The rent is too damn high, so here’s how some candidates hope to lower it

Andrew Romano
West Coast Correspondent

Presidential elections are decided by many things: media exposure, financial backing, personal chemistry, timing and luck. Policy positions often are just a way of signaling where a candidate stands on the political spectrum. But 2020 is shaping up to be different, the most ideas-driven election in recent American history. On the Democratic side, a robust debate about inequality has given rise to ambitious proposals to redress the imbalance in Americans’ economic situation. Candidates are churning out positions on banking regulation, antitrust law and the future effects of artificial intelligence. The “Green New Deal” is spurring a debate on the crucial issue of climate change, which could also play a role in a possible Republican challenge to Donald Trump.

Yahoo News will be examining these and other policy questions in “The Ideas Election” — a series of articles on how candidates are defining and addressing the most important issues facing the United States as it prepares to enter a new decade.

The rent is too damn high (as perennial New York candidate Jimmy McMillan has been shouting for the last 25 years).

The backlash against rising rents — and unaffordable housing more broadly — is a familiar problem in cities like New York, San Francisco, Los Angeles and Washington, where limited housing stock, sky-high demand and commercial speculation have pushed less-affluent residents to the periphery.

But the issue has spread beyond gentrifying metro areas — even reaching places such as Montana, where home prices have increased as much as 30 percent since 2010 and 68 percent of extremely low-income renters spend more than 30 percent of their paychecks on housing.

Nationwide, half of all renters — or roughly 50 million Americans — now find themselves in the same “rent-burdened” situation. (In 1960, only about a quarter of renters spent that much on housing.) To meet current demand, America would have to build another 9 million rental homes overnight — 7 million of them for lower-income families. Homelessness is on the rise, with as many as 600,000 Americans now sleeping in shelters or on the streets. Meanwhile, overall homeownership has fallen to a 50-year low, as economically insecure millennials are buying houses at a much lower rate than earlier generations.

For the last century or so, U.S. housing policy has given short shrift to renters, who are disproportionately lower-income and minority, while giving preferential treatment to homeowners. But the Democratic Party’s leftward policy lurch in the wake of the 2016 presidential election — combined with the widening effects of the affordability crisis and a field of 2020 Democratic contenders that includes several former mayors and an expert in personal finance and bankruptcy law — is transforming housing into a more potent issue than ever before.

“Previously, affordable housing could sort of just be swept into the corner as an ‘urban issue,’” says Henry Kraemer, a progressive organizer and advocate who last year co-authored a story in the Nation exhorting Democrats to campaign on housing. “But now it's a suburban phenomenon, a rural phenomenon, and a national problem — and it’s getting the attention of policymakers at every level.”

Three of those policymakers happen to be vying for the Democratic nomination: Massachusetts Sen. Elizabeth Warren, California Sen. Kamala Harris and New Jersey Sen. Cory Booker.

The last time the federal government took a serious approach to affordable housing was more than 80 years ago, during the Great Depression. From 1933 to 1941, President Franklin Roosevelt launched a range of employment programs, including the Public Works Administration, which built model homes for both the poor and the middle class. Yet the PWA wasn’t solely focused on housing, and social reformers and their congressional allies began to push for a federal program that would “encompass the basic housing need of the population as a whole,” as Sen. Robert Wagner, D-N.Y., demanded in 1936.

Their solution was the Housing Act of 1937, which was intended to provide public housing for lower- and middle-income Americans and give the federal government more control over where that housing was built. The key word is “intended.” Attacked by the real-estate industry and conservative politicians as “communistic,” the Housing Act was watered down by Congress; in the end it applied only to the poor and allowed communities to opt out. The result was the housing projects we’re familiar with today: cheaply built, shoddily maintained, geographically isolated — and ultimately too few in number to accommodate more than a fraction of Americans living in poverty.

Over subsequent decades, all federal follow-ups fell prey to the same forces of opposition.

By the 1970s, funding had dried up and units were either being neglected or demolished. Washington’s focus shifted to the private sector instead: first with the Nixon administration’s Section 8 program, which provides poor people with vouchers to spend on private housing, and then with the Reagan administration’s low-income housing tax credit, which attempts to incentivize developers to build affordable units. Yet neither market-based policy has kept pace with need, which has soared in the wake of the housing crash in 2008 that led to 3 million foreclosures.

For decades, both Republicans and Democrats have largely ignored rental housing; while homeowners reaped the tax benefits of the federal mortgage-interest deduction, it wasn’t until 2016 that Democrats even mentioned renters in their presidential platform. This oversight has, in turn, perpetuated inequities of race and class that began in the 1930s with discriminatory mortgage lending practices (“redlining”) that continue to this day in the form of exclusionary zoning and that have made it extremely difficult for people of color, denied access to one of the largest sources of intergenerational wealth, to climb the economic ladder.

So far, three 2020 contenders — Harris, Booker and Warren — have put forward concrete housing affordability proposals; a fourth, Julian Castro, former San Antonio mayor and secretary of Housing and Urban Development, has signaled that he’s likely to follow.

The three existing plans all began life as bills in the Senate.

Harris’s legislation, called the Rent Relief Act, was first proposed in July 2018; it is the least complex (and most cautious) of the three. Basically, Harris would provide immediate relief to cost-burdened renters by allowing taxpayers who make less than $100,000 per year (or $125,000 in high-cost areas) to claim a refundable tax credit for the rent and utilities they pay over 30 percent of their income. The poorer the taxpayer, the more generous the tax credit.

“America’s affordable housing crisis has left too many families behind who struggle each month to keep a roof over their head,” Harris said when she announced the plan. “This bill will ensure no family is priced out of the basic security of a place to live. Bolstering the economic security of working families would strengthen our country and increase opportunity.”

Booker’s bill, called the Housing, Opportunity, Mobility and Equity (HOME) Act, materialized shortly after Harris’s. It goes a bit further. Like Harris, Booker would provide a refundable tax credit to cost-burdened renters; unlike Harris, Booker would also attempt to tackle the low supply of affordable units, one of the main causes of the crisis. He would do so via what Curbed calls “a laundry list of progressive urbanism practices” designed to curtail exclusionary zoning and stimulate affordable housing construction. It would authorize high-density and multifamily zoning; eliminate off-street parking requirements for new development; shorten the permitting process; remove height limitations; tax vacant land and/or donate it to nonprofit developers; allow accessory dwelling units; and require that no less than 20 percent of all new units be affordable. Booker’s bill would enforce these changes by withholding subsidies from jurisdictions that refuse to comply; it would also allow renters to defer 20 percent of their tax credit into a savings fund.

Warren’s proposal was the last to appear. It is also the most comprehensive. First floated in September 2018 and reintroduced, in revised form, earlier this month, the American Housing and Economic Mobility Act does not include direct relief for renters in the form of a refundable tax credit; it would, however, do more to address the structural causes of the crisis than either Booker or Harris’s bills by dedicating $470 billion over 10 years to fund the construction of more private affordable housing for extremely low-income households; adding $3.6 billion in new capital funding for public housing; creating an incentive fund to combat local restrictive zoning laws and encourage strong renter protections such as rent control or stabilization; limiting institutional investors’ ability to buy single-family homes; and addressing decades of racism in federal housing policy.

“In the same way that we think about health care, as a basic human right, having a decent and safe place to live should be a basic human right,” Warren said during a recent CNN town hall in Mississippi.

Warren’s bill is also the only one, according to Moody’s, that has a funding mechanism. Warren plans to pay for it by restoring estate-tax rates to Bush administration levels and increasing rates for estates worth $10 million or more.

The politics of housing will always be complicated and controversial. On the Democratic side, however, the appeal of these proposals is clear: renters are a growing and ever more geographically diverse segment of the population, and demographically, there’s a lot of overlap with the party’s increasingly minority and millennial base. Harris and Booker are likely to score points with rent-burdened voters who need more money today; Warren is likely to appeal to Democrats seeking to address the larger inequities underlying the affordability crisis.

Beyond the Democratic primary process is where things would get a lot more challenging. In the context of a general election — or if one of these candidates actually tried to push his or her housing plan through Congress as president — the same forces that have stymied past reforms would fight back again: conservatives who view renting as a moral or financial failing; taxpayers reluctant to help other people pay their rent; industries and landlords that stand to lose market share or revenues.

Another problem for Harris and Booker is that while their tax credits might help reduce poverty overall, critics say the money wouldn’t actually help to solve the problem it’s designed to solve. “The subsidy would almost certainly go to the landlords, who would raise the rents once they realized that their tenants could afford to spend more on housing without reducing their other expenses,” predicts MarketWatch’s Rex Nutting. And as Jibran Khan explains in the National Review, these bills could also “compound the problems facing renters by reducing the political pressure” to fix them: “Defenders of the status quo will simply point to the [tax credit] and insist that something has been done.”

Warren’s alternative, meanwhile, would do more to address those problems. But the sheer scale of the bill, along with its focus on structural racism and government responsibility, would likely make it harder to pass.

“The core agreement of American politics has been ‘Keep the middle class happy; keep giving them stuff,’” says Pete Harrison, a senior adviser to the liberal think tank Data for Progress. “Housing is the number one vehicle for that imbalance— and it's really hard to change.”

Recent battles over rent control and relief in big blue states like New York, Illinois, and California offer a cautionary tale. In the Golden State, for instance, voters went to the polls last November to decide whether to repeal a law blocking cities from applying rent control to units constructed after certain dates. All the major newspapers and many leading Democratic officeholders endorsed the repeal, which would simply let local governments decide which rent controls were appropriate for their cities. But opponents, led by the California Apartment Association, outspent supporters 3 to 1 in a campaign to convince voters that developers would cut back on construction if rent control spread — and the measure was defeated by nearly 20 percentage points.

“Everyone is a progressive on issues until one like housing comes to your front door or backyard, then you want a solution to be for someone else, somewhere else,” Harrison explains. “Changing that will take some deep soul-searching in a lot of American homes. But I think it can change — if a really clever politician can weave a narrative about how fixing our housing policy is one big part of how we save your money for retirement, how we save your kid's future, and how we save the planet.”

(Cover thumbnail photo illustration: Yahoo News: photos: AP(4), Getty Images)

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