Cory Booker's housing plan will cost $134 billion per year

Cory Booker’s new housing plan is vast and expensive. There are several parts to it but the bottom line, according to Booker’s own estimate is $134 billion per year. The Washington Post reports the plan would do is provide a tax credit to everyone paying more than 30% of their current income in rent.

Under Booker’s plan, anyone paying more than 30 percent of their before-tax income would be eligible for a tax credit, which would cover the difference between 30 percent of their income and the fair-market rent in their neighborhood.

The fair-market rent is an average calculated each year by HUD. You can look up the fair-market rent in your state and county for 2019 here. Huffington Post notes there’s no income cap in Booker’s plan:

There would be no income cap limiting who could qualify, and the median credit for a participating family would be $4,800 per year. Booker’s campaign estimated the credit would cost $134 billion annually, which it said would be funded in part by restoring some taxes cut by Republicans in 2017.

I haven’t seen the plan, just various news articles about it but there are a lot of questions that haven’t been asked yet. For instance, if you’re a renter who can barely afford a one-bedroom apartment in, say, Washington, DC, but you know Cory Booker’s plan will pay the difference above 30% of your income, why wouldn’t you move into a nicer apartment or a much bigger one? If a one bedroom is going to take up 30% of your income, why not rent a 3 bedroom for the same amount and sublet (legally or not) the other two rooms? Also, why not just move to a much nicer area and get a luxury high-rise if Uncle Sam is going to help you out for the difference? Maybe there’s some kind of cap based on salary? Again it’s not clear how the plan is going to actually work.

That’s the small picture stuff. The big picture is what happens to rents when property owners discover the government is prepared to extend the amount people can pay with an average of $400 per month. I don’t think it’s much of a leap to suggest rents are going to go up sharply, i.e. more money chasing the same goods creates higher prices. On that point, Booker’s plan does include money for new housing:

His proposal would seek to increase the supply of affordable housing with a carrot-and-stick approach, by tying federal infrastructure grants to demonstrated progress on the local level while committing $40 billion to building new units.

That’s a lot of money but it would at least tend to bring the price of rentals down rather than drive them up. Cities that are dealing with double-digit increases in homelessness (like most of the big cities on the west coast) would probably be eager to get their hands on that money. But of course, there’s no free lunch. Everyone, not just a few billionaires you’ve never met, will be paying for this in the form of higher taxes.