HOUSING and Urban Development Secretary Samuel R. Pierce is caught in a dilemma. The Office of Management and Budget wants him to come up with ways to curb the soaring costs of housing assistance programs. In housing, however, it's almost impossible to stop what's already started, and the secretary has inherited commitments to very large future expenditures. The 1984 budget he is reported to be proposing tries to reconcile this conflict.
This year, federal low-income housing aid will cost about $7.5 billion. Even so, about 40 percent of lower- income renters don't get needed help. The programs are expensive partly because housing costs have soared, but also because they were designed to be a better deal for developers and landlords than for tenants. The most expensive program, Section 8 construction and rent subsidies, for example, puts insufficient pressure on developers and landlords to keep rents in line. Developers and investors also received mortgage subsidies and favorable tax treatment. Because program contracts extend from 15 years for existing units to 30 years for new construction, the government faces a future obligation of at least one-quarter of a trillion dollars.
Since new construction has proved to be very exensive, HUD plans to end most new starts -- after the well-timed spurt last month gave a needed boost to the housing indicators. Subsidies to existing units would be continued -- though perhaps at a reduced rate -- and 300,000 more households would be made eligible this year. Smaller numbers of eligibles would be added in later years, presumably working toward the goal of reaching all 6.3 million families estimated to need help.
The secretary would also make small but important changes in the terms of rent subsidiesfor existing housing. Households would receive vouchers, determined by their income, with which they could shop for housing that met minimum standards. This would give tenants an incentive to bargain with landlords for lower rents and open up a larger range of existing units to eligible tenants.
The drawback of the voucher approach is that it's not likely to stimulate new construction for lower- income families or to end the discrimination that still keeps minority families out of decent housing in some areas. If HUD continues to cut the value of subsidies, moreover, landlords would have little incentive to upgrade substandard housing. Over time, the program might simply become an income subsidy for people already in decent housing.
If the private housing market revives, however, and developers respond to the improved tax incentives for multi-family housing, lower-income families could use their vouchers to move into units vacated by those able to buy better housing. It's a trickle-down approach, plain and simple, but in the housing area it could help more people than past programs that tended to spend large sums of money for the benefit of relatively few.