Cato Policy Analysis No. 292 December 22, 1997

Policy Analysis

The Inherent Flaws Of HUD

by Howard Husock

Howard Husock is the director of case studies in public policy, Kennedy School of Government, Harvard University.


Executive Summary

The temptation when discussing the Department of Housing and Urban Development is to focus on its scandals and inefficiency 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 peddling 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 streamline 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 fundamentally 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.

Full Text of Policy Analysis No. 292 (PDF, 28 pgs, 62 Kb)

1997 The Cato Institute
Please send comments to webmaster