The White House

Congressional Democrats continue to push hundreds of billions of dollars in new spending for ‘affordable housing’ programs as part of their effort to pass a multi–trillion–dollar tax–and–spend bill. 

Lawmakers on the House Financial Services Committee have proposed billions of dollars in wasteful spending programs that would grant broad new powers to federal bureaucrats. House Financial Services Committee Chairwoman Maxine Waters (D–Calif.) claims this spending is needed to “transform neighborhoods of poverty into functioning, sustainable mixed-income neighborhoods.” However, the proposals would instead centralize power within the office of the Secretary of Housing and Urban Development (HUD) and give the Secretary wide latitude to spend new funding with little to no oversight. The legislation even gives the HUD Secretary $3 billion for vaguely defined “administrative purposes.”   

Many of the new policies being implemented in this legislation contain numerous exceptions and loopholes, opening up opportunities for new waste, fraud, and abuse. For example, the definition of “first–time” or “first–generation” homebuyers is so broad it can include people who have owned a home before, and does not require an individual to be low–income. Senator Pat Toomey (R–Pa.) has even noted that, “a member of Congress could qualify for a taxpayer–funded down payment under this program.” All that is necessary for funding is an attestation of need, for which there are no penalties for fraud. In fact, the bill takes deliberate steps to protect lenders if they wittingly accept a false attestation.   

The legislation also contains giveaways to blue states – Senate Majority Leader Chuck Schumer (D–N.Y.) has earmarked $40 billion within the bill exclusively for the New York City Housing Authority (NYCHA), an agency known for being a poster child of internal corruption and mismanagement. This direct subsidy doubled President Biden’s original request for housing spending, and is equivalent to $250,000 for every family living in public housing in New York City.  

Rather than pushing hundreds of billions of dollars in wasteful new spending, lawmakers should focus on removing regulatory barriers at the local, state, and federal levels so that more homes and apartments can be built, quickly and cost–effectively.  

The Stanford Social Innovation Review (SSIR) notes that similar reforms have already been successful in both the public and private sectors in states such as Minnesota and Oregon. For instance, in Oregon, the legislature recently passed HB2001 (which ended single–family zoning regulations) with bipartisan support as a means of pushing local jurisdictions to expand housing projects district–by–district. Some localities have even incorporated new technologies into housing development, such as advanced computer programs to rapidly process months’ worth of paperwork, 3–D printing to produce certain construction materials, and new home assembly techniques to improve worker productivity.  

As SSIR notes, private investment and banking companies can also play a role in providing innovative methods of ‘creative financing,’ which allows more low–income renters to access credit and improve their financial position. The Review notes that this local, private sector innovation is the key to improving housing affordability, not greater government interference: 

There are no simple nationwide solutions to housing affordability… With the focus on solutions and innovation, it is possible to identify marvelous creativity at the ‘grassroots level’ which is already underway throughout the country. As we recognize the innovation that is in progress, it helps highlight the directions and paths that should be followed to improve housing affordability.

Professor Lee Ohanian of UCLA, a senior fellow at the Hoover Institution, has advanced a similar argument in his article, “The Economics of Why Homelessness Worsens as Governments Spend Even More on the Problem.” Regarding California’s homelessness crisis, Ohanian notes that building permits are absurdly difficult to obtain compared with in the past due to red tape and superfluous environmental regulations. This, combined with construction costs to the tune of nearly five times the national average in urban areas, severely limits the housing supply for low–income renters. His proposed solution suggests focusing housing construction in non–coastal areas, where prices are much lower, eliminating unnecessary regulatory burdens, and re–allocating existing funds for infrastructure development and tax incentives to promote local employment opportunities.   

Lawmakers should not be looking to address homelessness through billions in new wasteful spending, new federal mandates, and trillions in tax increases. Instead, the solution should involve private sector innovation, deregulation, and a focus on local management that ensures municipalities have the tools they need to tailor policies that best suit local conditions.