These truths to be self-evident, that all men are created over the years, a member of Congress, I get to have a lot of really interesting people and experts on what they're talking about. This is the podcast for insights into the issues. China, bioterrorism, Medicare for all in depth discussions, breaking it down into simple terms. We we hope we hold these truths. We hold these truths with Dan Crenshaw.
Everybody, welcome back. You know, I want to get into some deep diving, into some policy. I don't know. We don't do that often enough these days. Well, maybe that's not true. But today I want to talk about housing. I think this affects a ton of people, especially people my age, millennials. We find it more difficult to find an affordable place to rent or and certainly buy more. Millennials are continuing to live with their parents.
GenZE is going to have the same problem. I want to dissect the reasons for this and maybe look forward to some solutions on what we can actually do about it. And I have a feeling that just free housing for everybody probably won't work very well, but maybe my guest will disagree. My guest today is Howard Husic. He's an adjunct scholar and domestic policy studies at the American Enterprise Institute. It focuses on local government, civil society, urban housing policy.
Also an executive senior fellow at the Philanthropy Roundtable. Look, he's been everywhere to include the Harvard Kennedy School. Both graduated from there and now we're talking today. Howard, thanks so much for being on.
Thank you, Congressman. Great to be on. So I want to talk about housing. You also have a book called Who Killed Civil Society The Rise of Big Government and the Decline of Bourgeois Norms. I want to ask you about that at some point, too. I think that's that sounds like an interesting title and gets probably the heart of the culture wars that we find ourselves in.
But, you know, maybe wrap it into I bet you can wrap it into our discussion however you like, but I caught my eye.
So, look, why is housing so expensive?
Let's just let's just start let's just go right from the top. What's your analysis and why it's so expensive? And, you know, what do we do about it? Well, it's interesting. Housing is expensive in some places and not expensive in some other places. So housing is really expensive in New York and San Francisco and in Boston has been anyway. And that's because this is not going to shock you. Demand exceeds supply. Yep. And that's really basic.
And why don't we have more supply? Well, because regulation inhibits the growth of supply and it does it in a couple of ways. First of all, it's really hard to build new housing. California is the ultimate example. They've got environmental laws that tremendously increase the cost of construction. There's there's going to be new environmental laws to have solar panels on new construction. And it goes on and on and on. And so anytime you do that, you increase the cost.
Sounds like a good social good, but it increases the costs.
And that's a fact. Like I've talked to developers in Houston that do development in Houston and in in California, and they tell me it's maybe four times the time to build something. Same thing.
Yeah. And housing is you know, it depends on your salary, but housing is a lot more affordable in Houston. And that's why California for the first time is losing population. I mean, that is an amazing thing. California has been the destination for generations for Americans. And now you have a reverse exodus because of high housing prices caused not only by the construction cost, but by zoning. So if you look at San Jose, California, which is one of the 10 largest cities in the United States, even though people don't think of it that way, you know, 90 percent of the land is single family zoning.
If you want to convert your single family house to a two family, you can forget about it. That's another way that supply is inhibited is do we have to acknowledge the fact, too, that we just have more people?
You know, we're always going to have this finite amount of space that we can live in. And more and more people have a preference for living in cities. You know, is this is this even if our regulations were perfect, do we just have to acknowledge this inevitability of rising prices?
Well, I actually don't think so. I think we're seeing I think we're at a watershed. I think prices are going to stay high in California. But I think the pandemic is a big change maker. And suddenly you can work from home in Buffalo and work for Facebook. Yeah, this is going to be a real game changer.
And we're starting to see an exodus from the expensive metros if that were a big.
So you think it's going to balance itself out in a sense?
Well, I think it's too soon to tell, but I'm seeing that as well.
I agree with you. I'm I'm hearing it from people all the time. They're like where our office just told us, never come back.
You know, it's just that anybody really like commuting now.
But I do like I mean, I like being around people. And I. I don't know I don't know that I would do well at a purely remote situation, but some people do.
Yeah, but if if you could I agree with you.
You know, I miss the WaterCooler and the mini fridge, but, you know, if people can like stealing other people's food in the mini fridge when I'm the boss, they can't tell me.
No, that's great. That's great. I'm just kidding. Ethics chill. Jeez.
But look, if you can get a really great house. I'm from Cleveland, Ohio, originally, right. There's a city there that used to be the richest, wealthiest city in the United States called Shaker Heights, Ohio. You know, you can buy a mansion there for a quarter of a million dollars, you can't buy a parking space in San Francisco for a quarter of a million dollars. We're in midtown Manhattan. That is actually not much of an exaggeration.
So people are going to figure this out and say, if I'm getting the same paycheck and I can get five times as many square feet, you know, I'm going to think about that.
OK, so you've kind of successfully debunking that. I mean, so the real problem then is we're not building enough in the places that we have in the in the space that we have. You know, I want to read some statistics here. Prior to the pandemic, more than 20 percent of millennials lived with their parents, which is up from 11 percent in 2001. And this is led in part or maybe perhaps a consequence of, you know, causality can work in both directions.
A delay in millennials forming families, definitely having kids at a later age as millennials, but that's when they should be purchasing homes. So, you know, where do we start? I mean, how can somebody, you know, normal middle class millennial, how do we make it more affordable for them or against kind of the same question as before? Should they just be looking elsewhere? Do we have to disabuse ourselves of this notion that you have to buy in this neighborhood right from the beginning or right downtown right from the beginning, is that if we just change the way we think about housing?
Well, one thing we can do, and I'll take a slight tangent on this, we could help with school choice and with improving public schools because there's a lot of concentration of demand in, quote, unquote, good school districts. Yeah, now we're playing a kind of a musical chairs game with those. And when you're taking away some of the chairs are not adding chairs. Well, the cost of the remaining chairs goes up. Right. But, you know, if you can say, look, I can move to this low cost neighborhood, but I still know the schools are going to be OK or if they're not OK, I can take my voucher and go to a school that is OK.
That would help even things out to.
Yeah. How do you see. The effects of the pandemic, the policies during the pandemic, they've been beneficial. How have they affected the housing market? Maybe structurally speaking, long term speaking? You know, so we've allowed for mortgage forbearance, which means basically a delay in your payments, eviction moratoriums at federal level, at state levels. So, you know, how soon do you think we can transition back to normal?
And have these been effective strategies? And what's what's not an effective strategy when it comes to helping people in times like this? What about cancelling rent? You know, things like that.
Right. So I think mortgage forbearance is OK because it doesn't mean that it's wiped off the books. Right. So if, say, you must pay later, I'll pay it later. And we're not going to, you know, put that on your credit rating. Well, that's OK, because the people have lost income. You know, to the extent that people use that and they still have their income, whether they're getting an interest free loan. And, you know, that's unfortunate.
And we hope they're not doing that. Yeah. Eviction moratorium and canceling rent is is a big problem. And I actually criticized the previous administration for adopting that. And I'll tell you why. Many, many. You know, you say the word landlord and you think of like Daddy Warbucks twirling his mustache. Right.
Let me just tell you, there are a lot of language, Lanzetta, mom and pop immigrant, most of them, I would say. Oh, most. Yeah.
And they bought, you know, a two, three, four unit place. Or maybe they bought to two family houses and suddenly there's an eviction moratorium. Well, are they ever going to get that money? They don't think there are people in New York their own tens of thousands of dollars and their, you know, low income immigrant families. So and there are people who are basically taking advantage of this eviction moratorium, because all you have to do is say, yeah, I'm a victim of a pandemic and check a box.
We don't even know if you're out of work. What. So we have to understand, are there needy tenants? Yes. They should get the kind of direct payments that this giant bill does a lot more than that. But to the extent that it directs direct payments toward really needy people, but that seemed fine. And then they can use that money to do what, pay their rent? Yeah, that makes sense. But having an eviction moratorium, we've got to understand, this is this is a circle.
It's not unrelated to the health of a small property owners.
Yeah, never mind. People like if you cancel, rent's pretty good chance you end up in a 2008 financial crisis. The reason we had that crisis, because everybody stopped paying their mortgage at the same time. And you're definitely going to stop paying your mortgage if you're not getting rent. And there's this yeah, there's this mythology on the left like, oh, well, just landlords can just eat it because they're rich. It's like, man, I know.
That's just I know a lot of quote unquote landlords, you know, basically just means you purchased your first home and then you move, but you kept it and you rent it out. But if you go a couple of months without rent, you're in really, really bad shape. It's not it's not affordable.
Right. Or, you know, come out of the height of the structure. We'll see that even with big property owners, if they're not getting that revenue stream. Yeah. You know why public housing went downhill. Originally, public housing was supposed to have its maintenance paid for by the rents, but then the federal government got in and said no more than 30 percent of income for rent. So they started the housing authorities. And guess what? All the projects fell apart.
Yeah, how about the same thing?
We're going to do the same thing with even with the big property owners, because if they don't get rent income, they're not going to fix the leaks.
Well, one thing I want to hit on, too, as far as why housing prices have gone up, we've been jumping around a little bit. So so, look, one, you know, supply is just not meeting demand. That's a that's a product of of overregulation. You know, the nimbies, the not in my backyard issues, which is to me, that's the most understandable thing because I kind of get it right. If you want communities to play in their own communities, maybe they don't want a big highrise.
I get it. But this causes a shortage in housing, as in San Francisco being a huge prime example of that. But also just the the price of lumber, the price of labor as has gone up dramatically. Right. I've got a stat here. Lumber is increased one hundred eighty percent at a twenty four thousand dollars to the price of an average new construction.
So is but is that is that a huge factor? I mean, these days, twenty four thousand on a house that are hundreds of thousands of dollars doesn't seem like it's a huge deal. But is it? You know, I don't know.
Well, one thing, we've had a lumber trade war with Canada, which was probably not a good idea because it did increase lumber costs. So some of us who are, you know, pretty much free traders, I'm not sure I'd include China, but pretty much free traders. Yeah, I thought that was a bad confrontation to have that did drive up lumber costs.
Yeah, I think we're in agreement on that. China is a different story, but.
Yeah, yeah. But there are a lot of innovations with prefabricated non-stick building housing. So if, if the private sector is given a chance to innovate, they will and they'll find ways to bring down housing costs. And they're already starting to.
So kind of shifting to to policy here, um, certainly at the local level. What you know, I'm going to read I'm going to read a quote from you and just kind of let let you expand upon that, because we're talking about, you know, is there evidence really that there's that increasing the supply and pushing more and more families into government run housing is a path out of poverty. So this is just the common refrain from the left. And I believe like to me, the solutions are always that, like first level, that first layer of thinking, like what's the first emotional reaction you have when you when you are presented with a problem?
And that's usually their solution. They haven't thought through it much. It's like people people need places to live. OK, let's just build places to live and then tell them to live there. Right. Well, sounds so simple, but it's not necessarily so. I'm going to quote you here. Nearly half, 47 percent of all the households in New York City public housing have lived in their apartments for 20 years or more. Some 18 percent have lived in the projects for at least 40 years.
This is not just intergenerational dependency. Spending a lifetime in public housing also reflects a lifetime of missed opportunity. The two main features of public housing are artificially low rents and resident income limits. Low rents encourage long term tenancy and income limits, penalize those who work to increase their earnings. Both conditions block public housing families disproportionately. African-Americans from building wealth. Right. A disincentive is the kind of things they would need to get out of poverty. And so, you know, I mean, so how should we be thinking about this?
Well, I have another book coming out about housing in the fall. It's called The Poor Side of Town and Why We Need One. And it's basically built around the idea that small houses. Including small two, three family houses that you own yourself has been the historic way that that poor people build wealth in this country and African-Americans had the great misfortune to arrive in the cities at the same time that we were on this massive public housing kick, Truman Administration in 1947, 800000 new units of public housing they authorized.
Here's what the problem is. You can't build wealth in public housing. There's a lot of reasons why there's a there's a black white asset wealth gap. Was there a redlining by the Federal Housing Administration? Yeah, there was a long time ago. But right now, to the extent that 47 percent of the families in public and subsidized housing are African-American, 47 percent, that's a lot more than the percentage in the population. You cannot build wealth because you can't own anything.
The government owns it now. You cannot own assets. I actually think we ought to. Well. They it's a big problem that poor people, poor black people have always been disproportionately represented, poor black neighborhoods were torn down all across the country, neighborhoods where people own stores, they owned houses, they operated churches torn down and replaced with public housing. This was a bad deal then and it would still be a bad deal if we did more of it today.
One other thing. They argue that one of the reasons there's a supply and demand problem is because developers can usually turn bigger profits by building fancier new units targeted at higher income families rather than units targeted at lower income families. And so that's why the government has to force them to build it. Is that true? Is there any truth to that?
Well, the way you make money in housing, you can build a McMansion on a two acre lot and maybe you'll make a profit. But if you could build eight smaller houses on that to acre lot because zoning didn't preclude you, you'd probably make more money that way. Yeah, right. So it's the available space density of housing. The more housing you have on a you know, on the same land, the cheaper that housing becomes. Now, in terms of NIMBYism, not everybody wants to live in a highrise.
You know, I really don't. And not everybody should be steered and local community shouldn't be forced to build high rises. What we have to find is some kind of compromise with local planning boards. Local planning boards all over the country are the ones who are going to call the shots on this.
It isn't going to be D.C. mean, nor should have got to say, look, we need some slightly smaller houses because I don't think them cheaper.
So do you. So, yes, I mean, what are your thoughts on zoning in general? Like in Houston, we have no zoning laws and it creates kind of a funny mix of things like throughout the city, but it seems to work OK. Not a lot of planning involved in it. What do you think about that in general? But zoning is not going away, so I can rail against zoning, Jack Kemp, when he was HUD secretary, had published a great report about how zoning and other barriers contributed to the high cost of housing.
That was 1990. Yeah, we're we're in this in this rinse and repeat loop on this. What we have to find is a is a language for talking to local planning board. Well, there's two ways the Biden administration wants to use the leverage of federal funding to force. Suburbs. Smaller communities, counties to build more subsidized housing. That's a bad idea because subsidized housing doesn't really allow you to build wealth. It's very expensive to build and it's not going to serve very many people.
The other way is to convince these local planning boards, just build a small number of small houses that your teachers can live in, that your firefighters can live in.
Yeah. That your sons and daughters, if they want to stay in the same community they can live in. We've got to find a compromise language that allows some kind of zoning relaxation, because without zoning, relaxation, we're always going to be chasing our tails. Yeah.
So, I mean, you're not saying do nothing, right, that the free market is not going to completely fix this problem. And this sort of gets it the last question. And that's why and that's why they say it's not a crazy point to make that, you know, when developers are given a choice in Manhattan or San Francisco, they're like, I'm going to build the expense. I'm going to build the really nice condos as opposed to the, you know, maybe double the number of not so nice condos because the market will bear it.
And I can charge, you know, more than double the price. And there's just there's just this endless supply of rich people who want to live here. So I might as well I get that. I guess I get that argument, you know, in places like Manhattan. But the question is, what would you really do about it?
Well, first of all, it looks like there's not going to be an endless supply of rich people in New York and San Francisco because this pandemic has been a game changer. Yeah, it's moving people out Astrue. There's a really, you know, hundreds of thousands of people have left Manhattan, not tens. Hundreds of thousands. Yeah. And a lot of them are moving out of the metro area because they found out there's no income tax in Florida, really.
And so they're checking it out. And that's that's a big destination for New Yorkers. San Franciscans are finding out that, well, a quarter lane is really pretty. I'm moving to Idaho. Yeah, and they are. So it may be that there'll be a push to lower prices, but in terms of the free market can't provide, which is the critique of the left. We don't have a free market in housing anymore than we have a free market in health care.
So speaking of a non free market mechanisms, you know, rent control, rent, the left loves rent control again. It's always it's always less land on the that first layer of thinking. We won't rent to my children. We make it cheaper.
Right? Well, it's like, OK, well, there's always consequences to this. So does it work? I mean, what are your what are your thoughts on rent control or does it and where is it implemented and what do you see from that. Yeah, there's no economist. I don't even think Paul Krugman of The New York Times, who won the Nobel Prize in economics before he became a pundit. I don't even think he'd be for rent control The New York Times editorial page before it got really well used to be against rent control.
Yeah. And there's a good reason for it. Maybe there's a hundred good reasons for it, but here's the first good reason. So let's say I own a rent controlled building. Who do I want to rent? Who do I want to rent to low income people? Because the rent is low, just the opposite. I want to rent to somebody who I know will pay the rent if I'm only going to get a thousand dollars a month in midtown Manhattan.
I want to make sure I get that thousand dollars. I don't want to rent to somebody with a 500 credit rating because I'm a Do-Gooder. So you have a significant number of people in New York City who are relatively affluent living in.
There is some scandals.
I think I was aware, like some New York City politicians had like 10 rent controlled apartments. A lot of Hollywood actors have their rent controlled apartment in Manhattan. That's where they, you know, it says and that nice.
Yeah. And it's it's it's it's a feature, not a bug, because it's the logic of it from an owner's point of view. Second, do I want to rent to a single mother with three kids? I'm thinking, well, wait a minute, there there's be a lot of wear and tear on my apartment, I want to rent to Dan Crenshaw, Millennial. Nowhere in here, I'm the best tenant. Well, all those parties mad, but, you know, but seriously, I want to write to somebody who is not going to not going to lead to wear and tear on my unit.
And then third of all, it's a missed opportunity. And this is the same point I make about public housing. It's a missed opportunity because I am lured as the beneficiary is such a great deal, I'm a stay here forever. I'm gonna stay here a long time, meanwhile, I could have bought something, I could have moved to another city where the pay would have been better. I am tempted by this low rent to make bad life choices.
Yeah. And what does it do to the market in order to do to the overall market? How does it. Affected. Yeah, so there are more than there are three million plus housing units in New York City, more than a million of them are rent stabilized in one way or another. That's the really, really large number. And what it does is it means that the non rent stabilized units, single to family houses, new buildings that were built, unsubsidized, that didn't get pulled into this.
There's a game of musical chairs going on all the time, all those other rents. What happens? They get bid up. So is there like operating in a totally different market, so as if it's as if it's a market with less supply even?
Yeah, and but if you if you controlled everything and I'm buying, you know, a building from 1970 when those buildings need maintenance. Yeah. If I can only get that thousand dollars a month, you're not going to get it. I kind of maintenance it now. Everybody who complains gentrification, I talk about what I call Shehab of the rent controlled city gets shabbier and shabbier and shabbier. Right. Yeah.
There's no incentive to invest. And certainly if you can't build in a rent controlled city either. I mean, there's no there's a housing shortage, generally speaking.
Well, if you know you're not going to get if your return is going to be limited. A lot of them have an exception for new construction or this and that. And some of them are complex. But if for whatever reason, you can't get the return you need. For your investors. They're not going to invest. California is interesting in twenty nineteen, Gavin Newsom led the charge to limit how much landlords can increase their rent each year and voters actually defeated the measure.
So, you know, California cities are interesting because you got this what's basically a crisis in San Francisco. I lived in San Diego for 10 years. It's a much differently run city. And you can sort of you can see these these concepts play out in real time and saying and I follow the housing market pretty close to San Diego. So, you know about a condo there. And like, you know, I don't know after my first deployment in 2009.
And so I've always followed the rent and the rent has not gone up a whole lot, almost at all, which is actually frustrating. But the reason it doesn't go up very much is not because of rent controls, because they kept building all these buildings around it.
In D.C., it's happening in the Navy Yard in Houston, it's happening inside the loop and tons and tons of new projects going up. And so this is good. It keeps it keeps it keeps rent down and not artificially down. But but in it and this is the point, right? It's down in a sustainable way. You know, when you artificially via mandate control prices, whether you whether it's a floor or a ceiling, this is not sustainable.
It creates other consequences when it happens naturally, meaning by market forces. It is, in fact sustainable. And and you can rely on it and predict predict based on it, which is which is a much healthier thing.
So I'm hoping this this work from home deal is going to create these new market forces that will, in a weird way, increase supply because my choices have expanded. And again, I'm from Cleveland, Ohio originally and so much underutilized real estate there with good infrastructure. You know, the weather isn't great.
I'll have to admit that does do a lot of these policies that we have in place. I mean, you know, we have a history of discrimination in this country in the 20th century. And I think a lot of this stuff came out of that. Perhaps, you know, how do we convince people that that's like that's you can't have the same policies for a different time. And in fact, these same policies that are meant to help people are are probably hurting them for some of the reasons that you stated, just trapping them in this.
And and then let's move into what is the right way to help somebody. You know, because a lot of our policy is that you and I talking about it, they're structurally intended. It's a little bit, you know, the causes better outcomes for the long term, but there is a short term as well. Well, that's true and. It's hard your line about the first blush, the superficial, you know, it's like minimum wage or rent control.
Yeah, the reactions, the reactionary policy making.
Right. But in terms of the history of discrimination. Minorities were discriminated positively and negatively and both were bad. So the positive discrimination was, hey, you get to live in public housing. Well, that didn't work out very well. Yeah, you can't own anything. The negative discrimination was this the Federal Housing Administration. And again, it was the government involvement. We shouldn't forget that the government, just like with Jim Crow in the south, the government was the source of this infamous redlining.
Here's how it worked. So I want to live in Detroit. I'm a minority auto builder. Autoworker and, well, I'm sorry you can't get a mortgage above. Six Mile Road because. That's the white area. Why is it the white area? Because the FHA assumed that if black people move there, white people would move out and property values would fall. And so they enshrined that in regulation and drew these red lines. That was misbegotten. But to your point, the other side of the coin can work out very poorly, too.
So one of my least favorite federal programs is something called the Community Reinvestment Act, Community Reinvestment Act says to banks. You need to invest supposedly the opposite of redlining. You need to invest here and poor neighborhood, a zip code, low income zip code be. The problem with that is that it incentivizes banks to push mortgage money out. Whether people are qualified or not, and we saw what happened in the 2008 financial crisis. Community Reinvestment Act was not the only reason there were crazy mortgage vehicles, but it was part of the reason.
And if my next door neighbor defaults on his mortgage and that house becomes abandoned, wow, that is a nightmare for me in my neighborhood.
I wonder what the stats on that are on on what's the word when you can't pay your mortgage? Totally cool. Yeah. When you default on your loan, I wonder what the stats are. Oh yeah. Foreclosure sign.
And I wonder if it adversely hurt minorities because these programs are meant to target minorities again in the opposite direction of redlining. You know, again, seems like a good, compassionate thing to do, you know, but it's it's has consequences.
So were they adversely impacted by the 2008 financial crisis? I don't know. It's a small minority.
Families were, in general, disproportionately affected by it. Now, to talk about the causes, there are a number of causes, like there were a number of neighborhoods like, say, Bedford Stuyvesant in New York and Brooklyn. Sounds like, well, that's the scariest neighborhood. But there were a lot of long established African-American homeowners there who were tempted into borrowing against their appreciation because you had gentrification that neighborhood and then they couldn't pay the bill. Right. Got to get cash out fast.
Yeah. And they got, I don't know, swindled, but they got Sweet-Talking. Yeah. And then you lose your home and then you're in a worse off position than you were before you got back, you know, because you weren't ready for it in the first place. Kind of like affirmative action. And there's a lot of studies that show that puts people in in places that they cannot possibly perform in. And, you know, who drop out.
And then. Now what?
Now you're even worse off than you were before you got that student loan. But but the thing I have pushed for years, and this would be something that Congress could ask for, the Treasury Department can do on its own, the Office of the Comptroller Currency can do on its own. Let's get the banks all the banks have to do to comply with the Community Reinvestment Act is to say we invested as to the fate of those investments. They don't report on them.
They don't break them out. That would be really, really interesting to know. And there's been resistance to that idea. The basic idea is they should do it because it's good. Yeah, yeah.
But it's there's there's consequences to everything. There are no solutions and policy. There are only tradeoffs to good rule rule to live by. Nobody wants to live by that rule. Oh, we can just get one point nine dollars million. It's just free. Like now we're making a trade off. It's a pretty bad trade because we're going to charge you fifty seven hundred dollars and then give some of you fourteen hundred dollars. I the math is crazy anyway, so I we're voting on that today so I'm like you.
It's in my head.
Well you know that's a tough vote. It's, it's ridiculous.
I don't think there are. I served in local government for a while now. There's almost no vote that isn't tough. Yeah. Yeah that's true. It's gotten used to it. Gotten used to it. I think this one's so over the top, you know, just changing subject for a second. The Democrats could make these took these these votes a lot tougher. They really could on all subjects. They just don't they they make them very extreme. And so it's easy it's easy to explain to people why I'm against it.
Why are you against the Equality Act? I mean, it sounds so nice, right?
You want people to discriminate against each other.
It's like, no, that's that's actually not at all what's in this thing. Here's what's in it. And people are like, wow, really? You know, yesterday they in the House passed the pro act, which basically basically eliminates independent contracting. So, hey, all you liberal freelance journalist. Sorry, you're done. Hey, this is crazy. It's really affects people at Uber. Dunn left Dunn, California knows this because they had to have a whole other prop.
vote just to fix the problem that they created with their stupid laws. So, OK, speaking of some stupid laws, I mean, what what could what could we do on housing as far as permitting goes to just make it cheaper? OK, so like what exactly is California doing so differently than Texas that it's like four times as long to just build the same exact apartment complex?
Well, environmental. They have a law called the California Environmental Quality Act, which there's a whole. Class of attorneys, that's all they do, yeah, sue and settle, sue and settle mantrap or advise developers on how to.
Sorry, that's my phone on Owers. Or advise developers on how to comply with Sequoia. So just think about that, just the fact that you have to have this class of lawyers charging ungodly amounts of money just to comply.
They're not getting minimum wage. Yeah, no, they're not. So that helps lift the costs a great deal of the time. This sounds really basic, but the time it takes to get the permit really matters a lot. So if you're in in Austin and it takes you a month to get a permit, I'm just making that up. Or you're in San Francisco and it takes. Five years, right, which is not crazy. Yeah. There's a time value of money that matters a lot.
The more rules you have, the more complex it is to get the permit right. I wish that all municipalities would be pushed by the bond rating agencies to report. How long does it take to get a restaurant permit? How long does it take to get a building permit? And we'll compare your potential for prosperity and repaying your bonded indebtedness on those kind of bases. But that doesn't doesn't happen right now. I have a couple other ideas. Can I tell you?
Can can. OK. So while you're here, I've been pushing the Congress for years.
I testified I testified before Representative Waters, which was on Maxine A. Maxine.
She's she's very she's very tough in how she cares a lot about low income housing.
I mean, now she doesn't live near any she doesn't live in her district or there's probably a lot of low income housing. She lives in a mansion outside of her district anyway. So I don't get personal about that.
And I don't know if that's right or not. Sound like you know it. But but I say this. We could manage five. We have five million ten million people living in low income housing. Five million units, we could change the rules in some really basic ways that would make a huge difference to help poor people become upwardly mobile. So, for instance, can you imagine signing a lease? In San Diego on that great apartment used to rent, was that when you were in the Navy?
Yeah. San Diego is a Navy town and. Yep, and four roommates. It's kind of a different thing. It's like, you know, I get the sense that a lot of young people these days don't feel like they should have to roommate with somebody. They want to live in the best spots. And it's like that's not how any of us grew up. I mean, just, you know, you know, again, there's cultural issues with some of the housing complaints as well.
But please continue.
But imagine you were signing that lease and the lease said. Any time your income goes up, your rent will go up. Would you sign that lease? No. But we ask every resident of public and subsidized housing to sign just that kind of lease. That's true. That's a good point. You know, so they have, you know, a high marginal tax rate, right?
They have no incentive to make more money, mean the same with welfare rights, basically any government program, because we want the means test it. And so. OK, because how do you get out of that? How do you get out of that problem? So you're aligning your incentives correctly?
Well, we've done it. There's there's a small number of housing authorities that are called moving to work. And they have latitude. San Bernardino in California. They say, OK, you can have a fixed. Percentage less fixed rate, this is your rent every month. If you agree that after five years, you're going to move out OK and make way for people on the waiting list. We could think imaginatively about how to incentivize people not to stay for 40 years in public housing, but to use it as a way station and their way up, which is the whole point of all safety net programs, or at least that used to be the point should be, you know, it doesn't seem like it's the point anymore.
It's it's like it's passed down. Generation to generation is so unhealthy for people and it becomes culturally imbued in us on the right and the left. I mean, I was terrified to see so many conservatives clamoring for their 2000 dollar check back in December when Trump was promising it. It was deeply wrong. You never lost your job, this pandemic. Why on earth would we give you money? This is insanity. Over 100 million people getting this check. We're really conditioning the American people to believe that there is money that they're entitled to.
And and it's it's terrifies me the most is that conservatives are believing it as well. And, you know, the fact that if the Democrats are right about how popular this one point nine dollars billion spending bill is, if they're correct about that in our country is in deep, deep trouble now, I don't think it's as popular as they say it is. I think once people realize what's in it and how it's being spent, they you know, they they change their minds a little bit.
But the fact that they're even hearing like, oh, relief and money and it's a lot of money. Yeah, I'm in favor of that. Guys, there are tradeoffs or tradeoffs to everything you get to spend endlessly. So.
Yeah, or the difficulty, of course, is the trade offs appear. Down the road, yeah, yeah, they're costales right now. That's true. So there are smart people who are saying inflation is going to happen, that printing money can't work forever. Smart people are saying that. And if we get back to you know, I'm old enough to remember 18 percent inflation before Paul Volcker, you know, and. This is not just the price of of of chicken has gone up.
This means that it will erode the value of all the savings of all the middle class. That's how Germany headed into World War Two, because inflation, hyperinflation. Now, we're a long way from that, you know, but if we set the table for that through Blow-Out spending and borrowing. Inflation is a monster. And so we have to be really careful about it. Talk about housing costs going up. You'll be carrying bushels of money and hoping that you're taking the Zimbabwe dollar.
OK, so singing on the track of solutions, then I made a couple of questions. You know, what's the best way to help the truly poor who, you know, have either fallen on hard times or just really, really poor? I mean, again, single mom to kids and she works a minimum wage job and truly can't afford housing in any market, you know, or somebody who just just lost their job needs some time to get on their feet.
And then another category of, again, your kind of normal millennial who's, you know, normal job. But, you know, housing ends up taking up like 60 percent of their of their monthly income. So I guess two part question. I mean, solutions to especially the low income, is it is it vouchers, you know, in the sense that, you know, like like like Section eight vouchers, choice vouchers with with maybe that program that you just mentioned.
And then let's figure out on the next question how to how do we just make overall costs go down? And I think we've kind of covered that in some ways, structurally speaking. Well, you know, we tend to take a snapshot of a situation and say, well, this is really bad, how do we fix that right now? Yeah, well, let's give that Low-Income person a cheap house and everything will be fine. Yeah. I think that housing vouchers are no better than public housing, they've distorted the market tremendously.
You've got Section eight concentrations. Bad maintenance and in buildings were housing vouchers are concentrated because there's not enough revenue to keep up the buildings. And so, you know what? We I would rather go with something like a supplement to income like the earned income tax credit. Yeah, I don't think and I think that's in this one point nine dollars billion bill, Earned Income Tax Credit, even if you're not earning any money. That's a really bad idea, the child welfare allowance that people are talking about, which would go to anybody with the child.
Yeah, whether you're working or not, tapping off people's income and letting them decide how to use that money is the best idea. I think if we're going to have a safety net and safety net is inevitable in an industrialized society, we can't say, you know, sink or swim. We're never going back to that. So we have to be smart about how we use that money. And I think, you know, I once walked around a big public assistance office in New York that was at that time run by a gentleman named Robert Doar, who is now the head of the American Enterprise Institute.
I'm associated with it, but I tell this story anyhow. I'm not flattering him. He had these thermometers up on the wall there. And one is how much you earn if you're on public assistance, and the other was how much you earn if you're working and you're getting these death benefits on top of that because you're working. And the second thermometer was at a much higher level. And that's what we have to have in people's heads, that you're better off working, that the government will supplement your income if you work.
And we have to continue to structure our programs around that. I don't think we should say the only thing you can do is this money is to rent a house. Maybe people say, you know what, I'm willing to double up. Right, and save money. So I got a great voucher. The only way I can do it is to. Live basically by myself, yeah, and you have to find a specific Section eight housing qualified, they.
They also tell me that, look, you have to go through a lot more hoops to even build Section eight housing and has a lot of federal requirements on it that, you know, don't make sense that a normal safe builder just wouldn't do because it's silly. You know, it's like, you know, where the sockets have to be. I mean, it's very, very specific. And so there's just less incentive to build it. Plus plus then when you do build it, usually, I mean, in theory, I think you could charge more than what the voucher is worth, but they tend not to because they know nobody's going to they're not going to pay it so well to build low income housing tax credit is a huge federal tax expenditure, as they call it.
Money that the Treasury is not getting for building subsidized housing costs per unit in California is nearly four hundred thousand dollars to build one low income unit. Why? Why is it so?
Just because the extra regulations that they require to build it, extra regulations and and its new construction and it's got to be nice, you know, you're going to have a mixed income unit. So they've got to have units that appeal to market tenants. Yeah. So because the the Government Accountability Office has done a series of reports on why low income housing tax credit programs are so expensive, they're for people with low income, but they are not low cost to build.
So are they effective at all? Are they helping anybody in what are we what are we getting out of this?
Well, it's interesting, you know, if you live in a cheap place and it's a nice new place. You might be happy, you might be pleased, you might also feel weird if you're one of 10 low income families in a building with 90 other higher income families, you might feel strange about that. You might rather live. People tend to be more comfortable with people. They have more in common now or in their social and I don't mean racially, ethnically, I mean socioeconomically, you know, otherwise you feel like, wow, is he looking down on me or what?
It just strange I mentioned before, if it's forever and not, you know, a stepping stone, then. Yeah, and it should be a stepping stone. I mean, you know, there is upward mobility in this country, but but not if we disincentives upward mobility.
And that's exactly what we're doing with our our housing policies. We're just incentivizing upward mobility.
So if I'm hearing you right, I mean, the best way to just deal with it's not just housing, but all safety net programs, all welfare, whether it's food, housing and just basic income. I mean, I think that's that basically covers the three categories of some kind of welfare, an earned income tax credit that just covers all of them. And you can spend the money on however you want to just be a far more efficient.
I would I would basically cash them out. Yeah. And and let people decide. Give them. Right. Trust people to make good decisions for themselves. Yeah. And forget don't forget food stamps. Right. That would be included. Right.
Oh it's enormous. And there's like 80 programs. I mean it's deeply confusing.
You provide health care into this too, by the way, cut Medicaid, you know, including my former colleague in chaos who now runs an organization, American Companies, and says, why do we pay people, pay people a ton of money and say the only thing you can do with it is by this expensive Medicaid insurance program. Let's give them money and say you want to buy a barebones health care plan. Yeah, OK. That's their choice, too.
Yeah. And it's just more efficient, right? Your policy saving. We could spend the same amount of money, give it to people now in health care. I would, I would argue, put it in HSA. So they are only spending it on health care. But know you can you can work this stuff out, but it's it just seems like. And then then the other thing I like about, you know, because like you said, a Section eight voucher still has to be used on Section eight housing.
So they still know that you're a Section eight person. It would be nice if they didn't know that. Right. It would be nice if you could have, like, some form of anonymity. And you know what I'm trying to say. Yeah. And then it's easy when you're when you just, you know, you have money that you get from an earned income tax credit and then you give to somebody.
One question I have I don't know if we have this level of detail, but earned income tax credit, the entire principle behind it is look for as you earn more money, you get a bigger tax credit. But obviously, that can't be infinite.
That has to seen you get a lesser tax credit. OK, sorry.
That's true. So it does work out. Yeah. So at a certain point. But you're OK. Yeah. Sorry, I totally misspoke so.
Yeah. Yeah. But here's what really worries me and worries me about any of these housing programs. When you pay 30 percent of your income in rent, let's say you get married and your new spouse has a job. Well, you get hit with a big penalty, don't you? Yeah, the higher income goes. We got a marriage penalty, earned income tax credit, housing subsidies. Everything. And, you know, 72 percent of African-American babies are born to single parents.
Now, that's tragic. And it didn't used to be true before we expanded this welfare say. People think, well, that's always been true of minority families. Know when Daniel Moynihan wrote his famous report about worrying about this, it was under 30 percent. So we have. Created incentives that have hurt children born into poverty. What do you think you've written a little bit about Biden's plans, you know, he mentioned extending housing vouchers to any family paying more than 30 percent on rent, not sure 30 percent of the income of their income on rent.
That's like that's a lot of people these days. I probably pay at least 30, at least 30 percent on rent.
That would be a massive new entitlement. Yeah, I wouldn't I would get that entitlement. Yeah. Because, I mean, I have to have two rents living in D.C. and Houston. It sucks, by the way.
So, yeah. What do you think about that. How would that. How would that affect the market? Well, how would it affect? You know. The budget, I mean, we it would be a massive new entitlement because many, many more people are qualified based on that metric than are currently served by low income housing programs. So you would vastly expand this. And again, if you give people money, the only thing you can spend is on you're going to the supermarket.
You can only spend it on hamburger. Wait a minute. I really want tofu. I'm sorry, man. Yeah, you know, hamburger is good for your housing is good for you. Well, you know, and also, I grew up with my mom and double up for a while and save money and then I'll buy a house. That's a better choice.
And as you mentioned, it's the incentive structures are still backwards, right? It's still this incentivizes getting that getting that higher paying job just incentivizes marriage, which would.
We're even moving. Even moving. Yeah, right. So if I have a rent stabilized apartment in New York and again, for your listeners in heartland America, a million rent stabilized units in New York, that's more population than a lot of states, right? Yeah. And they hear about well, there's a great job in Houston, Texas. You know what? I got such a great apartment. You'll hear. I can't move. Right.
It's a part of it. What last question? President Trump made a huge deal about it. He was saving the suburbs. I think it was the worst possible messaging I've ever heard about a policy. But it was his the policy was basically what you know, federal government was subsidizes low income housing in rich neighborhoods and makes the argument that I forget what the policies even called. But it makes the argument that, you know, that's how people get out of poverty.
They have to be around other people who are out of poverty. And that's somehow and that's better. And Trump fought against this and. I think, again, with the probably the weirdest messaging ever, but what's what's the proper way to describe that policy and one of the arguments for and against it?
Well, it's called affirmatively furthering fair housing. That's right. Yeah, it was an Obama era policy. And the idea was, if you accept community development funds and you've got to accept low income housing and we shouldn't have high income, exclusively high income zip codes, we should have a diverse economic mix. And as you say, that will provide better services and help upward mobility for the relatively small number of low income persons who would be in those high income zip codes.
Again, that thinking is the former president, unfortunately, and I would say that was a kind of a race based dog whistle. You know, it was unfortunate. I'm saving your suburbs. Well, what are you really saying? You know, but here's what I do think that he had, that the policy has it backwards. The way you get to a higher income neighborhood is by making a series of good life decisions, not suddenly being plump down there and saying you made it will.
No. You didn't make it. You got a gift. You didn't make the choices, the sacrifices, the savings, marriage. All of those good life decisions that allow you to move from an apartment or public housing to buy a small house in Levittown or in what's the equivalent in Houston, starter homes. Right. So saying that all these good habits will rub off because you're living down the block from people who make good decisions. What do you say?
You're saying you get the same rewards without having made the same hard choices. Now, does that mean there should be racial discrimination? Absolutely not. Anything that anybody can afford to buy or rent, they must be. Must be. We've got to enforce that. You've got to do whatever it takes to enforce that to make sure people are not turned away. But and maybe this is the last question.
That's an argument you hear a lot on the left. They're hyper concerned about discrimination. Those part of the part of the reason for the Equality Act, they believe LGBT people are discriminated against in housing. Is there any data to back this up? What do we see in reality? Is it still happening? If you know a realtor. They are so scared to death. You know, realtors I know are afraid to tell potential buyers about religious institutions in the neighborhood that they might be interested in attending because that might be considered steering.
Realtors are afraid, scared to death that they'll be charged with discrimination, lose their license, lose their livelihood. So I think enforcement has been. Sirius. Now. Should Hudd one of the things Hudd ought to be doing if we have to have Hudd is to send out inspectors. Yeah, send out minority inspectors if they get turned away, send out white inspectors and find out if they can get the apartment, prosecute those people. Yeah, I'm for that.
I'm for rule of law. But to assume that it's going to happen when we pass the Fair Housing Act in 1969. We've done something about this, so I think to the extent that it's a problem, it's a much less problem, less of a problem than it used to be, and enforcement should be funded and be real. I think that about wraps it up and I got to go anyway. Howard, thank you so much for being on.
That was that was really informative. I think this is a subject not a lot of people know a lot about. And thanks for distilling it for us and giving us some solutions. I always like to come away with some simple solutions on what we should be talking about and how we should do this.
All right. We're not we're only supposed to say thanks for your service to military guys, but I thank you for their service in government because this a hard job and it's yeah, I miss the old kind of fighting for sure.
It was it was much easier. So awesome.
I appreciate you having me on, Representative, and good luck with what you're doing. Thank you very much. All right.