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Reagan's Homeless

by Peter Dreier

to more on Reagan's shameful legacy

As some Americans mourn the death of Ronald Reagan as if they'd lost a friend, let us recall that the two-term president was no friend to America's cities or its poor.

Reagan came to office in 1981 with what he viewed as a mandate to reduce federal spending. In reality, Reagan increased federal spending by dramatically increasing the military budget while slashing domestic programs for working class Americans, particularly the poor. The result was a bloated federal deficit that mortgaged the nation's future.

Reagan's fans give him credit for restoring the nation's prosperity. But whatever economic growth occurred during the Reagan years benefitted the already well-off. The income gap between the rich and everyone else in America widened. Wages for the average worker declined. The nation's homeownership rate fell. Despite boom times for the rich, during Reagan's two terms in the White House, the poverty rate in cities grew.

Reagan owed little to urban voters, big-city mayors, black or Hispanic leaders, or labor unions -- the major advocates for metropolitan concerns. His indifference to urban problems was legendary. Early in his presidency, at a White House reception, Reagan went up to the only black member of his Cabinet, Housing and Urban Development (HUD) Secretary Samuel Pierce, and said: "How are you, Mr. Mayor? I'm glad to meet you. How are things in your city?"

Reagan not only failed to recognize his own HUD Secretary, he failed to deal with the growing corruption scandal at the agency. Indeed, during the Reagan years, HUD became a feeding trough for Republican campaign contributors. Fortunately for Reagan, the media didn't uncover the "HUD Scandal" until he left office. It resulted in the indictment and conviction of top Reagan administration officials for illegally targeting housing subsidies to politically connected developers.

Reagan also presided over the dramatic deregulation of the nation's savings-and-loan industry, which allowed S&L's to end their reliance on home mortgages and engage in an orgy of commercial real estate speculation. The result was widespread corruption and mismanagement, and the collapse of hundreds of thrift institutions. This ultimately led to a federal taxpayer bailout that cost hundreds of billions of dollars.

The Reagan years saw pervasive racial discrimination by banks, real estate agents, and landlords, but the Reagan administration simply looked the other way. Community groups uncovered blatant "redlining" by banks using federal Home Mortgage Disclosure Act information. Reagan's HUD and Justice Department had access to the same data, but failed to prosecute or sanction banks who violated the Community Reinvestment Act, which prohibits racial discrimination in lending. For example, of the 40,000 applications from banks requesting permission to expand their operations, Reagan's bank regulators denied only eight of them on CRA grounds.

Overall, federal assistance to local governments was cut 60 percent by Reagan's two terms. Reagan eliminated general revenue sharing to cities, slashed funding for public service jobs and job training, almost dismantled federally-funded legal services for the poor, cut the anti-poverty Community Development Block Grant program, and reduced funds for public transit. The only "urban" program that survived cuts was federal aid for highways, which primarily benefitted suburbs, not cities.

These cutbacks had a disastrous impact on cities with high levels of poverty and limited property tax bases, many of which depended on federal aid. In 1980, federal dollars accounted for 22 percent of big-city budgets. By the end of Reagan's second term, federal aid was only 6 percent. Reagan said that state governments would step in to fill the gap. But, facing their own fiscal traumas, they didn't. State aid constituted 16 percent of city budgets in 1980 and remained the same nine years later.

The consequences were devastating to urban schools, libraries, sanitation, police and fire protection, and municipal hospitals and clinics, many of which shut their doors during the Reagan years.

The Democrats in Congress went along with these cuts but balked at Reagan efforts to sharply trim federal aid to needy individuals. Overall funding for welfare and food stamps actually increased, but because the number of people on welfare grew, each family actually received left money.

Although many commentators recently praised Reagan for running positive campaigns with inclusive messages, Reagan's speeches appealed to the GOP's conservative base by including codewords such as "welfare queens"

Reagan is often lauded as "the great communicator," but he used his rhetorical skills to stigmatize poor people, which laid the groundwork for slashing the social safety net -- despite the fact that Reagan's own family had been rescued by New Deal anti-poverty programs during the Depression. During his stump speeches, Reagan often told the story a so-called "welfare queen" in Chicago who drove a Cadillac and had ripped off $150,000 from the government, using 80 aliases, 30 addresses, a dozen social security cards, and four fictional dead husbands. Reagan dutifully promised to roll back welfare. Journalists searched for this welfare cheat in the hopes of interviewing her, and discovered that she didn't even exist. Nevertheless, Reagan kept using the anecdote.

The imagery of "welfare cheats," which persists to this day, helped lay the groundwork for the 1996 welfare reform law, pushed by Republicans and signed by President Bill Clinton.

The most dramatic cut in domestic spending during the Reagan years was for low-income housing subsidies. Reagan appointed a housing task force dominated by politically-connected developers, landlords, and bankers. Its 1982 report called for "free and deregulated" markets as an alternative to government assistance. Reagan followed their advice. In his first year in office, Reagan halved the budget authority for public housing and Section 8 housing to about $17.5 billion. Each year thereafter, Reagan sought to eliminate federal housing assistance to the poor. Congress would not make such deep cuts, but it met Reagan more than halfway. For those few poor families lucky enough to get into subsidized housing, he raised their rents 25 percent to 30 percent of their already meager incomes.

Federal housing assistance for the poor had never been an entitlement, but the proportion of the eligible poor who received federal housing subsidies declined during the 1980s. In 1970, there were 300,000 more low-cost rental units (6.5 million) than low-income renter households (6.2 million). By 1985, the number of low-cost units had fallen to 5.6 million, and the number of low-income renter households had grown to 8.9 million, a disparity of 3.3 million units.

One of Reagan's most enduring legacies is the steep increase in homeless people. By the late 1980s, the number of homeless had swollen to 600,000 on any given night and 1.2 million over the course of a year. A growing number were Vietnam vets, children, and workers laid off by the epidemic of plant shutdowns during the 1980s.

Defending himself against charges of callousness toward the poor on Good Morning America in early 1984, Reagan uttered a classic blaming-the-victim statement.

"What we have found in this country, and maybe we're more aware of it now, " Reagan said, that "people who are sleeping on the grates, the homeless who are homeless, you might say, by choice."

During the Reagan years, tenant groups, community development corporations, and community organizations fought to limit the damage done by these cruel cutbacks. Some of the better ones strengthened their skills and gained momentum, which helped them win some important victories later on, when Bill Clinton was in the White House, such as a significant expansion of the Earned Income Tax Credit, stronger enforcement of the CRA, and others. But it has been an uphill battle. Funding for low-income housing, legal services, job training and other programs have never been restored to pre-Reagan levels, and the widening disparities between the rich and the rest persists. America still hasn't fully recovered from the harm done by Reagan's policies.

President George W. Bush, who often claims Reagan's mantle, recently proposed cutting one-third of the Section 8 housing vouchers -- a lifeline against homelessness for 2 million poor families. In this and many other ways, the Reagan revolution toward the cities continues.

We've already named a major airport, schools and highways after Ronald Reagan and since his death, some people have suggested other monuments to celebrate his memory. But perhaps a more fitting tribute to his legacy would be for each American city to name a park bench - where at least one homeless person sleeps every night - in honor of our 40th president.

Peter Dreier is the E.P. Clapp Distinguished Professor of Politics and director of the Urban & Environmental Policy program at Occidental College in Los Angeles. A second edition of his book, Place Matters: Metropolitics for the 21st Century (coauthored with John Mollenkopf and Todd Swanstrom) will be published by University Press of Kansas in December. He is also coauthor of The Next LA: The Struggle for a Livable City, which the University of California Press will publish later this year

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Albion Monitor June 11, 2004 (

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