March/April, 1994
The Housing Affordability Crisis: Progressive Responses
Shelter Burden: Local Politics and Progressive Housing Policy by Edward G. Goetz. 250 pp. Philadelphia: Temple University Press. 1993. $39.95 (cloth)
Shelter Poverty: New Ideas on Housing Affordability by Michael E. Stone. 423 pp. Philadelphia: Temple University Press. 1993. $49.95 (cloth) $18.95 (paper)
by W. Dennis Keating
In Shelter Burden, Professor Ed Goetz of the University of Minnesota focuses on the local government response to federal cutbacks in housing in the 1980-1990 decade. During this period, he estimates that increased state and local governmental spending on low- and moderate-income housing made up approximately one-third of the loss of federal aid. Goetz acknowledges the restraints on the fiscal capacity of local governments attempting to promote greater equity and income redistribution, e.g., limitations on their ability to tax, competing budgetary demands, economic restructuring that has reduced central city tax bases. Nevertheless, Goetz demonstrates that many local governments have been increasingly responsive to addressing housing affordability problems.
Goetz sees this pattern as a result of the actions of the housing movement and, in particular, the growth of nonprofit community development corporations (CDCs), as well as other community-based housing organizations. He documents the financial support of local governments for CDCs through his own and other national and local surveys. This, in turn, can lead to a larger role for nonprofits in the delivery of affordable housing, although this is not guaranteed.
Goetz outlines four models of CDCs and local low-income housing delivery systems: 1) local government sponsorship; 2) [public-private] partnerships; 3) community-based networks; and 4) pre-organization. Goetz surveyed 133 cities, using 13 progressive housing policies, to determine which U.S. cities were the most progressive. His top three cities, in order, were Berkeley, San Francisco and Los Angeles, all in California.
Goetz' major case study was Los Angeles in the last terms of former longtime mayor Tom Bradley (generally cast as a moderate/conservative Democrat). Goetz sees more liberal and progressive changes in the city's housing policies as resulting directly from advocacy by various community organizations. What effect the 1993 election of conservative Republican Richard Riordan as mayor will have on the future of more progressive housing policies in the nation's second largest city remains to be seen.
In addition to city governments, Goetz surveyed the directors of statewide housing coalitions in 32 states. As with cities, Goetz found evidence of significant impact on state housing policies by progressive statewide housing coalitions. However, he found it more difficult to measure this.
Goetz sees the 1990s as a "post-federal" era, meaning that the pre-1980 HUD budgetary levels for low- and moderate-income housing are not likely to be restored, even with incremental increases (e.g., since the Clinton administration and Henry Cisneros have embarked upon re-inventing HUD). Therefore, Goetz sees state and local government as continuing to be very important for the development and implementation of progressive housing policies. Goetz identifies three attributes of the progressive paradigm: growth with equity; economic democracy; and the creation of a viable third sector of nonprofit housing. His analysis supports the view that incremental reforms are possible at the state and local levels, even in an era of federal neglect of housing policy and conservative opposition to governmental intervention in the private housing market.
Professor Michael Stone of the University of Massachusetts, Boston, has written a lengthy version of previous arguments for removing housing from the market system and making it a nonprofit good. He argues for social ownership similar to nonprofit cooperative and public housing more prevalent in Western Europe, echoing similar proposals made by John Gilderbloom and Richard Appelbaum in their book Rethinking Rental Housing (1988) and John Emmeus Davis in The Affordable City: Toward a Third Sector Housing Policy (1994).
Stone's contribution to the debate over the problem of housing affordability and how to address it is his concept of shelter poverty." By this, he means that each household's ability to pay for decent shelter should take into account their income and composition, as well as their other basic needs. He rejects affordability standards such as the twenty-five or thirty percent of income for housing payment requirements used by HUD. What Stone is concerned with is meeting the needs of lower-income Americans for all basic necessities, including housing. His basis for analysis is ability to pay, not what is actually paid in a mostly market-driven housing system.
By his definition, in 1991, an estimated 29 million U.S. households comprising 85 million persons were shelter poor. Forty percent of renters, compared to 20 percent of homeowners, were shelter poor. Half of African-American and Hispanic households were shelter poor, compared to one-fourth of white households. Stone calculates that our national housing affordability deficit in 1991 was $95 billion, equivalent on average to $300 monthly needed by shelter poor households. This deficit has increased by half in the past two decades.
Much of Stone's analysis elaborates upon the magnitude of the shelter poverty problem, its historical roots, and the failure of public policy through programs like public housing, urban renewal, welfare assistance, Section 8, and the low-income housing tax credit to solve shelter poverty.
Stone then discusses in detail his concept of social ownership, removing much of the housing stock from the private market and making it permanently affordable. His ideas are a more detailed version of previous proposals made through the Institute for Policy Studies – A Progressive Housing Program for the United States (1987) and The Right to Housing: A Blueprint for Housing the Nation (1989).
Stone would replace market-based incentives used to produce low- and moderate-income housing with direct federal capital grants. He proposes to buy out the private rental market through government bonds at a total cost of $280 billion ($18 billion annually over 40 years). He proposes to substitute cooperative forms of ownership to replace individual home ownership. Stone estimates that the costs for his proposed social housing program would be $100 billion annually (about half of which would support the operation of housing in the social sector). This is roughly four times higher than HUD's current authorized budget. Stone would also establish a National Housing Trust Fund to provide credit to the social housing sector. One source of financing this massive increase in federal funding would be the elimination of regressive federal tax benefits for homeowners and landlords. Another source would be tax reform (additional taxes on the wealthy and corporations).
Obviously, Stone's proposals would require a virtual political revolution, especially among the two-thirds of Americans who are owner occupants. The banking, real estate, homebuilder, insurance, and development lobbies that have so influenced American housing policy would all fiercely oppose such changes. Throughout, Stone argues for ideologically-based organizing, citing examples in Massachusetts. He also cites a few examples of populist organizing against taxes, redlining, and foreclosures as offering hope of a possible constituency to provide support for his proposals. However, there are few examples of progressive municipal regimes, none at the state level (although some states have adopted progressive housing reforms), and no indication that there is any support nationally among voters or in Congress that such radical policies would receive any serious political consideration. The Clinton administration's apparent refusal to even consider a proposal by Labor Secretary Reich to limit the "mansion" subsidy to help to pay for health care reform indicates the difficulty of directly challenging the current housing system.
In the present economic, political and social climate, the radical "socialistic" nature of Stone's reforms, combined with an incredible price tag when the federal deficit prevents virtually any major domestic social reforms that are not self-financed, means that his call for a right to housing will not soon be heard in Washington, DC. However, Stone, like Goetz, identifies many housing reform policies on the way to a right-to-housing that have been enacted at the federal, state and local levels. This gives hope that incremental changes, largely at the grassroots level, may eventually form the basis for more progressive, systematic changes at the national level when a political constituency for such change emerges.
Boiling Point: Democrats, Republicans and the Decline of Middle-Class Prosperity by Kevin Phillips, 307 pp. New York: Random House. 1993.
by John Atlas
The 1992 federal elections and the state and city elections in 1993 proved that a middle class worried about the economy, crime, and social issues will dominate American politics for the next several years. Housing activists ignore middle-class concerns at their peril. Will the middle class support our struggle to attack the horrible housing problems that a minority (even if a growing one) of the people face? Can the middle class be mobilized to ally with the poor? Kevin Phillips has the best record of understanding the middle class' political impact. In his latest book, Boiling Point, Phillips describes the growing potential of a populist alliance of the middle class and the poor.
Phillips is an unlikely advocate for this kind of populist alliance. He first emerged as the sage of middle-class behavior when his 1969 book, The Emerging Republican Majority, predicted a realignment of American politics based on white middle class support for conservative Republicans. He identified the first stirrings of this resentment – focused on liberal elitism and issues like crime, taxes and race – that would change politics for a generation. President Nixon based his "Silent Majority" strategy on Phillips' analysis.
In his 1990 book, The Politics of the Rich and Poor, Phillips took another look and found the Republicans favoring the rich at the expense of the poor and the middle class. The previous ten years of Republican policies, Phillips documented, fostered increasing social inequality and greater concentration of wealth at the top. The middle class, angrier then ever, turned it's anger toward conservative elitism. Republican policies redistributed wealth upward from the middle class and poor to the rich, promoting extremes of wealth and poverty, conspicuous consumption, speculation, huge deficits and eroding middle-class wages and standard of living. Two highly visible groups symbolized the poles in American society; billionaires and the homeless.
The vision of America as a confident, striving, middle-class society was unraveling. The result, Phillips predicted, would be a populist social and political upheaval in the 1990s. George Bush beware, he warned. The broad middle class, goaded by a resentment of the rich and fearful of losing more economic ground, will take its self-interest to the voting booth.
Bush's defeat in the 1992 campaign proved Phillips correct again. In very different candidates Pat Buchanan, Jerry Brown, Bill Clinton and Ross Perot appealed to a frustrated middle class. "The rich get the gold mine and middle class gets the shaft. It's wrong and it's going to ruin the country," Bill Clinton said during the campaign. In Boiling Point, Phillips reevaluates the middle-class rebellion since the 1992 election. (When Clinton took his cabinet to Camp David for a retreat in January 1993, he took Phillips' book with him.)
With both statistics and vivid anecdotes, Phillips describes the decline in middle-class living standards. Taxes up; real incomes stagnant or falling; fewer government services delivered; layoffs soaring; pensions at risk; skyrocketing health care and college costs, and a worsening housing situation. Homeownership is down, homelessness is up and foreclosures are multiplying all over the country, including the affluent suburbs.
These are not simply symptoms of a down turn in the business cycle. A more profound trend is at work: the restructuring of the U.S. economy in a global order. And business adjusts. For example, Phillips recounts the blunt advice that dispassionate marketing strategists were giving their retail clients: Downsize, since the market for families earning under $25,000 would get larger despite upturns in the business cycle. You can't help notice that moderate priced restaurant chains are posting new bargain meals.
Middle-class decline also can be seen as the population increases in cheap, distant-end of the freeway homes and in poor urban neighborhoods. Phillips quotes Rutgers University demographer James Hughes: "The upscale outer-suburb life style will fade. The 80s consumer would pay anything to save time. Now people will drive to outlet stores to save money."
But the rich made out like bandits and, as Phillips shows, the gap between the rich and everyone else has grown dramatically. While speculators and corporate raiders took home huge sums, the average American family ended up fearing for its dwindling savings, insurance coverage, home values and pensions. Never has the imbalance between the rich and everyone else been greater than it is now. The collective income of the top one percent of Americans, a mere million families, is overtaking the combined income of the entire middle 20 percent of the population, about 50 million people. While the ranks of the very rich have grown slightly, the middle class – the great engine of American prosperity and social stability – is shrinking.
A typical middle-class person may not realize that in 1979, the average CEO made 29 times the income of the average manufacturing worker. And that by 1988, that outrageous disparity had more than tripled. They do recognize that the nation's power elite – the wealthy one percent at the top – have much to do with their problems.
Not since the New Deal has there been a better opportunity to build a populist coalition of the poor and the middle class due, Phillips suggests, to this middle-class anger and the decline in prosperity. The political future, Phillips argues, will resonate with middle-class anger correctly believing that the source of its suffering was the rich getting richer in the deregulated, free market era of the 80s.
While today's middle-class revolt is just the latest manifestation of a populist thread that has run through American history, a hidden danger exists. Not all populist movements were inclusive. As John Judis points out, in the summer 1993 issue of The American Prospect, while some populists in the late 1800s unwaveringly supported a movement of black and white, many southern populists, particularly after 1892, sought to exclude blacks. Similarly, while many populists during that era and in the 1930s identified the privileged elite as business tycoons or financiers, others identified the members of the elite as Easterners and even as Jews.
In other words, one current of populism has always sought to unite the middle with the bottom of society, including whites and blacks, small business owners and labor, tenants and homeowners – against uncaring big business and the wealthy. The other tendency pitted the people against both the top of society and the bottom including blacks and immigrants. The more inclusive populism formed the underlying rhetoric of progressive populism. The more exclusive populism underlay the appeal of modern conservatism represented by people like George Wallace, David Duke and Pat Buchanan.
The conservative middle-class populism of the 1970s and 1980s that, according to Phillips, was a reaction against the fear of crime and social disorder, is giving way to a new middle-class populism. It's a populism that helped elect Clinton and is directed upward at the wealthy who enriched themselves in the Reagan-Bush years. Sixty-two percent of the population rejected Bush and his country club pals. Ironically, Perot – a billionaire – tapped some of the same sentiments.
Moreover, while the populism of the 1970s was antigovernment, (the middle class reacting against elitist liberal social policies), the new populism, Phillips suggests, is potentially progovernment as the middle class seeks relief from the economic consequences of the financial elites and free traders.
Phillips clearly thinks a populist movement's time has come. If he is correct, will the movement be led by some neofascist like Pat Buchanan or someone like Jesse Jackson or Ralph Nader? Housing activists in concert with other progressives can help determine its direction.
John Atlas is President of National Housing Institute