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No matter who the next President is, the homeless crisis is likely to get worse. An additional 200,000 units of low-income housing could disappear over the next five years as loans expire from a tax-break program of the 1960s and '70s. The Federal Government had encouraged private developers to build low-income housing by offering to subsidize 40-year mortgages on the buildings. Now many owners are taking advantage of an option to pay off the mortgages after 20 years, freeing them to sell or rent the apartments at the prevailing market price. The result could be hundreds of thousands more people in shelters.
The Reagan Administration's approach to housing was another version of the supply-side experiment: instead of subsidizing low-cost construction, as Washington had done since the 1930s, the Reaganites decided to subsidize tenants. Give cash vouchers directly to the poor to help them pay their rent, went the theory, and the market would respond by supplying more housing. Vouchers have had some success in the Southwest, where prices are depressed and vacancy rates relatively high. But in much of the country, as housing prices have increased by 43% in the past eight years, voucher recipients have been unable to find apartments with affordable rents that also meet federal quality standards. In New York City, where rent control, high taxes and land prices discourage the construction of modestly priced housing, three out of four vouchers were returned to the Government last year after futile apartment searches by the recipients. Supply-side housing, like supply-side economics, has had drastic, unintended consequences.
The Administration finally admitted last year that homelessness was an "unprecedented crisis" when the President signed the McKinney Homeless Assistance Act, a compendium of programs covering everything from job training to food assistance. The act authorized the spending of $1 billion over two years, but attorneys for the homeless had to sue the Government to get the funds moving out of a clogged federal pipeline. The $500 million in first-year funds, haphazardly distributed in hundreds of U.S. cities, so far has done little tangible good. Last February, Reagan signed the Housing and Community Development Act, which provides assistance to 152,000 needy families and authorizes the renovation of 10,000 run-down public-housing units. Neither bill does anything to encourage the desperately needed construction of new low-cost housing.
On the campaign trail, Vice President George Bush's response to the housing crisis has been to ignore it. In answer to a question at the first presidential debate, Bush called for full funding of the McKinney Act and involvement of private benevolent organizations -- the "1,000 points of light" -- in communities that aid the homeless. Michael Dukakis has endorsed the recommendations of the National Housing Task Force and is committed to spending $3 billion of federal money to build homes, mostly for low-income people.
With the Federal Government straining under a $2.6 trillion debt, it is obviously unrealistic to expect that low-cost housing funds will be restored to pre-Reagan levels. But any serious program to stem homelessness is going to require money. The National Coalition for the Homeless estimates that it would cost $4 billion to build 280,000 additional units of housing over the next two years.