Political MoJo

The Trouble with Housing Policy

| Wed Nov. 9, 2005 4:03 PM EST

James K. Galbraith argues that expanding homeownership is a good and proper policy route for helping working families to increase wealth. George Fredrickson made a similar point in a recent New York Review of Books essay, "Still Separate and Unequal," where he discussed the vast wealth gap between white and black Americans, and argued that historical disparities in homeownership were to blame:

How did this vast inequality come about? It was mainly the result of the greater white access to home mortgages that were insured and subsidized by the federal government. Before the 1930s a home buyer had to put down 50 percent of a house's price and could get only a relatively short-term mortgage, perhaps only ten years. By the 1950s, as a result of a series of federal housing programs, including the GI Bill, most Americans could get long- term mortgages—up to thirty years— with a down payment as low as 10 percent. By 1984 seven out of ten whites owned their own homes, worth on average $52,000. But only one in four blacks owned a home, worth, on average, less than $30,000. ...

The advantages of whites over blacks ... were more characteristically Northern than Southern; they manifested themselves in the growth of virtually all-white suburbs outside the major cities and virtually all-black ghettos within them. This new form of racial segregation was not simply the product of private choices, among them the refusal of white home-owners to sell to blacks, blockbusting and the racial "steering" of home buyers by real estate agents, and the personal prejudice of bankers asked to approve loans for blacks.

The urban segregation that has contributed so much to the persistence of black inequality came about in large part because between the 1930s and the 1970s federal housing agencies refused to approve mortgage loans in neighborhoods that were "redlined," which meant property values were deemed uncertain because of the presence of blacks.True enough. All the same, modern-day housing policy to correct this imbalance sometimes seems pretty painfully misguided. The Bush administration, like its more liberal predecessor, has made a point of offering subsidized mortgages to low-income and especially minority families, which is a great idea in theory, as Galbraith's and Frederickson's pieces might suggest. But so long as homes remain unaffordable for 80 percent of all renters, including 21 million renters who couldn't get mortgages under even the loosest of underwriting standards, these sorts of policies will only go so far.

Lower-income families that can afford homes, meanwhile, often end up with units in need of costly repairs or are located in poor neighborhoods plagued by crime and unemployment. Not the best way to create wealth, obviously, or reduce the inequality and segregation Frederickson's talking about. In Baltimore a few years ago, reporters discovered that homes basically falling apart were being "patched up" and sold to low-income families at inflated prices. In the South, 40 percent of low-income home-buyers were steered into trailer parks on leased land. Not to mention the fact that extending homeowner credit to low-income and/or minority neighborhoods usually opens the door to predatory lenders to walk on in.

Plus, it's not even clear that owning a home is always a fantastic wealth-enhancing strategy for low-income families. It's true that the median wealth of low-income homeowners is 12 times that of renters with similar incomes, and most of that comes from the home. But renters and owners tend to be very different people to begin with, at different stages of the life cycle, in different financial situations. How "good" of an investment owning a home is often depends on when an owner enters the market, how long it holds the property, local market conditions, etc. On the downside, some low-income families who buy a home can quickly find themselves assailed with all sorts of costs—insurance costs, property taxes, utility bills—and often borrow against the equity of their home in a financial pinch, erasing any wealth.

That's not to say Galbraith or Frederickson are on the wrong track; clearly they know what they're talking about. Still, we hear about policies to promote homeownership—from both parties—as a strategy for helping working families, but they deserve far more scrutiny. It's troubling, for instance, that the percent of mortgage loans that end in foreclosure have risen from 1.24 in the 1990s to 1.46 these days—a potential sign that people are being steered into homes before they're ready. A proper housing policy, perhaps, would increase the stock of affordable housing and help out low-income renters until they're ready to own a home. What we have now, unfortunately, is a national housing policy primarily intended to benefit lenders—who, these days, depend on sub-prime loans to low-income families for profits—while slashing rental-assistance programs like Section 8.

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Did Texas Just Ban Marriage?

| Wed Nov. 9, 2005 1:54 PM EST

HJR No. 6 passed in Texas yesterday, supposedly to ban gay marriage. But read the text closely.

Sec. 32
(a) Marriage in this state shall consist only of the union of one man and one woman.
(b) This state or a political subdivision of this state may not create or recognize any legal status identical or similar to marriage.

Is it egg-heady coastal elitism to point out that Texas just defined marriage and then made it illegal for everybody, even heteros? I wonder if "family values" include literacy.

Louisiana's post-hurricane disaster: Part 1, the state

| Wed Nov. 9, 2005 1:35 PM EST

Much of the debris left behind in Louisiana by Hurricanes Katrina and Rita is familiar to Louisiana citizens, for it is the detritus of a system that relies on pork, patronage, and power plays. When the Louisiana Bond Commission met several weeks ago, it performed the shocking act of doing nothing to change its pre-Katrina plans. Every item that had been earmarked before August 29, including $4 million for the Morehouse Parish Equine Center, the proposal that drew the most negative response from both the local and national press. State Treasurer John Kennedy requested line-item approval of the Bond Commission's work, but when the commission met a second time, its members voted to make no changes.

Governor Kathleen Blanco has done the most annoying thing a governor can do to the state legislature--and it is something no governor has ever before dared to do--she announced the elimination of the legislators' $11 million worth of slush funds. These funds, the source of annual power struggles in the state, are the goody funds legislators use to get pet projects for their districts, and they are considered sacred. Complaints are mounting over Blanco's decision. The governor has also announced intended cuts in every department except for the legislative and judiciary departments, but those may also fall to the cutting ax before the current legislative session is over.

To outsiders--and even to many within the state--it was startling to hear Blanco demand that legislators making money off of post-hurricane relief must disclose their income. Though it appears to most of us to be inappropriate for them to be earning any income from relief efforts in the first place, it is safe to say that if the governor were to prohibit such schemes, her plans for Louisiana would be shut down by powerful state senators and representatives. She is boxed in by a system that has been in place for generations. Some of us were hoping she would put her foot down, anyway, but that isn't going to happen.

Political experts in Louisiana say that legislators in districts not directly affected by Katrina and Rita simply are not concerned with the immense social and economic damage done by the storms, and are interested only in what they can get for their own districts. Katrina and Rita directly affected parishes in southeast and southwest Louisiana, but central and northern parishes did not experience any storm damage. Of course, if the New Orleans economy and the economies of surrounding parishes are permanently destroyed, there goes the Port, the Superdome, a huge tourism industry, what had become a rapidly growing film industry, the state's oil and gas business, and the Louisiana seafood industry.

Before the two hurricanes brought an unprecedented crisis to Louisiana, the state was already dealing with crises in its healthcare and educational systems, as well as several environmental crises. Blanco's team and the state government had massive tasks set before them, and Louisianians were skeptical about solutions. Now there is reason for even more skepticism, as these crucial matters are displaced by the issue of immediate economic recovery, and the state's lawmakers exhibit near-blindness in their vision.

Dover Evolves

Wed Nov. 9, 2005 1:20 PM EST

One small, but nonetheless sweet victory for people who acknowledge the virtues of empiricism: the Dover, PA, school board was thrown out of office by the town's voters. These are the folks who decided to join with the Thomas More Law Center to force a landmark test case in the hopes of establishing "intelligent design"—widely viewed as a stalking horse for biblically-based creationism—as constitutionally permissible classroom instruction.

Why Paris is Burning

| Wed Nov. 9, 2005 11:53 AM EST

Today at Mother Jones:

Mark LeVine sees in the French riots "a microcosm of the larger struggles of Muslims...to integrate into a globalized order from which they have been marginalized for decades, even centuries." (LINK)

Andrew Testa, in a stunning photo essay, portrays Thailand's sea gypsies, who outsmarted the tsunami but could be swept away by an even greater force--modernity. (LINK)

Jack Hitt confers the Aaron Burr Award for Constitutional Devotion on...Tom DeLay? Rick Santorum? (LINK)

Bill Hogan introduces Dr. Gilbert Ross, onetime jailbird and now America's most aggressive debunker of legitimate scientific research. (LINK)

Clint Hendler warns of Republican attempts to weaken the Endangered Species Act. (LINK)

Our Least Green Congressman

| Tue Nov. 8, 2005 10:17 PM EST

There are lots of representatives with low marks on environmental issues. But based on a string of recent high-profile actions and missteps, Richard Pombo seems to have developed a special talent for raising the ire of environmentalists.

The California Republican is perhaps best known for the drastic changes to the Endangered Species Act he pushed through the House this Fall, changes friendly to industry groups. (And while we're on the subject, you may want to check out my recently-posted article about one of the bill's key provisions. It would have merely enshrined an earlier, little-noted rule change by the Bush Administration which already, in certain cases, ended oversight of federal projects by the government's endangered species experts.)

Pombo, who chairs the House Resources committee, has also came under fire for recommending that the National Park Service auction off, and thereby privatize, 15 sites. The Center for Public Integrity recently determined that the Congressmen owed taxes on two trips sponsored by a foundation with "highly unusual" management and financial procedures—and funding ties to pro-whaling and fur trade groups.

And today comes a report, from the Environmental Working Group, that Pombo has slipped a line into the House's budget reconciliation bill that would reverse a Clinton-era ban on selling over 350 million acres of public lands to miners, oil drillers and loggers. So far the provision hasn't gotten much attention—and if there ever was an example of falling for blatant-spin, it's this Reuters wire containing the news, entitled "Republican wants to help poor gather firewood." Talk about burying the lede.

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Cheney's Torture Kick

| Tue Nov. 8, 2005 3:41 PM EST

Dick Cheney is truly insane. The vice-president is now off making impassioned pleas in defense of torture:

Last Tuesday, Senate Republicans were winding up their weekly luncheon in the Capitol when the vice president rose to speak. Staffers were quickly ordered out of the room—what Cheney had to say was for senators only. Normally taciturn, Cheney was uncharacteristically impassioned, according to two GOP senators who did not want to be on the record about a private meeting. He was very upset over the Senate's overwhelming passage of an amendment that prohibits inhumane treatment of terrorist detainees. Cheney said the law would tie the president's hands and end up costing "thousands of lives." He dramatized the point, conjuring up a scenario in which a captured Qaeda operative, another Khalid Shaikh Mohammed, refuses to give his interrogators details about an imminent attack. "We have to be able to do what is necessary," the vice president said, according to one of the senators who was present.
Andrew Sullivan has been particularly eloquent about the wrongness of torture and the wrongness of forcing our military officers to carry it out and the wrongness of our archipelago of secret CIA prisons around the world. Consider too that Elliot Abrams, the man who covered up the El Mozote massacre in El Salvador during the Reagan years and called the U.S.-backed death squads in that country a "fabulous achievement," is now trying to dissuade Cheney from his views on torture. Once again: Cheney's now too extreme for Elliot Abrams.

Now some people might be tempted to think that yes, Cheney's moral compass is a bit askew, but he is vice-president, he does know a lot that we don't know, and maybe we should give him the benefit of the doubt that the executive branch really does need to "be able to do what is necessary." Sorry, but no. Cheney doesn't deserve the benefit of the doubt, ever. Throughout his time in Washington he's shown himself to be, frankly, a strategic moron with exceedingly poor judgment, as seen in this anecdote from his tenure during Bush I:

Following one White House meeting at which he'd asked for more time and more troops, Stormin' Norman reports; Joint Chiefs of Staff Chairman Colin Powell called to warn the Desert Storm commander that he was being loudly compared, by a top administration official, to George McClellan. "My God," the official supposedly complained. "He's got all the force he needs. Why won't he just attack?" Schwarzkopf notes that the unnamed official who'd made the comment "was a civilian who knew next to nothing about military affairs, but he'd been watching the Civil War documentary on public television and was now an expert."

And then, twenty pages later, Schwarzkopf casually drops the information that he got an inspirational gift from Secretary of Defense Dick Cheney right before the air war finally got under way. Cheney was presenting a gift to a military man, and he chose something with an appropriate theme: "(A) complete set of videotapes of Ken Burns's PBS series, The Civil War."

But that wasn't the only gift that Dick Cheney had for Norman Schwarzkopf. Having figured out that the general was being too cautious with his fourth combat command in three decades of soldiering, Cheney got his staff busy and began presenting Schwarzkopf with his own ideas about how to fight the Iraqis: What if we parachute the 82nd Airborne into the far western part of Iraq, hundreds of miles from Kuwait and totally cut off from any kind of support, and seize a couple of missile sites, then line up along the highway and drive for Baghdad? Schwarzkopf charitably describes the plan as being "as bad as it could possibly be... But despite our criticism, the western excursion wouldn't die: three times in that week alone Powell called with new variations from Cheney's staff. The most bizarre involved capturing a town in western Iraq and offering it to Saddam in exchange for Kuwait." (Throw in a Pete Rose rookie card?) None of this Walter Mitty posturing especially surprised Schwarzkopf, who points out that he'd already known Cheney as "one of the fiercest cold warriors in Congress.This is not a man worth trusting.

On the Backs of the Poor

| Tue Nov. 8, 2005 2:17 PM EST

According to the Washington Post, the Republican Congressional leadership is having trouble finding enough moderate Republican votes to agree to the 2006 budget, which would shave a mere 0.002 percent of federal spending—yes, that's all—by hacking apart important programs for the poor and middle classes. Those cuts would include making Medicaid recipients pay more, hacking student loans, weakening child support enforcement, and limting food stamps. The president, compassionate guy that he is, has promised to veto the Senate's alternative cuts, which would instead save $10 billion by getting rid of a "slush fund" for insurance companies buried in the 2003 Medicare bill. In fact, despite what the Post's headline says, this isn't even fiscal discipline on the part of Congress—the full Republican budget would increase the deficit by $16 billion over five years, due to $70 billion in new tax cuts that were passed separately.

In the end, it seems likely that Hastert and company will get their budget passed, even if they have to twist moderate arms and resort to all the legislative gimmickry in the books. They've done it before. They might even have to jettison ANWR drilling from the bill in order to make it palatable to "moderates"—who will bravely vote to limit food stamps and health care for the powerless—and just sneak it back into the budget later on. Republicans are good at this. Nevertheless, "liberal activists"—at least that's what the Post calls them; one might also say "people with decency"—are putting up a strong fight against the cuts, trying to pressure moderate Republicans:

"It's a different group every week, coming in here, making calls," said John Gentzel, communications director for Rep. Jim Gerlach (R-Pa.), whose suburban Philadelphia district has been "saturated" with budget protests. "It's just one group after another."…

This week, Democrats will hold a conference call with a Wisconsin college student to talk about student loan cuts and will serve lunch at a District school to highlight the budget's impact on subsidized school lunches. They will also stage a mock hearing to tar the entire budget as an effort to finance tax cuts for the rich on the backs of the poor.Note the Post's language—it's the Democrats who are going to "tar the entire budget." What exactly does this mean? The budget quite obviously is an effort to finance tax cuts for the rich on the backs of the poor. What else would you possibly call it? Who benefits from tax cuts? Who benefits from Medicaid? Which one is getting passed, and which one hacked? The New York Times, refreshingly, actually saw through this budget nonsense, and tore it apart, but the Post can't seem to do anything other than give friendly cover to the Republican Party. No doubt they think it's more "objective" that way.

Europeans have it better?

| Tue Nov. 8, 2005 12:55 PM EST

Today at Mother Jones:

James K. Galbraith knocks a few holes in the notion that Europeans have it better than Americans. (LINK)

Bill McKibben explores the Brazilian city of Curitiba, a global model for development that both respects the earth and delights its inhabitants. (LINK)

Sara Catania profiles hellraising Ukrainian journalist Olena Prytula, whose newspaper keeps the Orange Revolutionaries honest. (LINK)

Nick Turse considers who had the real intel about the war -- the protesters who knew it would be a disaster and that, in any case, it was wrong. (LINK)

Tova Andrea Wang and Jonah H. Goldman argue that requiring voters to present a nationally uniform driver's license at the polls compromises voter rights and won't solve the problem of electoral fraud. (LINK)

The Truth About Free-Riders

| Mon Nov. 7, 2005 8:44 PM EST

The latest issue of the British Medical Journal has an excellent article on American drug companies. To put this in context, recall that of late, the pharmaceutical industry has been lobbying the U.S. government to sign "free" trade deals with other countries that would: raise prices on patented drugs; extend patent protection to delay the introduction of generics; and block "re-importation" to the United States. Why would they do such a thing? Because, says Big Pharma, the rest of the world hasn't been paying its "fair share" of research expenditures, and it's time for them to stop free-riding. Which brings us to the BMJ article, which basically screams "Liar!"

The United States government is engaged in a campaign to characterise other industrialised countries as free riding on high US pharmaceutical prices and innovation in new drugs...

The campaign, strongly backed by the pharmaceutical industry, seems to have started in the late 1990s as a response to a grass roots movement started by senior citizens against the high prices of essential prescription drugs. This issue was the most prominent one for both parties in the 2000 elections and has since been fuelled by a series of independent reports documenting that US drug prices are much higher than those in other affluent countries...

We can find no convincing evidence to support the view that the lower prices in affluent countries outside the United States do not pay for research and development costs. The latest report from the UK Pharmaceutical Price Regulation Scheme documents that drug companies in the United Kingdom invest proportionately more of their revenues from domestic sales in research and development than do companies in the US.

Prices in the UK are much lower than those in the US yet profits remain robust. Companies in other countries also fully recover their research and development costs, maintain high profits, and sell drugs at substantially lower prices than in the US.Interestingly, the U.S. pharmaceutical industry's claim that European countries "free ride" seems to be based primarily on a 2004 report produced by Bain & Company, a consulting group in Boston. (The AARP passed it widely around.) But that report doesn't provide any evidence for its claim that "innovative drugs" are somehow less available in Europe as a result of overly-low prices. Perhaps American pharmaceutical companies aren't marketing their absolute latest and flashiest patented drugs in Europe, true. But considering how many of these are "me-too" drugs with little to no significant medical benefit, perhaps it's no surprise that Europeans aren't suffering much for the loss.