Right-Sizing HUD

“HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.”[i]

HUD has 8,700 employees, 127 subsidy programs and a $46.7 billion budget that does more harm than good.[ii] Public housing projects and federal vouchers have been proven ineffective and costly failures. According to the CATO Institute, HUD’s program to subsidize home ownership has created large economic distortions and was an important cause of the 2008 financial crisis and subsequent recession.

HUD has been Right-Sizing HUD for years.[iii] It had responsibility for overseeing the financial activities of Fannie Mae and Freddie Mac until 2009. The Department’s failure to properly oversee these two agencies directly contributed to the financial meltdown and ensuing recession.

A prime example of corruption is Debra Gross who headed a crucial policy office at HUD.[iv]  While employed as a HUD Director, Gross was also the Deputy Director of a national non-profit called Council of Large Public Housing Authorities (CLPHA).  CLPHA managed 40% of the nation’s public housing, 26% of the Housing Choice Vouchers and an array of other housing programs.

Gross unethically and illegally changed inconvenient rules and regulations to benefit CLPHA.  The HUD Inspector General issued a scathing report on Gross’ activities. Even after Gross admitted she violated HUD’s conflict of interest rules, she failed to recuse herself from dealing with CLPHA regarding housing matters.

Another prime example is Andrew Cuoma, HUD Secretary appointed in 1997 by Bill Clinton. Under Cuomo’s watch, $59 billion disappeared. HUD could not say where the money went because it failed to produce audited financial statements.[v]  But it’s not just Cuomo. HUD Secretaries Samuel Pierce (1981-1989), Henry Cisneros(1993-1997) and Alphonso Jackson (2003-2009), for example, have horrible records too.[vi]

A review of housing policies and HUD leadership in recent decades suggests that we need to discard the idea that federal housing officials act in the general public interest when setting their agendas.[vii]

Conclusion.  Public housing has largely been a failure. Public housing projects have become centers of crime and dysfunction. “Housing was traditionally a private concern, and it should be made so again because government involvement has done great damage. Policymakers have not learned this lesson even after the recent housing boom and bust. Since the housing and financial meltdowns, federal intervention in housing markets has substantially increased, thus paving the way for further troubles down the road for taxpayers and the economy.”[viii]

Recommendation. 

  • Contract with a major private sector consulting firm to plan and eliminate the Department of Housing and Urban Development within two years.
  • Contract with a major private sector consulting firm to plan and execute a 100% reduction in force within two years.
  • Move any residual functions to the respective states.

Ten year estimated savings:  $534.2 billion.[ix]

[i] U.S. Department of Housing and Urban Development, www.archives.hud.gov/hl/newsletters/honolulunews0510.pdf

[ii] CATO Institute, www.downsizinggovernment,org/housing-and-urban-development

[iii] CATO, “HUD Scandals,” www.downsizinggovernment.org/hud/scandals

[iv] The Judicial Watch Blog, “HUD Director Changed Policies to Help Her Leftwing Group,”

Jamuary 27, 2015, http://www.judicialwatch.org/blog/2015/01/hud-director-changed-policies-help-leftwing-group/

[v] The Komisar Scoop, “Fees for Our Friends: The Scandal that Taints Andrew Cuomo,”

http://www.thekomisarscoop.com/2006/08/fees-for-our-friends-the-scandal-that-taints-andrew-cuomo/

[vi] CATO Institute, “Hud Scandals,” http://www.downsizinggovernment.org/hud/scandals

[vii] Ted DeHaven, CATO Institute,  “Three Decades of Politics and Failed Policies at HUD,” Policy Analysis No. 655, 11/23/2009,  http://www.cato.org/sites/cato.org/files/pubs/pdf/pa655.pdf

 

[viii] Ibid.

 

[ix] HUD savings based on 2015 budget of $46.6 billion increased 3% annually through 2014.

 

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