NIXON'S NONPROGRAM FOR HOUSING
Dolbeare, Cushing N.
0n January 5, 1973, President Nixon, with but little advance warning, suspended all federal housing subsidy programs. The Department of Housing and Urban Development and the Farmers Home...
...Thus, if income distribution were equalized, everyone living in new housing would need some form of subsidy...
...To provide for the needs of low- and moderateincome families, the Administration proposes expansion of the experimental housing allowance program, authorized in 1970 and just beginning to get under way, with instructions to HUD to report findings within 18 months...
...Even worse, perhaps, is the effort to withhold public housing operating subsidies and instead to force local housing authorities to evict very-low-income families or charge them higher rents...
...To bolster the private sector, the President proposed a series of measures intended to improve the credit system...
...These included: • removal of the ceiling on FHA and VA mortgage insurance, and urging states to do likewise, so that mortgage interest rates can rise as high as necessary to attract sufficient funds to the mortgage market...
...The approach to formulating these goals was a modest one, based on replacement of existing substandard units rather than on the proportion of units that would need to be subsidized if everybody, including low-income people, were to be provided with equal access to new housing...
...In order to provide equal access, subsidized housing goals would need to be set in relationship to people's ability to pay for new housing...
...This would require a production rate for public housing, or equivalently subsidized housing, of 1.5 million units per year...
...The critical nature of the housing crisis is illustrated not only by the Administration's proposals, but by the fact that none of the major housing bills currently proposed contemplates an approach on anything like this scale...
...To make up for past neglect, we should at least consider a program to replace, over a 10-year period, almost all of the housing now occupied by the 15 million households with incomes below $4,000 in 1970...
...almost two-thirds, entirely in the form of tax subsidies, went to families with incomes above $20,000...
...Somewhat later, incoming secretary of HUD James Lynn announced that "bona fide commitments" would be honored even though the projects might not have been formally approved...
...For one thing, housing now being provided by the private sector without subsidy is beyond the economic reach of 80 percent of American families...
...Yet the existing stock of housing is inadequate to meet the needs of a growing population, even if none of it needed to be replaced...
...Of this amount, $10 billion was in the form of tax subsidies, primarily to middle- and upper-income families, and $2 billion was for housing subsidies to low- or moderate-income families...
...supporting, through a reinsurance program, the development of private mortgage insurance companies...
...The Administration has accepted and even fostered a further myth: that the level of federal expenditures for housing subsidies is becoming intolerable, and that most housing subsidies benefit low- or moderate-income families...
...The Administration justifies this nonprogram by the conclusion that the housing problem in this country is basically an income problem and, therefore, the solution is to raise incomes rather than provide housing...
...An immediate, intensive study of the housing problem and housing programs was undertaken within the Department of Housing and Urban Development, and the Administration promised to reveal its new approach in September...
...These should be minimum goals...
...establishing a tax credit for financial institutions investing in residential mortgages...
...Thus we must accept the fact that housing programs and housing subsidies will be needed to provide for population growth, for replacement of obsolete and inadequate housing, and, perhaps most important, for a genuinely free choice of housing locations...
...Not quite 20 percent of the $12 billion went to COMMENTS AND OPINIONS 13 households with incomes below $10,000...
...Indeed, not only the Nixon proposals but the Democratic proposals as well call for the phase-out of public housing into a new and more flexible approach...
...Six million of these were to be subsidized for low- and moderate-income families...
...At this rate, the 25 million families with incomes above $10,000 would have new housing within 14 years, but it would take 179 years for the 15 million families with incomes below $4,000 to receive new housing...
...The Administration's proposals, by creating higher interest rates and thus greater tax deductions while shutting off subsidies for lower-income families, will increase these inequities...
...Housing subsidies in this country in fact do not go to low-income families...
...In 1972, for example, the total amount of federal housing subsidies was approximately $12 billion...
...TO THOSE of us who have long been concerned with the inequitable distribution of income and wealth in this country, the prospect of an Administration seriously concerning itself with the problems of poverty is an attractive one...
...By now experience should have taught us that such flexibility, particularly in the hands of producers or reactionary local governments, does not benefit those with greatest need...
...Again in the words 12 COMMENTS AND OPINIONS of the President, "Our principal efforts should be directed toward determining whether a policy of direct cash assistance—with first priority for the elderly poor—can be put into practical operation...
...Historically, the development of housing programs in this country has been constrained by a series of myths...
...Projects "in the pipeline"—to use the jargon of housing officials for what has been approved but not yet built—were unaffected...
...During this interim period an additional 200,000 subsidized housing units will be approved, most of them projects with applications pending when the axe struck last January...
...These proposals have already been forcefully attacked by the very institutions they were designed to support as at best inadequate and at worst counterproductive...
...But an income solution, even one of complete equality of income for all, would not solve our housing problem...
...14 COMMENTS AND OPINIONS...
...The myth that an urgent national problem could be solved at little or no cost to the federal treasury led to two decades of housing programs, from 1949 through 1969, when the federal government more often than not made a net profit on its housing operations...
...Nine months of frenetic "study" had produced, in the words of Representative Henry Reuss, a member of the House Housing Subcommittee, "not a mouse but the promise of a mouse in 1975...
...authorizing more flexible repayment plans under federally insured mortgages...
...The myth that private enterprise, supported by government insurance or subsidy programs to a modest degree, should be the major source of our housing supply has led to a pattern of housing construction so that, even in 1972 when housing subsidies were at their peak level, 64 percent of new housing was priced to serve households with incomes above $10,000 and only 3 percent for households with incomes below $4,000...
...In the words of the President, The forces which will do the most to shape the future of housing in America will be the forces of the market place: families with sufficient real income and sufficient confidence to create an effective demand for better housing on the one hand, and builders and credit institutions able to respond to that demand on the other...
...The Department of Housing and Urban Development and the Farmers Home Administration of the Department of Agriculture were ordered not to process any new applications for subsidized housing...
...Late in September a presidential message was sent to Congress stating that the moratorium would be permanent, except thatagain— existing commitments would be honored and a small number of additional units provided...
...IN 1968 Congress adopted a national housing goal calling for the production of 26 million new or rehabilitated housing units in 10 years...
...Thus we have the moratorium on new housing subsidies...
...In other words, to state the matter simplistically, the Administration proposed to move toward greater if not total reliance on the private sector for housing construction and, perhaps, toward housing allowances for low-income families in order to meet their needs...
...The Administration met its deadline, after a fashion...
...If we were henceforward to adopt this policy, one-quarter of all housing production should be in the income range now served by public housing for households with incomes below $4,000 per year, and somewhat more than onethird should be in the income range served by the moderate-income programs of HUD and the Farmers Home Administration...
Vol. 21 • January 1974 • No. 1
