Housing allowances for Congress? Maybe not.

Last updated on: June 29, 2017 at 8:09 am by Jane the Actuary

Housing allowances for Congress? Maybe not. 2017-06-29T08:09:51-06:00 Jane the Actuary

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from Flickr: https://www.flickr.com/photos/footprintfl/6332271341

In the news on Tuesday (e.g., at The Hill):

Just days before he resigns from Congress, Rep. Jason Chaffetz (R-Utah) said Monday that House and Senate lawmakers should receive a $2,500 per month housing allowance — something he explained would help ease housing costs for members who can’t afford two mortgages or rents.

“I really do believe Congress would be much better served if there was a housing allowance for members of Congress,” Chaffetz told The Hill in an interview in his Capitol office, where he sleeps whenever he’s in Washington. “In today’s climate, nobody’s going to suggest or vote for a pay raise. But you shouldn’t have to be among the wealthiest of Americans to serve properly in Congress.”

Megan McArdle writes that, yes, indeedy, it would be good for legislators to sleep somewhere other than their Capitol offices, but

Yet it seems worth pointing out that our congresscritters could do something to help themselves, without even dipping into the federal treasury. Thanks to Washington’s unique constitutional status, Congress has more power over its operations than over any other city. The city has “home rule,” to be sure, but that home rule was a gift from Congress, and Congress can take back that gift any time they want. Or amend it, to slash through the array of zoning regulations that help to make Washington housing so expensive. At the very least, they could repeal the height limits, dating from 1899, which make it impossible to build true high-rises in downtown Washington, and thereby forces up the price of conveniently located housing.

And Heather Schwedel at Slate thinks she’s writing a tongue-in-cheek proposal when she suggests, “Don’t Give Congressmen a Housing Subsidy. Make Them Live in Dorms.” (What is it with article titles with punctuation in them?), which is the work of someone too recently a college student and fails to mention the current real-world example of dorm-living legislators, in Myanmar, who would probably find the in-office accommodations of some Congresspeople to be an upgrade but accept their living conditions for the greater good of being able to serve their country.

Now, McArdle’s not wrong in raising the issue of housing costs in D.C. and elsewhere being artificially high due to zoning restrictions. And actual “corporate housing”-style units would not be a bad idea, really, all joking aside — studios or 1 bedrooms with some common areas for socializing, perhaps, appropriated for from the same line item as Congress uses to fund other expenses. And there are real questions about the appropriate pay level for Congress, and how it should be set so that, in principle at least, a “regular citizen” who is not independently wealthy, can continue to support a family while travelling back and forth to D.C. Is the remedy to milkers and double-milkers and all the ways in which Congress sucks up money from corporations, more federal money? (But if so, I don’t want to hear another word about how politicians are “serving their country”!)

But let me tell you about housing allowances: back in the day, when we were expats and our employer followed a traditional financial package for its expats (which I believe has fallen out of favor in the meantime; now they just give you your pay and you fend for yourself and rationalize any financial losses as “worth it for the experience”), we got a housing allowance. There was a real reason why it was a “housing allowance” rather than just a “temporary increase in pay”: it was based on the estimated actual housing expenses for our family size and new location, with an offset based on the expected net rental income from renting our existing house (based, that is, on average housing costs for our family size in our hometown), both of these adjusted, in some fashion, for our income level.

Oh, and, as we experienced it, the “allowances” in the expat package were all grossed up to reflect the impact of taxes. Which turns $2,500/month into between $40,000 – $50,000 per year, depending on how the gross-up is calculated.

Chaffetz’s proposal misses this element of variability — it’s just a flat sum of money for everyone. To be sure, there is no reason for variable costs (at least, so far as I know, it’s rare for Congresspeople to move their entire family with them), but absent this, what he’s really proposing is a pay increase, and that’s a whole ‘nother issue.

Image from Flickr: https://www.flickr.com/photos/footprintfl/6332271341

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