Examining the Growth of the Welfare State, Part II

House Subcommittee on Health Care and Financial Services

2025-05-07

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Summary

This hearing of the Subcommittee on Healthcare and Financial Services focused on federal welfare programs, particularly housing assistance, and aimed to examine their effectiveness and alleged disincentives within the current system. <citation data-start-id="1.1" data-end-id="1.2"></citation> The discussion featured testimonies from experts, including former HUD Secretary Dr. Ben Carson, and explored various aspects of social safety nets. <citation data-start-id="1.21" data-end-id="1.22"></citation>

Themes

Disincentives in Welfare and Housing Programs

Many participants highlighted how existing federal welfare and housing assistance programs, such as Section 8, inadvertently discourage marriage and active employment. <citation data-start-id="1.17" data-end-id="1.19"></citation><citation data-id="1.27"></citation> The "marriage penalty" was a significant point of concern, where combining incomes upon marriage could lead to a reduction or loss of benefits, or increased rental payments. <citation data-start-id="1.28" data-end-id="1.29"></citation><citation data-start-id="5.33" data-end-id="5.38"></citation> This structure is argued to foster dependency and impede economic mobility, with the average Section 8 tenant spending a decade in the program. <citation data-start-id="1.41" data-end-id="1.42"></citation><citation data-id="5.32"></citation> Dr. Ben Carson noted that public policy, even unintentionally, can create barriers to family formation and self-sufficiency. <citation data-start-id="5.29" data-end-id="5.32"></citation> To counter this, Mr. Howard Husock proposed implementing time limits for non-elderly, non-disabled tenants in housing programs, similar to those in TANF, to encourage upward mobility. <citation data-start-id="15.23" data-end-id="15.24"></citation> He also suggested an escrow system for increased income rather than higher rent, to promote homeownership. <citation data-start-id="15.30" data-end-id="15.31"></citation> The chairman also pointed out that the earned income tax credit similarly discourages work and marriage. <citation data-start-id="18.4" data-end-id="18.6"></citation>

Critiques of the Low-Income Housing Tax Credit (LIHTC) Program

The LIHTC program faced substantial criticism for its inefficiency and complexity. <citation data-start-id="7.4" data-end-id="7.5"></citation> Chris Edwards of the Cato Institute explained that the program primarily benefits developers and investors rather than the intended low-income tenants, due to intricate financing and inflated construction costs. <citation data-start-id="7.11" data-end-id="7.13"></citation><citation data-start-id="7.26" data-end-id="7.28"></citation> He highlighted that LIHTC apartment buildings are significantly more expensive to construct than market-based alternatives and that a large portion of the subsidies goes to stakeholders other than tenants. <citation data-start-id="7.11" data-end-id="7.12"></citation><citation data-start-id="7.28" data-end-id="7.28"></citation> Edwards advocated for deregulation, tax reforms, and reduced property taxes on apartment buildings as more effective ways to boost affordable housing supply. <citation data-start-id="7.34" data-end-id="7.36"></citation><citation data-start-id="7.40" data-end-id="7.40"></citation> Concerns were also raised about instances of fraud and corruption linked to the LIHTC program. <citation data-start-id="7.19" data-end-id="7.24"></citation>

Defense of Social Safety Net Programs and Counterarguments

Ranking Member Brian Timothy Jack offered a strong defense of social safety net programs, sharing his personal experience as a beneficiary who was lifted out of poverty. <citation data-start-id="2.2" data-end-id="2.4"></citation><citation data-id="2.15"></citation> He asserted that these programs are crucial for stabilizing families and promoting economic mobility, and warned that proposed budget cuts would cause severe harm to constituents. <citation data-start-id="2.3" data-end-id="2.4"></citation><citation data-start-id="2.7" data-end-id="2.10"></citation> Mr. Indivar Dutta-Gupta echoed this sentiment, viewing basic needs programs as essential social protections and investments that provide significant immediate and long-term benefits, particularly for children. <citation data-start-id="17.4" data-end-id="17.5"></citation><citation data-start-id="17.11" data-end-id="17.16"></citation> Democratic members expressed strong opposition to proposed cuts to programs like SNAP and Medicaid, arguing these measures would harm millions and primarily serve to fund tax breaks for the wealthy. <citation data-start-id="2.24" data-end-id="2.28"></citation><citation data-start-id="2.29" data-end-id="2.31"></citation> They emphasized that most recipients are striving to improve their lives and that cuts would exacerbate issues like mental health crises and homelessness. <citation data-start-id="2.12" data-end-id="2.13"></citation><citation data-start-id="76.25" data-end-id="76.35"></citation>

Role of Government in Housing and Community Development

Republican members and Dr. Carson voiced concerns about excessive government involvement in housing, citing historical inefficiencies and potential erosion of individual dignity. <citation data-start-id="5.53" data-end-id="5.55"></citation> They specifically criticized the "Affirmative Further Fair Housing (AFFH) rule" for imposing federal control over local zoning and incurring substantial costs. <citation data-start-id="66.6" data-end-id="66.9"></citation> Dr. Carson argued for communities to flourish organically through a sense of common good, rather than being dictated by government regulations. <citation data-start-id="67.1" data-end-id="67.16"></citation> Mr. Howard Husock suggested privatizing the management of housing authorities due to documented corruption and incompetence, advocating for the involvement of private sector expertise. <citation data-start-id="71.1" data-end-id="71.12"></citation> Conversely, Mr. Indivar Dutta-Gupta argued that basic needs programs should be seen as crucial investments in opportunity, especially for families and children. <citation data-start-id="17.11" data-end-id="17.12"></citation>

Tone of the Meeting

The meeting was characterized by a contentious and deeply polarized tone. <citation data-id="2.2"></citation><citation data-id="2.5"></citation> Republican members and their invited witnesses primarily advocated for reforms to reduce dependency and what they termed the "growing welfare state," frequently pointing to disincentives for marriage and work. <citation data-start-id="1.17" data-end-id="1.20"></citation><citation data-start-id="5.29" data-end-id="5.33"></citation> In contrast, Democratic members strongly opposed proposed budget cuts, highlighting the critical role of social safety net programs in poverty alleviation and human well-being, often through emotional personal testimonies. <citation data-start-id="2.2" data-end-id="2.4"></citation><citation data-start-id="2.15" data-end-id="2.17"></citation><citation data-start-id="76.4" data-end-id="76.10"></citation> The debate underscored a clear ideological division regarding the purpose and future of these programs, with both sides making passionate appeals. <citation data-start-id="2.29" data-end-id="2.32"></citation><citation data-start-id="85.19" data-end-id="85.20"></citation> There were notable disagreements on facts and policy interpretations, contributing to the overall tension. <citation data-start-id="45.5" data-end-id="45.6"></citation><citation data-start-id="50.1" data-end-id="50.1"></citation>

Participants

Transcript

The Honorable Ben Carson, M.D.

Well, one more time, we're about to begin a very interesting hearing on the Subcommittee on Healthcare and Financial Services. And we're going to have a lot of people here, but there are other hearings going on as well today. I got two other hearings today. But what are we here? We're about... Four minutes late. We'll wait one more minute and then we'll start because I think that's a good idea. I'm easy going. This hearing on the Subcommittee on Healthcare and Financial Services will come to order. Welcome, everyone. Without objection, I may declare a recess at any time. I recognize myself for the purpose of making an opening statement. For the people in the room today, I'll point out there are a lot of other hearings going on, so a lot of the congressmen are gonna be jumping in and out, which I don't like, but that's what we've got. Okay. At our last hearing, we talked about some of the disincentives that happened because of our welfare program. And the fact is, the federal welfare system, I don't think they're talking about food stamps, low-income housing, Medicaid, Pell Grants, everything, is filled with horrible incentives and disincentives. It certainly discourages marriage, and I know there's a kind of a Marxist-y 60s sort of thing that kind of makes fun of the old-fashioned leave it to be or family. We have a program that discourages marriage and hard work, and at the same time, encouraging dependency.

The Honorable Ben Carson, M.D.

Cost taxpayers more than a trillion dollars annually while failing to lift people out of poverty. Today's hearing, and this is kind of the second one we're taking up this topic, will provide an opportunity to hear from three witnesses who are experts in federal rental assistance programs. Dr. Ben Carson, the former secretary of HUD, Good friend of mine. These programs are textbook examples of good intentions gone awry. I don't know they're even good intentions. I can't see how you could put programs like this out there not knowing what had happened. For example, Section 8 housing vouchers and public housing programs contain marriage penalties, making it foolish to get married. In many cases, individuals risk losing the Section 8 voucher if they marry somebody with a even average income, and their combined threshold brings them out of eligibility for those programs. As we discussed in part one, marriage and a strong family unit are the well-established way to get people out of poverty, and not just out of poverty. We know that You're going to be raising children, less likely to commit crime, more likely to do well at school, less likely to have drug problems, less likely to have depression, anxiety, other disorders. Yet our current welfare system, including housing assistance payments, discourages marriage. It's not hard to find people who say, I can't work more, I can't get married, or I'll lose my benefits. Due partially to these penalties, the number of children born to unmarried women has skyrocketed. In 1960, 5% of the children were born to unmarried women, 5%. We're now at 40%. And of course, it's not coincidence that things began to shoot up after Lyndon Johnson in the 60s declared war on marriage.

The Honorable Ben Carson, M.D.

Like marriage, the current system discourages rental assistant recipients from seeking employment, higher wages, or overtime if the increased income pushes them out of eligibility. We are fostering a cycle of dependency and government assistance. The average Section 8 tenant spends 10 years on the program and the average public housing tenant 12 years. Welfare also benefits the middle man and administrative state more than the low income Americans it purports to be for. Section 42 low income housing tax programs give the developers tax incentives to build affordable housing for low and moderate income people. Yet the program's complicated design mostly benefits developers, law firms, accounting firms, and state bureaucrats. I don't know who thought that thing up, but man, that's a mess. Middlemen and administrators can take advantage of Section 8 in public housing as well. The Milwaukee Housing Authority reported in January that its leadership misused $2.8 million federal dollars intended for the tenants to pay its staff. The problem had apparently been ongoing since 2019, but wasn't caught for six years.

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