Wednesday, October 31, 2012

Crafting a New Rental Policy: Lessons from US Housing Policy History

by Alexander
von Hoffman
Senior Research Fellow
As the United States continues to recover from the worst economic downturn since the Great Depression, it is worthwhile to consider the ways Americans responded to similar predicaments in the past.  Four times in recent American history, housing-related crises led the US government to initiate large-scale housing programs for low-and moderate-income Americans. In my recent working paper, I explored the political processes that led to the successful adoption of these programs and discovered lessons in strategy that could help advocates of policy change today, particularly those seeking to craft a new rental housing policy.

During the economic crisis of the Great Depression, Franklin Roosevelt’s New Deal produced the public housing program. In response to the acute housing shortage at the end of World War II, the government found a winning formula in the housing component of the G. I. bill. To help solve the urban crisis of the late-1960s, the Johnson administration set a high goal for national housing production and enacted two large low-income housing production programs based on subsidizing private industry. When these programs careened into crisis in the 1970s, Richard Nixon inaugurated a new approach of vouchers, although it would take almost a generation before that policy was fully accepted.

Photo: Atlanta Housing Authority, Clark Howell Homes (Public Housing), circa 1945, photographer unknown, courtesy of the Library of Congress

While these programs offer insight into the content of housing policy, they also provide valuable lessons about successful strategies for winning adoption of new policy today. First, history teaches that new housing policy is more likely to be passed and to succeed if it involves a decentralized program (such as the US public housing program) to help build local institutional infrastructure and political support and to respond to local conditions. A politically successful policy will also make extensive use of the private and nonprofit sectors, as did the Veterans Administration housing program, mortgage subsidies for low-income rental housing, rental vouchers, and low-income housing tax credit. Using private sector agents to carry out a new housing policy creates stakeholders, spreads political support, and helps avoid criticism for increasing government bureaucracy.

A second key ingredient in a successful drive for a new federal housing policy may seem obvious: the higher the rank of government official who favors a policy, the better are the chances it will be enacted. The president’s direct interest in the passage of a new program lends the greatest weight, but lack of support from the president need not be fatal (in the case of public housing, Franklin Roosevelt disliked the program but his wife, Eleanor, lobbied him to support it). History also shows repeatedly that strong political support is essential from non-governmental national organizations with local affiliates, coalitions of grass-roots groups, or—as in the classic case of public housing—powerful interest groups (labor, for example) whose main constituency is not related to the housing industry. Outside political force is most effective when it is felt from local jurisdictions where members of Congress go looking for votes.

A third lesson is that special commissions and White House conferences can potentially generate helpful ideas from experts in the field and build outside political support of important interest groups, but they must be carefully composed and organized lest they wander off track, producing impractical or impolitic ideas. Agency officials should think through a short- to medium-term strategy that would include identifying an ideal program or range of programs, a public relations effort to heighten awareness and build enthusiasm for the program goals, and lining up of political support from interest groups, other federal agencies, and elected officials.

Fourth, while Americans can be sympathetic towards the poor, history shows they are most enthusiastic about helping working people. For this reason, government aid to members of sympathetic middle-class groups (e.g. veterans or the elderly) has usually been more popular than aid targeted strictly to lower-income groups (e.g. welfare programs). Of course, so-called middle-class groups may contain or can be defined to include low-income people, and reformers can succeed in helping the poor by including them in programs that target so-called “worthy” groups.  The public housing crusade of the 1930s, the housing component of the G. I. bill and, more recently, the “workforce housing” campaigns in Illinois and elsewhere demonstrate the appeal and the potential of programs with an ambiguous constituency. Some policymakers may still prefer to propose programs explicitly targeted to very low-income people; in order for these to succeed, however, proponents may have to argue that the program will inculcate or reward self sufficiency—conditions aimed at imposing middle-class values.

Today, these lessons can be applied to strategies for the development and adoption of a new rental housing policy. Such a policy should be accompanied by an education campaign that presents renting as a positive act, not a failure to own a home, and as something that Americans of all income levels choose to do. This is no easy task. More than a century’s worth of discourse about the virtues of homeownership, the falling incomes and status of renters in recent decades, and the declarations of recent presidents about the importance of raising the homeownership rate have all helped equate the idea of the “American dream” with owning a house. Yet the current political and economic climate offers many reasons that renting can be the right housing choice for Americans: it offers choices in location and building type, frees individuals from the maintenance burdens of homeownership, and may offer opportunities to live debt-free. As more Americans face the reality that they can only afford to rent—or would be better off doing so—they are more likely to welcome a government policy that helps them do so.

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