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A person's home is his subsidy

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By John Stossel
Saturday, Jan. 12, 2013, 8:56 p.m.
 

The Obama administration now proposes to spend millions more on handouts, despite ample evidence of their perverse effects.

Shaun Donovan, secretary of the Department of Housing and Urban Development, says, “The single most important thing HUD does is provide rental assistance to America's most vulnerable families — and the Obama administration is proposing bold steps to meet their needs.”

In this case, HUD wants to spend millions more to renew Section 8 housing vouchers that help poor people pay rent.

The Section 8 program ballooned during the '90s to “solve” a previous government failure: crime-ridden public housing. Rent vouchers allow the feds to move tenants from failed projects into private residencies. There, poor people would learn good habits from middle-class people.

As always, there were unintended consequences.

“On paper, Section 8 seems like it should be successful,” says Donald Gobin, a Section 8 landlord in New Hampshire. “But unless tenants have some unusual fire in their belly, the program hinders upward mobility.”

Gobin complains that his tenants are allowed to use Section 8 subsidies for an unlimited amount of time. There is no work requirement. Recipients can become comfortably dependent on government assistance.

In Gobin's more than 30 years of renting to Section 8 tenants, he has seen only one break free of the program. Most recipients stay on Section 8 their entire lives. They use it as a permanent crutch.

Section 8 handouts are meant to be generous enough that tenants may afford a home defined by HUD as decent, safe and sanitary. In its wisdom, the bureaucracy has ruled that “decent, safe and sanitary” may require subsidies as high as $2,200 per month. Because of that, Section 8 tenants often get to live in nicer places than those who pay their own way.

Kevin Spaulding is an MIT graduate in Boston who works long hours as an engineer and struggles to cover his rent and student loans. Yet all around him, he says, he sees people who don't work but live better than he does.

The subsidies are attractive — they cover 70 to 100 percent of rent and utilities. If Section 8 recipients accumulate money or start to make more, they lose their subsidy.

“Is there a real incentive for the tenants to go to work? No!” says Gobin. “They have a relatively nice house and do not have to pay for it.”

Once people become reliant on Section 8 assistance, many do everything in their power to keep it. Some game the system by working under the table so that they do not lose the subsidy. One of Gobin's lifetime Section 8 tenants started a cooking website. She made considerable money from it, so she went to great lengths to hide the site from her case manager, running it under a different name.

“Here's a lady who could definitely work. She actually showed me how to get benefits and play the system,” says Gobin.

Despite $20 billion spent on the program last year, demand for more rental assistance remains strong. There is a long waiting list to receive Section 8 housing in every state. In New York City alone, 120,000 families wait.

America will soon be $17 trillion in debt, and our biggest federal expense is income transfers. We don't help the needy by encouraging dependency.

John Stossel is host of “Stossel” on the Fox Business Network. He's the author of “No They Can't: Why Government Fails, but Individuals Succeed.”

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