The rent is too damn High Edition

In this edition: A ‘tsunami’ of evictions looms over the U.S. as a consequence of the coronavirus closures and recession. Executive attempts to address the crisis are laughable. A provocative policy proposal: We should consider using eminent domain on bank-owned properties to increase the amount of available low-income housing.

Personal note: RIP Gary Eckles, friend of the newsletter. I received the phone call from his daughter this week. Mr. Eckles was a longtime professor and an expert in speech and parliamentary procedure, who ranked alongside some of the greats in the filed. He was the man who recruited me to the College of William and Mary, just before a bad car accident forced him to retire early. One of the few people I have ever met whose appetite for conversation and work was insatiable, and a real disciple of truth.

Two weeks ago, Dominic Burkett, friend of the newsletter and co-founder of Marquee Consulting, explained how the impact of the coronavirus outbreak would be comparable, in its effects on higher education, to the 2008 financial crisis or the post-WWII period. In other aspects, it will be just as transformative. As if in recognition of this, the COVID-19 period has been often compared to the Great Depression, another period of historical crisis in America. Consumption has plummeted. Unemployment has rocketed. In the U.S., hospitals have struggled to find space. Stay at home issues have been ordered (or, in regrettable cases, not). Rent debts have racked up. Bailouts followed: the federally disbursed bailout funds count in the trillions; see this Committee for a Responsible Federal Budget interactive estimate for a rough picture. And the bailouts will need to keep coming.

Regardless of the comparison we settle on, this crisis will certainly increase inequality in the U.S. and across the globe. At the individual level, the direct payments to households— a throwback to the Bush era— have not been nearly enough. (Early speculations about how this may turn into Universal Basic Income (UBI) are, if they are ever to come to fruition at all, a long way off, and certainly not a salve to the current pains.) Federal unemployment benefits offered some relief in the form of the CARES Act, which is being used to pay for homes for the homeless in Alaska to paying for meals in Vermont.

Let’s turn to California, the state in which I am writing this, for a moment. The coronavirus outbreak has exaggerated the unbelievable levels of inequality in California as layoffs, furloughs, and other forms of closure prevent people from generating income, even as they continue to rack up rent debts. Assembly Bill 1436 seeks to stop rent rent/mortgage payments temporarily. It is considered the most aggressive bill on the scene, though some commentators have speculated that it might violate the Constitution. Even Assembly-person David Chiu, who introduced the bill, has had to admit it is at best a temporary stopgap. There is no level that has not been ravaged by the recession: for instance, the state budget for 2020-21, as Dan Walters from CalMatters pointed out, rests uncomfortably on billions in state financing redirected from schools.

Previous to the coronavirus-related shutterings, California had already seen staggering growth in its homeless populations and many nostrums about the housing crisis. Of the homelessness in the U.S., California accounts for about 27%, according to a Homelessness Policy Research fact sheet. Homelessness in the state increased by 16% between 2018-2019, according to that same fact sheet.

While the eviction courts in this state remain closed, there will be a severe problem upon re-opening. Several reporters and lawmakers have labelled it an impending “tsunami” of evictions. (It is always unsettling when politically created messes are described in terms of natural disasters, as if they were casus fortuitus, an “act of God.”)

The longer the country remains in lockdown, a timeline extended by an inefficacious response to the coronavirus outbreak, the more devastating the mass evictions tsunami will be. California’s courts are expected to allow eviction proceedings as early as September, following the Judicial Council of California’s 19-1 vote to not extend the eviction moratorium in the absence of legislation. Judges argued that it is not proper judicial procedure to use the courts to cover for legislative failures. Local protections across the state are either mixed or expected to screech to a halt.

Of course, this problem is nationwide. MSNBC profiled Jennifer Moon, a 46-year-old woman from Cedartown, Georgia, who missed two months rent payments ($900 total). Moon, a certified nursing assistant with pulmonary emphysema, a severe lung ailment, is a single mother with a disabled adult son. She was nearly evicted due to postponements in Georgia’s disbursement of unemployment benefits.

Moon’s story, which only just avoided a nightmare ending, will be echoed across the U.S. as gruelingly slow bureaucratic machinations slow unemployment payments and protections for renters elapse, which is not to even mention the cases not covered by those benefits. This is a stark reminder that an exposed and vibrating fault line in the country right now is inequality and, in particular, housing insecurity. Of particular concern are the rent debts, for the reasons we have already discussed.

President Donald Trump signed an executive order earlier this month that purported to address the looming eviction crisis in the U.S. The order allows officials to consider bans on evictions. It does not, importantly, actually ban evictions or allocate resources to aid renters.

Rent cancellation at the federal level, as recommended in Rep. Ilhan Omar’s (D-MN) bill, would help.

However, there is still the question of the property-owners, some of whom have complained that they have “lost control” of their properties and project that they will be forced to sell to large corporate managers. Evictions promise to be an exacting process for them, too, and refinancing offers little hope, further consolidating ownership of property to large conglomerates and other well-financed operations.

Ultimately, COVID-19’s legacy seems like it will be to advance inequality. “Solutions” to this legacy will have to address inequality.

A lot of the assistance proposals involve payments— sometimes direct— to landlords. Bailouts for property owners, in other words. This is, in effect, a call for a direct government step into housing. Whatever else the complaint of those against these measures, it probably can not be centered on the “fiscal irresponsibility” or the high cost of safety net measures, since this crisis period will necessitate high cost payments.

Once the crisis is “solved,” assuming it is, the monster of inequality will linger. More radical solutions to inequality ought to be considered. Permanent UBI, a wealth tax (something which, I add, Donald Trump called for in 1999 when he claimed a 14.25% one-off wealth tax on people/trusts worth more than $10 mil could wipe out the national debt), a looser understanding of “trusts and monopolies” and a serious period of old-fashioned trustbusting. These sorts of things should all be on the table moving forward. But what about the short-term?

A perhaps provocative policy proposal that touches on both issues to consider: California could use eminent domain to address the coming eviction crisis. The U.S. should use eminent domain to appropriate bank-owned investment properties to alleviate the housing crisis. These houses should be offered at a cut-rate price, only accounting for upkeep fees, and, therefore, expanding the availability of low-income housing available.

 

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