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Policy Analysis No. 292

December 22, 1997

Policy Analysis

THE INHERENT FLAWS OF HUD

by Howard Husock

Executive Summary

The temptation when discussing the Department of Housing

and Urban Development is to focus on its scandals and ineffi-

ciency or, as Washington puts it, waste, fraud, and abuse.

And, indeed, there have been many such problems throughout

the history of the department.  They have ranged from flawed

home appraisal procedures, which emerged only two years after

the agency began its work in earnest, to the influence ped-

dling of the 1980s, which saw a former cabinet secretary

convicted of steering HUD contracts to those paying his

lobbying fees.  Clearly, the department has been troubled in

what public management observers call the "implementation

phase" of its work.  It is with such matters in mind, coupled

with budget constraints, that pressures have mounted to

"reinvent" HUD.  Those who would reinvent HUD seek to stream-

line its sprawling bureaucracy, improve the oversight of

grants to housing authorities, and curtail corruption.

But such discussion begs more fundamental questions

about the central goals of HUD.  HUD was established to (1)

upgrade specific neighborhoods, particularly "black ghettos,"

(2) support the construction of better housing for lower-

income households, and (3) limit so-called suburban sprawl by

supporting planning measures that force new development in

older portions of cities.

As worthy as those purposes may sound, each is fundamen-

tally flawed.  First, black Americans have joined the march

toward the suburbs, without public assistance.  Second,

subsidized housing has proven difficult to maintain and has

created perverse incentives that undermine the formation of

healthy neighborhoods.  And third, suburban sprawl is an

issue for local, not federal, government.  As a result of its

misguided goals, HUD has become a conduit for expensive,

counterproductive programs that do not justify a cabinet-

level agency.

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Howard Husock is the director of case studies in public

policy, Kennedy School of Government, Harvard University.