HUD Secretary Cisneros & Prof. Peter Dreier: The Death or Redemption of Public Housing?

By Peter Dreier, the E.P. Clapp Distinguished Professor of Politics and Director of the Public Policy Program at Occidental College in Los Angeles. Mr. Dreier opposes the U.S. House of Representatives’ approval of the Lazio bill to repeat the 1937 Housing Act. Dreier fears that this will lead to an increase in homelessness and over-crowding all across the United States.

Last month, the U.S. House of Representatives voted to turn back the clock by overhauling the nation's 59-year old public housing program for the poor. It approved a bill to repeal the 1937 Housing Act and replace it with grants to the states and local governments. The result will be to dramatically increase rents for the poor, guaranteeing a significant increase in homelessness and over­crowding. 

Under current law, low-income families in federally subsidized housing pay no more than 30% of their incomes for rent. The House bill would allow local public housing agencies to raise rents. The Senate has already approved a bill to overhaul public housing, and negotiators now have to work out the differences between the two versions. 

Rep. Rick Lazio (R-NY) and other Republican sponsors sold the bill as a way to give states and local housing authorities more "flexibility," but what it actually does is allow them to save money on the backs of the poor. But saving money or improving public housing was not the primary consideration for the Republican sponsors of this bill. Their attack on public housing is simply an election year ploy to introduce another wedge issue into the political debate. Like affirmative action, immigration, and welfare, the Republicans think of public housing as a code word. It's a subtle way to identify the Democrats as the party of minorities, the poor, and big government. 

While the GOP is proposing tax cuts for people earning over $200,000, it wants to raise rents on the working poor. Lazio claims that his bill preserves the current rent ceilings for the extremely poor, but a special provision would completely eliminate rent ceilings and tenants’ rights in 300 public housing agencies, including New York City, the nation's largest, with over 100,000 apartments, where the average household income is below $10,000 a year. Lazio's bill would penalize tenants who get off welfare and find work by allowing housing authorities to significantly raise their rents. And if they get an even better job, they'd get punished again with another rent increase.

Lazio attacked "the hulks of failure that characterize high-rise public housing" and called for greater use of housing vouchers to help poor Americans pay for rent in private housing. This echoed the views of Bob Dole, the likely GOP presidential nominee, who recently labeled public housing "one of the last bastions of socialism in the world." In a speech to the National Association of Realtors, one of the groups that has opposed public housing from the start, Dole said that local housing authorities have become "landlords of misery." He called for dismantling the U.S. Department of Housing and Urban Development and recommended replacing government assisted housing projects with housing vouchers.

These comments are partly right, but mostly wrong. Many older projects in the big cities are physically isolated, high-rise ghettos, underfunded and poorly maintained. That's why HUD Secretary Henry Cisneros has approved plans to tear down the most severely distressed public housing projects. But the biggest secret about public housing is that most of it is well-managed. The majority of units are in small and mid-size developments. Almost a million families are now on waiting lists to get into public housing, a testament to the failure of private landlords to serve the poor.

Lazio' sand Dole's attack on public housing should come as no surprise. Indeed, the real estate industry and its friends in Congress have fought public housing since it began in the Depression. Back then, public housing advocates, like their European counterparts, envisioned it for the middle­class as well as the poor. Private housing industry groups sought to sabotage the program before it got started. Warning about the specter of "socialism," they successfully lobbied to limit public housing to the poor so it wouldn't compete with privately-owned housing. Since it began in 1937, only 1.3 million units have been built.

Subsidized housing for the poor is essentially a lottery, not an entitlement. The HUD budget, now $26 billion, provides housing subsidies to 4.1 million low-income households. This is only 28% of the 13.8 million poor renter households who are eligible for federal housing assistance. 

Of those who receive housing aid, only 1.3 million families live in public housing units. Another 1.7 million live in private, government-subsidized developments. Another 1.1 million families receive the kind of housing vouchers Dole and Lazio lauded. That leaves almost 10 million poor households to fend for themselves in the private housing marketplace. Most of them pay more than half of their meager incomes just to keep a roof over their heads. (In the Los Angeles area, more than three-quarters of the poor do so). 

Public housing represents only a small fraction of the nation's housing for the poor. It certainly isn't primarily responsible for persistent poverty, racial segregation, and urban crime. Moreover, during the past decade, there's been almost no new public housing built. Almost all new federally-funded housing developments have been sponsored by non-profit community groups like churches and neighborhood associations. 

No doubt, federal housing programs can be improved. What lessons can we learn from our experience with these various forms of government subsidized housing? 

First, we should encourage people with a mix of incomes to live in these developments. Adding working class families to public housing provides poor residents with role models and job contacts. But the Lazio bill would discourage the working families from remaining in public housing, while allowing public housing authorities in New York City and elsewhere to raise the rents on our most vulnerable poor families. 

Second, government-subsidized developments—whether owned by local government, community groups, or private landlords—work best where the residents are well-organized and play a role in day-to-day management. Tenant ownership may be an ultimate goal for some, but giving residents a strong voice in issues like security, crime, tenant selection and eviction, social services, and other matters helps turn ''projects" into real communities. The Lazio bill offers nothing to promote this kind of resident self-help.

Third, housing vouchers are a good idea, but they are no panacea. Most families lucky enough to get housing vouchers manage to find apartments they can afford. But in tight housing markets with few vacancies, between one-quarter and one-half of them come back empty-handed. It's like giving people food stamps when the grocery shelves are empty. In some areas we still need to expand the overall supply of housing to make even the small voucher program work. But the GOP­controlled Congress has cut programs to expand the apartment inventory. 

Fourth, we should not concentrate poor people in the same neighborhoods, which exacerbates the problems of social and economic isolation. Moreover, racial discrimination by landlords has led to "Section 8 ghettos" in many cities. In Chicago, for example, over half of the families with Section 8 vouchers (most of whom are black) live in seven suburban communities, six of them in nearby south suburbs. But two years ago, when President Clinton asked Congress to approve an extremely modest pilot program called Moving to Opportunity (MTO) to help 1305 low-income inner-city families in five cities move to private apartments in better neighborhoods, the Republicans opposed it as "social engineering." The program passed anyway and is now working well in Los Angeles and elsewhere, although on a very small scale. 

Are Dole and Lazio now calling for a dramatic expansion of this approach? What would it cost to provide these 10 million poor families with a voucher to cover the difference between 30% of their income (the federal standard) and rents in private apartments? Based on the cost of the current Section 8 voucher program, it would cost about $30 billion a year. 

To put this figure in context, that's about what we now spend providing mortgage interest deductions to families with incomes over $100,000. Last year mortgage interest deduction for homeowners cost the federal government $58.3 billion—more than double the HUD budget. 

Wealthy homeowners don't think of themselves as living in subsidized housing, but they get the bulk of the nation's federal housing help. Taxpayers with incomes over $100,000 (5.65% of all tax returns) received $29 billion in mortgage interest deductions—half of the total amount. (In other words, the $29 billion in tax subsidies for those with incomes over $100,000 alone surpasses the entire HUD budget). The 1.6 million taxpayers with incomes over $200,000 received $12.6 billion in mortgage interest deductions. In other words, the wealthiest 1.2% of all taxpayers received 21.6% of the homeowner tax subsidies. The average subsidy for this latter group last year was $9,763. This is almost three times the cost of a typical Section 8 housing voucher.

Contrary to real estate industry rhetoric, these deductions aren't the linchpin of the American Dream for the middle class. In fact, only one-fifth of households with incomes between $30,000 and $50,000 received any homeowner subsidy. Those who did averaged only $845 in tax breaks. 

Last year, when Senator Bob Packwood was chair of the Senate Finance Committee, he suggested limiting the deduction interest on $250,000 in mortgage debt. (The current ceiling is $ 1 million). 

The Congressional Budget Office estimated that this would save the government more than $35 billion over five years, and affect only about 1.2 million of the wealthiest taxpayers. The savings could be used to expand the housing voucher program that Dole and Lazio have suddenly discovered. But Dole failed to endorse Packwood's proposal. 

In other words, Dole supports "capitalism" for the poor and "socialism" for the rich. 

The way we now distribute federal housing subsidy funds is wasteful and unfair. We subsidize the rich to purchase huge homes without helping hardworking families buy a small bungalow or most poor families to rent an apartment. 

For the Republican leaders, HUD—an agency that primarily serves the poor—is an easy target and a convenient scapegoat. But let's remember that the HUD scandal—where high government officials used agency funds to reward political friends and campaign contributors—took place during the Reagan administration. If HUD is now identified in the public's mind with mis­management and corruption, it's the GOP that should get most of the blame.

If Lazio, Dole, and their colleagues really want to help solve the housing crisis, they should learn from the many successes of the past decade. But then they couldn't use public housing as a wedge issue to help them win the White House and preserve their majority in Congress.

Delivered by Sec’y for U.S. Department of HUD Henry Cisneros at the first-ever Public Housing Summa. This excerpted speech was delivered at a first-ever Public Housing Summit, Arlington, Virginia, in late May. Here, Mr. Cisneros outlines four changes in public housing, with one in support of the Lazio bill.

At the initiative of President Clinton, public housing in America has changed, for the better and forever… Here are some of the ways we've ushered in change: 

1. Together we are changing the physical landscape of public housing. 

Because of structure, because of design, because of the formation of the regulations, because of their isolated locations, the worst of our public housing units have not been a help to low income Americans… for too many Americans, the housing has been their hell. 

First, we're replacing an unprecedented 30 thousand units of public housing. That's nearly 50 percent more than the previous 12 years combined… We are replacing these dysfunctional buildings with quality affordable housing and rental vouchers. 

To help with this rebuilding effort, HUD has implemented HOPE VI, a large scale initiative to provide you with funds and flexibility to reshape public housing and neighborhoods in completely new ways. We're providing you with technical assistance. 

2. HUD's Intervening in Troubled PHAs

Our second task has been to hold public housing agencies accountable to taxpayers and residents. What we've tried to do is intervene in a timely manner at the worst performing PHAs, to stop the damage, assess new priorities and set clear objectives to guide recovery.

For each troubled PHA, HUD assigns a "recovery team" of Department staff and private experts. This team works with housing authority staff, local leaders and residents to develop and implement a detailed recovery plan. In some cases, strategies are determined after close consultation with mayors and local stakeholders… 

3. We're moving families to self-sufficiency

One of our greatest challenges in public housing has been in changing the social dynamic there. This goes to the heart of what's ailing so many of the people who live within these structures. Until now, the rules of public housing discouraged work. Discouraged responsibility. Even discouraged marriage…  

In partnership with HUD, Congress has enacted rent and admissions policy reforms that give PHAs more flexibility in giving residents incentives to work and in admitting working families into public housing. Rents will no longer be calculated so that the hardest working residents get penalized the most. Some PHAs are setting policies which don't count new income in rent structures for over a year…  

HUD now permits PHAs to impose rent ceilings so that our rents don't exceed those of the market… 

And Congress has repealed federal preferences for admissions. No longer are you forced to admit only the poorest in your communities into public housing. Now you can design the socio-economic mix of residents that works best for your locality…  

4. And last, we're helping to make public housing safer

Because of their isolated locations, because of the blind tolerance that used to pervade many of our structures, crime has flourished in public housing. This should not and MUST NOT continue. The federal government used to hamper your own efforts to rid your housing of criminal elements… 

Plus, the President has called for, and HUD has issued, a "one strike and you're out" policy in public housing. Public housing agencies now have more power and resources to screen out those who've engaged in drug or criminal activity or who are making the environment otherwise unlivable for the rest of the tenants. These people will be evicted.

A Vision and a Challenge—And so, it is a new era that is dawning in public housing. I don't exaggerate when I say that the net effect of the changes—of the new framework of authority and flexibility—means that when you leave here you are in a whole new ballgame. 

For too long public housing in this country has been in a downward spiral. We've thrown oceans of money at the problem, while children's lives have been sucked into the islands of misery that too many of our public housing has become. We have an obligation to stop here. I am personally drawing a line in the sand. It is a line that divides the past from the future. Yesterday's meltdowns from tomorrow's new start…  

George Bernard Shaw once said, "Some men see things as they are and ask 'why'. Others dream things that never were and ask 'why not'." And that's what this conference is about. Why not have Public housing which works. Public housing which lifts families up. Public housing which is a contribution, not a drain, on cities. 

Let's ask ourselves as we commit ourselves: Why not?