A Home for Everyone
What if private investor capital were the only method for financing massive
enterprises such as the construction of our interstate highway system,
the erection of mammoth utilities such as the Tennessee Valley Authority,
or the cost of our national defense? Are there individuals or groups who
would have the resources or even the desire to underwrite such enormous
undertakings? Probably not. Considering the magnitude of the contributions,
investors understandably would view potential returns on their investment
as dubious at best. Only the federal government has the resources to shoulder
such endeavors, so vital to our national security and well-being.
It should therefore be quite obvious that while the private sector flourishes
in many segments of the economy and fulfills a vital role to be sure, there
are specific areas where private enterprise falls short. It is here that
the public sector, government, must step in. But even in areas where government
involvement is a seemingly appropriate approach to solving problems, success
is by no means guaranteed. In fact, in too many cases, the project fails
miserably, only exacerbating the problems it was intended to solve.
As a case in point, consider the government’s rent-subsidy housing program
for low-income individuals. For several years now the federal government
has subsidized the construction of low rent units, paying contractors top
dollar for building such units. Upon completion, these units are then rented
out to qualified tenets who pay only 50% or less of the fair market price.
The government then makes up the difference to the contractor.
Has this government-run program been a success? Well, the answer seems
to depend on whom you ask. Contractors and bankers are very happy with
it. After all, the contractors receive generous payments for their services;
plus they are guaranteed that the units will produce a handsome steady
income. What’s more, they still own the properties. The bankers? Sure,
they are delighted. They make huge profits on any moneys loaned in connection
with the program.
But now ask the tenants and you’ll hear a far different story. They’re
likely to be deeply concerned about the crime rampant in most all public
housing. They are upset over the lack of maintenance and general poor physical
condition of the facilities. They are discouraged and defeated because
they know that they will never know the pride of home ownership as long
as they are trapped in what are sometimes described as “inhuman conditions”.
Now ask yourself. As a taxpayer, do you feel that your money is well
spent on public housing? Do you think it genuinely helps people better
their lives, or is it simply perpetuating a lifestyle and standard of living
abhorrent to us all? Remember, the taxpayers’ money paid to contractors/landlords
in rent is gone forever, and neither the tenant nor the government has
anything at all to show for it. Isn’t that like pouring money down the
proverbial rat hole?
On balance, this program appears to be a failure. But let’s not, as
the saying goes, “throw out the baby with the bath water.” That we need
some sort of public housing assistance for the poor goes without saying.
Just look at the statistics. The average cost of a new home in this country
has escalated rapidly. There are millions of hard-working adults with families
who simply cannot afford either the down payment or the monthly mortgage
payment. For these people, the American dream of owning a home of their
own is far out of reach. Every person has the right to adequate housing.
We therefore know the need for housing assistance is real, but we know
that the present program is not working. We also know that it is in the
best interest of all Americans to assist those less fortunate; thus we
must ask ourselves what we can do. How can we overhaul the program so that
people will have a chance to experience the dignity that comes with ownership?
How can we ensure that government money will be used to help those in need,
rather than going into the pockets of manipulative builders and bankers?
How can we institute a program that will eventually be self-sustaining…a
program that would ultimately cost the taxpayers nothing and in the long
run save them money?
There is a way. First, we propose that builders construct more housing
that is affordable to those whose income is below the national average.
Mortgage payments would not exceed 20% of monthly income and down payments
not more than 10% of annual income. Second, the government would create
a self-sustainable endowment, aimed at providing low interest loans (below
4%) for first-time buyers whose annual income is below average. Buyers
would repay the loans to the government in the form of monthly installments,
according to a sliding scale based on their income. Although funds for
the purchase of homes would be made with up-front federal money, there
is every reason to believe that this initial investment would be repaid,
and with interest. Eventually, the program would experience a positive
So what will this program accomplish. It will put an end to the lining
of the contractors’ and bankers’ pockets with taxpayer money. It will enable
millions to own their own property, raising their living standard and engendering
a personal pride that will likely spill over into other aspects of their
lives. And it will stop the never-ending waste of taxpayer dollars, an
absurdity that benefits none.
Government-operated programs don’t have to be wasteful and ineffective.
With the application of a little common sense, the housing program could
be run like a profitable business. If that happens, everyone will win.