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Wednesday, December 7, 2016

Will Carson Beat the HUD Miasma?

Career bureaucrats care nothing about the comings and goings of transient political appointees.

Ben Carson, a physician and conservative pundit, has been tapped to head the Department of Housing and Urban Development, where offices are waiting for him and his new staff – plush offices that hold transient political employees which the permanent staff, ensconced in grim offices through the rest of this concrete monstrosity, is habituated to ignore completely.

The new big shots will sit at their desks until they are called by the media to comment on housing policy. They will suggest many changes, no question. Carson is highly skeptical of the federal role in housing and might even attempt to reform this agency, which is one of Washington’s leading exporters of socialism to cities around the country.

Prediction: nothing will change.

Pictures on the Wall

Kemp loathed public housing for its astonishing failures, and had every intention of privatizing the nation’s stock.The appointment takes me back in time. I was doing research in the offices of HUD back in 1993, the tail end of the tenure of Jack Kemp, another reformist who failed. I was at the offices of HUD in DC and pouring through records of spending and loans to real estate development exactly during the time when the housing boom really began to get crazy.

(As I think back on it, the fact that I was even there at all, looking through files and getting to know the permanent staff at the agency, would be inconceivable today. No one is allowed into this bureaucracy anymore.)

As I was working, I heard a series of loud crashes outside the door. I looked down the hall and saw a man calmly walking while tossing pictures of Kemp off the wall and onto the floor, shattering the framed glass. A man behind him with a push broom swept up the debris and put it into a large plastic trash can on wheels. A third man came behind him, putting up the new picture of the new head of HUD.

For the huge numbers of workers there, showing up day after day and obeying the regulations as they pertain to them, this is the only real difference between one appointee and another. It’s just a different picture on the wall. Everything else remains the same.

Good Intentions, Huge Budgets

The tenure of Kemp at HUD (1989-1993) tells you all you need to know about how government works. He came with three profound convictions. He got the job as a kind of political payout to the merchant class, the quasi-libertarians who were skeptical about George Bush’s free-market convictions. Yes, the cabinet-level appointment was a sop. But Kemp decided he would use his position to do some good, and show the country the power of markets as a replacement for Great Society programs.

First, he believed the inner cities were victims of socialism as imposed by Washington; he intended to bring free markets to these areas using a strategy he called “enterprise zones.” The idea was to map out a distinct area of a city that would be exempt from a series of taxes and regulations.

Second, he loathed public housing for its astonishing failures, and had every intention of privatizing the nation’s stock, granting title to the residents themselves.

Third, he believed that home ownership was the key to feeling you had a stake in the community, because owning a home is the American dream. Here he let his romance swamp his rationality. There is nothing wrong with renting. It is not like socialism at all. But his push for ownership inadvertently contributed to the creation and entrenchment of policies that fueled the housing boom that ended in calamity 15 years later.

“If you want to make changes around here, you need to propose some new spending program.”But what about the first two ideas? He pushed for them very hard at the outset. But what he quickly came to realize is that he had no power to change policy at all. Everything he wanted to do relied on a responsive Congress, and he couldn’t get anyone interested. This situation persisted for many months.

Everyone kept telling Jack some version of the following: “If you want to make changes around here, you need to propose some new spending program and get someone to sponsor the bill.” Now, this is awkward, since he came to HUD with the intention of gutting its power and, eventually, its budget. But in Washington, no one gains anything from cutting anything. Bureaucrats, politicians, and special interests all lose with budget cuts. So long as that is true, cuts can’t happen.

So he changed tactics. He put together a $4 billion housing program that would sell public housing to its tenants, and got the President’s backing for it. It was called HOPE, for Homeownership and Opportunity for People Everywhere. Then he put together a task for Economic Empowerment, and worked to get some money allocated to that as well. He couldn’t get anyone interested until after the Los Angeles riots of 1992, when he suddenly became the focal point of media attention.

The HUD budget began to grow at an unprecedented rate by standards of the day. Later audits found vast evidence of misallocation of funds resulting from all the new programs. Home ownership and enterprise zones, because they were spending programs more than actual deregulation programs, ended up creating vast new opportunities for graft and misallocation in an agency that was already riddled with scandal.

Of all the useless and destructive agencies in Washington that need to go, HUD tops the list. Incredibly, the advent of the government-insured mortgage-backed securities industry started out of the Housing and Community Development Act, which was seen as the crown jewel of Kemp’s tenure. Kemp’s intellectual error – assuming ownership itself rather than private property in general was the key to prosperity – would eventually result in disaster.

Kemp left HUD in 1993, now a much larger agency with vastly more power. His dreams had been destroyed by the bureaucracy and by the impossibility of reform in Washington. He had failed just as much as his predecessors and his failure foreshadowed the same from his successors.

More Pictures

Twenty-four years later, the same ritual will repeat itself. The pictures of the old HUD head will be taken down and shiny, new pictures of Ben Carson will go up. Members of the permanent bureaucracy will roll their eyes if they even notice the change at all. He will learn within weeks that no change happens in DC unless it comes in the form of a new spending program. Four years from now, he will be replaced by someone new, and he will spend the rest of his days on this earth wondering why he ever bothered.

Of all the useless and destructive agencies in Washington that need to go, HUD tops the list. The only way forward is not reform but shuttering. The building itself could be bought and turned into some much-needed housing for the poor in that section of DC.