure has spiraled. American workers face declining job security as companies downsize, move overseas, and shift more jobs to part-time workers. The cost of basic necessities is rising faster than incomes. These problems are certainly not confined to big cities.

If we adopted some of these successful policies found in other affluent, democratic, capitalist countries (as John Mollenkopf, Todd Swanstrom, and I recommended in our book, Place Matters: Metropolitics for the 21st Century) the U.S. would have cleaner, safer, healthier cities and urban regions. But we can’t just snap our fingers and make that happen. The problem is political. First we need to mobilize the political will to address these problems, and find the right combination of policies that can win the support of a significant majority of the voting population and members of Congress.

The long-standing problems at HUD that Venkatesh identifies are symptoms of the weak political constituency for low-income housing and the poor, not a matter of inherent bureaucratic ineptitude. Like FEMA, HUD’s successes and failures are the result of political choices.

Compare FEMA’s (and HUD’s) success in helping the victims of the Northridge earthquake in the Los Angeles area in the 1990s (during the Clinton administration) with FEMA’s (and HUD’s) failure to help the victims of Hurricane Katrina in New Orleans and Gulf Coast (under Bush). FEMA’s and HUD’s failures were symptoms of the Bush administration’s disdain for government in general and the poor in particular. It was a problem of indifference, not incompetence. (Or, put differently, it was Bush’s indifference that led him to appoint incompetents to run FEMA).

Some of HUD’s programs — the Section 8 voucher program, FHA insurance (despite its redlining of cities until the 1970s), CDBG and HOME, and even some well-designed senior housing and family public housing, and funds for community-based non-profit housing — have been effective, but underfunded, corrupted by political cronyism, and, as Venkatesh writes, not adequately linked to transportation, economic development programs, and social-services programs or administered on a regional basis needed to address the realities of 21st- century urban areas.

Since it was created in 1965, however, HUD’s failures have been political failures. This has been displayed in the lack of support from the White House and Congress to adequately fund low-income housing, the political cronyism that allowed HUD programs to often be used as feeding troughs for politically-connected developers (such repeated “scandals”), the unwillingness of the White House and Congress to give HUD the authority and tools to address issues of fair housing, redlining, and snob zoning by suburbs that excluded low-income housing in affluent areas, and the lobbying power of the banking industry, which persuaded the White House and Congress to weaken regulations on lenders, so that all the key federal agencies (HUD, the Fed, and other banking regulators, Fannie Mae and Freddie Mac) failed to deal with predatory lending and subprime lending until it became a crisis that threatens to sink the entire economy.

It isn’t clear that abolishing HUD, as Venkatesh suggests, would solve any of these problems, but would simply move them to other agencies. Yes, it would be a great idea to have a federal government that dealt holistically with incomes, jobs, education, the social safety net, housing, transportation, pollution, and infrastructure, and maybe even reorganized the federal agencies so they did a better of collaborating. But dismantling HUD isn’t likely to achieve any of those goals.

Since the first public housing projects were built in the early 1930s, federal housing programs have had successes and failures, depending on the political constituencies mobilized at the time. As Gail Radford shows in her book, Modern Housing for America, the first wave of New Deal public-housing developments were successful: well-designed, well-built, and well-managed. But within a few years, the private real estate industry, threatened by their success, lobbied Congress to transform public housing into housing of last resort, with inadequate funding, poorly-build, typically in marginal areas, racially segregated, and with veto power by local governments.

Likewise, the Fair Housing Act of 1968 was a political triumph of the Civil Rights movement, but ever since the Nixon administration, it has not been given the authority or tools to address the problem of racial discrimination by landlords, banks, and realtors for fear of alienating key political constituencies.

HUD has always been starved for funding, which is why government-subsidized housing for the poor is a lottery, not an entitlement (only one-quarter of the eligible families get any assistance). Meanwhile, the federal government provides tax breaks to wealthy homeowners (through the mortgage and property tax deductions) that they don’t need, while few working class homeowners (and no renters) get any tax breaks at all. The size of federal homeowner tax breaks (over $100 billion a year) is almost three times the size of the HUD budget. The amount of those tax breaks going to the richest 10 percent of homeowners is larger than the entire HUD budget for low-income housing.

Since the late 1970s, conservative forces in American politics — the fragile coalition of big business and the religious right, in particular — have used their political clout to demonize government as a tool for social and economic improvement. Although public opinion has always been more pro-government than the views of the economic elite and opinion-shapers, the conservative forces have been effective at influencing public policy, through a combination of campaign contributions and pushing their ideas via think tanks, right-wing publications and talk shows, and effective voter identification and mobilization. The influence of the right was so powerful at one point that even President Bill Clinton, a moderate Democrat, felt compelled to say that the “era of big government is over.”

Once in office, George W. Bush and his conservative allies in Congress have sought to dismantle government regulation of business around workers’ rights, consumer safety, public health and the environment, and other key functions, reduce taxes overall and especially on the wealthy, and invest in much-needed environmental, infrastructure, transportation, and housing so to address the nation’s future needs.

There were clear indicators in the 2006 mid-term elections, which will likely be confirmed in this November’s races for the White House and Congress, that the nation’s political mood has been shifting, frustrated by the war in Iraq, by widening inequality and declining economic security, and by the Bush administration’s crony capitalism.

It is still unclear, however, whether liberals and progressives can find a coherent policy agenda to replace the New Deal and the Great Society, to counter the right-wing’s “anti-government” message, and to find a way to protect and expand social democracy at home in the midst of globalization. The question is, can the key elements of the liberal and progressive forces in the U.S. — the labor movement, the environmental movement, the women’s movement, the community organizing movement, and the liberal wing of the Democratic Party — mobilize a majority of Americans in enough key states and Congressional districts around a new “social democratic” vision, and translate public opinion into public policy?

Abolishing HUD won’t achieve any of those goals. We need a positive policy agenda that focuses on what we need to do in both the short-term (the next four and eight years) and the long term (the next 20 or 25 years). Then we can figure out the right bureaucratic structures to carry out those ideas.

  1. 1. To level the playing field for union organizing campaigns, we need to reform the nation’s unfair labor laws.
  1. 2. To improve conditions for the growing army of the working poor, we need to raise the federal minimum wage (to at least the poverty level — $9.50/hour), expand participation in the Earned Income Tax Credit, and add a housing component to the EITC to account for varying living costs in different parts of the country.
  1. 3. To provide adequate resources to house poor and working class families, we need to expand federal housing subsidies, and strengthen the capacity of nonprofit development and homeowner counseling programs. The federal government should no longer subsidize or insure housing developments built exclusively for the poor (including LIHTC-funded projects), but require mixed-income developments. We also need Washington to insist on construction of mixed-income housing in suburban areas and gentrifying urban areas (through a combination of carrots and sticks).
  1. 4. To guarantee an adequate supply of credit to expand the nation’s housing supply and stablize financial markets, we need the federal government to impose strict regulations on lenders and brokers, streamline all the federal bank regulators into one agency, and take control of Fannie Mae and Freddie Mac while focusing its mission.
  1. 5. To address the nation’s health care crisis, we need some form of universal national health insurance.
  1. 6. To improve our public schools, especially those that serve the nation’s poorest children, we need to increase federal funding for smaller classrooms, adequate teacher training, and sufficient books and equipment. We cannot rely primarily on local and even state funding for public education.
  1. 7. To provide families with adequate child care, we need a universal child care allowance that reaches families regardless of income. This can only be accomplished with federal funding and some state matching formula that accounts for variations in states (and parents’) ability to pay.
  1. 8. To redirect private investment in cities and older suburbs, we need to provide sufficient funds to clean up toxic urban brownfields.
  1. 9. To address the problems of growing traffic congestion, we need federal funds to improve public transit of all kinds as well as federal laws to limit tax breaks and other incentives that promote suburban sprawl and “leapfrog” development on the fringes of metropolitan areas.
  1. 10. To address the problems of environmental pollution and public health, we need to invest in research and development of green jobs and green industries, and train the next generation to work in them, as recommended by the Apollo Alliance, a coalition of environmental, labor and business groups.

Achieving these goals will take a generation. There are no short-cuts to changing the political climate. It will require the kind of sustained mobilization of ideas and people that characterized the Right for most of the last generation. We need to devise stepping-stone reforms that move us down this path, since we won’t get there all at once. For example, we won’t achieve any kind of single-payer national health insurance for a decade or more, but we need to find incremental steps that can marshal majority support in Congress (like the legislation sponsored by Oregon Democatic Sen. Ron Wyden).

The task for reformers — in housing and other areas — is to help shape policy ideas that keep our eyes on the prize, but to also win legislative and regulatory victories that get us closer to the goals of real structural reforms. Abolishing HUD sounds dramatic, but it achieves neither the short-term nor long-term objectives that will get us closer to addressing the outrage of 36 million Americans below the official poverty line, and many more Americans living on the edge of social and economic catastrophe.

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