An Example Of The Destruction In The "Reconciliation" Bill: Public Housing Bailout

Even this late in the process, it’s still impossible for a mere member of the public to find out in much detail what all may be buried in the massive “budget reconciliation” bill now making its way through Congress. And the whole thing may yet get stopped, or substantially reduced, by the unexpected good sense of a couple of Democratic Senators (or even just one). Nevertheless, there is enough general information about what is planned by the bill’s proponents to give us some insights into the economic wreckage that could be coming if these people get their way.

Among things included within the bruited $3.5 trillion price tag (undoubtedly way understated), you likely are aware of at least some of the largest components. Included are things like large expansions of child tax credits, pre-K education subsidies, childcare subsidies, Obamacare expansion, Medicare expansion, subsidies and tax credits for useless “green” energy projects, and on and on and on. But for today I’m going to focus on just one of the many vast spending expansions, namely the proposed $80 billion for bailing out public housing.

At one time, some of us thought $80 billion was a lot of money. Now, it is just one of the smaller crumbs buried in this multi-trillion dollar behemoth.

Michael Hendrix of the Manhattan Institute has a good summary of this item today at RealClearPolicy, in a piece titled “Democrats Want to Hand America's Failed Public Housing an $80 Billion Slush Fund.” I have written frequently about the failure of socialist-model public housing generally, and of the New York City Housing Authority in particular, and also about the remarkable way that NYCHA and other public housing entities are somehow able time and again to parlay their ongoing disastrous failure into more and more and yet more taxpayer funding. (See, e.g., here and here.) The proposed “reconciliation” bill takes this game to a whole new level. It appears that the idea is to throw some massive spending numbers in with so many other massive spending numbers that nobody will be able to focus on this one issue or to object effectively. And the public housing bureaucracies will once again be hugely rewarded for failure, indeed with a far larger bailout than ever before.

Hendrix provides a brief chronology of this latest round. It started with President Biden at the beginning of his term proposing an incremental $40 billion for the nation’s failed public housing authorities. But then in April Senate Majority Leader Chuck Schumer got into the act:

Back in April, Sen. Schumer called on President Joe Biden to double his planned spending of $40 billion on public housing — “it’s just not enough,” said Schumer more recently. He wanted all of the original money just to pay NYCHA’s repair bill. And what Schumer wants, he gets: an increase to $80 billion in spending on public housing and enormous influence on securing half of it for a NYCHA bailout.

(My emphasis.). And just how much is the NYCHA “repair bill”? Readers of my previous posts know that NYCHA has gotten itself into a very deep hole by following the unworkable socialist model, where the game is to wait until your facility falls apart and then use the disaster to put the squeeze on the politicians for a bailout. NYCHA’s grim “projects,” mostly built from the 1940s to 1970s, after decades of incompetent maintenance, have basically reached the “falling apart” state. Should you come to New York as a tourist, you will definitely want to avoid going anywhere near these hideous and dangerous places, so I’ll have to give you a picture to illustrate how unpleasant they are:

By now most all of the major building systems in nearly all of the buildings need major upgrades or replacements — plumbing, electrical, heating, roofs, façades, windows, and so forth. And by the way, none of them have building-wide air conditioning, nor is there any feasible way to provide it in these older buildings, which is why you see so many window air conditioners in the picture. (Somehow the poor have plenty of money for air conditioners.)

So how much will all of this cost the taxpayers? In 2015 the de Blasio administration put out a big Report called “NextGeneration NYCHA,” which estimated a need for some $17 billion for these capital replacements and upgrades. They have about 170,000 apartments in their projects, so that number would represent about $100,000 per apartment. But that was just the beginning. In February 2018 they put out a revised number, which was $25 billion. In December 2018 an independent entity, the Regional Plan Association, put out its own estimate of what NYCHA needed for capital upgrades, and it was now $45 billion. A budget presented by NYCHA in December 2019 then put forth a new range of estimates, including a “worst-case” scenario of some $68.5 billion by 2028. That’s the latest I can find right now, but I wouldn’t be surprised if the number has gone up even more since then.

At $68 billion for capital replacements and upgrades for 170,000 apartments, we’re now talking about some $400,000 per apartment. For comparison, the median sale price of a single-family home in the United States for August 2021 was $380,000 — and for that you own the place free and clear, without mortgage or need to pay rent. Also, fully half of the houses go for less. In other words, for well less than NYCHA is demanding in taxpayer bailouts, you could buy every one of the tenant families a fully-paid-up mortgage-free median single family house somewhere in the United States, and then bulldoze the horrible NYCHA projects and be done with them. That would provide all the NYCHA tenants much improved housing and for much less money. But of course it would also mean putting the entire NYCHA bureaucracy out of business, plus losing the big bloc of bought-and-paid-for Democratic votes represented by these lifetime-dependent public housing residents. Clearly, that’s not how this works.

So here is Hendrix on how the Schumer add-ons in the “reconciliation” bill would deal with the issue of capital needs of NYCHA and other public housing entities:

The Democrat’s reconciliation bill gives Housing Secretary Marcia Fudge the authority to allocate $66.5 billion in new public housing dollars however she pleases. Given its soaring repair bill, NYCHA alone could easily soak up every new discretionary dollar spent on public housing. Then there’s another $10 billion Fudge will get to spend under her agency’s “business as usual” formula plus $2.75 billion in grants under terms also set by the secretary. In short, it’s an $80 billion slush fund.

In other words, even though the cost has become completely unjustifiable and preposterous, you don’t expend one minute of energy to consider a better way to do the job for less. Instead you give the failed bureaucracy every dollar it wants, in the form of a gigantic slush fund with no strings attached, and you bury it somewhere in a multi-trillion dollar spending blowout and expect that nobody will notice how their hard-earned money is being thrown away.

Meanwhile, just a few points, both old and new, on how totally disastrous NYCHA’s failure has been:

• From the Wall Street Journal, February 6, 2018, “Anger as New York City Public Housing Residents Go Without Heat, Hot Water.”: “More than 143,000, or 80%, of New York City’s 175,000 public housing apartments have been without heat or hot water at times this winter, city officials said Tuesday. Tempers flared over widespread heat and hot water outages in New York City public housing at an unusually contentious City Council hearing. Some residents were in tears. . . . Residents have been left without heat sporadically throughout the winter, on average for two days at a time, according to city officials. The outages, which the city has blamed on aging boilers, have affected more than 320,000 people.” From City Councilman Ritchie Torres on then-NYCHA head Shola Olatoye: ““She has haplessly presided over a humanitarian crisis.”

• From the New York Post, March 17, 2018: “As Politico reported last week embattled city Housing Authority chief Shola Olatoye has been trying to win more labor flexibility, albeit with no backup from City Hall. Soon after taking over in 2014, she sought common-sense changes to work rules that have maintenance staff and other skilled workers on the job exclusively from 8 a.m. to 4:30 p.m., Monday to Friday. But the Teamsters vetoed her plan for staggered shifts. One result is the agency’s huge overtime bill, which (for example) leaves its plumbers as some of the very highest-paid city employees — five of the top 10 OT earners these last two years. The 2016 overtime king was NYCHA plumber Vincenzo Giurbino, who took home an added $228,000 atop his $141,152 base salary.”

• From Hendrix at RealClearPolicy today: “The pandemic highlights NYCHA’s long history of harming the health and safety of its residents. Just this month, New York City public health officials admitted that NYCHA residents are dying from Covid-19 at nearly twice the city rate. “The pandemic has trapped many poor New Yorkers in miserable living conditions in the city’s public housing system,” observed The New York Times. It turns out that one of the deadliest places to be in New York City during a pandemic is in a New York City Housing Authority apartment.”

• Also from Hendrix today: “[J]ust this week, Brooklyn’s District Attorney charged nine NYCHA contractors with bribery over the authority’s no-bid contracts. ‘We have every reason to believe that there are other superintendents being offered bribes,’ said DA Eric Gonzalez. Despite record levels of funding, ‘New York’s public housing isn’t getting better,’ admitted The New York Times. Sometimes more money means more problems. There’s an ‘ecosystem of people willing to make and take bribes at NYCHA,’ found the Brooklyn DA.”

One could go on indefinitely with this. The crime rate in all categories is also a multiple at NYCHA projects as elsewhere in the City. And I should also mention that the progressives in Congress want not only to bail out the existing failed public housing, but also to lift all restrictions on building more, and put up yet more funding for that. It will be just one more step toward the utopian world of perfect justice and fairness that they are planning for us. More and more taxpayer money for greater and greater failure and outright corruption.