Dear Congressman
Jimmy Panetta,
Do you really believe that offering some form of funding, tax
deductions for renters and the Affordable Housing, Training & Consulting (AHTC)
program is a solution to affordable housing?
There
is, currently, a serious movement to deny residential growth. As the saying goes, we support additional
housing but not in my neighborhood!
We
(as a community) have put up barriers to prevent population growth. There are endless requirements to be overcome
by prospective builders like environmental impact reports justifying water use,
air quality, additional traffic solutions, protection of unknown animal species
"ad infinitum."
And
if a project somehow gets past all this, there are impact fees, architectural
reviews, permit fees and then, of course, the ultimate confrontation with
planning commissions and city councils or county board of supervisors. And finally there is a very real possibility
of litigation put forth by the "smart growth" or "no growth" contingent. None of this takes into account the actual cost of buildable
land.
Inflation vs The
National Debt.
Under the current "Borrow & Spend" technique, the United States
pays more than $523 billion in annual interest on a national debt exceeding $22
Trillion and the current gross national product is $20.66 trillion. One has to wonder if we as a nation are
bankrupt?
Under the so-called "modern monetary theory" advanced by some
political leaders and economists: "deficits
are not nearly as dangerous as we've been led to believe."
Stephanie Kelton, an economist at Stoney Brook University, was quoted:
"The biggest mistake we make is thinking
of the federal government as a household that has to repay its debt." Ms. Kelton contends the United States won't
default on its governmental debts because it can always print more money
through the Federal Reserve; moreover, she doesn't believe that flooding the
market with more dollars contributes to inflation. Inflation is prevented, according to her
theory, by increasing interest rates and taxes.
The real question is: "Does flooding the market place with more
money lead to inflation by reducing the value of a dollar?" Possibly, a comparison with a previous year -
let's say 1955 - might reveal a more accurate story.
1955: McDonald's sold hamburgers for
15 cents, gasoline 20 cents/gallon, minimum wage $1.00/hour, motel room
$2.00/night, hospital room $15.00/day and a house could be purchased for
$14,000 or less. Of some interest is
that in 1955 college tuition cost $250 per semester and the student could rent
a room with kitchen privileges for $30 a month - so it was possible for a young
person to pay for a college education without borrowing money. Today it costs the average college student
between $60,000 and $100,000 for four years and the national student debt
exceeds $1.5 trillion. San Francisco
recently reported a one bedroom unit would rent for $3,000 per month.
In 1955 the national debt was $272 billion and the gross national
product (GNP) was $440 billion. Today
the national debt of $22 trillion exceeds the $20.66 trillion GNP. The current federal $7.25 minimum wage does
not purchase anywhere near what $1.00 did in 1955. Unlimited borrowing and the flooding of our
market place with borrowed money has reduced the value of the dollar.
Ultimately, we must ask ourselves if
the printing of all this borrowed money is a contributing factor to
"un-affordable" living accommodations? I
would have to say "YES!" There is much
discussion concerning the increase of the minimum wage as a solution - but what
would it take in today's dollars to equal the value of the dollar in 1955? I shudder to think of it . . .
It would appear that offering tax
credits, tax deductions and low interest rate loans does not begin to solve the
basic problem of unaffordable housing nor the high cost of living because it
simply is not possible when considering the decreasing purchasing power of the
American dollar, the high cost of vacant land, the expensive labor with
benefits and the massive building requirements.
A possible solution might develop if
we - as a nation - reduced our national debt, reduced our population and made
the value of the American dollar somewhere near the purchasing power of 1955.
Piper's Papers