Belmont Club

Community organizer

Binyamin Appelbaum of the Boston Globe describes how Chicago proved that it is actually possible to build a perpetual motion — ahem — perpetual money machine. The formula is as follows: take one large batch of community activists, add programs to create massive amounts of low cost housing, add public subsidies and stand back!

The squat brick buildings of Grove Parc Plaza, in a dense neighborhood that Barack Obama represented for eight years as a state senator, hold 504 apartments subsidized by the federal government for people who can’t afford to live anywhere else.

But it’s not safe to live here.

About 99 of the units are vacant, many rendered uninhabitable by unfixed problems, such as collapsed roofs and fire damage. Mice scamper through the halls. Battered mailboxes hang open. Sewage backs up into kitchen sinks. In 2006, federal inspectors graded the condition of the complex an 11 on a 100-point scale – a score so bad the buildings now face demolition.

It’s not only a tale of what Tony Rezko really did for a living, but what many of Obama’s closest political and campaign associates do to this very day. It’s a story with endless variations but one basic motif. Take a good cause, like providing low cost housing; persuade government to kick in money to subsidize it and turn the whole thing into a racket. Repeat as necessary.

As a state senator, the presumptive Democratic presidential nominee coauthored an Illinois law creating a new pool of tax credits for developers. As a US senator, he pressed for increased federal subsidies. And as a presidential candidate, he has campaigned on a promise to create an Affordable Housing Trust Fund that could give developers an estimated $500 million a year.

But a Globe review found that thousands of apartments across Chicago that had been built with local, state, and federal subsidies – including several hundred in Obama’s former district – deteriorated so completely that they were no longer habitable.

Grove Parc and several other prominent failures were developed and managed by Obama’s close friends and political supporters. Those people profited from the subsidies even as many of Obama’s constituents suffered. Tenants lost their homes; surrounding neighborhoods were blighted.

And now these prodigies have a chance to succeed on an even larger scale. The Globe describes how the enviable successes of Chicago are now poised go national.

Obama has continued to support increased subsidies as a presidential candidate, calling for the creation of an Affordable Housing Trust Fund, which could distribute an estimated $500 million a year to developers. The money would be siphoned from the profits of two mortgage companies created and supervised by the federal government, Fannie Mae and Freddie Mac.

“I will restore the federal government’s commitment to low-income housing,” Obama wrote last September in a letter to the Granite State Organizing Project, an umbrella group for several dozen New Hampshire religious, community, and political organizations. He added, “Our nation’s low-income families are facing an affordable housing crisis, and it is our responsibility to ensure this crisis does not get worse by ineffective replacement of existing public-housing units.”

The names of those involved in the development projects are familiar with those who have been following the Senator’s career. The Davis law firm, the Woods Fund of Chicago, Valerie Jarrett, Habitat Co. But some people believe that the Senator must have been misled; that he was somehow blindsided and betrayed by people he trusted. The Globe article describes the mixed feelings among his supporters:

some people in Chicago’s poorest neighborhoods are torn between a natural inclination to support Obama and a concern about his relationships with the developers they hold responsible for Chicago’s affordable housing failures. Some housing advocates worry that Obama has not learned from those failures.

“I’m not against Barack Obama,” said Willie J.R. Fleming, an organizer with the Coalition to Protect Public Housing and a former public housing resident. “What I am against is some of the people around him.”

Jamie Kalven, a longtime Chicago housing activist, put it this way: “I hope there is not much predictive value in his history and in his involvement with that community.”

Willie Sutton when asked why he robbed banks famously answered, “because that’s where the money is.” People who are disappointed to learn that community activists sometimes take advantage of the poor should ask themselves ‘who else would they fleece’? Next to an actual criminal background, the company of the professionally virtuous is often the most dangerous one to have.

Maybe one of the reasons (fittingly remembered on the 4th of July) that a republican democracy works better, on average, than an aristocracy is that it makes no special assumptions about the virtue of the rulers. And maybe the best rule of thumb in politics, as distinct from the system of justice, is that every politician is assumed guilty until proven innocent. Maybe that’s going too far. But as Ronald Reagan once said, “trust, but verify”.

Tip Jar.