John Kennedy Presses Expert On How Government Can 'Incent' Local Authorities To Increase Housing

2 weeks ago

During a Senate Banking Committee hearing last week, Sen. John Kennedy (R-LA) spoke about ways the Federal Government could incentivize local authorities to increase housing supply every year.

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Transcript

00:00Mr. Kennedy, the floor is yours, sir.

00:05Thank you all for being here.

00:06Professor Glazer, you're head of the Department

00:11of Economics at Harvard?

00:14No longer.

00:15But you've taught there since 1992.

00:21I think you need to turn your microphone off.

00:25You did your PhD work at Chicago?

00:28That's correct, sir.

00:29How many years ago?

00:30You publish about five articles a year?

00:33I don't know.

00:34I've published a few.

00:40I appreciate your testimony, because you not only

00:42talked about the problem, but you talked

00:46about possible solutions.

00:50No disrespect to anybody, but revamping our appraisal process

00:55or title insurance or talking about power imbalances

01:02is not going to get homes built, not

01:06in a free enterprise country.

01:10Our problem is supply, isn't it?

01:12Yes, sir.

01:14And the main reason we have a problem with supply

01:18is because of land use regulation, isn't it?

01:23I've been saying that for 25 years, Senator.

01:25Yes, I agree with that very strongly.

01:27And land use, zoning, some would call it,

01:33is within the job description of some state,

01:39but mostly local government.

01:41Is that right?

01:42That's correct, sir.

01:43And Congress has a history, it seems to me,

01:46you can disagree certainly if you do,

01:49of just throwing money at the problem

01:52and trying to tell local government how

01:57to get more houses built. And local government

02:01takes the money and pushes back, because politicians

02:06at the local level, they like to eat and live indoors too,

02:11and they like to get re-elected.

02:14And they don't want to make anybody

02:16upset by changing land use regulation in a way

02:22to encourage more housing.

02:24Would that be a fair assessment?

02:26My words, not yours.

02:29I will not disagree with any of those words, Senator.

02:33There's a plan that's been talked about in Canada.

02:38And what the Canadians have said,

02:40they're talking about it, it hasn't been implemented.

02:42But the proponent of the plan, I've

02:46talked with Senator Warren about this,

02:49has said, look, we need to incent local government

02:57to increase housing starts.

02:59But we need to use a carrot and a stick.

03:05What if America had a law?

03:07Congress passed a statute that said, look,

03:09we don't care how you do it, states,

03:13but you need to increase your housing

03:16starts by 3%, 4%, 5% a year.

03:20Do it however you want to do it.

03:22If you do that, we will give you extra federal money.

03:27If you don't do that, we will take federal money away

03:31from you until you start doing it.

03:35Would that work?

03:37If you're willing to champion such legislation, Senator,

03:40I'm willing to be behind you.

03:42I think there are challenges with that in the US.

03:46The difficulties of taking away spending

03:47that was already expected may be particularly hard.

03:49It may be easier to do with discretionary grants

03:51than with spending that's targeted.

03:55I also think it needs to be targeted not

03:57to the state's level of production,

03:59but to production in the most productive parts of the state.

04:02We don't want California to meet its requirements

04:04by building in areas that are very far away from Los

04:07Angeles or San Francisco and so forth.

04:11But I think basically something that creates carrots

04:14and ideally sticks as well that tries to encourage

04:17states to do the right thing.

04:18And from my perspective, the battleground

04:20of affordable housing is in places like the California State

04:22Legislature.

04:23And I would love those legislators

04:25who want to do the right thing, who

04:26want to make California a state for outsiders

04:28to be able to say, look, the federal government is pushing

04:30us in this direction too.

04:32Can we just not lose our spending for x?

04:33Can we do this?

04:34And I think that would be very powerful in the hands

04:36of the state legislature.

04:37Who would be best to decide the most productive areas

04:41to incent housing?

04:43I would use Bureau of Economic Analysis numbers

04:45of output per capita.

04:47I don't think it's, you know, but this can be debated.

04:50We can, you know, lots of people.

04:52I would not hand it over to an agency, though.

04:54I would put it directly in the legislation.

04:56Do you think our problem in America with housing

04:58is caused by a power imbalance?

05:02I don't, I'm not sure I know what that means.

05:04Me neither.

05:05Me neither.

05:08Thank you, Senator.

05:09Thank you, sir.

05:11Right.

John Kennedy Presses Expert On How Government Can 'Incent' Local Authorities To Increase Housing

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