If last week’s federal 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 an urban underclass.

At first glance, the changes look less dramatic than they really are. The proposed budget converts 75 percent of the $17 billion Section 8 housing-voucher program, which pays the rent for 3 million households annually, into bloc grants to the states. The states can then administer the funds as they see fit, subject to certain constraints. Second, the budget establishes a minimum rent that recipients of housing aid must pay themselves. Finally, it phases out the HOPE VI public-housing program, under which the federal government has spent some $5 billion over the past ten years 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.

And reform of housing assistance 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—some three-quarters or more—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 housing 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 are hoping 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, North Carolina, encourages public-housing tenants to agree to a five-year time limit in exchange for residence in a newer apartment.

To date, such 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 make themselves 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 federal commission on “severely distressed” public housing that identified some 100,000 of the nation’s 1.3 million public-housing units as being in such bad shape that tearing them down was a no brainer. But for the Clinton administration, destroying wretched public-housing projects was only a prelude to building newer, better “mixed-income” developments. These developments would bring together poor, non-working households receiving housing assistance 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 public assistance 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, say, that the troubled kids of the dysfunctional families will be a bad influence on the children of the working families?

Much 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 perceives, housing subsidies—like unlimited cash welfare entitlements—are part of the problem, not part of the solution. And that is a revolutionary perception.


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next