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The People, Not Washington, Will Solve America's Everyday Problems The People, Not Washington, Will Solve America's Everyday Problems

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Special Report: 2013 OUTLOOK

The People, Not Washington, Will Solve America's Everyday Problems

Some of our most intractable problems merit innovative solutions. They aren’t going to come from Washington.

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For the moment, policymakers can be forgiven for possessing a one-track mind. Official Washington is gripped by an all-consuming budget fever—and the only cure is a deal to avert the so-called fiscal cliff. But even after officialdom solves today’s problem, tomorrow’s awaits: In the coming months, policymakers will likely push toward large-scale entitlement reform or, even more ambitiously, tax reform. In the queue behind those monumental challenges are some of the most significant and thorny issues facing the country, including the need for sweeping changes to the nation’s immigration laws and the threat of a warming planet. By the end of 2013, there won’t be much political oxygen left in this town for anything else.

But a host of other, everyday problems will continue to vex Americans—problems that Washington may be either unwilling or unable to tackle. These demand attention far outside the Beltway, at the local level. They include the burgeoning traffic on our streets and highways; the shrinking pool of affordable housing; escalating gun violence; the rising invasion of online privacy; the strain on municipal services; and the high cost of healthy food. Even the challenge posed by runaway defense spending (a top-down, D.C.-driven issue if there ever was one) can benefit from more national popular support for a leaner, more efficient military in a postwar era.

 

All of these problems are threaded throughout the fabric of the nation. And if they are to be solved, the people, not the Washington pols, will have to be the ones lighting the way.

Affordable Housing

Reform the Tax Code to Aid Owners and Renters

The trend toward New Urbanism—which unites housing, retail, and open space, while placing a premium on walkability and reducing the need for long automobile commutes—has been cheered by environmentalists and many residents. But the higher costs of living associated with such development risk squeezing some renters out.

 

Academics and advocates have long argued for preserving existing affordable-housing inventories through grants and subsidies, but even then, units are often protected for only a fixed number of years before they go on the open market. A growing push toward “inclusionary zoning,” which requires that a certain portion (usually between 10 and 20 percent) of units in new or rehabbed developments be earmarked for affordable housing, could help lower-income urbanites. In exchange, local housing authorities give breaks to developers on density limits or charge them fees that are then funneled to housing assistance. This type of zoning requirement has made inroads over the last 30 years in places such as Montgomery County, Md., San Francisco, and Boston.

The key, advocates say, is to ensure that affordable units are built into the city’s fabric as more and more communities realign themselves along transit lines. “What we want to do is target areas where housing prices are likely to go up in the future,” says Jeffrey Lubell, the executive director of the Center for Housing Policy at the National Housing Conference. Citing a neighborhood in Washington, he says, “The idea would be to find a Columbia Heights five or 10 years before it starts to happen and really get in and put the policies in place so that as the neighborhood becomes more attractive and marketed to tenants and higher-income folks, moderate-income families are not displaced—and also that a share of the newly developed and newly renovated housing is available.

“Tying this in part to public-transit expansion is one way to get at this,” he adds.

But one challenge of inclusionary zoning is that it “only works in a strong market with pent-up demand,” says Clark Ziegler, the executive director of the Massachusetts Housing Partnership.

 

A more radical proposal to assure affordable housing is to alter the U.S. tax code. The mortgage-interest deduction has long been criticized for channeling the greatest amount of relief to the wealthiest. Under current law, tax filers can claim a deduction for interest on mortgages and home-equity loans of up to $1.1 million.

The National Low Income Housing Coalition is pushing to reform the tax break in a way that it says could help President Obama toward his goal of ending homelessness and shrink the 4.5 million shortfall of affordable-housing units for the 10.8 million people at the lowest income levels. The coalition advocates dropping the mortgage cap to $500,000 and converting the itemized deduction—which benefits only about quarter of taxpayers, according to the Internal Revenue Service—to a 15 percent nonrefundable tax credit.

“When you convert the deduction to a credit, you make it available to low-income homeowners who do not get a tax benefit for having a mortgage because they either don’t make enough money or they don’t pay enough in interest to itemize,” says Sheila Crowley, the group’s president and chief executive. “If you convert it to a credit from a deduction, then you catch non-itemizers; you will significantly expand the number of households who will get a tax break.”

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