The Free Market 15, no. 1 (January 1997)
In October, former HUD Secretary Henry Cisneros spent $716 million to demolish decrepit housing projects. Before you cheer, consider this. The units won't be replaced with a market system. More money will be spent on yet another socialistic program, this time to pay welfare recipients to move into private housing in suburbia and elsewhere.
The residents ticket to "freedom" is Section 8, a housing welfare program under which recipients pay 30% of their income (which can be zero) towards an apartment or house. The federal government kindly picks up the rest. The Section 8 program reviled by everyone but the special interests who greatly benefit from it symbolizes the irresponsibility and anti-taxpayer bias of government social policy.
The new Cisneros program is the successor of the short-lived Moving to Opportunity program. Jack Kemp started that in an attempt to shift people on welfare from inner cities into affluent suburban neighborhoods. The theory accepted by most apologists for government urban planning was that poverty and crime result from surroundings, not behavior. This can be corrected by relocation to middle-class areas.
As Cisneros explains, public housing is a failure because it "concentrates the very poor." HUD therefore wants to send these people into middle-class neighborhoods. In 1994, however, the program became a political liability. It had set off alarm bells in several American cities, including Baltimore. After hearing constituent complaints, Senator Barbara Mikulski, a left-wing Maryland Democrat, spiked the funding.
As Cisneros explained to the New York Times, "we learned not to offer a program like this during an election year, when people are looking for a wedge issue and are not above frightening people with questions of race." Still, Cisneros unapologetically defends the idea: "Our goal was to introduce market principles and discipline for residents and housing authorities." However, the notion of mixing "market principles" and government handouts is one of the biggest frauds of the 1990s.
Through Section 8 rental subsidies, HUD still gives some people keys to the best apartments in town while sending the bill to middle-class taxpayers. HUD sets the subsidy levels ("fair market rents") for each city or county in the country; the amount of the subsidy determines where the housing welfare recipient can live. Not surprisingly, HUD has been extremely generous with other people's money.
With such abundant handouts, many Section 8 recipients enjoy far more comfortable housing than working Americans. One taker, Pamela Price, told the Los Angeles Times that "this is like Christmas" after she used her new certificate to move into a luxurious apartment complex with a heated swimming pool, four spas, six tennis courts, and two air-conditioned racquetball courts.
Section 8 certificates entitle welfare families to move into an apartment complex in Silver Spring, Maryland, that brags of its heated pool with water jets, microwave ovens, and "deluxe modern kitchens with convenient breakfast bars."
HUD says it provides "freedom of choice." Yet it comes at other people's expense. For instance, HUD will pay up to $1,771 a month for welfare recipients to live on the island of Nantucket, Massachusetts. This is a higher rent than 95% of the nation's renters pay and far higher than most American renters can afford. Yet, according to HUD, this is simply "fair."
In 1994, HUD raised subsidy levels in Plano, Texas, to $750 for a two-bedroom and $900 for a three-bedroom apartment. Yet the median rent there is $586 per month. In the Washington, D.C., area, HUD pays up to $1303 per month for rent for welfare recipients. In some areas around Washington, however, there are almost no apartments renting for such a high price.
The Washington Post reports the case of a 21-year-old mother of two who lives in a town house in Burke, Virginia, with three bedrooms and four bathrooms; all of her $1,000 a month rent is picked up by taxpayers. How many other 21-year-old unmarried mothers live in three-bedroom, four-bathroom townhouses?
Section 8 recipients in Fairfax County have concentrated along Route 1 in Alexandria, which one unsubsidized resident said "is synonymous with dilapidated homes, drug dealing, crack houses, and a host of other social and criminal problems. I have witnessed drug dealers directly operating out of Section 8 housing, and other recipients have turned their homes into crack houses and garbage dumps." Section 8 also causes disruption in working-class neighborhoods. As the Baltimore Sun recently noted, "In an area where many houses ordinarily could be leased for under $350, the poor families $600 a month housing vouchers have made renting to Section 8 tenants so profitable that many speculators are no longer interested in ordinary working-class renters." The General Accounting Office reports examples of Section 8 apartments renting for twice as much as unsubsidized units across the street. And the public housing residents HUD is dispersing come from areas with crime rates as high as 20 times the national average. A Washington, D.C., rap band even named itself the Section 8 Mob.
Section 8 is hailed by many liberals and even some conservatives for giving the poor "freedom of choice." Chicago has distributed thousands of certificates to public-housing residents, who have used them primarily to move to a handful of communities on the city's southern edge. (A front-page New York Times headline last December hailed this as "An Underground Railroad from Projects to Suburbs.")
Bribery is routine in the distribution of the benefits as well. Last October, a former administrator of the Detroit Housing Administration was convicted of 49 counts of conspiracy to solicit bribes. He was charging people to move their names up on the waiting list. In September, a former employee of the Pomona Housing Authority in California was indicted for accepting bribes to add people who were not eligible for the program.
It is easy to understand why many politicians would prefer Section 8 over current housing projects. Section 8 is better than public housing because it creates fewer embarrassments for HUD. Dispersing the problem can make it more difficult to hold government officials responsible for the havoc they sow. Yet the program has actually failed as badly as public housing, and provides one more reason to get the government out of the housing business.
James Bovard is author of four books, including Lost Right. Go to jamesbovard.com
