Privatizing public housing--Obama's "Shock Doctrine" march to the right of Bush

by: Paul Rosenberg

Sat May 22, 2010 at 12:00

The Bush Administration jumped on Katrina as an opportunity to advance their privatization agenda, with two major targets: public schools and public housing.  As Open Left's focus on education has shown (see Jeff's regular Sunday "Left Ed" diaries at 4 PM), Obama's education agenda has actually expanded Bush's attack on public education. Now, as David Kaib highlights in quick hits, Obama is attack public housing as well.

There is a need for money to invest in public housing, and it would have been a perfect fit within a decently-conceived stimulus package.  But of course, there wasn't room for it because of all the tax cuts and its deliberate small size.  So now, privatization is the answer, as if the private housing market hadn't already done enough damage to last the rest of the century. David links to a Dkos diary by George Lakoff. "Below the Radar: HUD is Trying to Privatize and Mortgage Off All of America's Public Housing"  which begins thus:

The Obama Administration's move to the right is about to give conservatives a victory they could not have anticipated, even under Bush. HUD, under Obama, submitted legislation called PETRA to Congress that would result in the privatization of all public housing in America.

The new owners would charge ten percent above market rates to impoverished tenants, money that would be mostly paid by the US government (you and me, the taxpayers). To maintain the property, the new owners would take out a mortgage for building repair and maintenance (like a home equity loan), with no cap on interest rates.

With rents set above market rates, the mortgage risk would be attractive to banks. Either they make a huge profit on the mortgages paid for by the government. Or if the government lowers what it will pay for rents, the property goes into foreclosure. The banks get it and can sell it off to developers.

Sooner or later, the housing budget will be cut back and such foreclosures will happen. The structure of the proposal and the realities of Washington make it a virtual certainty.

The banks and developers make a fortune, with the taxpayers paying for it. The public loses its public housing property. The impoverished tenants lose their apartments, or have their rents go way up if they are forced into the private market. Homelessness increases. Government gets smaller. The banks and developers win. It is a Bank Bonanza! The poor and the public lose.

And a precedent is set. The government can privatize any public property: Schools, libraries, national parks, federal buildings - just as has begun to happen in California, where the right-wing governor has started to auction off state property and has even suggested selling off the Supreme Court building.

The rich will get richer, the poor and public get poorer. And the very idea of the public good withers.

And Lakoff quotes from PETRA the statement that bill's intent is to:

provide the opportunity for public housing agencies and private owners to convert from current forms of rental assistance under a variety of programs to long-term, property-based contracts that will enhance market-based discipline and enable owners to sustain operations and leverage private financing to address immediate and long-term capital needs and implement energy-efficiency improvements.