The Public Option

by Ganesh Sitaraman

  23. Charles L. Edson, “Affordable Housing—An Intimate History,” in The Legal Guide to Affordable Housing Development (Tim Iglesias & Rochelle E. Lento eds., 2d ed. 2011).

  24. Alexander von Hoffman, “History Lessons for Today’s Housing Policy: The Political Processes of Making Low-Income Housing Policy,” Harvard University Joint Center for Housing Studies (Aug. 2012), www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w12-5_von_hoffman.pdf.

  25. Edson, “Affordable Housing,” at 5.

  26. National Center for Health in Public Housing, “Public Housing Residents,” http://nchph.org/about/public-housing-residents (last visited June 21, 2018).

  27. Alana Semuels, “The Power of Public Housing,” Atlantic (Sept. 22, 2015).

  28. U.S. Department of Housing and Urban Development, “HUD’s Public Housing Program,” https://portal.hud.gov/hudportal/HUD?src=/topics/rental_assistance/phprog.

  29. “The State of the Nation’s Housing 2018,” at 30–31, Joint Center for Housing Studies of Harvard University, http://www.jchs.harvard.edu/state-nations-housing-2018.

  30. “Demolition Begins on Last Cabrini-Green High Rise,” CBS News (Mar. 30, 2011).

  31. Nicholas Dagen Bloom, Public Housing That Worked: New York in the Twentieth Century (2009).

  32. See Robert Collinson, Ingrid Gould Ellen, & Jens Ludwig, “Low-Income Housing Policy” 30, 33–34, NBER Working Paper 21071 (Apr. 2015).

  33. See Janet Currie & Aaron Yelowitz, “Are Public Housing Projects Good for Kids?” 27 (July 1999), www.princeton.edu/~jcurrie/publications/Are_Public_Housing_ Projects.pdf.

  34. As a rule of thumb, an eligible household is defined as any family making below 50 percent of area median income. See U.S. Department of Housing and Urban Development, “Worst Case Housing Needs: 2017 Report to Congress” (2015), 9–10, https://www.huduser.gov/portal/sites/default/files/pdf/Worst-Case-Housing-Needs.pdf.

  35. Mireya Navarro, “227,000 Names on List Vie for Rare Vacancies in City’s Public Housing,” New York Times (July 23, 2013).

  36. Collinson et al., “Low-Income Housing Policy,” at 36.

  37. Susan Popkin, “Public Housing and the Legacy of Segregation,” Urban Institute (Aug. 19, 2013), www.urban.org/urban-wire/public-housing-and-legacy-segregation.

  38. Collinson et al., “Low-Income Housing Policy,” at 13–14.

  39. Center on Budget and Policy Priorities, “Policy Basics: The Housing Choice Voucher Program” (May 3, 2017), www.cbpp.org/research/housing/policy-basics-the-housing-choice-voucher-program.

  40. U.S. Department of Housing and Urban Development, “FY 2016 Income Limits,” www.huduser.gov/portal/datasets/il/il16/IncomeLimitsBriefingMaterial-FY16.pdf.

  41. Collinson et al., “Low-Income Housing Policy,” at 29–35, provides a helpful overview of these questions.

  42. On the topic of extended wait lists, see Gillian B. White, “America’s Invidious Eviction Problem,” Atlantic (Mar. 1, 2016) (quoting Matthew Desmond as saying, “In cities like Washington D.C., the waiting list is not counted in years but in decades. Young mothers who apply for housing assistance in our nation’s capital literally could be grandmothers by the time their application is reviewed”).

  43. Alex F. Schwartz, Housing Policy in the United States 241 (3rd ed. 2015). See also Ingrid Ellen, Michael Suher, & Gerald Torrats-Espinosa, “Neighbors and Networks: The Role of Social Interactions on the Residential Choices of Housing Choice Voucher Holders,” Journal of Housing Economics (2018); Lisa Sanbonmatsu et al., U.S. Department of Housing and Urban Development, “Moving to Opportunity for Fair Housing Demonstration Program: Final Impacts Evaluation” xvi (2011), www.huduser.gov/publications/pdf/mtofhd_fullreport_v2.pdf (finding that HCV holders moved to less distressed neighborhoods than public housing but to only slightly less minority-centric neighborhoods); Michelle Wood et al., “Housing Affordability and Family Well-Being: Results from the Housing Voucher Evaluation,” 19 Housing Policy Debate 367, 393–94 (2008) (finding that while voucher families moved to neighborhoods with “slightly lower rates of poverty” than a control group, “the differences in the neighborhoods of voucher users and those without vouchers … were not very large”).

  44. Matthew Desmond & Kristin L. Perkins, “Are Landlords Overcharging Housing Voucher Holders?,” 15 City and Community 137 (2016); Robert Collinson & Peter Gaining, “How Do Changes in Housing Voucher Design Affect Rent and Neighborhood Quality?” (Feb. 2018), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2255799; Amy Cutts & Edgar Olsen, “Are Section 8 Housing Subsidies Too High?,” 11 Journal of Housing Economics 214 (2002).

  45. Laura Sullivan & Meg Anderson, “Affordable Housing Program Costs More, Shelters Fewer,” National Public Radio (May 9, 2017).

  46. Adam J. Levitin & Susan M. Wachter, “The Public Option in Housing Finance,” 46 University of California Davis Law Review 1111 (2013).

  47. Levitin & Wachter, “Public Option,” at 1137.

  48. See also Richard Rothstein, “Public Housing: Government-Sponsored Segregation,” American Prospect (Oct. 11, 2012).

  49. Raj Chetty, Nathaniel Hendren, & Lawrence Katz, “The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunity Project,” 106 American Economics Review (2016).

  50. Kathryn Zickuhr, Lee Rainie, & Kristen Purcell, “Library Services in the Digital Age,” Pew Internet (Jan. 22, 2013), http://libraries.pewinternet.org/2013/01/22/library-services.

  7. Retirement

  1. Benjamin W. Veghte, Elliot Schreur, & Alexandra L. Bradley (eds.), “Report to the New Leadership and the American People on Social Insurance and Inequality,” National Academy of Social Insurance (Jan. 2017), Fig. 1, www.nasi.org/sites/default/files/research/Social_Security_and_Gap_in_Retirement_Wealth.pdf.

  2. Alicia H. Munnell, “Falling Short: The Coming Retirement Crisis and What to Do about It,” Center for Retirement Research at Boston College (Apr. 2015), http://crr.bc.edu/wp-content/uploads/2015/04/IB_15-7_508.pdf.

  3. Social Security Administration, “Research Note #1: Origins of the Three-Legged Stool Metaphor for Social Security,” www.ssa.gov/history/stool.html.

  4. William J. Wiatrowski, “The Last Private Industry Pension Plans: A Visual Essay,” Monthly Labor Review (Dec. 2012), www.bls.gov/opub/mlr/2012/12/art1full.pdf (data from 1981 to 2011).

  5. Employee Benefit Research Institute, EBRI Databook on Employee Benefits, chapter 4 (July 2014), www.ebri.org/pdf/publications/books/databook/DB.Chapter%2004.pdf (table 4.4, showing real median income from employer pensions from 1975 to 2011).

  6. Center for Retirement Research at Boston College, “Pension Sponsorship and Participation in the Private Sector, 1979–2010” (May 2013), http://crr.bc.edu/wp-content/uploads/1012/01/figure-14.pdf, and “Workers with Pension Coverage by Type of Plan, 1983, 1992, 2001, and 2013” (Sept. 2014), http://crr.bc.edu/wp-content/uploads/1012/01/figure-15.pdf.

  7. Alicia H. Munnell et al., “How Has the Shift to 401(k) Plans Affected Retirement Income?,” Center for Retirement Research at Boston College (Mar. 2017), http://crr.bc.edu/briefs/how-has-the-shift-to-401k-plans-affected-retirement-income; Alicia H. Munnell, Dan Muldoon, & Francesca N. Golub-Sass, “An Update on 401(k) Plans: Insights from the 2007 SCF,” Center for Retirement Research at Boston College (Mar. 2009), http://crr.bc.edu/briefs/an-update-on-401k-plans-insights-from-the-2007-scf; Edward N. Wolff, “Pensions: The Lost Decade?,” NBER Working Paper No. 16991 (Apr. 2011), www.nber.org/papers/w16991.

  8. Congressional Budget Office, “The Distribution of Major Tax Expenditures in the Individual Income Tax System” (May 2013), www.cbo.gov/publication/43768 ($92 billion of $140 billion tax savings).

  9. Frontline, “Can You Afford to Retire?,” interview with Alicia Munnell (Feb. 2006), www.pbs.org/wgbh/pages/frontline/retirement/interviews/munnell.html.

  10. Alicia H. Munnell, Rebecca Cannon Fraenkel, & Josh Hurwitz, “The Pension Coverage Problem in the Private Sector,” Center for Retirement Research at Bo
ston College (Sept. 2012), http://crr.bc.edu/briefs/the-pension-coverage-problem-in-the-private-sector.

  11. Munnell et al., “The Pension Coverage Problem.”

  12. Craig Copeland, “Employment-Based Retirement Plan Participation: Geographic Differences and Trends,” EBRI Brief No. 405 (2013), 9–11, figures 1 and 2; Veghte et al., “Report to the New Leadership,” figure 2 (showing that a typical white household has more than $100,000 in pension wealth, while a typical black household has only a tenth that much).

  13. Bureau of Labor Statistics, “National Longitudinal Surveys, Frequently Asked Questions,” www.bls.gov/nls/nlsfaqs.htm#anch41.

  14. Example: the pension cost of changing jobs. Suppose that Alice earns a steady income of $50,000 per year. She works from age twenty-five to age sixty-five, and she saves a steady 5 percent of her income for retirement. Assuming an interest rate of 5 percent and investment fees of 1 percent, Alice would accumulate about $238,000 in her retirement account. Now suppose that Alice spends ten years of her career (between ages thirty-five and forty-five) working for small firms that don’t offer pensions (changing jobs a few times over the course of a number of years is a typical pattern). The cost to her is pretty high: she loses ten years’ worth of pension contributions. The result is that she will have just $172,000 or so at retirement—about 25 percent less than what steady contributions would produce.

  15. Internal Revenue Service, Publication 590-A (2016), “Contributions to Individual Retirement Arrangements (IRAs),” www.irs.gov/publications/p590a/ch01.html#en_US_2016_publink1000230352.

  16. Center for Retirement Research at Boston College, “Workers with Pension Coverage by Type of Plan, 1983, 1992, 2001, and 2013” (Sept. 2014), http://crr.bc.edu/wp-content/uploads/1012/01/figure-15.pdf.

  17. Andrew Beattie, “Market Crashes: The Dotcom Crash (2000–2002),” Investopedia, www.investopedia.com/features/crashes/crashes8.asp; Christian Weller, “What the Market Crash Means for Your Retirement,” EPI Report (May 2001), www.epi.org/publication/issuebriefs_ib156.

  18. Employee Benefit Research Institute, “The Impact of the Recent Financial Crisis on 401(k) balances,” EBRI Issue Brief #326 (Feb. 2009), www.ebri.org/publications/ib/?fa=ibDisp&content_id=4192.

  19. Center for Retirement Research at Boston College, “401(k)/IRA Balances for Median Working Household with a 401(k), Age 55–64, by Income Quintile, 2013” (Sept. 2014), http://crr.bc.edu/wp-content/uploads/1012/01/Table-161.pdf.

  20. The standard rule (which may now be too generous, overstating potential retirement income), is that a retiree can safely withdraw 4 percent of her lump sum per year. Tara S. Bernard, “Some New Math for the Four Percent Rule,” New York Times (May 9, 2015).

  21. Ian Ayres and Quinn Curtis, “Beyond Diversification: The Pervasive Problem of Excessive Fees and ‘Dominated Funds’ in 401(k) Plans,” 124 Yale Law Journal 1346 (2015).

  22. Authors’ calculations, assuming a 5 percent rate of return before fees.

  23. Stan Haithcock, “You Just Gave Your Annuity Agent a Great Vacation,” MarketWatch (Aug. 12, 2014); Office of Senator Elizabeth Warren, “Villas, Castles, and Vacations: How Perks and Giveaways Create Conflicts of Interest in the Annuities Industry” (Oct. 2015).

  24. U.S. Department of Labor, Employee Benefits Security Administration, “Definition of the Term “Fiduciary”; Conflict of Interest Rule—Retirement Investment Advice,” Final Rule (Apr. 8, 2016), www.federalregister.gov/documents/2016/04/08/2016-07924/definition-of-the-term-fiduciary-conflict-of-interest-rule-retirement-investment-advice.

  25. Presidential Memorandum on Fiduciary Duty Rule (Feb. 3, 2017), www.whitehouse.gov/the-press-office/2017/02/03/presidential-memorandum-fiduciary-duty-rule.

  26. Steven A. Sass, “How Can We Realize the Value That Annuities Offer in a 401(k) World?,” Center for Retirement Research at Boston College (July 2016), http://crr.bc.edu/wp-content/uploads/2016/07/IB_16-12.pdf.

  27. For example, see David Laibson, “Golden Eggs and Hyperbolic Discounting,” 112 Quarterly Journal of Economics 443 (1997).

  28. See Nathan Zahm & John Ameriks, “Estimating Internal Rates of Return on Income Annuities,” Vanguard (Mar. 2012), https://personal.vanguard.com/pdf/s284.pdf (finding that rates of return on Vanguard annuities are, for the average purchaser age seventy or older, lower than the rates of return on risk-free Treasury securities).

  29. Thrift Savings Plan, “Administrative Expenses,” www.tsp.gov/PlanParticipation/BeneficiaryParticipants/administrativeExpenses.html.

  30. A standard annuity rule of thumb is 4 percent. Bernard, “Some New Math for the Four Percent Rule.”

  31. Joint Committee on Taxation, “Estimates of Federal Tax Expenditures for Fiscal Years 2016–2020,” JCX-3-17, www.jct.gov/publications.html?func=startdown&id=4971.

  32. C. Eugene Steuerle et al., “Who Benefits from Asset-Building Tax Subsidies?,” Urban Institute (Sept. 2014), www.urban.org/sites/default/files/alfresco/publication-pdfs/413241-Who-Benefits-from-Asset-Building-Tax-Subsidies-.PDF.

  33. See, e.g., Theresa Ghilarducci & Tony James, “A Comprehensive Plan to Confront the Retirement Savings Crisis” 2, Schwartz Center for Economic Research (2016), www.economicpolicyresearch.org/images/Retirement_Project/Retirement_Security_Guarant eed_digital.pdf; see generally Theresa Ghilarducci & Tony James; Rescuing Retirement: A Plan to Guarantee Retirement Security for All Americans (2016); Rowland Davis, Nayla Kazzi, & David Madland, “The Promise and Peril of a Model 401(k) Plan,” Center for American Progress (Apr. 2010), www.americanprogressaction.org/wp-content/uploads/issues/2010/04/pdf/401k.pdf.

  34. National Employment Savings Trust, www.nestpensions.org.uk/schemeweb/nest.html.

  35. National Employment Savings Trust, www.nestpensions.org.uk/schemeweb/nest.html.

  36. CalSavers Retirement Savings Program, “CalSavers Is Coming Soon,” www.treasurer.ca.gov/scib.

  37. Richard Thaler & Cass Sunstein, Nudge 111–115 (2008).

  38. For instance, some employers resisted advance payment of the EITC, which was in theory mandatory but in practice optional. Steve Holt, “Periodic Payment of the Earned Income Tax Credit Revisited,” Brookings Institution (Sept. 2015), app. 4–5, www.brookings.edu/wp-content/uploads/2016/07/HoltPeriodicPaymentEITC121515.pdf.

  8. Higher Education

  1. PBS Frontline, “A Subprime Education” (Sept. 13, 2016), www.pbs.org/wgbh/frontline/film/a-subprime-education (at 1:00 and 17:05); Annie Waldman, “How Corinthian Colleges Targeted the Homeless and Kids with Low Self-Esteem,” ProPublica (Mar. 18, 2016), www.valuewalk.com/2016/03/corinthian-colleges-explotation#document/p3/a283694 (original documents).

  2. Waldman, “How Corinthian Colleges Targeted.”

  3. PBS Frontline, “A Subprime Education.”

  4. David Baime & Sandy Baum, “Community Colleges: Multiple Missions, Diverse Student Bodies, and a Range of Policy Solutions,” Urban Institute (Aug. 17, 2016), www.urban.org/research/publication/community-colleges-multiple-missions-diverse-student-bodies-and-range-policy-solutions/view/full_report.

  5. Suzanne Mettler, Degrees of Inequality: How the Politics of Higher Education Sabotaged the American Dream 6 (2014).

  6. Mettler, Degrees of Inequality, at 81.

  7. For a full discussion of state funding cuts and tuition increases, see Michael Mitchell et al., “Funding Down, Tuition Up,” Center for Budget and Policy Priorities (Aug. 15, 2016), www.cbpp.org/research/state-budget-and-tax/funding-down-tuition-up.

  8. Mettler, Degrees of Inequality, at 11.

  9. Mettler, Degrees of Inequality, at 11.

  10. Mitchell et al., “Funding Down, Tuition Up.”

  11. Ashley A. Smith, “Zeroed Out in Arizona,” Inside Higher Ed (Mar. 12, 2015).

  12. Mettler, Degrees of Inequality, at 10.

  13. Jillian Berman, “Student Debt Just Hit $1.5 Trillion,” MarketWatch (May 12, 2018), https://www.marketwatch.com/story/student-debt-just-hit-15-trillion-2018-05-08.

  14. Mettler, Degrees of Inequalit
y, at 81.

  15. Bridget Terry Long, “The Impact of Federal Tax Credits for Higher Education Expenses,” in College Choices: The Economics of Where to Go, When to Go, and How to Pay for It (Caroline L. Hoxby ed., 2004).

  16. United States Senate Committee on Health, Education, Labor, and Pensions, “For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success” 2 (July 30, 2012), www.help.senate.gov/imo/media/for_profit_report/PartI.pdf (hereinafter Senate Committee).

  17. Gregory D. Kutz, “GAO Testimony, For-Profit College: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices” 11 (Aug. 4, 2010), www.gao.gov/new.items/d10948t.pdf (hereinafter GAO).

  18. GAO, at 10 (“A small beauty college told our applicant that barbers can earn $150,000 to $250,000 a year. While this may be true in exceptional circumstances, the Bureau of Labor Statistics (BLS) reports that 90 percent of barbers make less than $43,000 a year”).

  19. GAO, at 15–16.

  20. GAO, at 7.

  21. Mettler, Degrees of Inequality, at 164.

  22. PBS Frontline, “A Subprime Education” (at 8:30–8:45).

  23. Mettler, Degrees of Inequality, at 164.

  24. Hollister K. Petraeus, “For-Profit Colleges, Vulnerable G.I.’s,” New York Times (Sept. 21, 2011).

  25. GAO, at 17.

  26. GAO, at 17.

  27. Senate Committee, at 7.

  28. Senate Committee, at 8; Adam Looney & Constantine Yannelis, “A Crisis in Student Loans? How Changes in Characteristics of Borrowers and in the Institutions They Attended Contributed to Rising Loan Defaults,” Brookings Papers on Economic Activity (Sept. 10–11, 2015), www.brookings.edu/wp-content/uploads/2016/07/ConferenceDraft_LooneyYannelis_StudentLoanDefaults.pdf.

  29. PBS Frontline, “A Subprime Education” (starting at 8:47; also 15:15).