The worst-case housing needs of low-income households arise largely from their high rent burdens, not from physically inadequate housing. Thus, the programs of housing assistance for these households initiated in the Great Depression should now be recognized as a part of the nation’s welfare system, not as an infrastructure investment program. This paper considers the most important implications of these facts for the design of housing assistance programs and for the administration of housing subsidies. Should the public sector provide assistance to very low-income renters? Of course, it should. For three-quarters of a century, the federal government has provided assistance to low-income renters, beginning with the Public Housing Act of 1937 and extending to the most recent budget proposal of the U.S. Department of Housing and Urban Development (HUD). It is also difficult to imagine that some form of assistance to low-income renters would not be available in the future.

This brief article discusses the rationale for programs that provide renter assistance, the choices about the assistance of the possible form may take, and the ways of judging programs’ success. Not surprisingly, none of this discussion is about what can be done tomorrow. Instead, it is intended to be relevant to strategic choices by the executive and legislature over some longer time horizon. Why should the federal government take an active role in policies of subsidizing rental housing? The initial rationale for the provision of public housing during the Great Depression was the acute shortage of decent housing coupled with the recurring unemployment of the time. An unemployment level twice as high as the current rate, along with a lack of effective demand arising from a calamitous recession, launched a program of government-sponsored housing production.  With the post-war boom in the American economy, the comprehensive Housing Act of 1949 emphasized the goal of providing a suitable living environment and decent, safe, and sanitary housing for all Americans. Improved housing conditions formed the rationale for subsidy policies, and progress could be measured by noting the extent to which inadequate housing was eradicated. In 1975, about 2.8 million renter households lived in severely inadequate housing, representing almost 11 percent of renter households. By 2001, the number of inadequately housed households (by Housing Act of 1949 standards) declined by 60 percent (Quigley and Raphael, 2004).