HUD's Public Housing Proposal

July 15, 2010

The Department of Housing and Urban Development is pushing legislation that would enable public housing projects to access private financing. Due to limits on how much of a tenant’s income can be used for rent, public housing authorities have been reliant on billions of dollars in annual federal operating and capital subsidies.

In seeking to assure public housing advocates that public housing isn’t going to be privatized (the horror!), HUD secretary Shaun Donovan declared that “Our fundamental premise is that public housing and all of the various rental programs that HUD invests in are a precious asset for the country and that we need to do something to preserve them.” 

Calling public housing a “precious asset” is an abuse of the English language. And the government’s return on its 80-year return “investment” in public housing is poverty, crime, and urban blight. Unfortunately, Donovan is just the latest Obama official to view government dependency as something to be celebrated.
A Cato essay on public housing and rental subsidies explains that public housing was originally meant to serve lower middle class working families. But when these families moved to suburbs following the post-World War II economic boom, the poor, non-working families – typically headed by a single-mother – remained behind. The result has been a concentration of poverty, which has bred generations of crime, illegitimacy, and dependency.  
From the essay:           
Public housing projects have also damaged the city neighborhoods that surround them. They have radiated dysfunction and social problems outward, damaging local businesses and hurting nearby property values. They have also harmed surrounding cities by inhibiting rundown areas from coming back to life by attracting higher-income homeowners and new business investment. Fear of those who live in housing projects has driven away striving, upwardly mobile people who are the ones that make neighborhoods flourish. 
At the same time HUD is trying to bolster public housing, it’s teaming up with other federal agencies to make housing more unaffordable. HUD is now dishing out grants to promote regional “smart growth” planning. As Randal O’Toole has shown, state and local housing regulations like “smart growth” result in housing being less affordable. HUD is now promoting such policies across the country.
HUD provides housing subsidies because the market supposedly can’t provide affordable housing to low-income people. (See the essay for why this isn’t true.) At the same time it wants to subsidize state and local policies that will make housing less affordable. If this sounds like it doesn’t make sense, it’s because it doesn’t.
It’s well past time to abolish HUD



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