June 08, 2004,
EDITOR'S NOTE: This appeared in the August 31, 1992, issue of National Review.
In the Wall Street Journal of May 19, 1989, reporter Andy Zipser claimed that "pretty much everyone agrees...that by any standard homelessness has multiplied enormously in a period of general affluence...and that if finger-pointing is called for, the fingers should point to Washington.... As need has escalated in recent years, total spending has plummeted."
Total spending did not plummet, however. Like the other mythmakers, Mr. Zipser has taken budget-authority numbers and used them as spending or budget-outlay numbers.
If the Congress appropriates funds for an aircraft carrier, it doesn't fund just next year's expenditures it bites the whole bullet. Actual spending may occur over five years or more. It funds the construction of subsidized housing the same way up front. In 1982, there was $240 billion for housing in budget authority appropriated in earlier years that hadn't been spent.
The budget authority for subsidized housing did decrease in the Reagan years, from $27.9 billion in 1980 and $26.9 billion in 1981 to an average of $10 to $11 billion in the years 1982-88. Thus there were annual opportunities for claiming that the budget had been cut. In a masterpiece of confusion, Time magazine claimed (May 21, 1990) that "Since 1980 federal outlays for rent subsidies and home-building for the poor and elderly have dropped from $41 million to $10 million," thus mixing up not only authority and outlays, but millions and billions as well.
In spite of reductions in budget authority for housing subsidies, annual outlays kept on increasing; construction funded in earlier years was built; the numbers of households and people subsidized increased.
Expenditures for low-income assisted housing doubled between 1980 and 1984; it took until 1990 for 1980 GNP to double. Federal outlays for low-income housing thus increased as a percentage of GNP. With the dollar increases came increases in the number of beneficiaries from 10.6 million people in 1980 to 14 million in 1990, an increase of almost one-third while the population increased by only one-tenth. The number of households assisted also increased, from 3.1 million in 1980 to 4.4 million in 1990. Additional beneficiaries were served by the Farmers Home Administration.
In sum, federal spending increases for housing during the Reagan Administration rivaled those for national defense; the percentage of the population receiving benefits increased; a record percentage of the population was employed; and yet the problem of homelessness began to appear supposedly because of the Reagan "budget cuts."
If budged cuts caused homelessness, the solution would be obvious and simple increase the budget. Just the opposite is the problem: homelessness occurred as a social phenomenon at a time when increasing cash outlays were subsidizing housing for an increasingly great percentage of the population.
Some writers have sought explanations in rent control and over-regulation as contributors to a decreased availability of low-cost rental housing, and indeed the consumer price index for rental housing increased somewhat faster than the overall CPI; on the other hand, vacancy rates generally increased in the 1980s, and other costs such as transportation and food increased at a lower rate than the overall CPI. More significant may be the constitutional challenges to vagrancy and loitering laws; by the 1980s, it had simply become legal to live and sleep on the streets.
Annelise Anderson, a Senior Research Fellow at the Hoover Institution and a former Associate Director of the Office of Management and Budget.