HUD Problems : Kemp Spurs High Hopes on Right, Left

It was “Black Monday”--Oct. 19, 1987. The Dow Jones Average had just fallen more than 500 points and a group of young stockbrokers had gathered in a Manhattan nightclub to listen to a speech by Jack Kemp, who was then a Republican presidential candidate.

Stunned by the events of the day, some people in the audience expected a stern lecture about Wall Street run amok and about the need for new brakes on the economy. They did not know Jack Kemp.

The only cure for an ailing free enterprise system is more freedom, Kemp argued. Fiercely ebullient, he talked about a “Kemp bull market” fueled by reduced taxes, lower interest rates and less government interference that would spread prosperity from Wall Street to the South Bronx and beyond.

“I want to unleash the power of entrepreneurial capitalism not only in New York City but in Liberty City, Miami, in East St. Louis and in Watts,” he said.

Now, it appears that Kemp will have a chance to test his vision of capitalism for the urban poor and do it amid the sort of crisis atmosphere that the former professional football quarterback says he relishes.

President-elect Bush has nominated him to be secretary of Housing and Urban Development, a position that could quickly make Kemp one of the most watched officials in the new Administration. Awaiting him will be the decade’s harvest of shame, the million or more homeless people who are HUD’s most conspicuous constituents.

Bush has promised a “kinder, gentler America,” and the sincerity of that promise will be gauged in large part by what HUD and other domestic agencies do in the inner cities to ease the pain of homelessness, joblessness, drug addiction, gang violence and economic stagnation during a period of acute fiscal austerity.

The nomination of Kemp, until this year a congressman for 18 years from Upstate New York, is raising expectations on both the right and the left. Conservatives remember him as one of the architects of Reaganomics and see him as one of their closest kinsmen in the Bush Administration. Many congressional liberals recall Kemp as a friendly adversary who was committed in his own way to making a better life for the urban poor.

Cranston Optimistic

California Sen. Alan Cranston is one of the optimistic Democrats. He is sponsoring a bill that calls for an expensive new federal housing program that could quickly put him at odds with Kemp. But aides say Cranston isn’t worried about that.

“He (Cranston) feels good about the nomination. He feels Kemp is someone we can work with,” said Don Campbell, a housing specialist on Cranston’s staff.

But many of the people who like Kemp have less affection for his ideas. Kemp has long championed the view that the poor need fewer handouts and more incentives to own their homes and start their own businesses.

So far, there is no serious opposition to his nomination, but there is plenty of apprehension in the air as people wait to see how Kemp responds to the most urgent question awaiting the next HUD secretary: What can be done about the growing shortage of low-income housing?

The crunch began in 1983 when the number of poverty-level families in the nation began to overtax the supply of affordable housing, according to an analysis by the U.S. Conference of Mayors.

Kemp’s voting record reflects a longstanding opposition to increased federal spending for new housing. However, people close to him caution against prejudging him from his votes.

“Some votes were cast on HUD and on housing issues out of loyalty to the Reagan Administration. I think now there are areas where you might expect a different approach,” said Mary Brunette, Kemp’s press secretary. Kemp is not granting interviews while his appointment is pending.

A nationally known real estate developer, James W. Rouse, a strong advocate of housing construction, met with Kemp this week at Cranston’s behest and came away optimistic.

“The difference between Kemp and some other conservatives is that he acknowledges that the shortage of low-income housing is a terrible problem,” Rouse said.

If his nomination is approved by Congress, Kemp will take over an agency whose declining budget and prestige have made it a ghost of its former self. Under the Reagan Administration, HUD funding for low-cost housing was cut by nearly 80%. At the same time, HUD’s principal programs of economic assistance to cities were either eliminated or severely curtailed.

Nor can the next HUD secretary expect the level of political support in Congress that heads of agencies enjoyed during the 1970s. As a result of population shifts, members of Congress from cities are now outnumbered more than 3 to 1 by suburban representatives. In 1970, urban legislators were in a majority.

Kemp would be assuming an office that has lost much of its sway over domestic policy. The man whom Kemp would succeed, Samuel R. Pierce Jr., was nicknamed Silent Sam and cast such a small shadow across official Washington that President Reagan, who appointed Pierce to the Cabinet job, once mistook him for a mayor.

Highly Visible

The voluble Kemp would surely cut a different figure. Friends and foes say that Kemp’s energy, combined with his influence in the White House and Congress, will ignite national debate on the problems of the cities.

“Kemp will generate debate. Once the debate starts, we’ll win,” said Maria Foscarinis, Washington counsel for the National Coalition for the Homeless.

Rep. William H. Gray III of Philadelphia, a leading House Democrat and vice chairman of the Congressional Black Caucus, speaks fondly of Kemp’s evangelical zeal and predicts that Kemp will turn HUD into a bully pulpit for cities.

“I used to tease Jack, ‘What you really wanted to be in life was a black preacher,’ ” Gray said.

“I’m not sure what he will be able to accomplish with the limited resources at his disposal, but he will raise the issues. The world will come to know who Jack Kemp is. His boss in the White House will know who he is. That alone will be a welcome difference.”

Kemp’s ties to black and Latino Democrats in Congress distinguish him from many other conservatives and help explain the enthusiasm some liberals in Washington have expressed about his nomination.

On this subject, Kemp is not shy about blowing his own horn.

“I take a back seat to no one in my ability to reach out to the blue-collar worker, to Hispanics, to blacks and folks at the grass-roots level,” he said on the campaign trail last year.

Rep. Robert Garcia, a Democrat who represents the South Bronx, one of New York’s most destitute neighborhoods, still speaks with amazement at the friendship that developed between him and Kemp.

“We were having a memorial for Munoz Marin (the late Luis Munoz Marin, former governor of Puerto Rico) when all of a sudden this fellow Kemp gets up to speak. I was dumbfounded. Here was a complete right-winger, getting up and speaking with such knowledge and such praise about Munoz and about Puerto Rico,” Garcia said.

“I quickly learned he was someone who was not afraid of blacks or Hispanics. We became fast friends and we started working on things. . . . They called us the odd couple.”

Urban Projects

Together, Kemp and Garcia sponsored a bill to create urban enterprise zones. The legislation was never fully enacted. It remains the subject of intense debate, and it lies at the heart of Kemp’s congressional agenda for rebuilding inner cities.

Enterprise zones take their cue from prosperous Third World cities, notably Hong Kong, where rapid economic growth has been attributed, in part, to an absence of taxes, government red tape and regulation. The Kemp-Garcia bill sought to foster a similar business climate in depressed areas of American cities.

Congress passed the bill but withheld the federal tax credits that the authors proposed. Meanwhile, several cities around the country have been able to set up enterprise zones free from some local levies and regulations.

Conservatives, including officials of the Washington-based Heritage Foundation, where Kemp is working for the time being, predict that enterprise zones will take root across the country once Congress agrees to the tax incentives that were originally intended.

Further Action Urged

But others argue that the federal government must do more. A study by the Urban Institute, a Washington foundation, of several successful enterprise zones concluded that tax abatements and deregulation were only the first steps.

“Far from creating an environment of no government and unfettered free enterprise,” the study said, successful zones have required hefty expenditures from local governments for assembling land, upgrading utilities, improving police and fire protection, providing technical assistance to businesses and training for disadvantaged employees.

However, the debate over enterprise zones pales compared to the fight over housing policy that the next HUD secretary will have to resolve.

Defenders of the Reagan Administration, which all but shut down federally subsidized housing construction, contend that in the past HUD building subsidies had amounted to a pork barrel for contractors and federal bureaucrats.

A new book by the Heritage Foundation urges HUD to stick to its current system of rent subsidies. Subsidy certificates, called vouchers, are distributed to lowincome renters who are then left to find available housing. The Heritage Foundation argues that under the voucher system more poor Americans are receiving housing assistance than ever before.

Blamed for Homelessness

Congressional liberals, on the other hand, blame the ballooning homeless population on the decision to stop subsidizing new housing. As the housing shortage worsens, the voucher system becomes more of a cruel hoax, its critics say. “It’s like giving hungry people food stamps to shop in an empty store,” said Derek Shearer, a professor of public policy at Occidental College.

A housing task force funded by Congress and chaired by James Rouse recently recommended a $3-billion construction program for low-income housing. The National Coalition for the Homeless and other groups are pushing for a $15-billion effort.

But over the various wish lists looms the federal deficit, an inky cloud that could envelop the most visionary HUD agenda.

“It may not matter who runs HUD, be it a Scrooge or a spendthrift,” said a senior staff member on one congressional budget committee.

Tribute to Kemp

In such a difficult time, it is a tribute to Kemp that both conservatives and liberals have high hopes for him.

“Kemp’s nomination is a master stroke. It shows you can have a kinder, gentler nation with tough, conservative policy,” said Stuart M. Butler, one of the contributors to the Heritage Foundation’s recent book dealing with HUD.

However, Democrat Stanley Treitel, director of a Los Angeles nonprofit corporation that builds low-income housing, believes that Kemp ultimately will side with those who say the federal government must build more housing.

Treitel knows Kemp and admired him enough to contribute to his presidential campaign.

“I’m optimistic about him because I know what kind of person he is,” Treitel said. “Once he starts traveling around the country and sees that he is dealing with people, with human lives, he will respond. It may mean he has to change his philosophy somewhat, but I think he is capable of that.”