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A Dangerous Precedent from the White House

In September, 2019, one chairperson, three notable economists, and two other accomplished researchers who comprise the Trump Administration Council of Economic Advisors gathered to write the official White House statement on homelessness in the United States. The Council of Economic Advisors was established under the Truman Administration in 1946, and serves as a resource for economic issues. Kevin Hasset is the current Chairman, appointed in 2017. Prior to his appointment, Hasset was the Chair in American Politics and Culture, and Director of Research in Domestic Policy at the American Enterprise Institute. He is a fiscal conservative with a history of research on tax policy, and has served as a Treasury Department advisor under the George H. W. Bush and the Bill Clinton administrations.

The finished White House statement is called “The State of Homelessness in America,” and is a rather dangerous document full of invalid assumptions and unanswered questions. It describes unexplored theoretical economic models to solve homelessness, and asserts ridiculous assumptions about why the cycles of poverty and homelessness persist. Clearly, the members of the Council of Economic Advisors (CEA) failed to conduct community-based research methodology while compiling this report, or someone would probably have pointed out a few of the fallacies.

Throughout the report, homeless is defined using the U.S. Department of Housing and Urban Development parameter. People experience homelessness if they “lack a fixed, regular, and adequate nighttime residence.” The CEA identifies four factors that cause homelessness. First, the housing market is over-regulated which drives up the cost to rent or buy a place to live. Second, some cities in warmer states make it really easy for unsheltered people to experience homelessness in public. Third, some cities offer far too many comfortable shelter options. Fourth, sometimes individuals face factors that increase their chances of experiencing homelessness.

The CEA lists over-regulation as the first cause of homelessness. In June, 2019, Trump signed an Executive Order Establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing, citing a laundry list of regulations that are supposedly the cause of expensive housing. Examples of these over-regulations include, “rent controls,” “excessive energy and water efficiency mandates,” overly burdensome wetlands and environmental regulations,” and “inordinate impact or developer fees,” to name a few.

According to the statement, over-regulation of housing increases the cost of owning a house. The CEA report identifies that, “when housing prices rise, economic theory predicts that more people will have difficulty paying rent,” which results in more homelessness. It estimates that if eleven metropolitan area housing markets were deregulated, homelessness nationwide would decrease thirteen percent. They additionally claim that deregulation would decrease homelessness by 54% in San Francisco, 40% in Los Angeles, and 23% in New York City. However, is it really over-regulation that’s causing the problem? Affordable housing specifically for occupancy of low, lower, and extremely-low income people must be built at a rate that matches or exceeds the social need; otherwise, certain populations will always experience a barrier, regardless of how many necessary regulations are erased.

The second cause is the tolerability of sleeping on the street. The unsheltered people who experience homelessness in some cities are just too darn comfortable to want to pay for a house or a stable apartment. Why live in your own place with access to a kitchen, a bathroom, and a roof, when you can cuddle up on the sidewalk or in a camp in states like California, Nevada, Washington, Oregon, and Hawaii? Some warm states are more active in their policing like Florida and Arizona, and their population of unsheltered people experiencing homelessness is lower than expected

given the temperature, home prices, and poverty rates. According to this CEA report, the warmer the climate, the more policing is necessary to reduce the rates of homelessness. On page 19, the report states that “one potential factor is differences in city ordinances and policing strategies, as these policies would directly affect the tolerability of living on the street.” However, they continue later on page 20 to state that, “policies intended to arrest or jail homeless people simply because they are homeless are inhumane and wrong,” and they cite nonpunitive measures of policing that connect people experiencing homelessness with necessary services.

This point creates a dangerous assumption that people who are experiencing unsheltered homelessness in a warm climate such as California require police intervention to connect them to social services. It removes their sovereignty as individuals, and places the blame for their situation on them. According to a 2018 California Public Radio program, 27% of unsheltered homeless adults with children in Los Angeles County were working either full-time, part-time, or seasonally. The problem, in either a warm state or a cold state, is a shortage of affordable housing. Without access to affordable housing, policing will not reduce the number of people who experience homelessness. It will only increase the number of people who are on a waitlist for social services, or who obtain a criminal record due to their experience with homelessness.

The third cause of homelessness is the right-to-shelter policies. Boston, New York, and Washington DC are subject to right-to-shelter, which guarantees a baseline standard of quality shelter availability for people experiencing homelessness. These three cities have sheltered homeless rates 2.7 times higher than any other city.

According to the CEA, they must be spending too much money on their shelter accommodations, because right-to-shelter policies are not a “cost-effective approach to ensuring people are housed.” They reference a book from 1996 called “Making Room: The Economics of Homelessness,” written by Brendan O’Flaherty, citing that, “free shelters that are hygienic, safe, and dignified enough to accomplish some of the goals they should accomplish are also attractive enough to bring in many people who would not otherwise be on the street.” Is the right-to-shelter policy really why these three cities in particular have higher populations of sheltered people experiencing homelessness? Many other socio-economic factors contribute, such as very small apartments which reduce the capacity for families to double-up; high population density and lack of parking areas, which reduce the ability for families to live in vehicles like across the West Coast; significant disparity in income levels; and of course, at least five months each year of inhospitable climate. Changing right-to-shelter policies will not reduce the number of sheltered people experiencing homelessness; it will only increase the number of unsheltered people experiencing homelessness in these cities.

Finally, the fourth CEA-cited cause of homelessness are conditions that some individuals face that increase their risk. These conditions include severe mental illness, untreated substance abuse, a criminal record and a history of incarceration, low income, and weak social connections. The report glossed over this discussion a bit, providing very little data for these variables, but referenced the need for “housing assistance programs” to support individuals in these conditions. Of particular interest is how being low-income is listed as a risk factor, yet the report provides no discussion of the American capitalist economic model of accepted wealth disparity. The richest 10% of the population controls 70% of the wealth, while the poorest 50% of the population controls only one percent. Low income is a systemic issue, not an “individual risk factor.”

When federal government committees such as the Council of Economic Advisors produce documents like this one, it obscures the issue. People experience homelessness because there is not enough affordable housing. Hamilton County faces a 40,000 unit affordable housing shortage, and we are not alone in our housing crisis. Erasing regulations and right-to-shelter policies while introducing increased policing practices won’t help. The solution is something we can accomplish in the City of Cincinnati: affordable housing.

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