The Monthly Interview: The Man Who Reinvented Public Housing

Working for President Nixon, Malcolm Peabody helped launch the creation of Housing Choice Vouchers, one of the few anti-poverty programs with enduring bipartisan support.

Earlier this year, the U.S. House unanimously approved legislation modernizing the decades-old federal housing voucher program for low-income Americans – once better known as “Section 8.”

In an era marked by unrelenting gridlock, the House vote – 427 to 0 – was a rare showing of bipartisan progress on a typically highly divisive issue: how to help Americans in poverty. As passed by the House, the measure would streamline the administration of housing vouchers by state and local authorities and make it easier for recipients to benefit. Praised by advocates and policymakers on both sides of the aisle, the bill now moves to the Senate, where Sen. Tim Scott (R-SC) and Sen. Bob Menendez (D-NJ) have already introduced virtually identical legislation.

The bill’s relatively unimpeded (and largely unnoticed) journey through Congress is testament to the bipartisan appeal of housing vouchers, first created in the 1970s. Now called the Housing Choice Voucher program, the program helps more than 5.5 million Americans afford housing, according to the Center on Budget and Policy Priorities, and is the federal government’s largest housing assistance program, at roughly $20 billion a year.

Housing Choice Vouchers – formerly Section 8 – help 5.5 million low-income Americans afford housing. It began as an experiment under President Richard Nixon.

It’s also widely hailed as one of the government’s most effective anti-poverty efforts, particularly compared to traditional, government-owned public housing. Housing vouchers allow beneficiaries to use their subsidies wherever a landlord accepts them. For liberals, this means vouchers can help poor families choose less segregated neighborhoods with better schools and employment opportunities. For conservatives, vouchers force landlords to compete for subsidies, leading to savings for taxpayers.

“The Housing Choice Voucher Program is by far our country’s best low-income housing program,” testified Ed Olsen, a University of Virginia economics professor who was among the first to evaluate the effectiveness of vouchers. “It provides adequate and affordable housing for participants at a much lower cost to taxpayers than any other program. It has outperformed other housing programs in every market condition and for every type of family studied.”

Less well-known is the program’s history – first as a state-level effort in Massachusetts, then as a federal pilot project, the Experimental Housing Allowance program, which was authorized in 1970 under President Richard Nixon. After early evaluations proved promising, Congress expanded the housing voucher program nationwide beginning in the early 1980s, and it eventually became the modern Housing Choice Voucher Program in 1998.

The architect of the original state and federal experiments was Malcolm E. (“Mike”) Peabody, Jr., who served under Massachusetts Gov. Endicott Peabody (Peabody’s brother) and then under President Richard Nixon as Deputy Assistant Secretary for Equal Opportunity in the Department of Housing and Urban Development (HUD). In an article for the Washington Monthly in 1972, Peabody advocated vouchers as a better way to tackle poverty than top-down government programs. “Funding the people,” Peabody wrote, would not only foster more social innovation and eliminate bureaucracy, it would address “the deepest emotional need of the poor today – the need to have freedom of choice, to have the freedom to determine the course of their own lives.” A subsequent article for The New Republic in 1974 argued that housing vouchers could help solve the multiple problems then plaguing traditional public housing: crime, concentrated poverty and segregation.

The Monthly recently caught up with Peabody to reflect on the genesis of the housing voucher program and the potential lessons it holds for future bipartisan efforts to reduce poverty. A longtime advocate of public charter schools, Peabody also helped pass charter school legislation in the District of Columbia. He now serves on the board of Issue One, a non-profit dedicated to campaign finance reform.

WM: You’ve written that the GI Bill was the original inspiration for your championship of housing vouchers. How did that come about?

Peabody: What impressed me enormously was that the GI Bill was a totally different program – different in the way it was handled, and different in the way it was funded. And it was enormously successful in changing lives and increasing the income and ability of the United States in the 15 to 20 years right after [World War II]. No other country was doing that, but we were, and the biggest driver was that the GI bill had educated so many people who could never have gotten a college education before.

The way that it was funded was new. It gave directly to the students rather than to the colleges. That made an enormous difference.

Malcolm E. Peabody Jr. pioneered the concept of federal housing assistance vouchers.

Malcolm E. Peabody Jr. pioneered the concept of federal housing assistance vouchers.

When I got engaged in civil rights in the late ‘50s and early ‘60s, I worked for [Gov. Nelson] Rockefeller and became the Executive Secretary of the New York State Commission Against Discrimination. After I got back from New York to start working for my brother in the 1960s – he [Endicott Peabody] was governor [of Massachusetts] from 1962 to 1964 – he asked me to come on as the civil rights director for his administration.

One of the things we did was to set up a low-income housing committee, and we came up with what was perhaps the first direct rental assistance plan to come from a state, in 1965. The idea of rental assistance going directly to the individual was inspired by the GI bill.

WM: How did this state program become a federal experiment?

Peabody: It was a very small program so it didn’t make huge impact. It wasn’t funded amazingly, but the results were good enough to inspire me when I got to the Department of Housing and Urban Development as Deputy Assistant Secretary for Equal Opportunity.

I [went] to the Under Secretary at HUD, Dick Van Dusen and told him I’d like to try this concept of rental assistance, and he said, “Sure.” So he introduced me to the head of the Model Cities Program, which was doing experiments all over the country. He appointed Otto Hetzel on his staff, and the three of us worked out a plan. We tried an experiment out in Kansas City in 1970-71. That experiment worked out extremely well.

WM: Why were vouchers more effective than traditional public housing?

Peabody: HUD money came in through the federal government and went down to the HUD offices throughout the country. From there it was distributed to the local public housing authorities, who then built the housing and set up the staff to run the housing. When you count the number of people between you [the tenant] and the money, it’s maybe 15 or 20 people. If you go out and try to rent housing, there’s just one person, the landlord. Therefore, you’re much more in control. Housing allowances tipped that whole program and put the money at the bottom with the people rather than with the bureaucrats at the top.

WM: Were people in the Nixon Administration as convinced as you were that this would work?

Peabody: [HUD Secretary George] Romney was horrified because in his mind it set up another program that would “entitle” people like Social Security and therefore lead them to further dependence on the federal government. It was never an entitlement program and didn’t become so, but that’s what he feared would happen.

So he didn’t want to pick it up, but [Sen.] Eddie Brooke [(R-MA)] thought it was a fabulous program. One of his staff, Tim Naegele, was wandering through HUD one day, and he asked, “What’s new?” He happened to talk to the lawyer engaged in our program, Irving Marguiles, who told him we’ve got this brilliant program and about the experiments that we had done.

Brooke was just overcome. He was a member of the Finance Committee in the Senate and was successful in setting up a much broader experiment – the [Experimental Housing Allowance Program] – with funding of $100 million. He sent it back to HUD to administer, and Romney was totally amazed.

The results of it were excellent all throughout. However, Congress at that time was not convinced because too many developers were making good money [building public housing], and they convinced the Democrats in Congress that this would destroy a perfectly good program. So it didn’t see the light of day until much later. It was the early ‘80s by the time it was picked up as a program by itself and given to HUD. And then it started expanding.

WM: Did this experience directly lead to your later work on charter schools?

Peabody: It certainly influenced me.

The [Washington,] D.C. School System deteriorated starting in the 1960s due to the wholesale departure of middle-class families who, due to the civil rights revolution, could move to better areas. Attempts by HUD to improve these communities in fact made them worse. Poor families who could not leave had no choice but to send their children to bad schools. The Charter School Law, by funding tuition to families, directly gave them choice as to where to send their children, which has led to major improvements in our public education in D.C.

WM: What was the problem with HUD programs and traditional public housing?

Peabody: The public housing projects were getting bigger and bigger and bigger, and they were becoming just nests of crime. It got to the extent that [HUD Secretary] Gov. Romney said enough, and he started blowing them up as he did with the Pruitt Igoe project in Saint Louis. This was in the early 1970s.

Urban renewal was also a big problem because it cleaned out areas of town that were functioning adequately for lower middle class and poor people and separated the poor from the lower middle class and put them in public housing.

In the late 1950s, we had a very large urban renewal program in southwest Washington, which moved out 25,000 people. It had been a village with upper income, middle income and lower income and there were churches and YMCAs. It was all cleaned out. The buildings were terrible to look at and there was crime in the alleys. So they decided to clean the whole thing up. But in doing so, the community that existed vanished. The middle class had funds and assistance to go to better communities, but we didn’t know what to do with the poor. So what we did was build public housing.

WM: Does the federal government have the capacity today to experiment in the way you did back in 1970? Would you be allowed today to do what you did?

Peabody: The charter school movement didn’t come from the federal government. It started at the state level. And the housing allowance in effect started at the state level too. So these things often come from the bottom, not the top.

This article has been updated. 

Anne Kim

Anne Kim is Senior Writer at the Washington Monthly.