Federal Housing Assistance Programs

 Senate Budget, Roundtable to Examine Federal Housing Assistance Programs

In 2003, my wife and I were blessed with our daughter, Catie. As she grew, and because we wanted to have more children, we were forced to look for something bigger than a one bedroom apartment. We had previously visited an Alexandria City Housing Fair, so we dug out the paperwork and started the application process for a subsidized mortgage. Because I was a stay at home Dad, we were within the guidelines for the low-income program. 

After looking at a few places, we got cold feet as housing prices were skyrocketing. We got back in because a staffer from the Alexandria Housing Office called and assured us that prices were not going to go down. I wish I had him on tape. We bought a nice condo for $257,000 (before fees) in 2005. You can probably guess the rest of the story. 

The next year, I went back to work temping as either an administrative professional (including a month at the National Low Income Housing Coalition in 2007) or as professional government contractor. While I was at the Department of Energy, she lost her job, but found a new one, then I lost mine and eventually landed at Graduate School USA until we lost both of our jobs and started getting UI on almost the same day. Needless to say, we did not pay the mortgage on a regular basis. By that time, the value of our unit was less than half of what we paid for it, so selling was not an option. 

A small inheritance from my mother’s passing allowed us to catch up and keep up payments until mid-2013, but when that money ran out, the financial and my health difficulties found us divorced in place. In November, we got a foreclosure notice and staved it off for almost a year by filing for bankruptcy. Still not willing (or able) to maintain payments, we converted to Chapter 7 and went our separate ways. 

At auction, the Alexandria Housing Office – who had lost their interest as the third mortgage holder, bought the property and flipped it for about $100,000 less than we paid originally. They came close to making back their investment and the first mortgage came close to being paid, but not the second (both from Virginia Housing Development Authority).

In 2008, the Troubled Asset Recovery Program was enacted, promising aid to homeowners. The next year, CNBC Rick Santelli had his “rant of the year” which put the kibosh on any aid to homeowners, although there was little appetite to provide it from the Larry Summers wing of Obama economic team anyway. They did, however, stay behind bailing out the holders of the bad paper. Had they done as originally promised and written down principle to market, we probably would have kept our home and still be married today. 

I am guessing that our story is not unique. My health challenges led to receipt of SSDI and assisted housing from Montgomery County. I have also been on the Section 8 waiting list for five years. My lottery number finally came up and, at last check, I was 7th in line for one of two units in Silver Spring. I should not have to be.

Federal Housing Assistance is required because incomes are too low. If the minimum wage had kept pace with inflation, SSDI payments would be adequate because wages would have been higher. They still can be. Simply enact a $15 minimum wage, then index it starting with when it was proposed by Senator Sanders in 2016. Use that increase to rebase benefit levels for the retired and disabled and few of us will need any kind of housing assistance.

If the child tax credit were increased to median income levels, made refundable and shifted to an offset against an employer-paid subtraction value added tax there would be no need for the mortgage interest deductions or family rental assistance. Unemployment Insurance beneficiaries would receive the tax credit in addition to benefits, as would workers whose skills were inadequate to keep a job at the new minimum wage. Instead, they would be paid that wage to gain the required skills, from ESL (no legal residence requirement) and GED to vocational or associates degree levels. 

There are those who think such assistance pays people to be poor. The only people who really believe this are those who want to keep a ready supply of low wage workers. These people are called CEOs. Everyone else gets a raise when the minimum wage goes up, franchisers will change prices and fees or lose business – so there is no small business excuse, and investors will get a normal profit – as always.

This is no exaggeration. No labor economist with a straight face will assert that any workers productive output is less than $20 per hour. When it is not, usually in the service industry, staff is sent home. When my marriage ended, I worked selling theater tickets. No one could go home and some were asked to stay when business was brisk, while people were sent home on weeknights. A lower wage would not have kept people at work, nor would a higher wage have led to understaffing during weekends when Kevin Hart had movie out.

There is no reason to have programs to support a second-tier economy if we are willing to pay decent wages. When doing so is a legal requirement, no one gains or loses competitive advantage from the higher wage. 

A child friendly wage, like the one proposed by the Catholic Church from Pope Leo XIII (Rerum Novarum) to Pope Pius XI (Casti Connubii, #119-122), to Benedict XVI (Caritas in Veritate) to Pope Francis’ upcoming encyclical is not possible in the free market. People with children would simply not be hired. Indeed, in the software industry, middle aged workers with children are often let go to be replaced with two recent graduates with more up-t0-date training. Such market failure demands public action along the lines I mention above. 

There are those who consider such aid to be socialism. I am sure that the great socialist, Milton Freidman, along with presidents from Ford to Trump, would beg to differ. The child tax credit has been increasing steadily, but not adequately. We can fix that with tax reform. Some childless workers and managers may have to accept lower wages, but everyone would have a decent quality of life. Work would pay, more people with money would spend more money. 

The CEO/Donor Class will raise a ruckus, but courage in Congress will show them to be paper tigers. Go big or retire to K Street (no one ever goes home).

There is a similar matter that needs mention – Fair Housing (especially considering recent campaign bloviating). In light of recent Supreme Court rulings including sexual orientation in sex for employment law – there is no reason to believe that this revised definition does not apply to every part of the Civil Rights Act – as well as the Fair Housing Act. 

Are civil penalties enough to force compliance? Experience shows that they do not. A former roommate, who got his Section 8 before I did, was exposed to possible discrimination couched in the language of credit. He complained to the Housing Office and the landlord caved in. This was only two years ago in liberal Montgomery County. The continued need for training by the Patricia Roberts Harris National Fair Housing Training Academy (where I also worked) is a less anecdotal.

When I was the Ward 3 Community Relations Representative in the D.C. Office of the Ombudsman, we were given a talk by the Solid Waste Management office. Their motto was that there is no better education than a ticket. This would be equally true in fair housing, as well as all other civil rights enforcement. It is time to quit talking about reform and to actually start doing it.