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April 9, 2021

Biden Enters the Housing Supply Minefield

The competitive grant program in the American Jobs Plan looks a lot like
Race to the Top, which didn't work out well for education reformers

 

The White House would like a lot more of these. And bigger ones. (John
Nacion/Sipa via AP Images)

The Chief

**** Housing is a universal need, and it's so tied up with
personal wealth building, economic health (see the financial crisis),
inequality, transportation, and even climate that it quickly turns into
a divisive subject. In reporting Chain of Title and the plight of
foreclosure victims, I saw how much personal investment we have in our
homes, how we use them to mark time and measure up in society. People
were scraping by to stay current on their mortgages before their medical
bills or utilities; they'd rather have a house than the heat in that
house.

What I'm trying to say is that the totemic value placed on housing,
particularly in the United States, makes housing policy divisive.
That's not necessarily going to change with federal investment. And
that's the context for one of the more tantalizing policy strands in
the American Jobs Plan, which is one of the rare throwbacks to the 2009
Obama stimulus.

The Biden plan vows

to "eliminate exclusionary zoning and harmful land use policies"
though a "competitive grant program that awards flexible and
attractive funding to jurisdictions that take concrete steps to
eliminate such needless barriers to producing affordable housing." The
grants will reportedly

be at least $5 billion.

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**** The policy idea here is that local control of zoning has led
to things like mandatory parking and height limits and single-family
requirements that have depressed the supply of housing, particularly in
expensive cities on the coasts, and that addressing the shortage would
keep up with demand and make these areas more affordable (or at least
not completely outpriced). The response from opponents is that this
tears down the character of neighborhoods and leads to gentrification
and congestion and doesn't reduce the cost of housing or the
displacement of lower-income residents, because the replacement housing
serves luxury markets. The response to that response is that those
luxury units still comply with the laws of supply and demand, and the
housing vacated by those snapping up gentrified replacements is
lower-cost, and you can solve congestion in other ways, like through
transit-oriented development. And then it just keeps going.

The policy arguments are even more entrenched than most debates, for the
sentimental reasons explained above. For this piece I want to talk about
the politics of the Biden administration entering into this argument at
the federal level. Because the model for this is something called Race
to the Top.

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About the only thing more important to people than their homes is their
kids, and in the late-aughts there was a separate fierce debate on the
center-left around "failing schools" and the need for education
reform. One side said that bad teachers had to be fired and testing had
to measure student achievement and nontraditional setups like charter
schooling had to be encouraged. The other said that teaching to a test
wasn't teaching and charters cherry-picked their own students and
testing didn't correlate to teaching and poverty and other factors
played into learning. And it just kept going.

The Obama administration got into the middle of that debate with Race to
the Top. Part of the 2009 stimulus and also priced in the range of $5
billion, it was a competitive grant program that gave states money if
they changed their K-12 rules to conform to the ed reform agenda. This
included supporting charters and evaluating teachers stringently and
turning around underperforming schools and developing more tests and
assessments. Nineteen states were eventually awarded grants, and many
standards were changed to acquire them.

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At the time, states were cash-strapped from the recession, and the Obama
administration was exploiting that to make the education reform changes
it wanted. Today, cities are more cash-strapped than states (and really
everyone's in better shape now that the American Rescue Plan's
fiscal aid is in process), and the money dangled would come in handy, if
land use were changed.

It's what happened after Race to the Top that's more notable. School
districts opted out

of the reforms, and eventually so did several states
.
Backlash to low pay rallied the nation

to the cause of teachers, including in red states. And education
reformers rather rapidly lost their advantage within the Democratic
coalition. During the 2020 presidential campaign, every Democratic
candidate distanced themselves
from the
charter school movement. Biden's education secretary marked a real
shift

from the Obama years too. And when the Biden team initially added a
competitive grant for pandemic resources for schools in the American
Rescue Plan, the pushback of it as "Race to the Top 2.0" was so
furious that it was quietly removed
.

Part of this is because teachers are such a large and powerful
constituency within the Democratic Party that deliberately antagonizing
them wasn't going to work. But the model of a Democratic
administration taking sides in an intra-party debate and using federal
dollars to boost their desires led to their side of the debate being
completely walked out of the party. Is it better for Democratic
education reformers that they got a handful of states to change their
education policies, some temporarily, if in the exchange they gave up
practically all of their influence within the party?

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And could this happen with these competitive grants for land use? Not
everything is the same, of course, and the exclusionary zoning/housing
supply charges have arguably more support among Democrats than education
reformers did. But though conservatives pay more lip service to it, the
stirrings of local control are ever-present, and tensions run as high in
housing as they do in education. The potential for a backlash is
definitely present, and the politics of housing are volatile.
Supply-side reformers might want to be careful what they wish for.

Granted, there's eight times as much money, about $40 billion, in the
Biden plan for public housing investment, though a lot of this will go
to fixes of the existing dilapidated stock rather than supply. An
investment in social housing, which would start by repealing the
Faircloth Amendment

that literally makes it illegal to build new public housing without
bulldozing old units, would do much to balance the scales on this.
Faircloth repeal, authored by AOC, passed the House in their
infrastructure bill last year; I'd imagine it will pop up again in the
Democratic version of the Biden package.

By the way, this piece is part of our Building Back America series, a
deep dive into the Biden public investment package, and you can read all
the stories by clicking here
.

What Day of Biden's Presidency Is It?

Day 80.

We Can't Do This Without You

Today I Learned

* This Ezra Klein piece

is well-informed about the Biden team's self-conception. (New York
Times)

* I agree that care infrastructure is more of an ongoing cost, which
argues for a social insurance approach
,
as we counseled in our special Family Care issue last year. (New York
Magazine)

* Biden seemingly making a mistake

in not surging vaccine doses in the handful of states with outbreaks
right now. (Stat News)

* Pentagon spending in the proposed Biden budget, due today, is going to
go up

slightly. (Politico)

* I don't think "nobody knows anything about corporate taxes
"
is a particularly inspiring harbinger for the policy outcome. (Politico)

* There's a China economic bill coming in the Senate next week and now
there's a bipartisan foreign policy companion
.
(Axios)

* Manchin could just be setting up a process

to bring Republicans aboard the public investment package, and then
spurn them if they decline. (New York Times)

* Legal limbo for 300,000 asylum seekers
.
(HuffPost)

* Biden's implied support for the Amazon union effort does not appear
that it will lead to victory
.
(Vox)

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