Tag: subsidy programs

States Should Flatly Refuse to Create ObamaCare Exchanges (New Cato Video)

This new Cato Institute video explains why it is in no state’s interest to create an ObamaCare Exchange.

Many thanks to Cato’s very talented Caleb O. Brown and Austin Bragg.

For the more-words-no-pictures version, click here or here. For a word about ObamaCare profiteers the pro-Exchange lobby, click here. Click here to read about what is happening in the states.

Don’t Need More Rental Subsidies

At Tuesday’s congressional hearing on the future of Fannie Mae and Freddie Mac, Rep. Barney Frank (D-MA) said that “It’s a mistake for the government heavily to subsidize homeownership.” Coming from one of the biggest cheerleaders for federal homeownership subsidies, and an architect of the housing meltdown, a conversion from Frank would be welcome.

Unfortunately, Frank followed the comment with a call for more rental housing subsidies:

We are much better off trying to subsidize rental housing, because when you put people into decent rental housing, you do not confront the problems we have seen putting people inappropriately into homeownership.

Frank is correct that tying oneself to a mortgage is much riskier than renting. The federal bias toward homeownership has been predicated on its alleged civic virtues, but there’s no virtue in being a slave to an expensive mortgage, especially when one’s house is worth less than the note.

But the government’s dismal experiences with rental subsidies, including public housing, demonstrate that more federal interventions are unwarranted. In addition to abolishing homeownership subsidies, the federal government should also abolish rental subsidies, as a Cato essay by Howard Husock argues.

The following are some key points from the essay:

  • Before federal subsidy programs were begun, and before the widespread use of detailed housing regulations and zoning ordinances, private markets did a good job of provided housing for lower-income Americans. During the period from 1890 to 1930, for example, vast amounts of new working-class housing were built in American cities. Data from that period show that a significant percentage of residents of poor neighborhoods did not live in overcrowded tenements, but instead lived in small homes that they owned or in homes where the owners lived and rented out space.
  • Since the 1930s, the federal government has funded one expensive approach to low-income housing after another—without seeming to notice that the new approaches were made necessary less by market failure than by the failure of past public policies. Public housing projects erected to replace slums soon became severely distressed, housing vouchers meant to end “concentrated poverty” instead moved it around, and the low income housing tax credit program provides large subsidies to developers and few benefits to low-income families.
  • A major social benefit of private and unsubsidized rental and housing markets is the promotion of responsible behavior. Tenants and potential homeowners must establish a good credit history, save money for security deposits or downpayments, come with good references from employers, and pay the rent or mortgage on time. Renters must maintain their apartments decently and keep an eye on their children to avoid eviction. By contrast, public housing, housing vouchers, and other types of housing subsidies undermine or eliminate these benefits of market-based housing.
  • Federal housing subsidies are very expensive to taxpayers. In 2010, the federal government will spend about $26 billion on rental aid for low-income households and about $8.5 billion on public housing projects.

Federal Subsidy Programs Top 2,000!

January 22, 2010 is a day that should live in infamy, at least among believers in limited government. On that day, the federal government added its 2,000th subsidy program for individuals, businesses, or state and local governments.

The number of federal subsidy programs soared 21 percent during the 1990s and 40 percent during the 2000s. The entire nation is jumping aboard Washington’s gravy train. My assistant, Amy Mandler, noticed the recent addition of two new Department of Justice programs, and that pushed us over the threshold to reach 2,001.

There is a federal subsidy program for every year that has passed since Emperor Augustus held sway in Rome. We’ve gone from bread and circuses to food stamps, the National Endowment for the Arts, and 1,999 other hand-out programs from the imperial city on the Potomac.

Figure 1 shows that the number of federal subsidy programs has almost doubled since the mid-1980s after some modest cutbacks under President Ronald Reagan.

Most people are aware that federal spending is soaring, but the federal government is also increasing the scope of its activities, intervening in many areas that used to be left to state governments, businesses, charities, and individuals. To measure the widening scope, Figure 1 uses the program count from current and past editions of the Catalog of Federal Domestic Assistance. The CFDA is an official compilation of all federal aid programs, including grants, loans, insurance, scholarships, and other types of benefits.

Figure 2 shows the number of subsidy programs listed in the CFDA by federal department. It is a rough guide to the areas in society in which the government is most in violation of federalism—the constitutional principle that the federal government ought not to encroach on activities that are properly state, local, and private.

As the federal octopus extends its tentacles ever further, state governments are becoming no more than regional subdivisions of the national government, businesses and nonprofit groups are becoming tools of the state, and individualism is giving way to a more European desire for cradle-to-grave dependency.

Yet recent election results indicate that Americans may be starting to wake up and fight back. Whether we are more successful than Cicero and Cato the Younger in battling to retain our limited-government republic remains to be seen.

Funding ACORN

The ACORN scandal provides a good opportunity for citizens concerned about profligacy in Washington to explore some of the tools available to find out where their tax money goes.

A good place to start your research is the Federal Audit Clearinghouse on the Census website. All groups receiving more than $500,000 a year from the government are required to file a report. Just type in “ACORN” as the entity and the system pops up the group’s filings. My assistant John Nelson summarized the federal programs and amounts received by ACORN in recent years:

2003

Housing Counseling Assistance $1,168,388

Community Development Block Grants $388,273

Home Investment Partnership $8,000

Self-Help Homeownership Opportunity $204,082

Fair Housing Initiatives Program $85,000

Total $1,853,743

2004

Housing Counseling Assistance $2,209,009

Community Development Block Grants $221,007

Home Investment Partnership Program $21,092

Self-Help Homeownership Opportunity $127,183

Fair Housing Initiatives Program $105,000

Total $2,683,291

2005

Housing Counseling Assistance $2,605,558

Community Development Block Grants $367,560

Self-Help Homeownership Opportunity $153,082

Fair Housing Initiatives Program $140,917

Total $3,267,117

2006

Housing Counseling Assistance $1,955,074

Self-Help Homeownership Opportunity $59,541

Rural Housing and Economic Development $47,619

Fair Housing Initiatives Program $150,000

Community Development Block Grants $238,809

Total $2,451,043

2007

Housing Counseling Assistance $1,813,011

Self-Help Homeownership Opportunity $46,608

Rural Housing and Economic Development $30,504

Fair Housing Initiatives Program $60,000

Community Development Block Grants $372,950

Total $2,323,073

My colleague, Tad DeHaven, has discussed why these HUD programs that funded ACORN ought to be abolished completely.

Subsidy information is also available from IRS Form 990, which is filed by all non-profit groups and compiled at Guidestar and other websites. I am not an expert on this data, but Velma Anne Ruth of ABS Community Research has done a detailed analysis, which she kindly sent to me. She finds that federal funding for ACORN was about $1.7 million in 2008 and about $2.2 million in 2009.

Finally, a user-friendly website to research recipients of federal grants and contracts is www.usaspending.gov.

ACORN’s share of overall federal subsidies is tiny, but as thousands of similar organizations have become hooked on 1,800 different federal subsidy programs, a powerful lobbying force has been created that propels the $3.6 trillion spending juggernaut. ACORN’s own website touts its lobbying success in helping to pass various big government programs. So cutting off ACORN is a start, but just a small start at the daunting task of cutting back the giant federal spending empire.

Does Big Government Breed Corruption and Sleaze?

Washington is riddled with both legal and illegal corruption, but why?

Perhaps it is because government is too big and has too much power. The federal budget redistributes $3.5 trillion through more than 1,800 subsidy programs. The regulatory burden is $1.2 trillion and there have been 51,000 new regulations since 1995. And there are more than 70,000 pages of tax law and regulations.

These are the reasons why Washington is a hornet’s nest of deal-making, influence-peddling, and back-scratching.

In this new video, produced by the Center for Freedom and Prosperity, I argue that reducing the size and scope of government is the only effective way to control Washington sleaze.