House Panel Votes to Cut All Funds for Scandal-Plagued HUD Program

Reacting to scandals at the Department of Housing and Urban Development, a key House appropriations subcommittee has voted to eliminate all funds on Oct. 1 for a controversial low-income rent subsidy program, it was disclosed Wednesday.

The panel “zeroed out” money for the troubled Section 8 moderate rehabilitation program, which got $323 million in federal funding for the current fiscal year. The cut was voted Tuesday despite Housing Secretary Jack Kemp’s attempt to revise the program to eliminate influence peddling to obtain the grants.

But testimony before congressional committees in recent weeks has dramatized how such well-known Republicans as former Interior Secretary James G. Watt and a half-dozen former HUD officials have cashed in on political connections as consultants to benefit from a program intended to help poor people.

More Housing Construction

The subcommittee in charge of housing appropriations also decided to use some of the money that otherwise would go to the moderate rehabilitation, or “Mod Rehab,” program to authorize construction of 7,500 public housing units in the next fiscal year--an increase of 2,500 from the current figure.

In another move to block favoritism in HUD awards, the subcommittee adopted a requirement that all deputy assistant secretaries at the agency be career civil servants and not political appointees.

Kemp was told of the developments as he testified Wednesday before the housing subcommittee of the Housing, Banking and Urban Affairs Committee. He objected to the reduction in the number of political appointees but told the panel that he had taken a separate step toward limiting the power of political appointees once they leave office.

More specifically, he said that he had asked the Office of Government Ethics to bar all top-level HUD employees from lobbying his department for at least a year after they leave their jobs.

Kemp reacted calmly to the elimination of subsidy funds for the Mod Rehab program. However, he objected strongly to the subcommittee’s action requiring career employees in the deputy assistant secretary posts.

The Bush Administration did not ask for any funds for Mod Rehab, which was manipulated by HUD officials in the Ronald Reagan Administration, according to congressional testimony.

Rep. Henry B. Gonzalez (D-Tex.), chairman of the housing subcommittee, told Kemp at Wednesday’s hearing of the appropriations panel’s decision to chop all funds for the Mod Rehab program and the civil service requirement.

‘News to All of Us’

“It’s news to all of us,” Kemp said. “I would be terribly disappointed if deputy assistant secretaries at HUD were required to be career positions. . . . It would limit what the (HUD) secretary could do. . . . It’s a pernicious idea.”

Rep. Marge Roukema (R-N.J) asked for Kemp’s reaction to zero funding for the rehabilitation program.

“It wasn’t in the budget request that came from HUD,” Kemp replied. “We thought we could negotiate a better program with the Congress.”

While Kemp has said that he did not want to use the recent scandals as a subterfuge to eliminate housing programs intended for the poor, he has criticized the Mod Rehab program on grounds that it was too costly and gave excessive profits to developers.

If the appropriations subcommittee’s decision is upheld in the full committee and in the House itself, HUD would be able to carry over funds from the current fiscal year that were not spent before it ends on Sept. 30.

Kemp canceled applications under the program and ordered new applications by public housing agencies in cities and states to be selected under a new formula designed to eliminate any possibility of political favoritism.

In a June 2 announcement, however, he said that the program was “back on track” with awards to be made before Sept. 30, using the new criteria. While Kemp said that there was still about $225 million left to spend, a spokesman for the House appropriations subcommittee that deals with HUD’s budget said the amount is only $170 million.

Kemp’s steps on lobbying by former officials of the department might help bolster confidence in HUD.

Departing from the practice of his much-criticized predecessor, Samuel R. Pierce Jr., Kemp proposed to add 54 key political and career positions to the list of those subject to the post-employment curbs.

In the past, these 54 posts were exempted by Pierce from rules that forbid senior officials from lobbying HUD for one year on any matter and for two years on any matter that they were substantially and personally involved in deciding.

Congressional testimony has shown that many top officials left HUD and became consultants on housing issues, lobbying their former colleagues for favorable decisions on multimillion-dollar grants.

In a statement, Kemp called it important to expand coverage of the lobbying restrictions “if we are to make it clear to the American public that the revolving door at HUD has been closed.”