Biden’s rent control plan is another desperate attempt to buy votes

Strange and awful news has been swirling all around us recently, creating a lot of uncertainty. But one thing hasn’t changed: President Joe Biden is still pandering to voters with poor policy ideas. Even as, but perhaps especially because, his candidacy hangs by a thread.
Biden last week proposed to institute a 5% cap on rental price increases nationwide. The rent control measure is one way he hopes to curb housing costs that have soared in recent years. More to the point: It’s also how he hopes to win back voters who have abandoned him after a disastrous debate performance last month.
The cap would apply to landlords with more than 50 units, affecting roughly 20 million rental units nationwide. If corporate landlords increase tenants’ rent more than 5%, they would lose the ability to write off depreciation values, which is an important tax deduction for many businesses. Congress would have to approve the proposal, and that isn’t going to happen this year with Republicans in charge of the House.
The rent control plan is a terrible idea, but it’s easy to see why Biden latched on to it less than four months before the election. A third of households rent, making up 45 million housing units, according to Forbes. That’s a lot of voters.
About half of renters pay over 30% of their income on rent, which the Department of Housing and Urban Development marks as “cost-burdened.” A smaller portion of Americans pay more than 50% of their income on rent.
And because the cost to buy a home, including high mortgage rates, is so expensive, many Americans must continue renting.
An economist I interviewed confirmed that rent control measures are almost always a bad idea.
“Rent caps have many unintended consequences, foremost that fewer homes will be built,” Tobias Peter, codirector of the American Enterprise Institute’s Housing Center, told me. “It will also create inequality in the rental market −those that will benefit versus those that won’t. And it will lead to inefficiencies − people unwilling to move or downsize because they have a rent-controlled unit.”
Peter pointed to St. Paul, Minnesota, as a recent example of why rent control doesn’t work. New construction collapsed in St. Paul after the city passed rent control. In Minneapolis, however, the other half of the Twin Cities, the price of renting went down after more homes were built.
“Rent is driven by supply and demand,” Peter said. “The country has been underbuilding for decades and we are short millions of housing units. At the same time, the federal government and the Fed pumped lots of stimulus into the economy during the pandemic. More demand against a limited supply led to higher rents.”
Homelessness crisis:I lived in a homeless encampment for a week. I saw how Housing First doesn’t work.
Biden is right about rent being absurdly high in much of the nation, and home ownership is out of reach for many Americans. Homelessness, driven in part by high housing costs, also is an epidemic that seems insurmountable. It’s right to want to solve America’s housing crisis. But a rent cap is not the way to do it.
The housing market is much like the rest of our economy, which is rooted in the balance of supply and demand.
“Markets provide abundance,” Peter said. “The market would stabilize rents on its own if it were allowed to function properly. Unfortunately, actions from all levels of government – federal, state and local – have constrained the market’s ability to respond to the price signal.”
So, what can help lower housing costs? Loosen or abolish overzealous or frivolous regulations that add to the cost of everything that goes into building. Expediting the permitting process, lifting tariffs on construction materials, tossing out overly strict Occupational Safety and Health Administration requirements and loosening restrictions on logging also would help to reduce costs.
The left must own up to their rhetoric:Biden admits putting Trump in ‘bull’s-eye’ was a mistake. It’s a little late for that.
“Once you deregulate, the market will respond,” Peter said.
That is an epic slogan, one I want to plaster on the doors of every classroom from kindergarten to graduate schools. It’s especially helpful for people who have bought into the progressive mindset that more regulations and laws will improve the functions of businesses across America. They don’t. They often exacerbate things instead.
Biden’s rent cap is similar to his executive orders on student loan forgiveness, which the courts have consistently struck down. Both are outside the scope of what government can and should do, and both are more about pandering to voters than adopting sound policies.
The Democratic Party is a chaotic mess. So are Joe Biden’s policies.
Nicole Russell is an opinion columnist with USA TODAY. She lives in Texas with her four kids. Sign up for her newsletter, The Right Track, and get it delivered to your inbox.