Housing Priorities

AS with education and the environment, President Bush has done the right thing in putting low-income housing back on the federal government's agenda. His proposed $7 billion package of mortgage assistance, tax breaks, and aid for the homeless pulls together approaches that have long been discussed, and ought to be given a practical test. But as with those other major areas of domestic policy, Mr. Bush's housing proposals draw a mixed reaction. While the shift back toward federal action is generally applauded, flaws in the president's plan are all too apparent.

First, funding. Bush didn't spell out where the billions will come from. He did, unfortunately, tie an important provision - notably extension of the low-income housing tax credit - to passage of his capital gains tax cut. Housing and Urban Development Secretary Jack Kemp argues the capital gains cut will unleash huge new revenues and help pay for housing programs. But any such revenue boon is likely to be short-lived. Housing is a long-term commitment that demands assured funding before public officials and private developers can jump aboard.

Pinched budget or not, funding can be found if low-income housing is given the priority it deserves. Other more expensive undertakings - the savings and loan bailout, for instance - somehow get funded.

The importance of a federal housing initiative should be obvious at a time when millions of low-income Americans either live in substandard housing or have no homes. The federal government's withdrawal from the housing arena during the Reagan years halted construction of low-cost units even as demand for affordable housing was growing. Adding to the problem, hundreds of thousands of apartments built with federal subsidies have reached the date at which their owners can prepay mortgages and convert them to market rents.

All of which underscores the need to go beyond the Bush plan to address the dwindling supply of affordable housing. Block grants directly to cities, for example, would give local authorities the ability to either stimulate construction of new housing or buy excess housing that could be rehabilitated and made available to low-income people.

Some Bush ideas - like making it possible for public housing residents to own their units - should be retained when Congress takes up housing next year. The heart of the debate, however, should be the supply issue.