Affordable Housing Institute : US

Tuesday night, November 4, 2008

Dear Mr. President-Elect:

 

Congratulations, you’ve stepped into the most powerful job in the world. 

 

Or have you?

 

Some folks look at me and see a certain swagger, which in Texas is called “walking.”
George W. Bush

 

Because political capital is a commodity of value only so long as one is in office, a shrewd President interested in maximizing his impact should leave office with none left.  By that standard, I’ve done well.  I may have the lowest incumbent approval ratings since Harry Truman – and by the way, nobody liked how he conducted his war either – but that doesn’t matter to me.  I spent virtually no political capital on things I didn’t care about.  Instead I saved it.

 

“Let’s make sure that there is certainty during uncertain times in our economy.” — George W. Bush, Washington, D.C., June 2, 2008

 

Throughout my Presidency, I used any political capital I accumulated to make big and irrevocable commitments for our country, obligating the Federal government to long-term strategic courses of action.  The media snicker, but look at the record:

 

§   The tax cuts through 2010 – you’ll like dealing with their expiration!

§   The Medicare prescription-drug benefit – you get to be the one to cut Social Security.

§   Our commitments and expenditures in Afghanistan and Iraq – before you try exiting from either, you might want to try getting us out of Germany and South Korea.

§   Most recently, that concoction Hank and Ben put together. 

 

“One of the things important about history is to remember the true history.” –George W. Bush, Washington, D.C., June 6, 2008

 

Multi-billion-dollar bets, every one of them.  And I got them through, with little or no super-majority in Congress, nothing like the Democrats are certain to enjoy, and despite the press snickering at me from Day 1.

 

(By the way, I got most of them without using Pay-As-You-Go (PAYGO), an acronym I like because it sounds like what it means.)

 

It’s clearly a budget. It’s got a lot of numbers in it.
George W. Bush

 

Just because you’re not me, the press is going to like you more, although nowhere near as long as you think they will (Barack, stop smirking).  But that doesn’t matter, because I’ve seen to it you won’t have the freedom of action I enjoyed.  Aside from that financial shakeout thing, which is going to last well into the second quarter of 2009, the deficits are going to be nasty; in a recession, they always are.  You’re not going to have any discretionary money to spend – so other than make inspiring speeches and highlight your contrast with me, what the heck can you do?

 

“This thaw – it took a while to thaw, it’s going to take a while to unthaw.” –George W. Bush, on liquidity in the markets, Alexandria, La., Oct. 20, 2008

 

(You might want to leave Hank on the job for some months; he’s experienced at taking the flak and it’ll allow you to blame whatever he comes up with on me, which you’ll probably want to do anyway when you realize how unpopular tax increases or austerity measures will make you.)

 

Meanwhile, you’re going to hear from the affordable housing advocates.  I’ve looked on the Google – it’s basically a bunch of tubes – and seen these blogger people on the World Wide Interweb think housing’s important.  Here’s what you should do if, unlike me, you cared enough about rental housing to spend political capital on it:

 

“We got plenty of money in Washington. What we need is more priority.” –George W. Bush, Washington, D.C., June 2, 2008

 

1.  Don’t let inflation run away with the country.  When macro debt is greater than the macro value of assets, the macro cure is to devalue debts and increase the nominal value of your assets.  Both of these are inflationary drivers.  Inflation is the younger generation’s revenge on their elders’ over-spending, so it’s going to be the only tool you have to create the gradual readjustment of asset-to-liability ratios.  However, if you put a flabby socialist in as Treasury secretary, inflation could run away from you, and that would destroy foreigners’ confidence in us, which would be even worse.  So you’re going to have to inflate as fast as you can without risking a runaway rate.  It’s tricky.  Bone up on the late Seventies, but not the early Eighties.

 

(Oh, and don’t use phrases like ’stagflation,’ a ‘national malaise,’ or ‘Whip Inflation Now.’  Anything like that sounds defeatist, elitist, or cheesy.)

 

“We want people owning their home — we want people owning a businesses.” –George W. Bush, Washington, D.C., April 18, 2008

 

2.  Let Congress lead on housing.  This is just political resource management.  For the first time in a decade, you’re going to have a completely Democratic Capitol Hill, the Senate as well as the House.  (John, you can skip this section, since anything you submit will be DOA.) 

 

The Democrats won’t be able to pass much – that PAYGO stuff will get in their way – but that won’t stop Mr. Frank and Mr. Rangel in the House from generating a cornucopia of ideas.  It’ll be much easier for you to make broad statements about goals and let them hammer on one another – and those slower colleagues on the northern side of the Hill – before you get down into the weeds. 

 

A corn-on-cobbia of ideas?

 

3.  Put in a new-thinker as HUD secretary.  Like the last three Presidents before me (even Bill), I’ve been reducing HUD’s role in affordable housing, and pushing money to the states.  That’s where the activity is anyhow, and with the wide range of markets in America, state and local resources are playing – and should play – a much bigger role.  A good HUD secretary, one who comes from that community, will buy you a lot of goodwill even if he or she hasn’t got much money to spend.

 

Go get somebody who’s an up-and-comer, from a municipal or regional level, maybe an innovative housing authority director, maybe from the West.  Basically, you want a combination of Lord Mountbatten and F. W. de Klerk – somebody who realizes the best thing we can do for many housing programs is get them out of 451 Seventh Street SW and out under state or local control.

 

1947: Lord Mountbatten saluting the newly independent Indian flag

 

1990: F. W. de Klerk and Nelson Mandela, four years before full democracy

 

Nixon went to China.  You need as a HUD secretary a through-and-through houser who understands – and can sell – the necessity for getting HUD out of the way.

 

Hey, Mao, how ’bout democratizing?

 

Since we’ve had a policy innovation inversion, with all the housing-policy experiments happening at the metropolitan and municipal level, you might look at a go-getter, up-and-coming housing authority director, preferably from the West, somebody who can see the essential functions of government and separate them from the technical activities.

 

We’ve got to make the pie higher.

 

4.  Buttress homeownership. I meant all that guff I’ve said about the ownership society.  Homeownership’s a good thing, and we want more of it.  Okay, so we as a nation got totally drunk on risk-taking – heck, the whole world got drunk on risk-taking – and overheated the housing marketplace and pushed into homeownership a lot of folks who shouldn’t have been there.  Well, we did it, and undoing it would be hideous on many levels. 

 

“There’s no question about it. Wall Street got drunk — that’s one of the reasons I asked you to turn off the TV cameras — it got drunk and now it’s got a hangover. The question is how long will it sober up and not try to do all these fancy financial instruments.” –George W. Bush, speaking at a private fundraiser, Houston, Texas, July 18, 2008

 

Those people are homeowners now, and we should extend ourselves to keep them in that homeownership.  I’ve got money in the bailout bills for debt relief.  Tell Hank to lean on the banks he just injected capital into that they should work with lenders to develop restructuring proposals. 

 

5.  Innovate workforce housing using over-levered property, not Federal money.  This could be a good issue for you.  It’s the only housing type for which the Federal government does nothing – no interest deductions, no subsidy, no tax credits, nada (that’s Spanish).  You want to keep it that way – you won’t be able to afford anything else – but you can use that unsold condo inventory, or over-levered subdivisions, to turn those real estate assets into rental.  Some snarky guy in Boston wrote a lengthy article full of big words explaining how you do it. 

 

The thing that’s wrong with the French is that they don’t have a word for entrepreneur.
George W. Bush

 

Just advocating for this – it’s off-balance-sheet, remember – will buy you a lot of goodwill in blue metropolitan areas, and you’ll need that goodwill for anything else you want to do (yes, even you, Barack).

 

6.  Block-grant more HUD responsibilities to the states.  They keep claiming they can be much more efficient than HUD.  So just say to them, ‘okay, amigos, here’s last year’s appropriation, here you see me tearing up all the rules except a few – go to town.’

 

I am mindful not only of preserving executive powers for myself, but for predecessors as well.
George W. Bush

 

7.  Do a big-bang devolution of public housing.  Yes, even you, Barack.  Especially you.  The capital backlog is going to be enormous, and once you know what it is, you’re going to be under pressure to do something.  That Boston guy wrote extensively on it, and what to do.

 

I’m hopeful. I know there is a lot of ambition in Washington, obviously. But I hope the ambitious realize that they are more likely to succeed with success as opposed to failure.
George W. Bush

 

8.  The GSEs are up to you.  You’ve got pretty much total control over them.  You can keep ‘em if you want, just leash ‘em really, really tightly. Or you can wind ‘em down into your own private RTC.  I never bothered to appoint anybody to their boards, so our hands are clean. 

 

Don’t misunderestimate me.

 

See?  You have much less room to maneuver than you thought.  Good luck.  Blame me for anything you like. 

George.

 

PS  Just don’t call me. 

 

That’s my Presidency, and I am outta here!

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