Urban Decay Began With Ronald Reagan
Federal assistance to local governments was cut by 60% by the end of Reagan’s presidency
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As Peter Dreier so elequently wrote, “Reagan came to office in 1981 with a mandate to reduce federal spending. In reality, he increased it through the escalating military budget while slashing funds for domestic programs that assisted working-class Americans, particularly the poor,” Peter Dreier, May 1, 2004, in Shelterforce.
“Reagan also presided over the dramatic deregulation of the nation’s savings and loan industry, allowing S&Ls to end their reliance on home mortgages and engage in an orgy of commercial real estate speculation. The result was widespread corruption, mismanagement and the collapse of hundreds of thrift institutions that ultimately led to a taxpayer bailout that cost hundreds of billions of dollars.
“By the end of Reagan’s term in office, federal assistance to local governments had been cut by 60 percent. 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 the cuts was federal aid for highways—which primarily benefited suburbs, not cities.”
If the current lack of housing has been decades in the making, it will require an extraordinary reallocation of resources to catch up. A good place to start would be tax reform.”
The topic on KQED’s Forum on September 23, 2024 “How Should Progressive Cities Face Their Urban Crises?” hosted by Alexis Madrigal. The participants were Alicia John-Baptiste, president and CEO, SPUR; Jessica Trounstine, professor of political science, Vanderbilt University and author of “Segregation by Design: Local Politics and Inequality in American Cities” and Nithya Raman, urban planner, member of LA City Council, representing District 4.
The two problems that were foremost, not surprisingly, were housing and homelessness.
Alicia John-Baptiste referenced the fact that we have not produced enough housing and that funding was stripped from housing in the 1980s, which has helped create the current scarcity. Yes, something happened in the 1980s. She hits the nail on the head when she says the most challenging homeless cases to help are the long-term ones and that we need to invest more in prevention. Too true! We know that even one week of being homeless can result in mental illness and addiction. And that is the most essential point: how do you prevent people from becoming “unsheltered?” People seek relief from the misery of living on the streets and become vulnerable to alcohol and drug abuse. They are not criminals; they just don’t have a place to live.
Nithya Raman affirmed that these housing policies have been in place for “a very long time” and that we must look at the history and what has brought us to this point. Jessica Trounstine noted that housing problems result from purposeful actions; the government created the housing problem intentionally. I agree, and I thank her for that observation. That is a story that deserves a second look. However, the history of housing and homelessness was not the program’s focus, so it’s understandable that none of the participants wanted to delve too deeply.
Several things going on over the last 50 years are relevant to the discussion, such as the rich getting richer and the poor getting poorer. The rich acquired more houses, and the poor, in many instances, lost their homes during the subprime mortgage meltdown. I didn’t hear much about this during the discussion.
“The consequences were devastating to urban schools and libraries, municipal hospitals and clinics, and sanitation, police and fire departments – many of which had to shut their doors.”
More recently:
“Income inequality in the US is at its highest level in more than 50 years, according to new Census data. The gap between rich and poor is the widest in five states: California, Connecticut, Florida, Louisiana and New York.” CBS News September 26, 2019.
“The growth in income in recent decades has tilted to upper-income households. At the same time, the US middle class, which once comprised the clear majority of Americans, is shrinking. Thus, a greater share of the nation’s aggregate income is now going to upper-income households and the share going to middle- and lower-income households is falling.” PEW Research Center, Pew Research Center, January 9, 2020.
The solutions to the unsheltered situation are very straight-foward, and Nithya Raman states them succinctly: 1) provide more shelter beds, 2) provide hotel rooms, 3) provide supportive housing units. All three have been used with some measure of success in Los Angeles. So why haven’t we solved the homelessness and drug addiction crisis in San Francisco?
We know what needs to be done.
Is it simply the lack of political will? Is it because poor people don’t contribute to political campaigns? It’s more expensive to take care of people after they become homeless when the outcomes are more problematic, so why isn’t the City making every effort to keep people in their homes?
Is there a need to make it faster and easier to build? Raman cites Mayor Bass in Los Angeles. She set a goal of less than 60 days for approval of affordable housing. The problem is that no one wants to build affordable housing; real estate developers want market-rate housing. At least that’s the case in San Francisco, and I imagine it’s true in most other places.
“Fact: SF NIMBYs, such as they exist, are not stopping housing right now; the Federal Reserve and the preferences of speculative capital are. The City has approved tens of thousands of housing units that could break ground today, no NIMBY opposition, no frivolous lawsuits … they have building permits. But there’s not enough return on investment to make those units profitable, which is what developers care about.” - Tim Redmond, 48 Hills, September 27, 2023.
“The main reason so little housing is under construction has nothing to do with city “red tape” or fees. It’s the Federal Reserve’s interest rate hikes, which make financing much more expensive, and the cost of construction materials, wildly inflated since the pandemic, and the reduction in the demand for ultra-luxury units, which are often bought just as investments and never occupied.” - Tim Redmond 48 Hills, Sept. 2023.
The fantasy of local regulations as a hindrance is just that. A fantasy — at least in San Francisco. It’s a storyline propagated by billionaires like Michael Moritz of TogetherSF and politicians like Scott Wiener in an attempt to push through unrestrained development. The point should be made that billionaires and democracy are incompatible. Certainly, billionaires and social equity are incompatible. And the place to talk about this is at the local level, where the real-world consequences of tax policy and government spending are felt both in the home and in the community.
If the current lack of housing has been decades in the making, it will require an extraordinary reallocation of resources to catch up. A good place to start would be tax reform. When Reagan started his term, the highest personal income tax rate was 70%; today it’s 37%. We need to go back to 70%, tax the billionaires, and use that money to build affordable housing and fund social services.
It was beyond the scope, perhaps, of the discussion on Forum, but more needs to be said about income inequality, the unprecedented concentration of wealth in the hands of the elite few. What about billionaires like Marc Benioff of Salesforce paying no federal taxes? What about the subprime mortgage meltdown, when tens of thousands of poor people lost their homes after taking out adjustable-rate mortgages?
That is the big picture. It falls under what one participant called “the constraints of national politics.” We need to address those constraints, both nationally and in California. State politics is where we can most immediately craft solutions and make the most impact in the short term. Let’s change national and state politics by, at least, recognizing and talking about these larger issues. To coin a phrase, “think nationally and stately, act locally.”
David Romano is an environmental activist living near Ocean Beach
March 2025
