Ronald Reagan's complaint that some government subsidies are going to those who don't deserve them is more than just political rhetoric. One program that has gotten completely out of hand is the multibillion-dollar federal subsidy for construction of new apartment buildings. The huge subsidies are made under the "Section 8" program.
In New York City, for example, until recently a family of four with an income of $17,269 could qualify for as much as $6,000 a year in Section 8 funds. Subsidies of $5,000 to $7,000 a year to a single family are commonplace, complain critics.
The federal payments aren't going for subsistence-level cold-water tenements, or even to the kind of less-Spartan-but-far-from-luxurious units which many unsubsidized families earning $17,000 live. Investigators for Sen. William Armstrong (R-Colo.) have shown my associate Jack Mitchell photographs of posh garden apartments built wholly or partially with HUD money that many middle-income families could not afford without a federal subsidy.
Many of these government-subsidized projects have swimming pools, tennis courts, 24-hour security service, billiard rooms, underground garages and other appurtenances that would be the envy of a working-class taxpayer.
Some of these luxury apartments in urban areas rent for $2,000 a month and up -- but the tenant who qualifies for Section 8 aid may be paying as little as $200.
The basic trouble with the Section 8 subsidies is simply that too many people can qualify for them. The result is that the middle class, which shoulders the bulk of the federal income tax burden, is in some cases paying for the housing of other middle-class families.
Incredibly, many Section 8 projects require only a small percentage of income-qualified tenants to be fully subsidized by the government. The rest of the apartments in the taxpayer-built-developments are rented out to families who can afford to pay higher rent. Though they earn too much to qualify for full government assistance, these tenants benefit from bargain rents made possible by HUD's generous low-interest loans to the builder.
HUD doesn't even manage to collect the modest sums it is supposed to be taking in from qualified Section 8 tenants. One recent survey showed that the department failed to get adequate verification for 64 percent of those renters who claimed to qualify for the federal subsidy.
Another audit turned up evidence that only one out of 17 HUD regional offices had bothered to check on possible duplication of subsidy payments--an easily remedied oversight that may have cost the taxpayers millions in ripoffs.
One big problem with the Section 8 program is something HUD bureaucrats haven't told Congress about: the mind-boggling future costs of completing many outlandishly expensive housing developments. The reason they haven't told Congress is that they really don't know themselves what the cost will be.
And the big reason for this potential time-bomb is that naive investors, lured into the construction business by Section 8's glittering subsidies and tax breaks, can get in over their heads. They may make it rich if they can eventually unload on a private investor the apartment complex they built with HUD's money. But they can also go broke if they miscalculate their own costs, which are often hard to compute thanks to HUD's maze of paper work.
The real tragedy of Section 8's mishandling, of course, is that the program actually does help many families who would not otherwise be able to afford decent housing. At a time when millions of Americans can't afford to buy a home, this is important.