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Housing and American Privatism: The Origins and Evolution of Subsidized Home-Ownership Policy

Published online by Cambridge University Press:  14 October 2011

Paul George Lewis
Paul George Lewis
Affiliation:
Princeton University
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Extract

In the late 1980s, congressional investigations revealed patterns of influence peddling, lack of oversight, and poorly targeted expenditures at the U.S. Department of Housing and Urban Development, criticizing both the content and administration of various federal housing initiatives. Some commentators have concluded that the dogged preference for a private-sector strategy and the privatization of public activities in the Reagan administration—goals pursued while the agency suffered dramatic budget cuts—are at the root of recent HUD embarrassment.

Type
Articles
Information
Journal of Policy History , Volume 5 , Special Issue 1: Urban Public Policy: Historical Modes and Methods , January 1993 , pp. 28 - 51
Copyright
Copyright © The Pennsylvania State University, University Park, PA. 1993

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References

Notes

1. Gerth, Jeff, “Risks to H.U.D. Rose after Its Shift of Responsibility to Private Sector,” New York Times, 31 July 1989; comments of Hon. Marge Roukema (R-N.J.), Congressional Record, 14 November 1989, H8611.Google Scholar

2. Sam Bass Warner, Jr., pioneered the interpretation of urban governance in terms of the usurpation of the public agenda by a private perspective. See The Private City (Philadelphia, 1968)Google Scholar. For later perspectives on structural limits to urban policy, given the statemarket division of labor in the United States, see Shefter, Martin, Political Crisis/Fiscal Crisis (New York, 1985)Google Scholar; and Elkin, Stephen, “Twentieth-Century Urban Regimes,” Journal of Urban Affairs 7:2 (1985): 11–28.CrossRefGoogle Scholar

3. An excellent overview of the FHA experience is Jackson, Kenneth, Crabgrass Frontier (New York, 1985)Google Scholar, chap. 11. See also Abrams, Charles, “New Roles for Private Enterprise in Housing,” in Cooperation of the Public and Private Sectors in Housing, Princeton University Conference 88 (Princeton, 1968), 66–74.Google Scholar

4. Until 1949, the FHA favored white home buyers by officially recognizing racial and ethnic “stability” as a sound credit policy. Even a court decision overturning the FHA's policy of requiring racially restrictive covenants did not change its general orientation favoring white exclusionary suburbs. FHA credit was gradually expanded to reach those somewhat lower on the economic ladder by the early 1960s, but declining central-city areas remained effectively redlined. Jackson, Crabgrass Frontier; Abrams, “New Roles for Private Enterprise,” 67. Calvin Bradford demonstrated how later changes in FHA credit guidelines, meant to provide more credit possibilities in minority areas, served only to subsidize exploitative dual housing markets. See , Bradford, “Financing Home Ownership: The Federal Role in Neighborhood Decline,” Urban Affairs Quarterly 14:3 (1979): 313–35.CrossRefGoogle Scholar

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9. President's Committee, A Decent Home, 53.

10. Morton Schussheim, “Toward New Housing Policy,” Committee for Economic Development, Supplementary Paper 29, 53–55.

11. United States, Kerner Commission (National Advisory Commission on Civil Disorders), Report (New York, 1968).

12. In this sense the Great Society was by no means politically revolutionary. See Firestone, Bernard and Vogt, Robert, eds., Lyndon Baines Johnson and the Uses of Power (New York, 1988)Google Scholar, chap. 6 and throughout; and Conklin, Paul, Big Daddy from the Pedernales (Boston, 1986).Google Scholar

13. HUD Secretary Robert Weaver recalled, “As I look back, I am confident that if there had not been some of that hyperbole, if there hadn't been some goals that were accused of being unrealistic at the time, people would not have thought big, and if they didn't think big they couldn't think like Lyndon Johnson throughout and they wouldn't have gotten the legislation.” Firestone and Vogt, Lyndon Baines Johnson, 99.

14. Hugh Heclo delineates the role of insulated, professionalized issue networks in policy-making, and the resulting increases in the number of legislative proposals, in “Issue Networks and the Executive Establishment,” in King, Anthony, ed., The New American Political System (Washington, D.C., 1978), 87–124. Consider Sargent Shriver's description of his role in developing the War on Poverty as “scrounging around in the private sector, the public sector, in any sector I could find an idea, to put into this legislation.” Quoted in Firestone and Vogt, Lyndon Baines Johnson, 93–94.Google Scholar

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16. The story of HUD's origins is in Marlan Blissett, “Untangling the Mess: The Administrative Legacy of President Johnson,” in Firestone and Vogt, eds., Lyndon Baines Johnson, 65–71; and Hanson, Royce, The Evolution of National Urban Policy 1970–1980 (Washington, D.C., 1982), 2–3.Google Scholar

17. President's Committee, A Decent Home, 1.

18. Ibid., 1, 54. One might also argue that these “most successful” programs were the ones that had been the most generously funded.

19. Congressional Record (Washington, D.C., 1968), 4043, 4044–45.Google Scholar

20. See Hartman, Housing and Social Policy, 15.

21. Charles M. Haar, “‘Public’ and ‘Private,’” in Cooperation of the Public and Private Sectors, 22.

22. President's Committee, A Decent Home, 66, 79.

23. The National Association of Home Builders, long a powerful Washington lobby, was widely reported to have had a large hand in drafting the legislation. See Hartman, Housing and Social Policy, 137. Its former president, Leon Weiner, sat on the Kaiser Committee.

.24. This amounted to a typical monthly federal subsidy of $40 to $70 in 1968. Household income was to be recertified every two years.

25. O'Connor, James, The Fiscal Crisis of the State (New York, 1973).CrossRefGoogle Scholar

26. Following a typical strategy, Johnson, secured particularly enthusiastic committee sponsorship by giving key congressional players a stake in his legislative program. These included Senator Percy and Representative William Widnall, Republican sponsors of the original home-ownership proposal; the southern committee chairmen in each chamber, Senator John Sparkman and Representative Wright Patman; and Representative Leonor Sullivan, whose St. Louis district had hosted the pilot program. This ensued a core of active on-floor lobbyists for the bill.

27. Congressional Record, 20305.

28. Ibid., 20555.

29. Ibid., 20306.

30. Ibid., 20307.

31. Ibid.

32. Brock proposed another amendment to raise the required proportion of monthly income to be paid toward the mortgage from 20 percent to 25 percent. It was rejected.

33. Congressional Record, 21850.

34. Ibid., 15239.

35. Ibid., 14944.

36. President's Committee, A Decent Home, 2.

37. Congressional Record, 15240.

38. Quoted respectively in Ibid., 20307; McFarland, M. Carter, Federal Government and Urban Problems (Boulder, Colo., 1978), 139; and Thompson, “Congressional Politics of Housing,” 87.Google Scholar

39. Thompson, “Congressional Politics,” 87. Senator John Stennis, for example, saw in 235 “not a housing measure at all but a major step toward setting up a Federal guaranteed minimum income scheme on a piecemeal basis.” Congressional Record, 15598.

40. See, for example, U.S. Congress, House, Committee on Banking and Currency Hearing, Interim Report on HUD Investigation of how- and Moderate-Income Housing Programs (Washington, D.C., 1971)Google Scholar; Kummerfield, “The Housing Subsidy System,” in Mandelker, Daniel and Montgomery, Roger, eds., Housing in America (Indianapolis, 1973), 334– 47Google Scholar; Danielson, Politics of Exclusion, 87, 100–105; General Accounting Office, Comptroller General of the United States, Report to the Congress: Need for Fairer Treatment of Homeowners' Claims for Defects in Existing Insured Homes (Washington, D.C., 1977)Google Scholar; Roske, Mildred Deyo, Housing in Transition (New York, 1983), 258–59.Google Scholar

41. McFarland, Federal Government and Urban Problems, 141.

42. U.S. Congress, Senate, Committee on Banking and Currency, Subcommittee on Housing and Urban Affairs, Progress Report on Federal Housing and Urban Development Programs (Washington, D.C., 1970), 23.Google Scholar

43. Roske, Housing in Transition, 258.

44. U.S. Congress, Interim Report, 103.

45. Schussheim, “Toward New Housing Policy,” 61.

46. Danielson, Politics of Exclusion, 235–36.

47. See Fox, Metropolitan America, 198.

48. See Boyer, Brian, Cities Destroyed for Cash (Chicago, 1973).Google Scholar

49. U.S. Congress, Interim Report, 18.

50. Boyer, Cities Destroyed for Cash, 6.

51. See, for example, the remarkably strained exchange between Romney and Rep. William Berret (D-Pa.) during a 1971 committee hearing. U.S. Congress, Interim Report, 23–24.

52. Schafer, Robert and Field, Charles, “Section 235 of the National Housing Act,” in Pynoos, Jon et al., eds., Housing Urban America, 2d ed. (Hawthorne, N.Y., 1980, orig. 1969), 492.Google Scholar

53. U.S. Congress, Interim Report, 14.

54. Danielson, Politics of Exclusion, 100–104.

55. See U.S. Congress, Interim Report, 5; Rubinowitz, Leonard and Trosman, Elizabeth, “Affirmative Action and the American Dream: Implementing Fair Housing Policies in Federal Homeownership Programs,” Northwestern University Law Review 74:4 (1979): 493Google Scholar. 616, esp. 593–95; and Silverman, Ronald, “Homeownership for the Poor: Subsidies and Racial Segregation,” New York University Law Review 48:1 (1973): 72–135.Google Scholar

56. Danielson, Politics of Exclusion, 238–39.

57. Ibid., 104.

58. Quoted in General Accounting Office, Report to the Congress, 11.

59. U.S. Congress, Interim Report, 103.

60. Abbott, Urban America, 126. Material in the next paragraph is drawn from Hart- man, Housing and Social Policy, 138; McFarland, Federal Government and Urban Problems, 142; U.S. Congress, Interim Report, 9, 48, 105; Boyer, Cities Destroyed for Cash; and General Accounting Office, Report to the Congress.

61. McFarland, Federal Government and Urban Problems, 143.

62. Harrigan, John, Political Change in the Metropolis, 4th ed. (Glenview, Ill., 1989), 362.Google Scholar

63. Hartman, Housing and Social Policy, 138. The 5,000 figure was likely a vast underestimate due to HUD's studied number-juggling of its inventory. Boyer calculated at least 8,000 total houses in HUD's Detroit inventory in 1972, including those acquired under other subsidy programs. He forecasted the eventual foreclosure of up to 28,000 homes. Boyer, Cities Destroyed for Cash, 9–10.

64. Dolbeare, Cushing, “The Low-Income Housing Crisis,” in Hartman, Chester, ed., America's Housing Crisis (Boston, 1983).Google Scholar

65. Danielson, Politics of Exclusion, 87–88.

66. See Department of Housing and Urban Development, 1979 Statistical Yearbook (Washington, D.C., 1980), 186.Google Scholar

67. Markusen, Ann and Wilmoth, David, “The Political Economy of National Urban Policy in the USA, 1976–81,” Canadian Journal of Regional Science 5:1 (1982): 125–44.Google Scholar

68. See U.S. Congress, Congressional Budget Office, Housing Finance: Federal Programs and Issues (Washington, D.C., 1976).Google Scholar

69. HUD, 1979 Statistical Yearbook, Table 48.

70. Schussheim, “Toward New Housing Policy,” 56.

71. Dolbeare, “The Low-Income Housing Crisis,” 51.

72. U.S. Congress, Housing Finance, 32–33.

73. Lowi, The End of Liberalism.

74. See Greider, William, The Education of David Stockman and Other Americans (New York, 1982).Google Scholar

75. Wylde, Kathryn, “Partnerships for Housing,” in Davis, Perry, ed., Public-Private Partnerships (New York, 1986), 112.Google Scholar

76. Nenno, Mary, “H/CD after Reagan,” Journal of Housing (March-April 1989): 76, 78.Google Scholar

77. Jacobs et al., Guide to Federal Housing Programs, 92.

78. “Subsidy recapture” requires homeowners, upon reselling the house, to reimburse the government the lesser of (1) all federal subsidies received; or (2) 50 percent of the home's appreciation in values, minus improvements and sales costs. Jacobs et al., Guide to Federal Housing Programs, 106; and HUD communications to the author. While fiscally sound, the provision restrains the upward mobility new home owners might experience under 235.

79. As of September 1990, 179,685 of these early 235 homes still had their federal mortgage insurance in force. All data in these paragraphs are from HUD, Summary of Mortgage Insurance Operations (Washington, D.C., 30 September 1990).Google Scholar

80. Congressional Record, 14 November 1989, H8604.

81. President's Committee, A Decent Home, 1.

82. For dramatic case studies, see Boyer, Cities Destroyed for Cash.

83. Kummerfield, “The Housing Subsidy System,” 336.

84. See Struyk, Raymond, Should Government Encourage Homeownership? (Washington, D.C., 1977).Google Scholar

85. Aaron, Henry, Shelter and Subsidies (Washington, D.C., 1972), 143Google Scholar. On housing means tests, see also Badcock, Blair, Unfairly Structured Cities (Oxford, 1984), 37.Google Scholar

86. Schafer and Field, “Section 235 of the 1968 Housing Act.”

87. Badcock, Unfairly Structured Cities, 16.

88. Smith, Michael Peter, City, State, and Market (New York, 1988), 184.Google Scholar

89. See, for example, Boyer, Cities Destroyed for Cash, 4; Davies, “One Third of a Nation,” 45; Hartman, Housing and Social Policy, 142; and Struyk, Should Government Encourage Homeownership?, 8.

90. Badcock, Unfairly Structured Cities, 6, 52. See also, for example, Elkin, “Twentieth- Century Urban Regimes”; Stone, Clarence, Regime Politics: Governing Atlanta, 1946–88 (Lawrence, Kan., 1989)Google Scholar; and Smith, City, State, and Market.

91. See Lindblom, Charles, Politics and Markets (New York, 1977).Google Scholar

92. Robert Shapiro and John Young, “Public Opinion and the Welfare State,” Political Science Quarterly 104:1 (Spring): 82n.