B (2:50)

Oh, it's a good question. It's definitely something that people on the Hill spend some time on thinking about. How do you develop a catchy acronym for your bill? I will tell you, sort of the etymology of this is that there have always been some staffers who are really good at this and others who delegate it to them. And so some people just have a knack for it. The LLMs definitely do too. I would say 8 out of 10 of their suggestions are bad, but because 2 out of 10 are good, it is not an uncommon way to get a bill title these days. One of the funny parts of it is you'll see more bill titles now, at least in my anecdotal experience, where the title is something catchy and alliterative, but it's totally unrelated to the bill subject. And so sometimes that's confusing. You'll see a bill title that's something that makes you think it's about ocean science and then it's actually a housing bill because the acronym was something that seemed like it was a totally different issue. But one of the ways that AI maybe has some positive productivity benefits, for.

A (3:42)

Sure, I'm skeptical of the size of that productivity benefit. But I have heard from several people that the LLMs have taken away one of the fun brainstorming tasks on the Hill.

B (3:54)

There are still people doing it the analog way, I promise you.

A (3:58)

Okay, so real talk, the housing shortage. This national housing shortage has been widely covered. Treasury Secretary Scott Bessant recently said President Trump may declare a national emergency for the housing crisis. And I think listeners who live in big, expensive cities. I'm in New York, we have listeners in la, in kind of the Metropole will have a very visceral sense of this. It's been a hot topic. But why is this a national issue? And this is a question for the group. Why should I think housing is a national issue and not just like a. A New York and SF and a grab bag of big cities issue?

D (4:38)

I can speak to that a little bit. I think there's a couple of reasons. One is that these big, expensive metro areas are really huge drivers of economic growth. And so if you can get more people living in these Places and contributing more and growing GDP that helps the country as a whole. And then the other thing is that a lot of cities are now kind of following the path of these big expensive metros. I live in Atlanta, which historically was a place where housing prices were relatively inexpensive, but over the last several years, they've really ramped up in price. And you see that in a lot of metros across the country. So the problem that was maybe once concentrated to these really expensive coastal cities is becoming more universal and more ubiquitous.

B (5:23)

Yeah, I think Covid has an interesting influence here because if you look at the data from up for Growth, one of the premier national housing organizations that studies this, you see a change over the last few years. There are already trends leading to more and more places suffering from that severe housing shortage. But you start to have more people moving out of places like California into places like Montana, for instance. And if you talk to legislators in Montana who did some of their zoning reform work, just a couple thousand additional Californians actually had a pretty big impact on their housing stock. If you have a place that isn't growing very much and then suddenly gets an influx of work from home folks or folks who are deciding to leave the city, that matters. And so what used to be a regional problem has really become a national problem. The latest report from up for Growth shows that most metropolitan areas in the United States now have a housing shortage. It used to be a few, and now it's, I think maybe all metro areas except for six have a housing shortage.

C (6:21)

Yeah, I would say that it is a nationalizing problem that you see spreading basically wherever people want to live. And there's bad zoning, you have a problem. And the post Covid demand shocks, like Will was saying. I think I have a thread on Montana that it's like, you know, maybe a 7% vacancy rate before the pandemic, and their housing stock is smaller than Queens in New York City. And so it's something like 50,000 Californians is enough to drive Montana's vacancy rate to zero. And so, like, pretty soon you have to have a construction response to that. Now, that said, I still take an urban, economic, disciplined look at this. And a housing affordability problem is the combination of two problems. It is incomes and it is housing costs. And you can have a place that has very low incomes and high measured housing cost burdens, but houses are not sold for more than it costs to build a structure. Yimbyism and zoning reform can't solve a problem where houses are selling and renting at their construction cost. That's a problem of people having low incomes and not being able to afford construction costs. The wedge between costs and sale prices and rents tells you where land use regulations are doing the most damage. And that is places with high amenities and high wages. Amenities including weather. So it's good weather, good jobs and good infrastructure is where you see, that's where the demand spots are and that's where demand collides with bad land use regulation. So yeah, basically you want to be disciplined in the way you look at housing to income. But yeah, it's increasingly nationalized and you look at that wedge to identify the.

B (7:51)

Response and to try to pull together some of these great thoughts from Brian and Alex. In these high cost places, we are seeing an inability to build because of land use regulation. Regulations are too strict to allow housing to expand at the rate you would need to actually accommodate the number of people who want to live there, the amount of demand there is to live there. So there's this book by Yoni Applebaum called Stuck about a change in American life from we used to have a society where people would move all the time. They'd move to new places, they move within their neighborhood to a nicer house. And we become a society where instead of moving to places of greater opportunity, people move to places of lower cost of living. So the trends that led people to move from Mississippi to New York have now reversed. And a janitor can make more money relative to their cost of living if they live in a low cost place than in a high cost place. So we have turned an engine, opportunity into an engine of kind of disaggregation of poverty. You know, people have to move to poorer places in order to make ends meet and are no longer able to access that opportunity because of the land use regulations and zoning controls in the high cost, high opportunity places.

A (9:00)

That historical point is interesting, and I don't make you guys respond to this, but I just started last night this book by Stephen Ide, Homelessness in America. And he just does like a quick one on one history of homelessness up to the present day. And I was really struck that a hundred years ago, maybe a little earlier, nobody thinks homelessness is a problem of not enough houses or houses that are too expensive. That's just clearly not what's driving anybody to be homeless in this early period because there's tons of cheap housing everywhere you look. The problem is not the house itself. And now today, whatever you think about the causes of various kinds of homelessness, clearly a piece of that puzzle is a housing costs are really high for sure.

C (9:40)

Yeah. I mean when I started my first think tank gig in urban policy in 2013, it really was just those seven cities. And it's gotten worse, as we said. But it's long been true that there's an association between contract rents and housing market conditions generally. But there's a relationship between housing market conditions and homelessness rates. And you ask, ah, well, you know, why is that if substance use disorder and severe mental illness are important drivers of a kind of hardcore of difficult to treat homelessness. And the reason is in part because in tighter housing markets, think of New York or San Francisco, if your cousin develops a mood disorder in their 20s, as so often happens, and loses their job and needs a spot to stay, you middle class people in New York and San Francisco, sometimes they don't even have a spare couch, let alone a spare bedroom or you know, an adu, you know, a garage or a basement that could be inhabited just at a social level as a family in even high income places, you know, it's not possible. And so that's where the ability of family networks to be a buffer are an important channel for that.

D (10:38)

Sure.

B (10:39)

And one last thing to say here on the terminology of this. We talk about a housing crisis, but there are really two parts to it. There's an affordability crisis, people can't afford a home and there's a housing shortage. And in some parts of the country, and for some people, particularly the lowest income Americans, they're never going to be able to afford a home without some assistance. They're going to need a Section 8 voucher or another support. But in the highest cost parts of America and in a growing part of America, as we've talked about, you're needing a voucher even at a middle income level, 100% of the area, median income or above, in order to afford a home. And that's where the shortage part really comes in that in places where our land use makes it so, there is a massive shortage of housing. It becomes a problem for everyone where even a middle income person needs housing assistance and there isn't enough housing assistance to go around for all the low income people who would need that help might otherwise be able to afford a market rate house if they lived in a place like Minneapolis where housing is affordable even for a low income person. But if they live in New York or San Francisco or Honolulu, they're just not going to be able to make it work without significant subsidy. And of course, unfortunately that subsidy isn't available.

A (11:44)

Will, you mentioned Minneapolis as a Relatively affordable Metropole. And I think, Brian, you were talking about six or so metropolitan areas that don't have these big affordability issues and housing shortages. Just for listeners, like Minneapolis is doing well. Just give me a grab bag. What other places are doing well?

B (12:01)

Yeah, Minneapolis, Austin, Texas are really two of the big standouts. Both have a lot of people moving there. They have growing industry, they have growing job bases, but they also have recognized that they need to build more housing in order to keep it affordable to the people who live there, to the people who want to move there. And so in both of those places, we're actually seeing significant affordability. In Minneapolis, I think there's affordability at the 60% area median income level, which is significantly below average for just in a market rate house. So if you go to a place like Boston, New York, D.C. there's these big fights over we need more deed restricted affordable units, we need the government to require affordable units. And that's all well and good, but Minneapolis is doing it in the private market. And so that's been, I think, a real wake up call to people on the left that actually the a big role for exclusionary zoning here and causing this problem. And places like Minneapolis that have reckoned with a past of exclusionary zoning and reformed it are seeing the benefits.

A (12:58)

Well, let me just ask a broad question here before we dive into the bill, which is really interesting, where I want to spend some time trying to understand what actually is in there, what works, what might not work in that bill. But just at a really conceptual level, the zoning issue is a state and local issue. Why should we all agree federal law is a lever that you can pull to fix some of the housing issue across all these states and localities. Why shouldn't we just throw up our hands and say this is a problem for your mayor to solve and for your city council to solve.

C (13:32)

The case for the states is really, really strong. I have a variant of this idea from. It's actually from Catholic social thought called subsidiarity. The idea that decision making should be made at the level, lowest level of government or including the people themselves. So like individuals first time subsidiary has.

A (13:49)

Been mentioned on this podcast and hopefully not the last.

C (13:51)

Sure.

A (13:52)

Interesting and relevant concept anyway.

C (13:54)

Right. Yeah, obviously governance questions didn't become a problem, you know, yesterday. This question's been around for some time. And so the idea of you move it down to the lowest level at which a decision can reasonably be made. I like to add a little economist twist to that, which is you bring it to the lowest Level, including the individual, then that internalizes most of the costs and benefits of the decision. So are the spillovers contained within the decision making entity. And local governments that are small relative to their labor market area, their metropolitan area will tend not to internalize the consequences of growth control decisions and transportation planning decisions that affect the entire region.

A (14:28)

Put that in layman's terms, just walk me through that again without the econ.

C (14:32)

Sure. Local governments that are small relative to the area, that is the actual like commuting area and labor market area. Just because there's a line on the map doesn't mean you're in a separate city in a labor market sense. Labor markets are defined by how far out people are commuting in from into your region and where everyone is working together. And that's what a city is, is really a metropolitan area defined by commute flows regardless of what the lines on the map are. And so if you are small relative to that area, that means that you could say, hey, we're going to lock down growth here and our residents will just get jobs somewhere else. Like other people in the region can grow. Like why do we have to grow? Why doesn't the other city grow? And so you end up with this kind of like essentially a collective action problem at the regional level of who will bell the cat is the old, in all the mice's interest to put a bell on the cat, but which mouse is going to go up and take the risk to put the bell on? And so basically because we don't have metropolitan governments, the right level for most decision making that affects these metropolitan areas is a partnership between state and local control, where it's state guardrails making sure that regional and statewide interests are being taken into account by local governments when they make transport planning decisions and when they make growth control decisions that affect the region. And then to some degree there is also some federal spillover. So obviously you know, we have a progressive tax system. And so you could think of the federal government as a kind of residual claimant on the fiscal externality of higher taxes from when people move to higher wage earning areas, it affects the federal tax base, it affects national productivity, national output. So although states do capture most of the costs and benefits, there are some interregional spillovers that affect the nation as a whole.

B (16:11)

And to put a political lens on this, I used to work for a city councilor and it's very hard for a city councilor that represents a district to come out in favor of new housing because the voter participation rates in local Elections are something like 5 or 10%. The people who show up are the people who don't want something to change. There's good research on this from Katherine Levine Einstein, Boston University, that the majority of people are in favor of new housing, but the people who show up to a community meeting about it are vastly less likely to be in favor. Also vastly more likely to be elderly homeowners who have professional degrees as compared to the general population. And so if you're a city councilor, what you're hearing all the time is people who are thinking about the costs of growth, who are thinking about how they don't want their neighborhood to change. And that's not what happens if you're a governor. It's hard to find a not in my backyard governor in America. Almost every governor recognizes their state needs to grow or their state needs to not be hemorrhaging population like a lot of big blue states are doing right now. And so at that level of government, people are seeing the benefits. And that's also true at the federal level. At the state and federal level, you have elected officials with a broad enough purview that are looking at their whole state or the whole nation and seeing that we have a problem here with housing being really expensive and with there being a shortage of this good that we all say we want, but we make really hard to get through regulation. And so I think there are changes there. At the local level, it's often realtors associations will be opposed to new housing because they'll be very invested in the homeowner experience. But at the state level, at the federal level, the realtors recognize the benefits of home building. Same thing with unions. Unions want more work to do, they want more members. And so they care about growth, they care about construction. But the more local you get, the more people see the costs and not the benefits. So that's part of what Alex is talking about here and why it makes sense to do some of the stuff at higher levels. I also think it's pretty hard to find a NIMBY federal elected official. Most of them, they hear what is going on here. There was a important hearing that the Senate Banking Committee had where they listened to economists and heard about this problem spreading all around the country. That changed some minds. And they don't have in their ear that cantankerous person on the block who just doesn't want anything to change. Right. They're thinking about the majority. They're thinking about a broader set of people when they make decisions.

A (18:26)

What I'm hearing from you guys, Alex and Will is, I think, a very coherent explanation of why it's harder to make good zoning reform at the local level. But what I just really want to push on is just because it's hard to do at the local level because the town council is stymied by the people who don't want new building. I think most listeners know that. But why should I be optimistic that you can do stuff at the federal level? Like, just because it's hard at one level doesn't mean that a big bill package like this is going to fix the problem. Right.

C (18:56)

I agree with Will about the political economy of, like, the feasibility at the federal level. But with respect to state versus local balance, it is an objective thing. It's not like, oh, because of the tactics. I just want to go where it's easier. Local governments, they're not structured properly. It would be surprising if they got it right. In other words, on the merits, regardless of where it's easier or harder, it would be really hard theoretically, to imagine that local governments that are small relative to the labor market could possibly get the answer correctly.

B (19:23)

Sure. To think about in terms of, you know, why should the federal government be involved? Is this is just a really important issue to Americans, and it's really growing in its importance. It's now something people hear about in town halls. Cost of living is the top issue for voters. And historically, when issues get more important, they get more attention at the federal government. The federal government gets more involved in them. That doesn't have to mean federal government overriding or local governments. It doesn't in this case, but it means instead trying to provide the tools and supports and the nudges that are needed to try to get this issue taken more seriously. And I'm curious what you guys think. You might have better answers than me, but I think one way to think about this is the federal government has a lot of funding streams that already flow to state and local governments. As Brian said, it also has a fair amount of expertise in what works. That part of the history of zoning is that it was actually Herbert Hoover as commerce Secretary who pushed the first model zoning codes that were adopted by state and local governments and a hundred years ago.

A (20:23)

Yeah.

B (20:23)

That's how we got from a place where homelessness was not a housing problem to now homelessness being a housing problem. Right. That was one of the steps along the way in a history that has a lot of racism and income discrimination to it and trying to not have the wrong people live in your neighborhood. And so what the federal government is trying to do in this bill is, is a range of small to medium sized interventions that collectively dedicate the federal government's fiscal power, kind of redirect it in a few small ways in the direction of greater housing supply, greater construction of housing, reforming state and local zoning, and then also in terms of expertise and in terms of nudges, telling state and local governments, we're here to help. If you want to reform your zoning, here's a model zoning code that instead of being exclusionary and excessively restrictive and limiting a property rights, actually helps a local builder, helps a community member who wants to rebuild their house and add a granny flat in their backyard, helps those changes happen that we know need to happen. And so I think it's sort of a mix of technical assistance, funding, some financing mechanisms, and I don't want to forget the program reform part as well. There's just such an overhang of improvements that could happen to federal housing programs that have not been authorized in a very long time, that haven't been edited in a very long time. And so there are these statutory provisions from a very long time ago that are still in place that people have a lot of great ideas for how to fix. And so there's great stuff in this bill for that as well on disaster recovery, on rural housing, on homelessness, funding, all sorts of different areas.

C (21:58)

That's great. Yeah, I was going to weigh in and Ed, like, I like to bucket it into like this regulatory reform. There's technical assistance plus incentives and then there's like funding and financing reform are like the buckets and then you can drill down from there.

A (22:12)

That's great. Let's talk about those. So I'm going to leave regulatory reform for later. We've got funding which I want to talk about. And then technical assistance is like a phrase that I've been realizing recently. There's things that are in my D.C. vocabulary that are just in nobody else's. So will you just explain, when you say like a chunk of this bill is technical assistance, what does that mean?

C (22:34)

That means it involves instructing HUD to help state and local governments figure stuff out at a literally operational level. Like here is a law that is good instead of bad and how to understand that it's good rather than bad. It's not forcing them to do anything and it's not changing their incentives. It's just helping them understand a topic.

A (22:55)

Give me an example of where that might come into play. This bill passes a year later. Who needs the technical assistance?

C (23:01)

Yeah, the housing supply frameworks act in particular, that subcomponent of it is the Marquee Technical Assistance 1, because it's convening a national commission to, as will noted for the first time since Herbert Hoover, rewrite federal model codes for this stuff. And in this case, it would be not just for state governments, it would also be for local governments. And we convene this national commission to just gather best practices. And that would both guide HUD staff in the future when they're, say, applying incentives, when they're like, oh, what does it mean to be pro housing? Oh, there's a list. There's a list that we use to teach state and local government. Why don't we check the list that we publish? Oh, okay. That's what it means to be pro housing. And so it's both useful for staff in house, in hud, for, you know, they have grant administrators they might pull from. You know, there are different parts of the agency that are not full of land use experts. And so they themselves might need some technical assistance. So it's good for HUD and then it's also for helping state and local government understand good law rather than bad.

A (23:52)

And let me back up a second, because you mentioned something that caught my attention. So about 100 years ago, Herbert Hoover, future president was Secretary of Commerce and Commerce publishes these model codes, which you mentioned. Those model codes, are they still around when you say we want to update those? Is there a model code right now from 100 years ago that states and localities look at to understand what the feds think they should do on housing?

C (24:18)

It will shock you, Santi, to see how many states are still using Herbert Hoover's State Zoning Enabling Act. It's not every state. Some states did adopt their own, but basically dozens of states are still using the kind of framework of the standard State Zoning Enabling act. They had 19 states using it on, you know, within just a couple years of the model code passing, and there's dozens still using it today.

A (24:39)

Fascinating. And what's in there? Why does that code need reforming?

C (24:44)

So to our earlier discussion about where these powers lie and where the incentives are good. Zoning is actually not a local power. It is a state power that is delegated at the pleasure of the legislature and the governor to localities. Before 1916, not only was there no zoning, but localities could not zone. It was not a power they were entitled to. I like to chuckle when we talk about federal sovereign immunity with respect to post offices. One reason it's not explicit in the Constitution is because to the founding fathers, the idea is that local governments could control the building of things like post offices was, you know, they did not foresee it. So like all of our great cities were built without the ability to regulate growth in this manner. And so, yeah, that's why it's still there. It is the details of how to grant state police power to localities and the manners in which they may exercise it.

A (25:32)

Got it. So that's the technical assistance piece. I want you guys to try and explain the funding, the federal dollars out for people who, like me, I think are like generally pro growth, pro more building in cities, but who do not follow the ins and outs of federal housing policy. What's in this big package? And I guess question number two is what's in this big package that's like federal funding and gets through committee 24 0, like unanimously. Why is everybody so into this? It's spending more money. You'd expect some fights here.

B (26:06)

So there's a bunch of stuff in here, but maybe it's helpful to talk through a couple examples.

A (26:10)

Go for it.

B (26:10)

So one example in the bill is the Build now act, which I give Alex Arnlovitch a lot of credit for digging into the weeds on, so he can speak to as well. But the Build now act takes a pretty large federal pot of money. The Community Development Block Grant, that's a couple billion dollars distributed every year to local grantees. And it says if you're an expensive jurisdiction, if you have high costs, then we're going to compare how much housing you're building over time to your peers, to other expensive cities and towns. And if you build more than average, then you're going to get a bonus from Community Development Block Grant dollars. And if you build less than average, then you're going to get a cut. And the money will be distributed from places that are doing the wrong thing to places that are doing the right thing. It's not all their Money, it's only 10%, but it is significant. And that money is pretty flexible. A jurisdiction can spend that on infrastructure to support new housing. They could spend it on the cost of services for their population. They could spend it in a lot of different ways to help accommodate the growth that we know we need in high cost urban areas. What I like about the focus on the high cost places is as Alex said earlier, and I think Brian might have said as well, there are places in America that don't have a housing shortage. They have excess housing. They are tearing down old housing. But if you're in a high cost place where people want to move to Then your problem is a zoning problem. You're not building enough housing to meet the needs of your population. And so we want to rank you on what is your housing production over time. Not assuming that anywhere that is just happens to build a lot right now is great. But looking at have you had improvement over time? Did you go from being a place that didn't build very much to a place that built more or a place that built a decent amount to a place that actually built as much as their demand? Is a place like Jersey City that's doing amazing on this and do that comparison point and then you get more money. If you're doing a good job, but you don't get more money out of the general fund, you get more money reallocated, which I think was important to Republicans rather than a new expenditure, something that was just a transfer of funds. Another bill that is similar in concept to this is the build more Housing your transit Act. This is a bill that I rewrote a couple times, so it's dear to my heart. The idea behind this bill is the federal government spends somewhere between eight. Actually, I could look this up, but it's multiple billions. I think maybe $8 billion on capital investment grants every year. This is a grant program that funds pretty much every big new transit project in America. If you have big bus rapid transit project at the University of Utah or you're doing the second Avenue subway in New York City or sound transit in Seattle, you're all accessing this huge pot of money from the federal government. We have ways, but they're not very good ways right now of trying to say what's your land use around that housing? What's your land use around that transit? Are you letting enough housing being built so that we can really get the cost effective bang for your buck from building this pretty expensive new subway line, new bus rapid transit line. And so what the Biltmore housing your transit act does is it says if you are changing your zoning, land use permitting policies to make it easier to build more housing around a new transit station, then you get a significant boost in your federal funding. You're going to get higher in the queue basically for that federal funding. So a place like Los Angeles not to pick on them, but they have built a lot of transit and they haven't always reformed their zoning alongside it. They have large areas that are pretty large lots, only one home on them, pretty near transit. They would be downranked unless they change their policies. And the money would go to places that are letting new housing be Built.

A (29:50)

Alex, you want to jump in there?

C (29:51)

Sure, yeah. I consider those in the technical assistance and incentives bucket of that it's like housing supply frameworks act is giving you the technical assistance and then the carrots and sticks with that are, yeah, build more housing, your transit, Build Now Act. And then the Innovation Fund is the one other one that is also meant to $200 million for various innovative activities that have outcomes based measurement. I think it's implied that it'll use something like the Build now act data. One of our contributions there was figuring out this new census data source where the federal government, for the first time we do know how many houses there are in a jurisdiction, which is really exciting. And that data is now being published. And you know, those three parts together. Yeah, build more housing in transit, Build Now Act Innovation Fund really are the core of the incentives. And then I think if there's another bucket of like reforms that don't affect your direct incentives, but that reform funding and financing.

B (30:38)

And just to add in quickly on the Innovation Fund, part of what's so great about this is there is this argument that people make, oh, we're going to build new housing and what are we going to do about the schools, what are we going to do about water and sewer, all these costs that come along with letting more people live somewhere. The key thing that the Innovation Fund does is it changes that calculus. It says the federal government is actually going to help you out if you're both have an objective improvement in your housing supply, which is important because you're measuring whether reforms are achieving something. And also if you're doing reforms, if you're changing your zoning, you're permitting, if you're letting more housing be built, if you're doing both of those things, you can get this money and the money can go like with cdbg, toward a flexible range of things and actually even broader range of things. It can go to be the matching funds for clean water and sewer programs. So a local government would then be in a place where they can tell community members who maybe are concerned understandably about the costs of growth, that those are going to be covered and there's going to be help here. I do have two quibbles with the Innovation Fund. Number one, it only targets local governments, doesn't target states. And I think Alex said very eloquently earlier, why state governments are really the place where we should be relying on. They're the places that count for the costs and the benefits of growth. And also I don't really think it's very innovative. These are policies that are very old that we could be doing. You know, it's not innovative to be allowing an accessory dwelling unit in your backyard. It's not innovative to let someone build a building a little bit taller. We actually used to know how to do that. We built lots of tall buildings in America and then we made it illegal most places to do it. So that is a little bit different, but doesn't actually matter. Right. What's important is the policy here and the policy is really great. And that is new money. That's $200 million per year over five years authorized. So that was more of a priority coming from the Democratic side. And we're really excited that it got into the bill. It's similar than the pathways removing obstacles to housing pro housing program in the appropriation side of federal funding that has been funded for the last several years. That's carrots to governments that reform their zoning. And it's really exciting to see this happen on the authorizing side as well as the appropriating side.

A (32:45)

So that's broadly the technical assistance and incentives bucket that Alex pointed at. Talk to me a little bit about just the subsidy stuff because this is one that I think if you're just like a urban yimby and you think of the housing problem as zoning, you just don't have a great sense for this. I don't. I'm speaking for myself here. I've got a good sense of like, oh, we need to let people build more single stair buildings. We need to, you know, allow adus in the backyard and then we get to the housing subsidy side and I'm like, I actually don't understand the politics of this at all. I'm not convinced. Like what role does it play here in the housing problem? Any of the three of you? But I think especially Alex and will maybe educate me here.

C (33:27)

Yeah, like for what's in the bill here on funding and financing reform that's not designed to change the political economy at the state or local level, but that it's just direct action. One is the qualified mortgage rule. Tweak for small dollar mortgages. Basically directing the CFPB to look at the rule that basically with Dodd Frank set fee caps on mortgages but also raise the cost of underwriting by requiring you to document more. I mean some of the things we did want to do, like we wanted to eliminate no DOC or so called NINJA mortgages. No income, no job, no assets. So like the documentation changes, many of them are important and bipartisan, but we Raised the cost of underwriting loans. We cap those fees. So, so small dollar mortgages aren't really made all that much anymore. And so that's an important, like, community development thing in places that have lower, you know, if you're in the Rust Belt and median home price is 100k, a small dollar mortgage is really important for mortgage access in those places.

A (34:13)

And sorry, can you just explain, A small dollar mortgage is just a mortgage of a house below a certain cost.

C (34:18)

Yeah, a mortgage that is small. It's probably a fuzzy boundary there, but basically where the fixed costs of underwriting make it uneconomic and unattractive under current fee caps to issue those loans.

A (34:26)

Just, just to be clear, it became uneconomical for banks to underwrite these mortgages just because the hassle of going through the paperwork for a house that's 150k or 100 or, you know, 80k or.

C (34:36)

Whatever, if it costs you several thousand dollars to underwrite alone, but you face a fee cap on that underwriting, then there's a certain mortgage size that pencils for it to be worth your underwriting.

B (34:46)

And Alex, stop me if I'm wrong here, but this could be very helpful for accessory dwelling units and other smaller types of housing. One challenge we sometimes face with zoning reform is people thinking these are all going to be luxury units for really wealthy people. And the reality is there are a lot of zoning reforms you can do that are going to be small units on small lots that are more appealing to your average person, to a longtime resident, to an elderly person who's hoping to downsize, to a young person who's looking for their first home. And this helps make that possible. And it's also one of the things in the bill that is not always focused on high cost places. I believe this was a priority for Senator Scott and it's something they think about for rural areas. So it's a great mix in there. Alex knows more about the financing side than I do, but I do just want to highlight on this sort of housing program side, there's a bunch in here that's just trying to make federal programs work better. One of my favorites because it's something that I got to work on a little bit and is a priority for any state that's had disasters in them, which is most states at this point is the Reforming Disaster Recovery act, which for the first time authorizes federal disaster spending. So HUD doesn't need to do a whole new rigmarole every single time there's a new disaster funding tranche. They actually get to do the work in advance to figure out how to spend that money. They still have to do some work once disaster is announced, but it makes things a lot faster to get money to communities that need them.

C (36:07)

And then quickly, just the rest of the laundry list a little bit. Federal Housing Administration Title one loan limits. That's for manufactured housing subject to the HUD code. And it also covers a type of rehabilitation mortgage for not just manufactured housing. It change the language to include accessory dwelling units. So for manufactured homes, federal government will ensure, you know, like the FHA insures private mortgages, they also have a special program to ensure the mortgages of manufactured homes specifically because some states don't allow them to be titled as real property. And so they have to be so called personality or chattel property is the old legal term. And so because they're not legally real property, they have to get a different type of mortgage. And so the FHA kind of has a patch here in the fact that there's this insured lending product for them and raising those loan limits just they had decayed with inflation. But then it also matters for ADUs because previously beyond manufactured housing for site built homes, you could use them for ADUs, for example, because they're rehabilitation loans. If you're turning your attic, your basement into an adu, it was allowed, but a separate structure is not rehabilitation under the original text. And so they just added, you know, to include detached ADUs are now eligible for Title 1. So like, that's a nice little fix there.

A (37:17)

Super.

B (37:18)

Yeah. The thing I was saying about ADUs before is actually more relevant to this section because there's two types of ADUs. There's ADUs that you carve out of inside your house, like that basement unit. And then there's also building a backyard cottage. And this changes federal financing to make that second one much easier.

A (37:33)

Got it. Let me ask, we touched on manufactured housing a moment ago. I want to bring in our expert on manufactured housing here, Brian Potter, who has written more on manufactured housing than. I don't know what the finish of that sentence is, and I've had a hot breakfast. That doesn't make any sense. But section 301 in here, which is called the Housing Supply Expansion act, is a chassis reform act. Basically, for those of you who have not read Brian's work here, there's a Nixon era requirement that prefab homes have to be built on a permanent chassis so that you can move it around. Brian, weigh in here. Does getting rid of that requirement matter for home building? If so, why? If not, why not?

D (38:13)

So one minor point of clarification. It's specifically manufactured homes subject to this specific HUD building code that are required to have a chassis. You can build a prefab home, factory built, that doesn't have a chassis. It just has to meet the requirements of the regular building code.

A (38:31)

Got it.

D (38:31)

It's a little bit easier to meet the requirements of the HUD code. It was designed for what at the time were called mobile homes. Now we're called manufactured homes.

A (38:39)

And just explain for listeners who are not familiar, what's the difference between a manufactured home and a prefab home.

D (38:44)

So a manufactured home is what you would call a trailer or mobile home. It's basically designed to be move and portable. It's built to a separate code, the HUD building code, which is federal code instead of local codes. It doesn't need to be attached to a foundation or a permanent structure. And there's some various different code requirements in terms of like hallway widths and room sizes and stuff like that. A prefab home is a home that is built in, in a factory, but then is just installed on site and for all intents and purposes is indistinguishable from a conventionally built house. And so a big sticking point in sort of the manufactured home industry for a long time is that the HUD code requires manufactured homes to have what's called a steel chassis, which is basically this big steel framework that the house sits on and is what makes it possible to sort of make these things like trailers or portable homes. The argument from the manufactured home industry is that the vast majority of manufactured homes do not ever get moved. Once they are installed in a single place, they are effectively permanent. And so steel chassis is basically adding unnecessary cost to a house because you have this big, expensive steel framework that you have to attach onto your house. And the steel is not a trivial cost. It's on the order of like 10 to 15% of the entire house, maybe is this steel chassis. So it is a pretty significant cost element. So just by eliminating this requirement, you can theoretically eliminate the requirement to have a steel chassis on these manufactured homes and reduce their cost by quite a bit. So it's potentially a pretty big deal, depending on how much demand will go up, how much. The price of manufactured homes is sort of a binding factor in how many of them can get built. And even if it doesn't increase the number of homes, it certainly should make them more affordable.

A (40:36)

Alex, did you want to jump in there?

C (40:37)

Yeah, yeah, definitely. We've got that in at like around $5,000 per module. And these things ship for about $90,000 per module, including shipping costs, but excluding land for a single module, two bed, one bath, starter home, that's five grand off. 90 grand is a significant percentage. And 120 grand for a two module, 10 grand off, that is still pretty good. But the other interesting thing is it interacts with a rulemaking that began under the first Trump administration and was completed under the Biden administration that we put a lot of time into that allows in the HUD code for the first time up to four units for dwellings. And so right now, if you wanted to stack HUD code units on them, you'd have this weird chassis dead space. You'd have to like weld a hole for a staircase and you know, all this weird stuff. But being able to, you know, basically removing these chassis requirements is going to make it easier to get floor plan flexibility. We do also actually have a backup plan in the rulemaking process. The statute doesn't define a chassis. I like to joke that like, well, chassis isn't defined in the Bible. It's up to us to decide. There are some rulemaking backups if this were to not pass. But basically the design flexibility gets really interesting. But this is where now it goes back to the market to answer these questions of no one has ever built one of these before because they've been illegal until last summer. We have to see, like, can a manufacturer develop a compelling product out of this? It's only just been legalized, so we'll find out. But to the extent that these triplex and fourplex laws, the state and local building codes, the IBC is so terrible for plexes that a lot of plex bills haven't worked very well. If someone can use the HUD code to make a 4 Plex work, that could be interesting. But at this point, it hands back off to the entrepreneurs to see what kind of products they can make.

B (42:17)

And a four plex is just four homes in one building. If folks don't know that.

D (42:21)

Yeah, yeah, I agree with Alex that it's a big question how it's going to matter for especially these like multi module manufactured homes and yeah, small multi family buildings built to this HUD code, I will say I'm a little bit skeptical. Just because manufactured homes, their biggest advantage comes when you don't need to stick a bunch of modules together. When you can just have a single unit and just drop it on site and you're done. The more you kind of need to start attaching parts together and arrange these more complex ways. The kind of. The more the cost advantage of manufactured homes gets eroded a little bit. And so I think it's. Yeah, it's an open question as to how much this will end up making a difference for these multifamily manufactured home type buildings. But it's a straightforward positive change. Making things easier, making things cheaper.

A (43:07)

I want to hear from each of you, what's the piece of this mega bill that you're most excited about? Just which one do you think matters the most for housing affordability and for the housing shortage? Which piece are we going to call out here?

B (43:22)

I'm most excited about the financial levers for regulatory reform at the state and local level. The way Build now Act, the Innovation Fund, the Build more housing, your transit Act. Try to get local and state governments to think more carefully about some of the things that we know from the evidence about how building more housing benefits everyone will help local communities will help states with their economic growth. But we have not previously aligned federal funding with that reality. Federal funding has happened agnostic to whether or not you actually have good regulations and so saying hey, federal funding is going to flow to you if you improve your regulations, if you remove regulations that make it harder to build a home, harder to afford a home. That's a big change. And it's the first time in some ways the federal government is doing this other than a few early tests like the pro housing grant program in the appropriations bill that has been in the last few appropriations bill. But this is the first time that the committee has really taken a stab at this. And it's really exciting to see that Democratic and Republican senators came together and could kind of agree on using those fiscal levers for good.

C (44:27)

Basically there are lots of things that have lots of causal paths. But if I can cut $10,000 off 120k home and there's 100,000 of those homes already shipping, I'm like okay, I feel pretty good. I'm very confident that is going to have an impact on people. Also some of the subsidy tweaks on section 8 also we did a lot of section 8 streamlining in here. That's really exciting of it's just the law passes and then it happens. It's just I'm positive that it's going to work.

A (44:50)

Will you say just a little bit more about what those Section 8 tweaks are? Give me like 20 seconds there.

C (44:55)

Sure.

B (44:55)

Yeah.

C (44:55)

The Section 8 tweaks, allowing remote inspections. So when Section 8 was passed in 1970s, we had built our way out of the housing shortage.

B (45:03)

Right.

C (45:03)

When you said urban crisis in 1974, people are like, oh, you're talking about all the houses that are empty in our cities. Housing costs weren't the focus. Housing quality was the focus, the time. So Section 8 was stood up in part to raise the floor on housing quality. So there's a very intensive federal inspection process. You have to have a HUD certified government inspector show up before you're allowed to lease out a unit. It sits vacant until it gets through the process. It's just really onerous now at least we're allowing pre inspection is one thing. Like if you complete a building and you're like, oh, I just want to be on a list at the public housing authority of like pre approved units. Like anyone who gets a voucher knows they can come to me. So there's pre inspection, remote inspection and then income certification, paperwork reduction. Any federal income certification you've done for federal purposes in the last year, you're going to be allowed to reuse that instead of having to fill out the paperwork again. So like that's several million households that just kind of poof, their paperwork gets better. And voucher voucher lease up failure rates are more than half of vouchers fail to be leased up within 90 days and people have to go back on the waiting list. Depends on the local rules of how long the waiting period is. But this inspection thing's a real barrier to people actually being able to use their vouchers. So I am excited about that. Then intellectually I'm most excited about BuildNow. Not just because that's what I've helped the most with, but because we've solved our data problem.

A (46:20)

And BuildNow is the one that Will just mentioned the like creating these carrots and sticks for local.

C (46:26)

Yes, Build now is like a, on a per unit basis. So on the one hand it's like this will have some incentive effect, you know, at first, but it's also a kind of pilot to see, oh, like how can we have federal infrastructure dollars Chase heads. Which is good on the merits. And the politics. If you're growing a lot, you probably need more of all the federal funds that support local infrastructure in addition to the fact that it helps the political economy of allowing growth. And so this is a test run of does this data work, does the politics work? Is it administratively all going to fly? And we're doing it with a safe amount of money in a responsible way. But Will and I have been working on Something like this for jurisdiction level CDBG PRO grants, Pro Housing Pathways to Removing Obstacles to Housing grants that we really wanted to do something more unit based. But the federal government does not know how many units are permitted or did not until very recently released public data. The building permit survey doesn't give us this granularity and below the county level. And so now we have the data and now it's really exciting to put it to the test.

A (47:26)

Super. Brian, what are you most amped about here?

D (47:28)

My answer is not very interesting. It's essentially the same as Will's the Build now and the Innovation Fund and the Build More Housing Near Transit Act. And it's pretty much simply because those three involve the largest amount of funding directed towards housing and trying to incentivize it. So Build now and Build More Housing Near Transit are both changing the incentives around very large pots of federal money. And the Innovation Fund creates a pretty large pot of new funding. Most of these other things are tweaks to existing programs that maybe have relatively small amounts of money attached to them or build relatively smaller amounts of housing or they're sort of advisory things or we'll look into this. That it's pretty hard to know how that's going to turn out and end up mattering in the long term. But changing the incentives around very large amounts of federal dollars seems like a big deal to me.

A (48:19)

Yeah. Well, let's go back around. I just want to hear Brian, you mentioned a few of them that you don't expect as much impact. Alex and Will, anything else that you would put in that bucket or maybe overrated relative to what you expect the actual impact to be.

B (48:32)

I'll say. And that's a program to support state and local governments changing their zoning and deregulating. Part of the theory behind that that I think has worked well is rewarding political courage at the state and local level. If a state or local government is taking the hard step of changing policies that there's a lot of status quo bias around to make things more affordable for their then we should be helping them out. I'm more skeptical of the technical assistance side. I basically think that the zoning problem is not a problem. People not knowing what the right thing is to do. I think instead people know what the right thing is to do. It's just hard to do. It's hard to make change. When I was working in local government there were all these great plans that were put out by the planning office when I worked in the city of Boston and then they would run into the buzzsaw of political opposition and they wouldn't happen. So I'm less excited about proposals that are just planning related. But I do think that there's a great mix in this bill. And you know, Alex has written some work about how everything fits together. And so even though I'm more skeptical of that side, I think that fits together well with the nudges. And then you get both a nudge and the support for people to do the nudge. I could say more partisan things about some of the more Republican coded stuff in the bill, but that's less exciting. I mean, it was an important negotiation. It was important to get the mix of things in there.

A (49:51)

I do want to ask before we close, how did it come together? Just talk to me at a basic level. It's not every day that a committee moves something through that's this substantive and this bipartisan. Like, how does that happen?

B (50:06)

Yeah, it's a really great question. And I think there are a lot of factors here. But the most important thing is there's been a change in the way people at the federal level think about housing policy. Five or 10 years ago, not only was housing policy not on the top of the radar, but when people thought about it, they really thought about it as a finance problem. The federal government's job was to fund the mortgage interest deduction and the low income housing tax credit and things like that, and then let everything else happen. And I think what we've realized over time, influenced by important research done by academics like Ed Glazer and David Schleicher and others, is now housing also really has a regulatory problem that it doesn't matter how much money you throw at it, but you can't solve the problem if you're subsidizing demand and constraining supply. And so on the Democratic side, Democrats are waking up to that reality that in order to achieve the goals we want of affordability, we need to tackle regulation. And that ran into an open door from Republicans because Republicans love deregulation. They think that the free market is a great solution to this problem of affordability. And they also care about affordability. So there was a meeting of the minds between Senator Scott, the chair of the committee, and Senator Warren, the ranking member. Senator Scott had a road to housing bill out for a few years. It had run into a lot of Democratic opposition, but when he became chair, he was really willing to negotiate with Democrats about what a final bill would look like that could be bipartisan. Senator Warren, I think, doesn't get enough credit for Being an original yimby, she has been talking about YIMBY ISM for a very long time and very invested in it. But also in both offices, they were, you know, new. They had a lot of staff come in at the beginning of this session, and they had staff that came in that were really committed to these issues. There's a bit of a generational story too, of younger policy folks recognizing this as a regulatory problem because they've grown up with the housing crisis being one of shortage, not one of urban decay. And so there are changes there. When I first started in the Senate, sometimes I would talk to other staffers and when I would talk about YIMBY reforms to make it easier to build by changing regulations, they would think that I was pro landlord, when in fact there's nothing that could be further from the truth. You create more competition for landlords and help out tenants if you make it easier to build more apartments.

D (52:20)

Right.

B (52:20)

And so there's really been a change in the way people think about the issue. The ranking member and the chair were important factors. Their staff were important factors. But I think the key thing to your question about how did it get so bipartisan and pass 24 to 0? The Banking Committee and their staff did a really great job figuring out how can we include priorities from everyone on the committee. And there were a lot of newly elected members on the Democratic and Republican side on the Banking Committee. And there were also a lot of long standing bills that had been out there for a very long time that people have been trying to pass, like the Choice in Affordable Housing act to fix all the problems with the inspection regime, the Reform Disaster Recovery Act. And everyone had a priority they wanted in a big bill. And basically they just took all the bipartisan ones, a few from each side too, and paired them together. And then all of a sudden you had a bill where everyone across the committee and also off committee members who care a lot about housing, like Senator Schatz, Senator Padilla, they also had priorities included in the bill. And so it became something that was really a mutual win. I think, to summarize it, basically you have an issue that both Republicans and Democrats care about, which is affordability and cost of living. Housing is the largest component of affordability. Affordability. And you had a solution that was more Republican coded, which is changing regulations, making it easier for the private sector to do something. I'll also give a little bit of a credit to the outside advocates like Alex Arnovich and Ed Glazer, who have been involved at the committee level at the personal office level. There was an important hearing that the Banking Committee had on why the hell is housing so expensive? And for the first time, I saw members engaging with. They always like to cite this stat from the national association of home builders that 20 to 40% of housing costs are from regulations. But usually when Republicans cite that stat, they like to think that it's mostly federal environmental regulations, and it's not. It's mostly state and local zoning and building codes that are the problem. And for the first time, I think that switch happened where Republicans realized the regulatory problems were this zoning and building code stuff that Democrats like Tina Smith and Brian Schatz and others and Elizabeth Warren have been talking about for a long time. And Democrats realized that they had partners. And Senator Kennedy had this great exchange with Ed Glazer thinking about how could we incentivize better housing policy. That then Senator Warren went and worked with him. And that's how the Bill now act happened, was the two of them working together. And that's a microcosm of how the whole bill came together between Senator Scott and Senator Warren, kind of realizing that unlike some other issues, there really was a lot of common ground here. And there are things that both sides left on the table and didn't get into the bill. For the Democrats, we really care about funding for housing programs, and there's not a lot of that in this bill. For Republicans, they really cared about some welfare reform stuff like work requirements, and there's not a lot of that in the bill. But there was enough to agree to for 315 pages and 27 different bills.

C (55:06)

Which is pretty significant, the bill as a whole. Yeah. It's like on the one hand, something did change when Senator Brown left and Senator Warren became ranking member in addition to Scottish Chair. That the part of that is probably structural. Like we did hear from all the members that they're hearing constantly from constituents. It's just a top thing in town halls. Just they're hearing it constantly. And that is newer and growing. But then it's also like Will said about Senator Warren taking over as ranking member. She kind of put everyone on notice. Like, I'm actually serious about the housing crisis. You could see that in the staffing decisions she made when she became ranking member. She picks pro housing people. And everything kind of changed from getting to know to getting to yes. And so from January till now, the entire dynamic changed from getting to know to getting to yes.

A (55:52)

That generational change point that I think you're both flagging. It's just, I feel like the more of these conversations I do, the more I feel like it's an underrated factor in politics. It's just like staffers today are different from staffers five years ago. The actual ranking members or the committee chairs, those roles just turn over. And that matters a huge amount as much as does actual persuasion and convincing people. Anything else we should tackle? We've got kind of like a free zone here at the end.

B (56:19)

I mean, one other thing to mention that we haven't talked about yet is in addition to the chassis stuff, I think another significant regulatory change is the NEPA reforms in the bill. And this is something that there had been talk for a while about. Could we reform the National Environmental Policy act so that when the federal government supports housing in infill areas inside an urban area, inside an area that's already disturbed, we shouldn't have to go through extensive environmental review? And there was a lot of back and forth on this and there was a lot of work by a bunch of staffers and members, but they ended up coming up with something really great that environmental groups were comfortable with. And also means that there's just a paring back of those regulations. I forget if Brian or Alex said this, but it is hard to know when you're doing regulatory reform, but what's really going to matter. But a philosophy that I subscribe to is that you're pruning a bush and you don't know what's going to make a difference, but something is going to make a difference.

C (57:15)

Right.

B (57:15)

You don't know what the load bearing thing is yet, but you're going to reach it. If you do chassis reform and you do NEPA reform, you do some other things and we've made it too hard to build the things that we say that we want. So we need to make it easier to do that. So anyway, I just want to bring up the NEPA part.

D (57:28)

Yeah. One thing I'll flag on that I was looking at this the other day is that HUD is not a particularly large producer of eiss. So the very long multi year environmental studies, they are one of the largest producers of EAs. So that middle NEPA policy that basically you do a study to prove that you don't have to do this more involved, longer study, they are one of the largest producers of those. So they're putting in a lot of work to basically show that they don't have to do these really involved environmental studies. So basically comparing that back to maybe not have to do that so much work that does actually seem Like a pretty good idea to me.

C (58:05)

It's truly incredible. This in particular, FHA at HUD specifically has to go through NEPA at the loan level only for multifamily. FHA single family is much larger than the multifamily program. You don't have to do environmental reviews when you insure a single family mortgage. The government sponsored enterprises, Fannie and Freddie, Even though they're GSEs, they're not subject to NEPA when they insure mortgages multifamily or single family, they don't have to do nepa. Only FHA multifamily is subjected to this. Why are we doing this? And so, you know, we're finally at least addressing this for infill and for small multifamily.

B (58:40)

And I just want to add one other factor that I think helped lead to the bill, which Is I think 10 years ago Republicans not unreasonably thought of yimbyism and the zoning reform stuff as mostly a California thing and a coastal thing. And because the housing shortage has changed and the housing shortage is now affecting the Mountain west and the south and other parts of the country and because zoning reform and deregulation is fundamentally very friendly to what a lot of Republicans think, especially Republicans more on the libertarian end, we've seen a lot of changes happen, especially at the state level, that then I think made Republicans feel like this was theirs too. So you had the Montana miracle of a huge slate of zoning and permitting reforms there. You had the Florida Live Local act allowing residential construction in commercial zones across the state of Florida. You had a lot of bills happen in Republican states that then made Republicans realize this wasn't just thing in coastal cities and this wasn't just a thing for Democrats, but it was sort of a broader regulatory reform project that was important to them too.

A (59:44)

Last question for you. Three odds that this time next year this bill is law or say end of 2026. What are the odds that this thing is statute?

B (59:54)

Well, I'll tell you, there's a saying to always take the over on Congress that things take longer than you think. And so we might be at the point right now where there's like that apocryphal line about Zhou and Lai where it's too soon to tell about the French Revolution. And it also maybe is too soon to tell about when this bill will pass. The next step for it is the Senate floor and or some sort of vehicle. And then after that the House. And the positive sign is that a lot of these same issues are being talked about in the House, on the other hand, the House is just starting to think about this specific bill. Right. So they have their own priorities. So I'm hesitant to put a number on it, but I'm always annoyed when I listen to podcasts when people don't actually answer the question.

A (60:31)

Yeah, I'm asking for a number.

B (60:33)

I would say 50. 50, but higher likelihood over a longer time horizon.

A (60:37)

Right.

B (60:38)

And the reason I brought up the always take the over point is no one thought that the markup on this bill would actually happen in July. Everyone thought it would be delayed because there have been so many delays. It's not uncommon for a markup in the Senate to be delayed. But they did it. They really made it happen. And they actually made it happen two days earlier than they originally planned. They had originally planned it for July 31, and they moved it up to the 29th because there were conflicts. And so there was a lot of really hard work and there was really a commitment to get to. Yes. And that commitment remains. So that's why I feel more confident than I do about other things. Although, of course, there are always challenges. And so I don't want to be too confident. I think quite confident. But you gave me.

A (61:17)

You gave a number, and we'll. We'll take a. We'll take the number. That's more than, you know, some guests would give us. So, Alex and Brian, you have. Give different numbers.

D (61:24)

I have no particular insight on this. I will use Will's number.

A (61:29)

Okay.

C (61:29)

Yeah. This is the high case for our three to five year plan.

A (61:32)

Plan.

C (61:33)

And it happened in one year. And so some mean reversion. Just, you know, from a super abstract level, it's like, oh, this is what we expect to do in five years. So if it happens in one year, we're really off what our, you know, 2024 expectations were. But the thing is, I have high hopes. I would go with, yeah, like, high probabilities that significant parts of this become law soon because large chunks of it are bipartisan, bicameral. Like, this is in some ways the Senate coming around to House ideas that it's like, oh, these have been bipartisan in the House for a long time already. And then other parts are new. So I think that there are parts of it that are gonna be fragile. I would say, like, very low odds that the bill. A 20% chance that the bill as it is now is law by the end of next year, but significant chunks of it passing in some form. I'm. I am actually optimistic.

D (62:21)

Yeah.

A (62:22)

Will, you've been A great guide to the process from the inside. I'm curious maybe as we close. Alex and Brian, you guys both write a lot on housing, on housing policy. Alex more on the policy side. Brian more trying to understand what's happening on the construction side. But both of you, I would say in some sense advocates or policy entrepreneurs or whatever phrase you want to ascribe. How do you guys reflect on your roles in trying to make stuff like this Senate bill happen? Is this a success story? Is this highlight that gets really contingent and you just have to do your job all the time and eventually something happens in Congress? How do you see your perspective here? I'm asking this pretty horribly actually, but I think.

C (63:07)

But it's a wonderful question. I actually have a good answer for you, I think. I like to say that a great think tank can grease the tectonic plates of history.

A (63:15)

We can't mix metaphor normally. Greasing tectonic plates.

D (63:19)

That's right.

A (63:20)

Getting in there with the plates, the scrub.

C (63:22)

You people at IFP with your fracking and your geothermal, you think of it as like fracking a tectonic plate, you.

A (63:29)

Know, no comment, Alex.

C (63:30)

But we can help structural forces in society slide in maybe different directions, but certainly different paces. What we do is we provide correct information to people in a timely fashion to people who need that information. And so if them not knowing the thing that we can inform them of changes their actions, then we've made a real impact. If the other forces operative in society are such that they already have all the information they need and they're like, yeah, we just can't get to yes, for the forces of history, then information alone, you know, a think tank is not an army, but like making the Build now act work better by being like, hey, here's some census data that's brand new, very obscure, has not been publicized, nobody's ever heard of it. Here it is now, the federal government, we actually know how many units there are at a sub county level every six months. That is not something that anyone was aware existed. And so like bringing that information changed the course of that action because it was timely and relevant and was enabling to the process. But if there were other reasons that this bill, that the politics weren't going to work, then bringing that information would not have been decisive. We can't redirect the largest forces in society, but we can help things not slip that mistakes or missing information would otherwise, you know, might have impeded.

A (64:45)

Brian, does that ring true to your experience? I feel like as an observer of your work A lot of the most valuable stuff is that kind of like surfacing new information.

D (64:55)

Yeah, for sure. And that's kind of how I see what I do is like trying to explore and understand a lot of like how these mechanisms actually work and make it more obvious either because it's only knowledgeable to a small number of like rarefied people in some extremely niche industry that nobody else understands. A lot of energy stuff is like this, where if you work in electricity it's. Some of this stuff is very obvious, but anybody else, it's completely opaque. Or it's stuff that like nobody really understands at all. And being able to explore these mechanisms gives people a better able to make effective interventions. And both to Will and Alex's point about the policy uncertainty and unclear what the major impacts are going to be and how you can have sort of these impacts on like small aspects of the process. Maybe not the big giant thing. A lot of times these small incentive changes tweaks can have very outsized importance. When I thinking about this bill, I was thinking about another big giant, you know, gargantuan bill in the, in the 70s called the National Energy act, which had this one small provision in it called Purpa that was basically required utilities to purchase electricity generated by like private generators under some certain set of conditions. And it was a really small and unimportant bill. It was basically put in there because of the advocacy of this one really small company in the Northeast that wanted to build a garbage burning plant basically. And so they hired a lobbyist specifically for this. And the lobbyist was able to get this language into the bill. And that act, that Purpa ended up being incredibly important because it's sort of what kicked off a lot of the renewable energy construction in California and other places. Because all of a sudden these utilities had to sort of buy electricity from these small generating plants. A lot of the energy provided by a lot of these renewable sources, wind power and stuff like that, was from small plants and particularly. So it ended up having just been enormously important through this really one small aspect of this one giant omnibus bill. So I think again, making these incentives work better and tweaking how they work and providing good information to sort of massage their implementation can be pretty important. So yeah, that's kind of how I.

A (67:07)

Think about it broadly, Brian. That interjection that like this bill reminds you of a bill from the 70s, a little thing called Purpa is very. Brian Potter. This is the calling. I know.

B (67:17)

Well, I just had one thought to offer on the role of outside think tanks and advocates, because now that I am outside of government, I'm thinking a little bit about this myself. And I think this bill is a good example of the role that those groups play and how helpful they can be sometimes. When I was a Senate staffer, I would think about think tanks of having a last mile policy problem where they do this great work on sort of a general articulation of an issue, but they don't do the last mile that gets you to the actual policy solution. And this bill is a great counterexample. People at niscannon, at Mercatus, at Up for Growth, at a bunch of advocacy organizations all did a lot of work to figure out specific solutions that would work for everyone. And then committee staff worked 20 hours a day and worked incredibly hard and did an amazing job to get it over the finish line and to develop a lot of ideas. And so it's sort of a good counter example to politics as theater. This really was politics as substance in a cool way.

A (68:13)

Well, let me close by just saying to the three of you, I know counterfactual policy impact is very hard to measure, more so for bills that have not yet become law and may never become law. But I am very grateful for the work that all three of you have done on this really important issue. So Brian, Alex and Will, thank you very much for joining. Sam.