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Preserving Tax Incentive for Housing
When moderator Nicolas Retsinas, former assistant secretary for housing at HUD and director of the Harvard University’s Joint Center for Housing Studies, asked what issues lie ahead, Cisneros responded that any moves emanating from the Administration or Capitol Hill on tax reform must ensure that the interests of the housing community will be well-served.
“The Administration has placed a priority on the homeownership tax credit. I hope it is able, in discussions on tax reform, to sustain the impetus for the homeownership tax credit and protect all of the other elements in the tax code that relate to housing. It is very important.”
Cisneros also emphasized that it is absolutely vital for housing and the economy that the mortgage interest deduction remain an important part of the tax code.
During his years serving at HUD, Cisneros said he learned that altering the mortgage interest deduction “would be so disruptive to the housing sector” that the Administration and Congress should refrain from any attempts to change this important tax benefit. “You can’t quarrel with the role that housing plays in the American economy and you don’t want to tinker with something that has functioned as well as the housing sector has.”
What the Federal Government Can Do
The two former HUD secretaries differed on whether the huge federal deficit will force the Administration and Congress to make tough choices on housing, with Kemp arguing that it’s not the size of the deficit that matters but whether the economy continues to grow.
“I’m not frightened by a budget deficit that is 3.6% of GDP and moving down to 2.9% of GDP if the economy keeps growing. We have an $11.7 or $11.8 trillion economy. Go out over 10 years and the economy will grow to about $140 to $150 trillion. We can do it all if we have the right mix of policy. We have to grow the pie first, make a bigger slice for everyone.”
“President Bush wants seven million more affordable homes in the next 10 years. I think we can do better. We will hold Bush accountable for meeting his goals,” Kemp added.
The two former top federal housing officials agreed that there are several steps the government can take to facilitate affordable housing at a modest cost to the Treasury. Cisneros advocated focusing on predatory lending, fair housing and issues related to reforming the government sponsored enterprises Fannie Mae and Freddie Mac. “This doesn’t cost a lot of money and produces an awful lot of bang toward this agenda of moving people into homeownership,” said Cisneros.
Kemp called for expanding the earned income tax credit, providing more funding for the American Dream Downpayment Act and supporting the Community Development Block Grant programs.
Noting that roughly three-quarters of whites own their own homes while less than half of minorities do, the two housing leaders agreed that the task — and opportunity — in the coming years for home builders, lenders, community leaders, local and federal officials is to close this housing gap.
“The homeownership rate for whites is about 74% and it can’t go too much higher,” said Cisneros. “There is a high rate of growth among ethnic minorities and immigrants. They represent a huge demographic factor and will be the main play for the next number of years.”
Overcoming Regulatory Barriers and ‘NIMBYs’
“Expanding the supply of housing is absolutely essential to making it affordable, particularly to these people who are critical first priorities — police, teachers, firefighters,” said Kemp. Local leaders, community activists and politicians must work together to remove barriers. Housing is the most highly regulated industry in America — bar none. Everything from wetlands legislation to endangered species legislation, we all want to save the condor, see the eagles. All of this affects housing, it affects land distribution.”
Kemp added that another major obstacle is the “Not in My Backyard” syndrome, or NIMBYism. “Unless people are willing to set aside preconceived notions of what low- or moderate-income families bring to the community, I don’t know if we’ll ever solve this housing supply problem,” he said.
To keep this issue at the forefront, Kemp urged all interested parties to contact their local and federal lawmakers and to ask them one question: “What are you doing to relieve the regulatory burden on home builders?”
Citing the tremendous need to supply housing that is affordable for the nation’s public servants, Cisneros mentioned the example of local governments in California, which he said are having to “change the hours of police officers from five, eight-hour shifts a week to three, 12-hour shifts because the police officers are put up in a dormitory in the days between their three-day shifts and then sent home for four days because it’s not reasonable to ask them to commute the distances that they would have to commute because of home prices. That’s what’s happening in our country.”
“When a policeman or policewoman in Los Angeles has to be put up in a dormitory so that he or she can work three 12-hour shifts, that should be a national disgrace,” said Kemp.
Kemp and Cisneros pledged to “take their act on the road” to highlight the issue of workforce housing, and to promote their recent book, “Opportunity and Progress: A Bipartisan Platform for National Housing Policy,” written with Retsinas and Kent Colton, the former CEO of NAHB and a senior scholar at Harvard University’s Joint Center for Housing Studies.
The four authors aim to elevate housing as a national priority and ask the federal government to assume its place at the table partnering with states, localities and public and private sector organizations to address housing concerns.
Photos by Herman Farrer
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In a free-wheeling Workforce Housing Symposium discussion on housing challenges facing the nation, Jack Kemp and Henry Cisneros, two former secretaries of the 
“Ideas Jack has been discussing for 30 years are maturing — President Bush calls it an ownership society, Newt Gingrich called it an opportunity society. Jack had his own early conceptions of it and fueled some of the understandings of that concept. We are at a moment of paradigm shift in our society. For people, owning something is very important — be it stocks, financial instruments, a small business or their own home,” said Cisneros.
