Democrats may have no choice but to lower their ambitions on a sweeping social spending package. But if they abandon President Joe Biden’s historic investments in housing, it would be a major blunder.
In drafting Biden’s plan, the House Financial Services Committee recently approved the largest direct housing investment in generations. The $327 billion package, which would be spent over the next decade, amounts to nearly 10 percent of the president’s original proposal. Most of this money would go toward keeping people with low incomes in their homes, accelerating new construction in key areas, and rehabilitating or retrofitting older buildings, all of which are core to the ability of middle- and working-class Americans to live stable lives.
The scale of these investments is unprecedented in recent history. For some perspective, the Obama recovery bill included a one-time $14 billion investment in a slew of HUD programs, whereas the current House package is, in effect, more than twice that amount, every year for 10 years.
But despite both the historic nature of the package and its size in relation to the total reconciliation bill, other provisions have attracted most of the headlines — overshadowing its impact, and even its existence. The Child Tax Credit, paid family leave and universal pre-K are, after all, long-overdue expansions of the welfare state.
And with a small minority of Democratic lawmakers such as Sens. Joe Manchin and Kyrsten Sinema now demanding significant cuts to Biden’s plan, these housing investments are at real risk. The Washington Post reported over the weekend that the housing proposal “may prove among the first to hit the cutting-room floor.”
That would be a mistake for a host of reasons, both on the policy and the politics. If Democrats are serious about combating climate change, anxious about inflation or eager to deliver better quality of life to millions of Americans, then keeping the housing funds is crucial.
Now, it may not be entirely surprising that Biden’s housing agenda is endangered. Congress has long been reluctant to fund subsidized housing for the urban poor — the “welfare queen” mythology poisoned the minds of a generation or more of elected officials, and only now are we beginning to exit that mindset.
And while the package focuses heavily on the needs of many of the poorest and most vulnerable, the bigger picture is that it includes a level of spending that would be transformative for all Americans. Our country is currently suffering from a historic housing crisis, with cities and states unable or unwilling to raise the funds themselves to meet low-income housing needs or build more homes to promote affordability for the broader public.
For households themselves, housing costs are taking an increasing share of family budgets for low, moderate, and yes, even high-income households across the country, and yet production of new multifamily housing has failed to recover even to its pre-2008 recession levels in many metro areas — and, disconcertingly, particularly in places where jobs are being added fastest. As more people move to our cities, it is crucial that we also add housing, especially for the people with low and moderate incomes who are served by the programs in the House proposal — and who are invariably most devastated by a market left to its own devices.
To correct for these failures of both local governments and markets, the package would build new housing, rehab older housing and help lower housing costs for renters. About $200 billion of the $327 billion package is centered on three of the most consequential programs the federal government has to offer on housing: Section 9 public housing, Section 8 rental assistance and the Housing Trust Fund.
These specific investments include $90 billion for our national rental assistance program (Section 8) for both Housing Choice Vouchers, which tenants with low incomes can use to help pay for housing of their choice, and Project Based Vouchers, which offer subsidies directly to operators of low-rent housing for tenants with low incomes. Included in this is a large share of vouchers specifically for the would-be-formerly homeless — an investment that could more than halve homelessness by housing hundreds of thousands of Americans living in shelters or on the street. Street homelessness has not only spiked during the pandemic, but had been on the rise for years prior, too.
The package also includes an investment in programs that would construct and retrofit housing (the Housing Trust Fund and HOME programs) and could fund over 3 million homes over the decade. It would also make an $80 billion investment into our once distinguished, now deteriorating, publicly owned housing that would preserve or rebuild nearly another 1 million homes for over 2 million people.
In a potentially worrisome sign, Speaker Nancy Pelosi sent a letter to House Democrats on Monday suggesting that whatever bargain being negotiated between Democratic leadership and the moderate holdouts will likely include spending in only three categories: health care, child care and climate.
Still, Pelosi did mention “housing initiatives that are resilient and green,” and indeed the House package’s housing provisions have significant climate impacts in helping to get the ball rolling on climate adaptive upgrades. By making energy efficiency retrofits to public and non-profit owned properties all across the country, the investments would facilitate a much-needed scaling up of the production and installation of technology needed to reduce emissions in urban areas. In the same way that public investment in the procurement of electric bus and work vehicle fleets can help to grease the wheels for scaling up electric transportation productive capacity, investments in technology like heat pumps and efficient appliances and windows can help make these upgrades commonplace — and, importantly, cheaper.
In fact, the New York City Housing Authority, NYCHA, is in the planning stages of a building electrification retrofit pilot program for its older housing. It is also seeking to develop a new heat pump technology compatible with much of that older multifamily housing stock. Bringing this vision to fruition, however, and scaling it portfolio-wide, would require significant capital investments from Congress that this legislation could begin to provide. But 1 million clean, modern and carbon-neutral homes for working families is an attainable goal, and these investments would be a down-payment toward it.
Finally, although some politicians and economists point to housing costs as the latest harbinger of dangerous inflation, the typical monetary response of hiking interest rates would be not just useless, but likely destructive. Investments like those proposed by Biden, however, which include funding for the production of new multifamily developments and preservation of existing affordable ones, will do far more to combat inflationary pressures in the housing market.
The Obama administration’s approach to recovery on housing was, from nearly any angle, insufficient to meet the need, and we are still living with the results today: growing unaffordability, rising street homelessness and deterioration of past investments in our cities and towns. The package moving through the House to implement the Biden agenda, on the other hand, has real potential to not only house vast swaths of our homeless neighbors and construct new affordable homes, but also to make us more resilient in the face of climate change.
As negotiations over the reconciliation bill go forward and the top-line number of the package dwindles, Congress and the White House have tough decisions to make. Washington would do well to not overlook the importance of these housing investments and the impact they would have on communities across the country.
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By: Paul Williams and Cea Weaver
Title: Opinion | Why Democrats Would Be Fools to Slash Biden’s Housing Plan
Sourced From: www.politico.com/news/magazine/2021/10/05/biden-democrats-reconciliation-historic-housing-investments-515171
Published Date: Tue, 05 Oct 2021 16:30:59 EST
