VIEWSnConfessions of a Housing Policy JunkienIspent the 1970’s looking for a social policy agenda I couldnlove. I thought I had found one in federal housingnsubsidies.nThe image of the free family on its homestead powerfullynappealed to my imagination. I saw the suburban home asnheir to the Jeffersonian agrarian spirit, its bond to propertynstimulating the vigor, independence, and virtue once foundnon the yeoman farm. I agreed with Catharine Beecher, thenmid-19th-century philosopher of the American home, that anproper dwelling could shape a family’s moral character,npromote family stability, and help preserve a decent society.nI was persuaded by architect Frederick Law Olmsted’s 1868ndeclaration that the suburbs combined the finest aspects ofntown and country and marked “the best application of thenarts of civilization to which mankind has yet obtained.” Inlooked with approval on the business propagandists of then1920’s who sought to chill labor unrest with the promise,n”After work, the happy home,” and on the opportunisticnidealism of developer Bill Levitt in the 1940’s, whondeclared; “No man who owns his own house and lot can bena communist. He has too much to do.”nThe politicians also persuaded me that they were, fornonce, doing the right thing. The monumental Housing Actnof 1949, for example, had opened with a stirring declarationnthat “the general welfare and security of the nation . . .nrecquire . . . the realization as soon as feasible of the goal of andecent home and a suitable living environment for everynAmerican family.” Even that New Deal war-horse, LyndonnJohnson, made sense in his 1965 statement that “thenAllan Carlson is publisher of Chronicles and president ofnThe Rockford Institute.n14/CHRONICLESnby Allan Carlsonnnnultimate goal in our free enterprise system must be a decentnhome for every American family.”nI became convinced that federal intervention into thenfamily housing market had taken four positive forms (thenfifth, “public housing,” always seemed a disaster). ThenFederal Housing Administration, created in 1934, wasnmidwife to the long-term, amortized mortgage featuring anlow down payment. Establishment of the Federal HomenLoan Bank (1932-33) and the chartering of the FederalnNational Mortgage Association or “Fannie Mae” (1938)nformed the financial infrastructure for an expanding mortgagenmarket. The “GI Bill” of 1944 provided governmentninsurance and waived down payments for the millions ofnvets seeking mortgages. And reconfiguration of the federalnincome tax in the 1930’s and 1940’s also gave preferrednstatus to owner-occupied homes. Congress chose to excludenthe “imputed rent” of such dwellings from taxation, yet atnthe same time allowed taxpayers to claim deductions fornmortgage interest and state and local taxes. In addition,nfederal law exempted from taxation the capital gains derivednfrom sale of a residence, if a new dwelling was purchasednwithin a given time.nThe powerful combination of direct and indirect subsidiesnappeared to have dramatic, positive effects after World WarnII. Between 1945 and 1960 alone, there was a 90 percentnincrease in the number of owner-occupied homes. Econometricnstudies confirmed that federal interventions accountednfor a substantial share of this increase. More importantiy,nfamily life showed every sign of strengthening in this period.nAmerican fertility climbed from Depression-era lows to annaverage of 3.6 births per woman, marking an unprecedentednreversal of a century-old birthrate decline. The divorce raten