The Two-Income Trap - Elizabeth Warren [19]
Out of the Housing Trap?
Can families extract themselves from the two-income housing trap? We could make all the obvious suggestions here. Families should “downshift,” taking on no more mortgage debt than they can afford. If that means renting for another ten years or living in a neighborhood with lousy schools, well, that’s just too bad. This advice would certainly be sensible from a financial point of view. The problem is that families don’t find it particularly compelling. The experts have been dispensing these words of wisdom for at least a decade with no discernible effect, and we’re pretty sure that adding our own voices to the chorus would be useless.
Alternatively, we could take the usual liberal approach, calling for more government regulation of the housing market such as price caps. But we don’t think the solution lies with such complex regulations. Indeed, any effort to eliminate the fundamental forces of supply and demand with such artificial constraints might actually worsen the situation by diminishing the incentive to build new houses or improve older ones. Nor would we argue for outright government subsidies. Such programs may be appropriate to help a small number of low-income families get a decent place to live, but America simply cannot afford mass subsidies for its middle class to buy housing. Besides, direct subsidies are likely to add more ammunition to the already ruinous bidding wars, ultimately driving home prices even higher.
In order to free families from the trap, it is necessary to go to the heart of the problem: public education. Bad schools impose indirect—but huge—costs on millions of middle-class families. In their desperate rush to save their children from failing schools, families are literally spending themselves into bankruptcy. The only way to take the pressure off these families is to change the schools.
The concept of public schools is deeply American. It is perhaps the most tangible symbol of opportunity for social and economic mobility for all children, embodying the notion that merit rather than money determines a child’s future. But who are we kidding? As parents increasingly believe that the differences among schools will translate into differences in lifetime chances, they are doing everything they can to buy their way into the best public schools. Schools in middle-class neighborhoods may be labeled “public,” but parents have paid for tuition by purchasing a $175,000 home within a carefully selected school district.
It is time to sound the alarm that the crisis in education is not only a crisis of reading and arithmetic; it is also a crisis in middle-class family economics. At the core of the problem is the time-honored rule that where you live dictates where you go to school. Any policy that loosens the ironclad relationship between location-location-location and school-school-school would eliminate the need for parents to pay an inflated price for a home just because it happens to lie within the boundaries of a desirable school district.
A well-designed voucher program would fit the bill neatly. A taxpayer-funded voucher that paid the entire cost of educating a child (not just a partial subsidy) would open a range of opportunities to all children. With fully funded vouchers, parents of all income levels could send their children—and the accompanying financial support—to the schools of their choice. Middle-class parents who used state funds to send their kids to school would be able to live in the neighborhood of their choice—or the neighborhood of their pocketbook. Fully funded vouchers would relieve parents from the terrible choice of leaving their kids in lousy schools or bankrupting themselves to escape those schools.
We recognize that the term “voucher” has become a dirty word in many educational circles. The reason is straightforward: The current debate over vouchers is framed as a public-versus-private rift, with vouchers denounced for draining off much-needed funds from public schools. The fear