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By Howard Husock

America’s Trillion-Dollar Housing Mistake: The Failure of American Housing Policy.

Soundings

Howard Husock
Real Public Housing Reform
The Bush administration’s plans are quietly revolutionary.
Spring 2003

If its recent budget proposal is any indication, the Bush administration has big changes in store for the Department of Housing and Urban Development, the federal agency that runs the nation’s enormous subsidized-housing system. The Bush budget offers three key proposals—on housing vouchers, on public housing rents, and on public housing projects themselves—that, taken together, have the potential to transform public housing completely, so that it no longer fosters the growth of the urban underclass.

At first glance, the changes look less dramatic than they really are. The proposed budget converts 75 percent of the $18 billion Section 8 housing-voucher program, which pays the rent for 3 million households yearly, into bloc grants to the states. The states can then use the funds as they see fit, subject to certain constraints. Second, the budget sets a minimum rent that recipients of housing aid must pay themselves. Finally, it provides no new funds for the HOPE VI public housing program, under which the federal government has spent some $5 billion over the past decade to demolish and rebuild public housing projects.

But don’t be fooled by the seeming modesty of these reforms. If adopted, they are likely to bring housing policy much more in line with the emphasis on personal responsibility and work that has made federal welfare reform so successful. One telling detail: the administration wants to rename the Section 8 program “Housing Assistance for Needy Families” (HANF)—a name meant to echo “Temporary Assistance for Needy Families” (TANF), the name for the reformed welfare system.

Reform of housing assistance along such lines is long overdue. Public housing is really the last untouched outpost of the vast welfare support system that the 1996 welfare reform act overhauled, ending the idea of welfare as a federal entitlement. The vast majority of non-elderly, non-disabled public housing residents—upward of 76 percent—are the same single-mother households that make up most of the welfare population. But unlike welfare, public housing (whether in housing projects or in private apartments paid for by government vouchers) still comes with few strings attached. Under the current rules, a young, single mother receiving housing aid can raise her kids in a taxpayer-subsidized apartment for as long as she likes—an incentive to stay dependent and certainly no disincentive to having children out of wedlock.

By turning the housing-voucher program over to the states, HUD officials hope to encourage the same kind of state policy experiments that during the 1980s and early nineties set the stage for federal welfare reform—including the imposition of time limits on aid. “We are not going to preclude time limits,” says HUD assistant secretary Michael Liu. “We know that there are experiments going on around the country, and we think that’s great.” One such experiment, in Charlotte, encourages public housing tenants to agree to a five-year time limit in exchange for residence in a newer apartment. The push in just this direction is clear from HUD secretary Mel Martinez’s budget summary message, in introducing HANF: “Allocation of the funds to the states should allow for more coordinated efforts with the TANF program, successfully administered by the states, to support the efforts of those now receiving public assistance who are climbing the ladder of self-sufficiency.”

To date, such housing programs have been voluntary. But in New York governor George Pataki’s words, the bloc grant allows for “tremendous flexibility”—which includes mandatory limits. The message that a time limit conveys is that public housing is not an entitlement, and that those receiving housing assistance must do everything they can to become more independent.

The same message of personal responsibility lies behind the Bush proposal for a minimum public housing rent. Set at “not more than $50” a month under current law, rent would rise to “at least $50” a month. Paying $50 or more a month for housing, HUD officials say, would link public housing tenants at least slightly to the real world, the one in which it actually costs money to have your own place.

The planned phase-out of HOPE VI is another step in the right direction. The program began in 1993 in response to the findings of a special federal commission on “severely distressed” public housing that identified some 100,000 of the nation’s 1.3 million public housing units in such bad shape that tearing them down was a no-brainer. But for the Clinton administration, destroying wretched projects was only a prelude to building newer, better, “mixed-income” developments. These developments would bring together poor, non-working households receiving housing aid with working families a few steps higher on the income ladder, in the hope that the poor households would find themselves so inspired by their working neighbors that they would move off the dole and into the workforce.

The Bush administration recognizes that this hope is in fact a dubious leap of faith. “Some of us are concerned that HOPE VI reflects the view that a strong hand by government in social engineering will always result in something desirable,” says Assistant Secretary Liu. “The notion that mixing incomes is the answer: that’s still an experiment.” Why assume, after all, that the more dysfunctional families in the public housing population will change their lives, simply because they live next door to someone who earns more money than they do? Isn’t it just as possible that the troubled kids of the dysfunctional families will be a bad influence on the children of the working families? What’s more, in some major HOPE VI projects—notably in Chicago—developers are doubtful that two-parent, middle-income families will move in at all.

Better, Liu argues, to bring “a new emphasis on responsibility and an emphasis on work” to public housing—a shift that will push more poor households in subsidized housing to move up and out. As the administration clearly sees, housing subsidies—like unlimited cash welfare entitlements—are part of the problem, not part of the solution. And that is a revolutionary perception.

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