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Biden doubles down on failed government housing policies

Empower Wisconsin | Aug. 28, 2020 

By Howard Husock, National Review 

The Democratic convention may have emphasized Joe Biden’s character and life story, but it’s well worth scrutinizing the details of his policy proposals, too. 

Take a close look at his proposed $645 billion housing plan — “The Biden Plan for Investing in Our Communities Through Housing” — and you’ll find warmed-over ideas that have failed before and would harm the poor and minority households they’re ostensibly aimed at helping. The plan’s fundamental flaw is the assumption that the private housing market fails the poor, when in truth government-subsidized housing bears the primary blame for harming the poor.

The Biden–Harris plan is premised on the idea that millions of households pay more than 30 percent of their income for housing, and that the 30 percent benchmark should be a ceiling on costs. This superficially unobjectionable idea has been a HUD goal for years, but has actually had pernicious effects. When low income serves to qualify households for subsidized housing, that provides an incentive for, say, the formation of single-parent households — which dominate public-housing and housing-voucher programs and have no reason to seek a second income, whether by marriage or just taking in a roommate. Higher income actually disqualifies households from getting into subsidized housing, leading to higher rents for non-subsidized units.

The 30 percent ceiling must be considered one of the causes of the high rate of single parenthood in the African-American community, which is disproportionately represented in all subsidized housing. Blacks comprise 42 percent of all public and subsidized households, only 4 percent of which include two parents and children, and 75 percent of which are female-headed. Biden would vastly expand the number of such households on housing assistance by providing a housing voucher to any household paying more than 30 percent of its income toward rent.

What’s more, Biden would expand the reach of the Community Reinvestment Act (CRA), which has put pressure on regulated banks to make loans to lower-income zip codes and minority households, so that it covered so-called non-bank lending. Such expansion takes for granted the view that the CRA is necessary in the first place. But in a highly competitive financial-services sector, one must ask why profitable borrowers, no matter where they are located, would fail to find capital. The risk of the CRA has always been that it exerts pressure on lenders to make risky loans to satisfy regulators, and the major concern should not be banks’ bottom lines but the harm this inflicts on minority neighborhoods. The worst thing that can happen to any homeowner is to see a rash of foreclosures and vacancies on the block, and the CRA, whose loans’ success rate has never been seriously scrutinized, may well raise that risk.

Read more at National Review. 

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