Cisneros Is Shrinking Hud To Save It

Not so long ago, the Housing & Urban Development Dept. was a sitting duck. A bloated bureaucracy noted for crime-ridden housing and sweetheart deals with contractors, HUD was a prime target for congressional Republicans out to kill an agency. Even White House budget hawks wanted to put HUD on the chopping block to spiff up President Clinton's "New Democrat" credentials.

So how's HUD doing these days? Better than you might expect. Thanks in part to GOP defenders who like using HUD as a piggy bank to dispense money back home, the drive to kill the agency has stalled. But credit also goes to nimble HUD Secretary Henry G. Cisneros, who in December caught foes off guard by proposing a radical overhaul that went beyond what even most Republicans want. Had it not been for Cisneros' preemptive strike, "we'd be taking shots at a target without a plan for redemption," concedes Representative Sam Brownback (R-Kan.), a leader of the abolish-HUD forces.

RADICAL PLAN. Cisneros' plan borrows heavily from conservative doctrine. He would cut HUD's workforce of 11,400 by a third over five years and roll 60 HUD programs into three block grants totaling about $12 billion. That would give state and local governments more spending flexibility. And if enacted, his reforms would give all housing subsidies directly to low-income tenants in the form of vouchers. Currently, most assistance flows to public authorities or private owners, but vouchers would give tenants more housing choices and spur competition among project developers.

While GOP reformers like the block grant approach, the radical voucher proposal is unlikely to survive on the Hill. It faces strong resistance from many of the nation's 3,400 public housing authorities, which are raising fears that an all-voucher system would be costly and trigger housing project failures as residents move elsewhere. "That proposal is DOA," insists Senator Christopher S. Bond (R-Mo.), who chairs the HUD appropriations subcommittee. Even so, Congress may let Cisneros expand the use of vouchers on a limited basis.

Although many Republicans are no fans of the agency, they argue that the government shouldn't kill HUD and, in effect, walk away from the $90 billion it has invested in public housing. Moreover, the "pork" potential is alluring. "When you get in power, you come to favor programs where you distribute the largesse," notes former HUD Secretary Jack F. Kemp.

Nowhere is the bounty greater than in New York, where most lawmakers are--no surprise--staunch HUD supporters. The state received $2 billion from the agency last year. On July 17, Senate Banking Committee Chairman Alfonse M. D'Amato (R-N.Y.), whose panel oversees HUD, and Senator Daniel P. Moynihan (D-N.Y.) announced a deal to use $230 million in HUD funds to rehabilitate New York public housing. HUD officials say D'Amato has privately vowed to fight to save the agency.

Even so, HUD won't emerge unscathed. While Cisneros proposed freezing his budget at $26 billion, House Republicans want to slash the agency's 1996 spending to $19.1 billion. And there's still a question about whether the HUD chief will be around to close a deal--he remains the subject of an investigation into whether he lied to the FBI about payments to his former mistress. But for now, his reform bid has won him a seat at the negotiating table with the GOP.

"We are as serious about reforming this place as the Republican leadership," says Cisneros. And certainly, substantive free-market reform is long overdue. But the players will have to move beyond clever political moves--and a taste for pork--to make that happen.

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