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| Welcome to Wonkbook, Wonkblog's morning policy news primer byMax Ehrenfreund (@MaxEhrenfreud). Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here. Follow us on Twitter and Facebook. |
| How taller buildings could fix gentrification |
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The new "pencil tower" at 432 Park Avenue in Manhattan, which will consist of 104 luxury condominiums when finished, is 93 feet square at its base and 1,396 feet tall. Francis X. Clines reports that a dozen similarly slender skyscrapers are in the works. He calls this one "Gotham'sfickle finger of real estate wealth signalling the next Gilded Age."
A new rowhouse on V Street in Washington, D.C. also resembles a finger, although on a much smaller scale, and neighbors have a cruder nickname for it. It's one of a growing number of "pop-ups" -- new rowhouses that rise one or two stories above the older ones on the block.
Soaring rents in major cities worldwide make these residential beanpoles inevitable, whatever their size and location. A developer with a small lot but plenty of buyers will build up and up, in order to sell as many units as possible. Prices at 432 Park start at $7 million. But it isn't just real estate firms and their wealthy customers who benefit.
Taller buildings should mean lower rents and more space for everyone -- the buildings could be an outlet for the pressure of gentrification, however you define it. In theory, if hundreds of new luxury condominiums are built in pencil towers and pop-ups, landlords with desirable property elsewhere will have a harder time finding super-rich tenants. As a result, the wealthy won't colonize other neighborhoods, pushing out less affluent families.
One question is how large the luxury market really is. The 104 units at 432 Park are a drop in the bucket of demand at the high end. When the demand for luxury is addressed, developers will build more affordable units, but how long will that take? Would all of Manhattan be converted into pencil towers first?
We might never know, since tall buildings are so unpopular. In Washington, federal law limits the height of buildings to 90 feeton residential streets, and the city has ordained lower limits in many neighborhoods. Two economists estimated that these restrictions impose the equivalent of a 22 percent tax on the city's residents. In San Francisco, residents worried about their view of the Bay voted to give themselves a veto over construction above 40 feet along sections of the city's waterfront. And in Manhattan, some see 432 Park Avenue as"ugly," "uninspired" and "crass," a "new cathedral to uber-wealth."
The pencil tower isn't a pretty solution to the problem of exorbitant housing costs, or an elegant one -- rent controls ora more redistributive tax code would help urban residents more directly -- but it is a straightforward way of addressing the housing shortage that is causing financial hardship for so many Americans.
What's in Wonkbook: 1) Congress convenes Tuesday 2) Opinions, including Kleinbard on dynamic scoring 3) New York cop laid to rest 5) Regulating payday lenders, and more
Chart of the day:
As health-care costs have increased over the past ten years, Medicaid costs have remained stable. Per-capita spending on health-care nationally is now much higher than Medicaid costs per beneficiary. These low levels of spending might make the government program unsustainable. Christopher Flavelle forBloomberg.
President Obama has hinted he might reject the proposal for the pipeline. Last month, he said the project would not "not even have a nominal benefit" for U.S. consumers. Meanwhile, Republicans in the Senate are planning a vote in committee as early as Thursday, although it's unlikely they'd have the votes to overturn a presidential veto. Laura Barron-Lopez in The Hill.
Debates over immigration and health care are also coming up. The Department of Homeland Security is only funded through the end of February, so Congress will have to reach some kind of compromise on immigration policy before then. Republicans seek concessions on Cuba from the White House in return for funding the agency. Patricia Zengerle and Julia Edwards for Reuters.
But both sides hope there will be some space for cooperation. McConnell and Obama met after the election to talk about tax reform, free trade and infrastructure spending. But Democrats are skeptical of McConnell's ability to control the firebrands in his caucus, who are likely to oppose any compromises. Paul Kane in The Washington Post.
BARNES: Obama himself will be the obstacle to any real progress. He is "a clumsy negotiator," and if he wants an agreement on taxes or the Trans-Pacific Partnership, he'll have to work harder than he has in the past to bring along Republicans and his own party. The Wall Street Journal.
HUNT: A few compromises would leave both sides better off.The issues that the parties can't agree on, meanwhile, would set the terms of the 2016 campaign. It's also likely that the G.O.P. Congress will refuse to compromise with the president in order to make him look obstructionist. Bloomberg.
Meanwhile, two tea party congressmen will run against John Boehner for speaker. Reps. Louis Gohmert (R-Tex.) and Ted Yoho (R-Fla.) hope to reveal the dissatisfaction on the far right with the Ohio Republican's leadership. In particular, Gohmert pointed to Boehner's compromise with Democrats on a $1.1-trillion spending bill last month. Sean Sullivan in The Washington Post.
They probably don't have the votes. Even if Boehner lost the support of all 23 Republicans who are on the record as opposing him, he'd still have five more votes than he needs to be reelected as speaker. David Weigel for Bloomberg.
Football interlude: Terrell Suggs of the Baltimore Ravens manages to intercept a pass from Pittsburgh Steelers quarterback Ben Roethlisberger between his knees. Baltimore won 30-17.
SUMMERS: Now is an ideal time for a carbon tax. With gas prices falling, a carbon tax would be unnoticeable, even for poorer households living in the suburbs for whom commuting is a major and unavoidable expense. The Washington Post.
Climate scientists are overly optimistic, not alarmist. They're trained to be modest and circumspect and to skeptically examine all of their conclusions, but as a result, they're hesitant to say everything they know about global warming.Naomi Oreskes in The New York Times.
Federal regulations on methane are unnecessary and costly.Drilling companies already have a very good reason to prevent natural gas from leaking. When it does, they lose a valuable commodity. The Wall Street Journal.
KRUGMAN: How much credit does Obama deserve for helping the economy recover? Perhaps not all that much, but, contrary to his opponents' claims, he at least hasn't done anything to hold the economy back. The New York Times.
LUCE: The U.S. economy is in better shape, but the middle class isn't. Most Americans are still worse off than they were at the turn of the century, and though the economy has managed to create growth, no one is sure how to spread the wealth. The Financial Times.
MATTHEWS: The founding of America supports Thomas Piketty's argument about capital. "The slave-holding class was able to translate its wealth into political influence, enough to maintain the institution for 77 years after the Constitution was ratified. And the economic power of white men helped keep in place a system in which a substantial majority of the US population was denied suffrage for over a century. They kept in place a system that was, by any reasonable definition, not a democracy." Vox.
Around the country, cops are frustrated with civilian leadership. "Law enforcement officials say morale is flagging among the rank-and-file, who they say feel 'betrayed' by President Obama and Attorney General Eric H. Holder Jr. in their calls for tough reforms of policing tactics." Wesley Lowery and Kimberly Kindy in The Washington Post.
Republicans are also fighting for their agenda in the courts."Democrats say the legal moves reflect a convenient turnabout for the Republican Party and a newfound willingness to seek an active role for the judiciary when it benefits conservative policy goals." Michael D. Shear in The New York Times.
Regulators will write rules for payday lenders. The Consumer Financial Protection Bureau wants to extend federal authority for the first time into what has always been an unregulated sector of the banking system. Alan Zibel in The Wall Street Journal.
Brookings scholar Isabel V. Sawhill has had a change of heart about marriage. Long respected as the foremost liberal proponent of an ancient institution, Sawhill worries in her new book that preserving marriage might be impossible -- and that policymakers need to think of other ways to discourage single parenting. Brigid Schulte in The Washington Post.
A new rowhouse on V Street in Washington, D.C. also resembles a finger, although on a much smaller scale, and neighbors have a cruder nickname for it. It's one of a growing number of "pop-ups" -- new rowhouses that rise one or two stories above the older ones on the block.
Soaring rents in major cities worldwide make these residential beanpoles inevitable, whatever their size and location. A developer with a small lot but plenty of buyers will build up and up, in order to sell as many units as possible. Prices at 432 Park start at $7 million. But it isn't just real estate firms and their wealthy customers who benefit.
Taller buildings should mean lower rents and more space for everyone -- the buildings could be an outlet for the pressure of gentrification, however you define it. In theory, if hundreds of new luxury condominiums are built in pencil towers and pop-ups, landlords with desirable property elsewhere will have a harder time finding super-rich tenants. As a result, the wealthy won't colonize other neighborhoods, pushing out less affluent families.
One question is how large the luxury market really is. The 104 units at 432 Park are a drop in the bucket of demand at the high end. When the demand for luxury is addressed, developers will build more affordable units, but how long will that take? Would all of Manhattan be converted into pencil towers first?
We might never know, since tall buildings are so unpopular. In Washington, federal law limits the height of buildings to 90 feeton residential streets, and the city has ordained lower limits in many neighborhoods. Two economists estimated that these restrictions impose the equivalent of a 22 percent tax on the city's residents. In San Francisco, residents worried about their view of the Bay voted to give themselves a veto over construction above 40 feet along sections of the city's waterfront. And in Manhattan, some see 432 Park Avenue as"ugly," "uninspired" and "crass," a "new cathedral to uber-wealth."
The pencil tower isn't a pretty solution to the problem of exorbitant housing costs, or an elegant one -- rent controls ora more redistributive tax code would help urban residents more directly -- but it is a straightforward way of addressing the housing shortage that is causing financial hardship for so many Americans.
What's in Wonkbook: 1) Congress convenes Tuesday 2) Opinions, including Kleinbard on dynamic scoring 3) New York cop laid to rest 5) Regulating payday lenders, and more
Chart of the day:
As health-care costs have increased over the past ten years, Medicaid costs have remained stable. Per-capita spending on health-care nationally is now much higher than Medicaid costs per beneficiary. These low levels of spending might make the government program unsustainable. Christopher Flavelle forBloomberg.
1. 114th Congress convenes this week
Energy is at the top of the agenda for the G.O.P. leadership.Sen. Mitch McConnell (R-Ky.), who will be the majority leader when the new Congress convenes Tuesday, promised a "serious and significant debate" over energy policy. One immediate goal is to force approval of the Keystone XL pipeline. Ed O'Keefe and Paul Kane in The Washington Post.President Obama has hinted he might reject the proposal for the pipeline. Last month, he said the project would not "not even have a nominal benefit" for U.S. consumers. Meanwhile, Republicans in the Senate are planning a vote in committee as early as Thursday, although it's unlikely they'd have the votes to overturn a presidential veto. Laura Barron-Lopez in The Hill.
Debates over immigration and health care are also coming up. The Department of Homeland Security is only funded through the end of February, so Congress will have to reach some kind of compromise on immigration policy before then. Republicans seek concessions on Cuba from the White House in return for funding the agency. Patricia Zengerle and Julia Edwards for Reuters.
But both sides hope there will be some space for cooperation. McConnell and Obama met after the election to talk about tax reform, free trade and infrastructure spending. But Democrats are skeptical of McConnell's ability to control the firebrands in his caucus, who are likely to oppose any compromises. Paul Kane in The Washington Post.
BARNES: Obama himself will be the obstacle to any real progress. He is "a clumsy negotiator," and if he wants an agreement on taxes or the Trans-Pacific Partnership, he'll have to work harder than he has in the past to bring along Republicans and his own party. The Wall Street Journal.
HUNT: A few compromises would leave both sides better off.The issues that the parties can't agree on, meanwhile, would set the terms of the 2016 campaign. It's also likely that the G.O.P. Congress will refuse to compromise with the president in order to make him look obstructionist. Bloomberg.
Meanwhile, two tea party congressmen will run against John Boehner for speaker. Reps. Louis Gohmert (R-Tex.) and Ted Yoho (R-Fla.) hope to reveal the dissatisfaction on the far right with the Ohio Republican's leadership. In particular, Gohmert pointed to Boehner's compromise with Democrats on a $1.1-trillion spending bill last month. Sean Sullivan in The Washington Post.
They probably don't have the votes. Even if Boehner lost the support of all 23 Republicans who are on the record as opposing him, he'd still have five more votes than he needs to be reelected as speaker. David Weigel for Bloomberg.
Football interlude: Terrell Suggs of the Baltimore Ravens manages to intercept a pass from Pittsburgh Steelers quarterback Ben Roethlisberger between his knees. Baltimore won 30-17.
2. Top opinions
KLEINBARD: Dynamic scoring doesn't work. It would be great to calculate the macroeconomic effects of changes to the tax code -- if we knew how. In practice, the output of the models used largely reflects the modeler's ideological assumptions.The New York Times.SUMMERS: Now is an ideal time for a carbon tax. With gas prices falling, a carbon tax would be unnoticeable, even for poorer households living in the suburbs for whom commuting is a major and unavoidable expense. The Washington Post.
Climate scientists are overly optimistic, not alarmist. They're trained to be modest and circumspect and to skeptically examine all of their conclusions, but as a result, they're hesitant to say everything they know about global warming.Naomi Oreskes in The New York Times.
Federal regulations on methane are unnecessary and costly.Drilling companies already have a very good reason to prevent natural gas from leaking. When it does, they lose a valuable commodity. The Wall Street Journal.
KRUGMAN: How much credit does Obama deserve for helping the economy recover? Perhaps not all that much, but, contrary to his opponents' claims, he at least hasn't done anything to hold the economy back. The New York Times.
LUCE: The U.S. economy is in better shape, but the middle class isn't. Most Americans are still worse off than they were at the turn of the century, and though the economy has managed to create growth, no one is sure how to spread the wealth. The Financial Times.
MATTHEWS: The founding of America supports Thomas Piketty's argument about capital. "The slave-holding class was able to translate its wealth into political influence, enough to maintain the institution for 77 years after the Constitution was ratified. And the economic power of white men helped keep in place a system in which a substantial majority of the US population was denied suffrage for over a century. They kept in place a system that was, by any reasonable definition, not a democracy." Vox.
3. New York cops protest again at second funeral
Officer Wenjian Liu was laid to rest Sunday. Outside the funeral parlor in Brooklyn, assembled police turned their backs when Bill de Blasio began to speak, showing their disregard for a request from the police commissioner to respect the mayor.J. David Goodman and Kirk Semple in The New York Times.Around the country, cops are frustrated with civilian leadership. "Law enforcement officials say morale is flagging among the rank-and-file, who they say feel 'betrayed' by President Obama and Attorney General Eric H. Holder Jr. in their calls for tough reforms of policing tactics." Wesley Lowery and Kimberly Kindy in The Washington Post.
4. In case you missed it
In the states, newly empowered Republicans are aggressively pursuing conservative policies. Republicans have more power than ever in state government. They hold both executive and legislative control in 24 states. Their goals include right-to-work laws, restrictions on abortion, income tax cuts and repealing the Common Core. At the same time, many G.O.P. officials are talking about expanding Medicaid under Obamacare in a concession to liberal priorities. Reid Wilson in The Washington Post.Republicans are also fighting for their agenda in the courts."Democrats say the legal moves reflect a convenient turnabout for the Republican Party and a newfound willingness to seek an active role for the judiciary when it benefits conservative policy goals." Michael D. Shear in The New York Times.
Regulators will write rules for payday lenders. The Consumer Financial Protection Bureau wants to extend federal authority for the first time into what has always been an unregulated sector of the banking system. Alan Zibel in The Wall Street Journal.
Brookings scholar Isabel V. Sawhill has had a change of heart about marriage. Long respected as the foremost liberal proponent of an ancient institution, Sawhill worries in her new book that preserving marriage might be impossible -- and that policymakers need to think of other ways to discourage single parenting. Brigid Schulte in The Washington Post.
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