While the Department of Housing and Urban Development has lots of different programs, its bread and butter falls into two categories: subsidies that help poor people pay for homes (Section 8, HOPE VI, and the like) and subsidies that help middle to upper income people pay for homes (FHA and oversight of Fannie Mae and Freddie Mac). Most of what HUD does is deal with the unaffordability at housing by throwing money at people who use housing.
But why is housing unaffordable? It’s because state and (especially) local governments impose regulations that artificially restrict the supply of housing, such as zoning and rent control. They do this at the behest of incumbent homeowners and renters who gain financial advantage because what they have has become scarce.
Then, people realize that it’s really expensive for a new entrant to get a home. That’s where HUD comes in, with federal subsidies to help offset the unaffordability created by state and local policies.
There is no reason the federal government should be in this business. Unlike health care, there is nothing fundamentally unworkable about a private market in housing that requires heavy government regulation and subsidy. Withdrawing federal housing subsidies would force states and localities to cough up the money needed to offset their costly housing policies—or to relax housing regulations so that the market could drive home prices and rents down.
Abolishing HUD need not mean abolishing every program within HUD. We would still need an Office of Fair Housing and Equal Opportunity; that could go to the Department of Justice. Housing support programs that are heavy on service delivery should go to HHS.
But housing programs that are basically just income support for the poor, particularly Section 8, should be abolished in favor of an expanded EITC. And housing subsidy programs for people with higher incomes should be abolished without substitution.
We do need some temporary federal policy help adjusting to the housing bust; programs in this vein could go to Commerce to Treasury, and then be wound down in an orderly fashion. But in time, the goal of abolishing HUD would be to get the federal government out of the business of mucking with housing prices and mortgages. It’s good to hear that Romney is privately thinking along those lines.jbarrow
While the Department of Housing and Urban Development has lots of different programs, its bread and butter falls into two categories: subsidies that help poor people pay for homes (Section 8, HOPE VI, and the like) and subsidies that help middle to upper income people pay for homes (FHA and oversight of Fannie Mae and Freddie Mac). Most of what HUD does is deal with the unaffordability at housing by throwing money at people who use housing.
But why is housing unaffordable? It’s because state and (especially) local governments impose regulations that artificially restrict the supply of housing, such as zoning and rent control. They do this at the behest of incumbent homeowners and renters who gain financial advantage because what they have has become scarce.
Then, people realize that it’s really expensive for a new entrant to get a home. That’s where HUD comes in, with federal subsidies to help offset the unaffordability created by state and local policies.
There is no reason the federal government should be in this business. Unlike health care, there is nothing fundamentally unworkable about a private market in housing that requires heavy government regulation and subsidy. Withdrawing federal housing subsidies would force states and localities to cough up the money needed to offset their costly housing policies—or to relax housing regulations so that the market could drive home prices and rents down.
Abolishing HUD need not mean abolishing every program within HUD. We would still need an Office of Fair Housing and Equal Opportunity; that could go to the Department of Justice. Housing support programs that are heavy on service delivery should go to HHS.
But housing programs that are basically just income support for the poor, particularly Section 8, should be abolished in favor of an expanded EITC. And housing subsidy programs for people with higher incomes should be abolished without substitution.
We do need some temporary federal policy help adjusting to the housing bust; programs in this vein could go to Commerce to Treasury, and then be wound down in an orderly fashion. But in time, the goal of abolishing HUD would be to get the federal government out of the business of mucking with housing prices and mortgages. It’s good to hear that Romney is privately thinking along those lines.jbarrow