After the riots, fires, and looting in Los Angeles, both Jack Kemp, secretary for Housing and Urban Development, and Jesse Jackson blamed the federal government—not for failing to send in the military, but for not providing enough social and economic therapy. Here is Kemp’s analysis, on the MacNeil/Lehrer Newshour, of why blacks and Hispanics burned down large parts of Los Angeles, killed 58 people, and destroyed ten thousand buildings: “When an economy begins to contract, when the pie is shrinking, when people are out of work, when a father cannot put bread on the table for his children, when families don’t have a stake in a neighborhood and live on the welfare plantation . . . you get hopelessness and despair. Now, I’m not excusing rioting or killing or plundering property . . . “
Set aside the doubtful contention that fathers in the inner city have no bread to feed their children (a classic justification for theft). A recession is economy-wide, and many people lose their jobs. Most are not moved to murder. By blaming rioting, killing, and plundering on a shrinking economy, he is saying people do not have the free will to resist the temptation to act immorally. It follows that he is making excuses.
While Jackson wants to expand traditional welfare programs, Kemp says he has some better ideas: “There are people who are frustrated and [without] hope—have a despair about their lives and this is happening too often to those young teenagers who are turning to the streets. And we’ve got to change their attitude and their expectations about the future. And the only way to do that, in my view, is good education, more jobs for the inner cities, a better tax base for our cities, and investing in ownership of property in our cities.”
That “solution” sounds strangely like traditional welfare. True, he wants the poor to own property. But what Great Society liberal has ever opposed that? The question is whose property the poor are supposed to own: property they’ve earned, or property that has been confiscated from the middle class and redistributed?
At a time when most of the middle class can’t buy homes, Kemp wants taxpayers to give homes, gratis, to inner-city residents. Making monthly payments to a landlord apparently doesn’t give people a “stake in their community.” Somehow, we are supposed to believe that making monthly payments to a government mortgage company does. But until social science establishes a causal link between being a renter and being a felon, Kemp’s program is of questionable value.
His idea of home ownership might not be objectionable if existing public housing were sold to the poor at the same rate it cost taxpayers to build them. That’s what Samuel T. Pierce, Kemp’s predecessor at HUD, was doing before being run out of town. But Kemp’s housing sales have been far more costly. For example, converting the Kennelworth-Parkside project in Washington, D. C. to “tenant-owned” properties cost taxpayers about $170,000 per unit. And for each unit sold, the law says, another government-owned unit must be built.
Oddly, Kemp’s program does not really institute formal ownership at all. The few who make it through HUD’s red tape to take possession of their units are not allowed to resell homes on the market. How is that different from renting? Where’s the incentive to take care of the property? Thank goodness Congress granted HUD’s HOPE program only one third of the $1 billion Kemp had asked for in fiscal year 1993.
When Kemp complains the government “prevents poor people from saving,” he means he wants to raise the ceiling on assets held by welfare recipients. He argues that people on welfare should be able to save up to $10,000—ten times the amount allowed under present law—and still receive checks from Uncle Sam. But that would remove an important incentive to get off welfare, which is the desire to earn and save more income. In fact, removing the ceiling on income would make millions of new people eligible and lead to a vast expansion of welfare rolls.
Primary among Kemp’s ideas is the enterprise zone, which designates sections of cities for low taxes and special grants to promote new businesses. If Congress passes his legislation, he promises that inner-city poor will open new businesses, and that this will give them a “stake in their communities.” The trouble for Kemp is that Los Angeles already has an enterprise zone program, according to a 1990 article in Plants, Sites, and Parks magazine. And the zone covers the South-Central Los Angeles area that the mobs reduced to ash. For years, the state of California offered generous incentives for investment in zoned areas. This included tax credits of $19,000 per new employee, sales tax credits on new machinery up to $1.2 million, tax incentives for lenders who make business loans, 15-year carry-over of net operating losses and depreciation, subsidized rents, and marketing assistance. California’s zone program was partly responsible for creating new minority-owned businesses in Los Angeles’s poor areas, but the beneficiaries were not the inner-city blacks that Mr. Kemp wants to lift out of poverty. They were industrious Korean immigrants who probably would have opened businesses anyway. Eight hundred of their new enterprises were burned to the ground.
Given past experience at the state level, moreover, the beneficiaries of enterprise zone programs have been businesses that decide to relocate to better tax environments. But if private property cannot be secured against vandals, and insurance companies are reluctant to take on high risks, even zero taxes will fail to convince major businesses to move to high-crime areas.
Finally, what is giving the poor “a stake in their community” really all about? They already have “a stake in their community”: they live there. If that doesn’t suffice, it’s hard to know what would.
Perhaps Kemp should spend less time granting interviews and more time managing HUD, the job the taxpayers pay him to do. A recent audit conducted by the General Accounting Office found that the agency has lost track of more than $1 billion. This is the sixth audit in the three years Mr. Kemp has run HUD that has warned of waste, mismanagement, and possible fraud. An audit conducted by Price Waterhouse last year was so negative that he still refuses to release it publicly. Why should Kemp be counted on to save our cities from further destruction when he can’t get his own agency’s financial house in order?
Jack Kemp has become the Jesse Jackson of the right, pushing huge federal government programs for problems that are fundamentally local, cultural, and moral. On the other hand, the financial and political base for his 1996 presidential bid is coming along nicely.