It is a good afternoon. It's a pleasure to be here. Dean Lisa Anderson, thank you very much for the kind introduction. Mr. Mark Gordon, thank you very much for the great work. Mark Gordon used to be a practicing person at the Department of Housing and Urban Development, before he fled for academia. He did great things in government and if you're ever wondering what can you actually accomplish in government, Mark would be a good fellow to talk to. Now that he's in academia, he's still coming up with ideas and thoughts and helping. It's a pleasure to be with him.

It's an honor to speak at a lecture series names for Dr. Weston. Dr. Weston, in many ways was way ahead of his time. He was doing what we now do in the name of enlightenment, 20, 30 years ago. Carver Federal Savings Bank was basically what we could call the Community Reinvestment Act, today. It was a financial institution that said, let's invest in the local community as part of the mission of the financial institution. We're still fighting for that law today, by the way. But it was the founding premise of Carver Federal Savings Bank.

Mr. Weston fought the Department of Housing and Urban Development under a different secretary, thankfully. One of his points was that the HUD regulation of how many bedrooms you could have was too small and you were forcing too many people in too small a space. We now have the quality-of-life design standards, that say more bedrooms, more space, because it's not just a game of squeezing people into space, but their quality of life.

Dr. Weston took a hospital, Knickerbocker Hospital, and remade it into housing. This was unheard of at that time. We now have the school of adaptive reuse, which is going into cities taking old hospitals that are no longer needed, taking warehouses and redoing them, adaptive reuse. That was all Dr. Weston.

Before we had any of these fancy titles, he built affordable housing. He was a community activist, he was public-private sector partnerships before we came up with that great expression. So, it's truly an honor, my honor to be giving a lecture in his name.

We are at a very distinct time in this nation's development. You almost have to take a beat on where we are because it is almost self- contradictory. On one hand, we are doing extraordinarily well. I've been in Washington eight years working with the President and I wish I had a dime for every time the economic advisors walked into the President and said, the economy cannot get any better than this, Mr. President. This is it, you can't have this combination of low unemployment and low interest and low inflation. It can't get any better than this, it's going to have to start to turn, because the business cycles are inevitable.

It seems like they have said that almost every year for the past eight years. So, you have the strongest economy in history, they will say. Twenty-two million new jobs, stock market higher than ever before. We've created more millionaires in this economy than ever before. So, then life is good, right? Especially in this city where you feel, you live in this city, in Manhattan. You live in the glow of Wall Street. Live is good, how can it be any better?

Well, first, we are also in the middle of a very severe economic transition. I also believe we are at a point of national definition. The economic transition is this: as we have shifted to this new economy -- the information-based, high-tech economy, the only economy that those of you, the younger people in this room, really ever heard of - we have left behind the whole section of the country that was dedicated to the manufacturing and industry.

We can write articles and we can give speeches where we say the challenge now is to retrofit and change from the manufacturing- industrial to the high-tech economy. Yeah, but if you are in Buffalo, New York, it's not that easy to do that, because your economy was making steel. That's what you did. You hear about this transition to the high-tech economy, but it's much easier said than done. If you're Akron, Ohio; or if you're the Midwest and you have big parts of this country that are struggling.

This city is an anomaly, especially Manhattan. It is an anomaly. But you have many cities that are struggling, one out of three cities in the nation have what we call high poverty problems. One out of five are shrinking, 20 percent of the cities. One out of six have chronic high-unemployment issues. Upstate New York, as an indicator of this, Buffalo, Rochester, Syracuse, Albany, that industrial corridor. would be the second-to-last economy in the United States, if you had economic figures on just upstate New York. The entire Northeast corridor. So, first issue is you have a great economic transition and you have many areas that are struggling in that transition.

The second point is what I alluded to as a point of national definition. We're a success. Why? Well, the stock market says so. Look at the Dow Jones, that says we're a success. Why? Because the Dow Jones is the pulse of the nation. We have more millionaires than ever before. We must be a success.

Really? How do you define success? Well, a great economy is success. Is it? A great economy for who? For how many? What disparity of income? Is strong economics, alone, the definition of a successful nation? Maybe yes, maybe no. Some would say yes, I would say no.

You have, as you go across the country, problems as serious as they have ever been. You have one out of five children in poverty, 20 percent of the children in poverty in this nation. Which is the same number of children in poverty you had in the '60s. You have 40 percent child poverty in the City of New York. Twice the national average. Forty percent of the children in New York in poverty, twice the national average. Today, as we sit in the glow of the Dow Jones and the great planning for the new millennium, in this city, and you have no excuses.

If you take the necessary and obvious conclusion - that we should do something about this - then you say what do we do and how do we do it? Whatever solution you come up with, government is going to have to be part of that solution. Why? Because government is the vehicle for collective action. That's all government is. It's not an illusive concept, it's a very simple tangible concept. Some things we do alone because we can and individual action is always preferred. But some things we can't do for ourselves and, therefore, we have government.

Well, government is bad. I wish there was no government. That is not an option. Why? Well, it's not an option, because we can't do everything for ourselves. Oh, yes, we can, I don't need government. Fine, are you going to be your own policeman tonight? Are you going to leave the house and run around with a gun and make sure that your neighborhood is secure? If there's a fire, are you going to run out with a bucket and you're your own fireman? By the way, who's going to do the food inspection, before you family eats the meat? When the plane is about to land, are you going to run up to the tower and say, you land, you take off? If there's going to be a war, are you going to outfit your own family and defend the nation? We need government. It's not a yes or no. The question is, to what extent?

Well, why do we have this argument in this first place? Because people are very cynical about government. 1999 Gallup Poll, only 9 percent say they have a great deal of trust in government, 9 percent; 7 percent said they had a great deal of trust in politicians. They actually liked government better than politicians. By a whopping 2 percent.

How about this one? A Gallup survey ranking 45 different professions based on honesty and ethical standards, a congressman was 39th out of 45. Just behind gun salesmen. Ahead of only Internet journalists, insurance salesmen, HMO managers, advertisers, telemarketers, and, of course, car salesmen.

Why this cynicism about government? I will give you two hypotheses. Number one, and I think more and more relevant, and it's something you have to think about, I am a relatively young person. I was 39 when I was appointed Cabinet Secretary by President Clinton and was one of the youngest Cabinet secretaries ever appointed, second to Bobby Kennedy, who was appointed by his brother, John, to be Attorney General. I don't count Bobby Kennedy because that was nepotism. But if you take nepotism out of it. Then I am the youngest Cabinet secretary. 39, that was a long time ago. I'm now a seasoned 42.

But my generation, as a recently young person, my generation is much different than my father's generation in its perception of government.

When you talk about government to my father, it is an act of faith about how good and strong government is. He knows inherently, in his DNA, he knows how good government is. Why? Well, because government did tremendous things for his entire generation. Government won wars, right? World War I, World War II, Korea, government won wars. They went to school. How many people on the GI Bill and if it wasn't for government, I wouldn't have gone through school. If it wasn't for government, in the depression, I wouldn't have had anything to eat. If it wasn't for government, I would have never gotten my VA mortgage, that's how I got my first home. Government worked for that generation.

Government did not have that experience with my generation. What did government do for me? I was too young to be drafted, I never served in any wars. I was really too young to experience the euphoria of John F. Kennedy, or Bobby Kennedy. I never had that excitement, that possibility. My experience was with Nixon and Watergate. That was not the most seductive experience one could have. I did not have a warm and fuzzy feeling about government after that. Government did not pay my tuition, I had a student loan. It was through a bank, I think government was maybe somewhere involved in there, but I don't credit it with that. My experience with government has basically been negative, not positive. I think that's one of the causes of cynicism.

I think one of the other causes is government made mistakes. Government had some good ideas in the '40s, '50s, and '60s and they made some mistakes. They didn't strike out, it wasn't a disaster, but they made mistakes. My area, public housing, was a mistake. Boy, and people know it. You can go anywhere in the country and they will say, they ruined my neighborhood with that public housing. We had a nice neighborhood and then they came in with the public housing, and they built these big high-rises, and the neighborhood went to hell. They'll point to welfare, decade after decade you used to argue about welfare. Finally government admitted that it was a problem and it went away. Mistakes in policy, mistakes in management.

Most people experience government how, at the local department of motor vehicles. You want to talk about a relationship-ending experience, go renew your license at a DMV. Whoever that is that is in charge of that, you want to have nothing to do with ever again. You fill out your tax form, that's your other experience with government. Why would you want to have any relationship with this organization.

There are a lot of reasons for the cynicism, but we have to get past it. That I'm also convinced of. I believe we can. That's what we've been trying to do at HUD. Why HUD? Because HUD was the poster child for all of this. When you talk about bad policy, or bad management, or flawed implementation, or the demonic federal government, it's easier to hate the federal government, because it's the furthest away. HUD came to mind. HUD is the department that brought you the public housing projects. HUD is the department that brought you waste, fraud, abuse and scandals. HUD is just the icon for '60s policy gone bad. That's what HUD was.

Why did I take the job? I'm not quite sure, to this day. But the theory was, what if you could take that demonstration of failed government, or what people perceived as failed government, and actually turn it around? What if you could go right into the icon of the worst cynicism and change it? Admit the error and change it. Couldn't you then use that as a metaphor to build confidence, et cetera? That's what we did with HUD.

I took over HUD, I went through the confirmation hearings. At that time, they were talking about eliminating HUD, this is four years ago. The new Congress had come in, and they wanted to eliminate HUD, eliminate the Department of Education. I went into the confirmation hearing and the senators would have those pithy quotes like, you don't have to bother unpacking because you're not going to be here that long. I hope you don't sell your first house because you're only a temporary visitor in Washington, D.C. I said, basically, if I can't fix the department, then the department should go away. But before the department goes away, let's try, let's try to see if we can't figure out a good way, an effective way to actually reach the means.

Then we went and we started, literally, from ground zero. I went to the employees of the department, 13,000, and I said, look, the bad news is that they want to eliminate the department. The good news is, I think if we change, we can survive and they'll endorse us at the end of the day. We went back and we found the founding legislation and the founding speeches about what HUD was supposed to be. I said let's find out what the thought was, go back to the original thought and then find out what happened along the way and how we can get back to that original start.

It was the idea of John F. Kennedy. He died before HUD became a reality. Johnson actually passed the legislation, but it was the idea of John Kennedy. John Kennedy's idea was to have HUD, he didn't have that name for it, but wanted a center for urban innovation, an international center for urban innovation. That's what he started with. Columbia stole the idea. But he wanted an international center for urban innovation and he wanted a department that helped provide equal opportunity. Understanding that if you let the private market work alone, there are going to be disparities, there are going to be some people left behind and you need some corrective mechanism for the free market, and that's what HUD could do. Who can argue with that premise?

Somewhere along the way, we lost it. We started with a blank slate, we came up with a new policy, we went from what we called the entitlement policy, to the empowerment policy. What is the empowerment policy? It's saying, I'm not going to do anything for you, I'm government. You have to do for yourself. And that's the only way it will work, and that's really all you want from me in the first place. But I'm going to give you the tools and the ability to do what you need to do for yourself. Tools to enable you to empower you to do for yourself. Understanding that choice, is only choice if you have the power to actually make the choice. So you need an education as a tool. You need job training as a tool. You need access to credit as a tool. You need equal opportunity in housing choices as a tool. But then it's up to you. That's the empowerment philosophy.

The single, clearest distillation of that at HUD is in our economic development programs. Basically, we said, instead of doing all these constant subsidies, let's see if we can't get you a job, get the neighborhood an economic base, and then you lift yourself. The Empowerment Zones are the clearest definition of it. You have one here in Harlem. We have them across the country. Going extraordinarily well, give the tools to the local community, then let the local community do for itself.

When Mark Gordon used to work for a living at HUD, used to have a program called the EDI - Economic Development Initiative - program with the Section 108. At HUD everything has to be an acronym because they don't really speak English at HUD, it's an acronym or a number. The EDI 108 program is about $10 billion of federal funds that goes to spur local private investment. It's created hundreds of thousands of jobs all across the country and never cost $1 to the federal government. Create the economy, let the neighborhood do for themselves, give people jobs, let people do for themselves. The empowerment philosophy as opposed to the entitlement philosophy.

We did that across the board. Homeless programs. Esther Fuchs did a great study for us of the homeless programs. Rather than shelters and keeping people in the status quo, mobility and movement and how to give them opportunity and jobs and get them up and out. But not an entitlement, not a status quo mobility.

A program that we're announcing today, how do we provide affordable housing in this nation? Basically, through Section 8 vouchers. 1.4 million households get Section 8 vouchers. They can pay about $600, $700 per month. The program has been in existence for 20 years. But they only pay for rental housing. Which means you can take the voucher and go rent an apartment. But you can't buy an apartment and use that voucher to pay a mortgage.

Carver Federal Savings taught us what? Invest in the asset. Wealth accumulation. Most Americans derive their greatest wealth from their home. We're now going to change the Section 8 voucher program, make it an empowerment program. You can buy a house and use that voucher to now pay your mortgage. That was the new policy.

You then had to come up with a management structure that worked. So, what did we do? We got in the best management minds in the nation. We brought in Booze Allen and PriceWaterHouse and we said this is what we want to do. Here's our policy, please show us how to do it. Don't worry about what we have now, we have 81 offices all across the country, we have 13,000 employees in different places. But just let's design it from what we called the blank slate. We did it in partnership with a union, because HUD was going to be eliminated and maybe there was change involved in this scenario, but at least there was a job at the end of the day.

We totally restructured the department. We said to all 13,000 employees, nobody has a job today, you all come out of your box. We're going to redesign the department and then we're going to put the people where we need them and in the jobs that we need, rather than organizing around where the people are. That's why, one of the problems with the management in government is people take the status quo the way it is. You have an office in Los Angeles and an office in San Diego, therefore, you organize around those offices. Well, why don't you put the office where the work is? Well, because this is government, we don't do that. Yeah, but, imagine if you actually wanted to make government work and show people that it could work. Then you would do that. That's what we've done at HUD. It has not been easy, but it's working.

One of the other areas we've work in, how does HUD provide services? HUD doesn't do it from Washington, D.C., it normally goes through state and local governments. Now a new creation called Community Development Corporations. Harlem Community Development Corporation. Building through the strongest asset in the community. Often the strongest asset in the community is the faith-based organization; it's a church, a temple, a mosque. Why don't we use the church as the point of contact in the local community? This year, we'll do about $1 billion with about 1,000 faith-based organizations all across the country. By all accounts, it has gone well. It has gone well, not perfectly, but it's gone well.

We've taken the FHA, Federal Housing Administration, which is a big subdivision of HUD. When we took it over, it was $2 billion in the red every year. Now we're making $16 billion per year on a $500 billion portfolio.

Esther Fuchs came in and looked at our homeless programs. We had tripled the budget, but the product went up six or seven fold. So, yes, we tripled the budget, but we also got much more product.

Public housing, we literally will take down 100,000 failed public high-rises all across the country and rebuild smaller units.

We have the best budget in 20 years. The Republicans have given us the best budget in 20 years, four years before they wanted to eliminate us.

Let me end on this point, if I can. Two quick points. The issues we want to focus on between now and the end, one is the issues of guns and one is the issue of race. The issue of guns is, in my opinion, the most ludicrous issue that we face now. We lose ten children per day. This is a uniquely American phenomenon. We lose twelve times more people to gun violence than the other 25 industrialized nations combined. How crazy is that? There is no need for it. It's a very political issue. There's been legislation in the Congress that has sat there for two years and it's not going anywhere. This is an election year and I don't think it's going pass this year.

But we actually have an alternative mechanism, which is 30 cities have sued the gun manufacturers to make safer guns. They can do this if they want to. It's not that we're trying to stop guns, it's we just want to make safer guns, what they call personal identification technology. Only the authorized user should be able to operate a gun. Trigger lock, fingerprint lock, combination on a lock, and put in screening provisions so you don't sell to criminals. We can do both those things. We just have to want to do it.

As 30 cities sue manufacturers, the federal government threatened suit and we settled with a company called Smith and Wesson, which is the largest handgun manufacturer in the United States. We dropped the lawsuits, they will have mandatory safety devices on guns and mandatory background checks so they don't sell to criminals. We can do this. We just need to do it.

There is an incipient popular movement here, the Million Mom March, people all across the nation who are literally saying now, enough is enough.

The other issue is the issue of race. This nation's going to become a majority-minority. California just became a majority-minority. Whites are no longer a majority. New York City has, in may ways, always been the testing ground for the issue of race. Either we resolve this issue, or this issue defeats us, I am convinced.

Two-prong approach - and President Clinton started this, to his credit - talk about it. President Clinton's One America initiative. Talk about it. What are the fears, what are the resentments, why do I get nervous when I see a different skin color or a different accent or a different shape of someone's eye. Talk about it. That's what the One America dialogue was all about.

Number two, enforce the law. Enforce the law. Discrimination is illegal. It's not just not nice. It's illegal. You are a nation of laws, enforce the laws. I do the fair-housing enforcement. We'll do 1,000 cases, double what any HUD secretary has ever done before. Why? Because there's discrimination all across this country. It is there if you just choose to see it. We do cross burnings, we do the Ku Klux Klan, we do death threats, all day long. If we don't resolve the issue of race, it will defeat us. The question has always been - Is it our strength or our weakness? The answer is yet to come.

The last point is this. I started by saying there's cynicism about government. There is. Government has to change to resolve the cynicism. But it is also true that it is our best chance to make a difference and to make this place a better place.

There is so much more that we can do, so much more that we need to do and so much potential that we have yet to resolve. You don't see it in this city, but you can go to Appalachia where I was a few weeks ago, and it is as bad as anything you have seen.

You can go to the Chicago Housing Authority. Of the 15 poorest census tracks in the United States, 12 of the 15 are the Chicago Housing Authority. It is hell, that is the only way to describe it.

You can go to the Pine Ridge Indian Reservations, the poorest census track in the United States, 65 percent substance abuse. It is hell.

There is so much more we have to do. We have the ability to do it with the economy. You have this great economy, this great engine, you could be investing it all across the nation. You have so much untapped potential. You think this is a strong economy? You think the stock market is high now? Can you imagine how high it could be if we had the strength to invest and bring all the places along? If we had the strength to go back to those places that have been left behind, the poor areas, now, we invest in them? We make them productive, we make them workers. What is our trajectory if we don't? Can you really make it as a society with the worst income inequality in 30 or 40 years? With a racial problem that is still percolating at a time when you're becoming more and more diverse, not less and less?

In many ways the enemies for this country are not outside our borders anymore. They're all inside our borders. The challenges are within us. The enemy is within. It's ours to solve and government is the ability to do that. You can make it happen. Thank you very much for letting me be here today.

Content Archived: January 20, 2009