Are you struggling to pay your rent or your mortgage? If so, you’re not alone. Almost one-third of all American households fall into the category of “cost burdened” when it comes to housing. That means they are spending more than the recommended amount of 30 percent of their income on rent or mortgage payments.
To be more specific, among those working-class households earning between $30,000 and $44,999 per year, 42.6 percent of them are housing cost-burdened, and in many major metropolitan areas—where the population is disproportionately Americans of color—the percentage is well over half (Los Angeles: 75 percent, Miami: 66 percent, San Diego: 71 percent, New York-New Jersey-Philadelphia: 72 percent, Honolulu: 68 percent, San Francisco-Oakland: 70 percent, San Jose: 76 percent, Boston: 65 percent). Then there’s the people who can’t afford housing at all, and so are either homeless or have been forced to find some other living arrangement necessitated by the high cost of housing.
Something has to be done. Massachusetts Sen. Elizabeth Warren has put forth a plan to invest half a trillion dollars over 10 years to make housing more affordable, and she pays for it by reforming the estate tax to bring in more revenue—changes that would affect only approximately the richest 10,000 households. The plan thus won’t add a dime to the deficit. But, for anyone wondering, this is no race-blind plan. Warren approaches this problem in a way that specifically addresses racial discrimination in the housing market.
Here’s what Warren had to say about her plan:
“Housing is the biggest expense for most working families - and costs for everyone, everywhere are skyrocketing. Rural housing is falling apart and decades of discrimination has excluded generations of Black families from home ownership. My bill would cut rents by 10% and give families in urban, rural, and suburban communities more economic security," said Senator Warren. "This proposal will attack the rising cost of housing by helping to roll back needlessly restrictive local zoning rules and taking down other barriers that keep American families from living in neighborhoods with good jobs and good schools. After bungling housing policy for decades, it's time for Congress to make things right and pass my bill.”
From her press release, here are the elements of the plan:
- Increase federal funding to build or rehabilitate 3.2 million new housing units for lower-income and middle-class families and bring down rents by 10% in urban, suburban and rural areas.
- Put $10 billion into a new competitive grant program that communities can use to build infrastructure, parks, roads, or schools - as long as local governments reform land use rules that make construction of new affordable housing needlessly more expensive.
- Provide down payment grants to first-time homebuyers living in lower-income, formerly redlined or officially segregated areas to allow those families to start building home equity and close the racial wealth gap.
- Invest $2 billion to support borrowers whose wealth was destroyed in the 2008 financial crisis and who still have negative equity on their mortgages.
- Expand the Fair Housing Act to prohibit housing discrimination on the basis of sexual orientation, gender identity, marital status, and source of income, including government assistance.
- Strengthen the Community Reinvestment Act to cover more financial institutions, promote investment in activities that help poor and middle-class communities, and strengthen sanctions against institutions that fail to follow the rules.
- Make it easier to use housing vouchers in neighborhoods with good schools and good jobs and allows tribal housing authorities to administer their own vouchers programs.
A report done by Moody’s Analytics estimated that the plan would result in the creation of just over 3 million additional housing units defined as “affordable”—and would also create just under 1.5 million jobs—over the course of 10 years.
Warren went into more detail in an op-ed piece she wrote about the plan (we’ll get back to where it was published in a bit). She began by talking about the 2008 economic crash—which you’ll remember followed years of Republican control of the White House and both houses of Congress. She presented the plight of a particular family, the Smiths of Chicago. Michael Smith had worked at DHL until his job disappeared in that year. Warren continued:
That was bad enough, but a lousy, complex mortgage made the situation even worse. Michael told me that, in hindsight, he realized he’d been scammed when his bank had talked him into refinancing his old mortgage. The subsequent foreclosure turned their lives upside down. They lost their home and moved into a rental nearby. Their $17,000 down payment disappeared. Their credit rating was trashed. Their financial lives were destroyed.
The failure of government regulators to stop mortgage lenders from cheating millions of families like Michael’s is disgraceful. But it isn’t the only government failure—far from it. In 1935, the federal government officially adopted a policy of redlining, a practice that effectively denied home mortgages to families of color, shutting them out of the opportunity to build wealth.
[snip] It’s time for the federal government to start righting some of the wrongs that the federal government itself caused. Last week, I introduced the American Housing and Economic Mobility Act. My bill is designed to reduce housing costs across the country for both renters and buyers, urban and rural, and one feature focused on grants to first-time home buyers (or those who have not owned a home in three or more years) living in formerly redlined or officially segregated areas. The bill also proposes investing $2 billion in assistance to families that are still suffering from the financial crisis, and it would help bring more private capital into low- and middle- income communities by strengthening the Community Reinvestment Act. Together, these provisions would be a meaningful step toward reversing the after effects of decades of discriminatory federal government policy.
Look at what Warren did here. She began with the 2008 crisis: classic Occupy Wall Street, the 99 percent vs. the 1 percent stuff that stood at the center of the Bernie Sanders campaign. But she then went directly into redlining and not only did she mention it in this piece, but her bill puts money specifically into combating the effects of redlining (described most famously by Ta-Nehisi Coates) that are still being felt today. You can read Coates’ whole treatise, but I’d like to share one quotation he included, because it sums up the despicable nature of the policy so effectively:
“A government offering such bounty to builders and lenders could have required compliance with a nondiscrimination policy,” Charles Abrams, the urban-studies expert who helped create the New York City Housing Authority, wrote in 1955. “Instead, the FHA adopted a racial policy that could well have been culled from the Nuremberg laws [Note: the Nazi laws that provided the basis for depriving the Jewish citizens of Germany of all their rights].”
Warren put her money where her mouth is on this matter, demonstrating her understanding of how race and class have intersected on housing. She could not have written a bill that specifically set money aside for people on the basis of their race or ethnicity. Doing so would likely not pass constitutional muster. What Warren has done here is focus a portion of the funds on a specifically identifiable injustice, and seeks to remedy those harmed by that injustice. It is targeted in a way that is morally unimpeachable. Not that opponents won’t try, of course.
The bill is also inclusive. It appropriates funds for urban, suburban, and rural areas—the latter of which are disproportionately white. It’s not an ‘urban housing’ bill, but instead is a bill that would benefit all segments of the population. However, it does so in a way that does not ignore the specific impact racial discrimination has had. Additionally, the bill includes anti-discrimination measures that will help LGBTQ Americans, which is why the National LGBTQ Task Force Action Fund issued a statement in support. Furthermore, by reforming the provisions of the Community Reinvestment Act, Warren’s plan also strengthens the ability of regulators to prevent and punish present-day racial discrimination in housing.
I said we’d discuss where Warren chose to publish her piece, and that’s because of what her choice says about her political aims, and how she sees the Democratic landscape heading into 2020. She published the piece in The Root, which is arguably the leading African-American political forum. That decision, on top of the content of the bill itself, strongly indicates that Warren will take steps to avoid the fate that befell Bernie Sanders in 2016, namely being painted as focused primarily on economic inequality to the relative exclusion of racial inequality.
Whatever one thinks of that charge, the data makes clear that African Americans voted more for Hillary Clinton than for Sanders—although that disparity was much greater among older black voters. Warren is making a real effort to show that she does not take a ‘class, not race’ approach to solving America’s problems.
Any candidate who wants to lead the Democratic Party and take on Donald Trump (presumably) in 2020 must show a clear understanding of intersectionality, or how economic inequality interacts with other forms of discrimination in ways that produce different effects for different communities. Here we see Sen. Warren making an important statement that she gets it.
Ian Reifowitz is the author of Obama’s America: A Transformative Vision of Our National Identity (Potomac Books).