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Stop Treating HUD Like A Second-Tier Department

UPDATE: Dec. 5, 7:30 a.m. — Donald Trump on Monday morning said he would nominate retired neurosurgeon Ben Carson as his secretary of housing and urban development. Carson has no previous experience in housing policy, but a friend told The New York Times that he did spend time in public housing during his childhood in Detroit.

What follows is my earlier analysis, before Carson’s nomination became official.

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Ben Carson apparently still hasn’t decided whether to accept Donald Trump’s alleged offer to appoint him secretary of housing and urban development.1 If he does accept the position, it will mark a reversal for the retired neurosurgeon, whose adviser earlier said Carson didn’t want to serve in Trump’s Cabinet because he has “never run an agency.”2 But whether or not Carson is qualified for the HUD role, the agency that he might end up running is one of the most important in the federal government — even if that isn’t always how it is treated by incoming presidents.

HUD sometimes has a reputation as a bureaucratic backwater — presidents rarely put their closest advisers in charge of it. But in terms of its impact on Americans’ lives, HUD is far from second-tier. It has a budget of nearly $50 billion and employs over 8,000 workers. Its programs have a major impact on poverty, home ownership and affordability. Its data collection and enforcement roles are key for fighting discrimination and segregation. Here are four reasons why HUD and housing policy matter. Let’s hope President-elect Trump and maybe-Secretary Carson see that.

Poverty

Housing should be at the center of any attempt to fight poverty. Recent research by Harvard sociologist Matthew Desmond, among others, has shown that inadequate housing is often a catalyst for a cycle of poverty; it triggers residential instability, which hurts the life outcomes of children and their parents. And for the poorest of the poor, the homeless, experts are increasingly promoting a “housing first” approach, in which authorities try to help people find housing as a first step toward addressing other poverty challenges.

But housing policy in the U.S. is skewed toward rewarding wealthy homeowners (with tax deductions) rather than renters, who tend to be poorer. HUD oversees the Section 8 housing voucher program, which helps about 5 million people pay for private housing. Another roughly 2 million people are in public housing.

But, crucially, the majority of poor Americans who qualify for housing assistance don’t get it — about 75 percent, according to the Center on Budget and Policy Priorities. Of those families below the federal poverty guideline, 67 percent don’t get any housing assistance. A new HUD secretary could help change that, or could promote other reforms that would let the government help more poor families afford housing.

Housing finance

HUD has a huge influence on the mammoth U.S. mortgage market. The Federal Housing Administration, a sub-agency under HUD, underwrites one in six mortgages. That makes HUD responsible for over $1 trillion in mortgages. This FHA insurance allows many Americans — especially lower-income ones — to get mortgages at a lower cost than they could otherwise attain.

HUD also plays a crucial role in helping to avoid another housing bust like the one that helped spark the 2008 financial crisis. Along with other housing regulators, HUD helped draft regulations required by the Dodd-Frank financial reform act. HUD, for example, helped set the definition of a “qualified residential mortgage,” which affects how mortgages can be securitized (or packaged into financial investments). Runaway securitization was a major factor in the housing bubble.

Housing discrimination and segregation

Perhaps HUD’s most important role is that of ensuring equal access to housing, a role enshrined in the 1968 Fair Housing Act. The law made the agency responsible not just for fighting housing discrimination but for “affirmatively furthering” fair housing. The Obama administration last year announced plans to enforce that requirement by withholding federal funds in historically segregated areas. Contingent on receiving funds, state and local public housing authorities would be required to address how affordable housing development and zoning regulations further the goals of the FHA.

Not much is known about Carson’s views on housing. But in 2015, he published an Op-Ed in The Washington Times lambasting the Obama administration’s enforcement measures. As Emily Badger of The Upshot wrote recently, Carson’s comments suggest that if he takes charge of HUD, he could water down — or end outright — the agency’s role in desegregation and in fighting housing discrimination.

Data collection

Lastly, HUD is an important source of data on U.S. housing. The American Housing Survey, in particular, is a massive biennial survey on homes, housing costs and related subjects. It is used by policymakers, researchers, nonprofit groups and businesses to understand local communities and how they are changing.

HUD has also shown itself to be adaptive in its data collection. Experts pointed out how HUD did a poor job of collecting data about eviction, for instance. In response, starting with the 2017 AHS survey, HUD will incorporate a roster of eviction-related questions previously tested in the field.

Footnotes

  1. A spokesman for Carson last week said Trump had offered him the job; Trump hasn’t confirmed the offer.
  2. Armstrong Williams, a Carson adviser, made the comment in response to reports that Trump had asked Carson to serve as secretary of Health and Human Services.

Andrew Flowers writes about economics and sports for FiveThirtyEight.

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