Nobel-Prize-winning economist Milton Friedman famously quipped that “nothing is so permanent as a temporary government program.” If only he’d known how apt this would prove during a pandemic.
Of course, Friedman didn’t mean to suggest that expansions of government power and control over the economy are never rolled back or repealed. Just that we ought to be wary of promised “temporary” programs or interventions, because there will inevitably be a strong push for their perpetuation. We’re witnessing this phenomenon play out in real-time as politicians in Washington push to—yet again—extend the federal government’s halt on evictions nationwide.
The so-called “eviction moratorium” in question was initially implemented by Congress in March 2020 and then drastically, unilaterally expanded by the Centers for Disease Control in September 2020. (Yes, under the Trump administration.) It made tenants below a certain income threshold immune from eviction even if they did not pay their rent, so long as they provided written notice and cited certain excuses. Landlords who violate the moratorium were threatened with fines of up to $100,000 and jail time. They were, however, still allowed to evict tenants under a narrow set of circumstances, such as tenants who engaged in criminal activity or endangered public safety.
After the Biden administration took control in January 2021, it once again extended the supposedly “temporary” nationwide dictate. The moratorium is supposed to lapse on Saturday, July 31. Yet Washington politicians are again mobilizing to renew the order.
President Biden has called on Congress to pass legislation expanding it, after the Supreme Court suggested that it cannot be renewed unilaterally. Meanwhile, Speaker of the House Nancy Pelosi has said that “extending the eviction moratorium is a moral imperative.” As I write this newsletter, Congress is considering legislation to extend it.
But despite politicians’ lofty rhetoric, renewing this drastic measure would be an enormous mistake.
For one, the so-called moratorium was always a constitutionally suspect power-grab. Just think about this: The director of the CDC, an unelected bureaucrat, cited one vague law to unilaterally issue a mandate essentially seizing millions of landlords’ properties and subjecting those properties to unpaid occupation.
It’s as if the CDC ruled that anyone could go to a grocery store, fill up their cart, and walk out without paying. It effectively canceled peoples’ contracts and seized their property. It did so without providing them the “just compensation” required by the Takings Clause of the Constitution.
“CDC inserting itself into private rental contracts, effectively transferring control of private property from the lawful owner to the renter, is possibly the most socialist action our government has taken in decades… and without an act of Congress!” Congressman Thomas Massie lamented on Twitter. “Rental contracts are governed by state law. There is no federal authority to overturn them. The CDC order is an affront to the rule of law.”
CDC does not have the authority to do this. It’s dangerous precedent and bad policy. https://t.co/Gcz0ZmUtZh— Senator Rand Paul (@RandPaul) September 3, 2020
So, from the get-go, the eviction moratorium was a bad idea and a dangerous power-grab. But it also created an economic catastrophe and unfairly burdened an entire class of Americans.
Contrary to popular misconception, landlords are not all rich people or mega-corporations. Many are middle-or-working-class Americans who own one or two small properties, or perhaps even just own a multi-family home and rent out the part they don’t occupy. Oftentimes, rental properties are these peoples’ retirement investments and crucial to their long-term financial security.
The federal government basically commandeered their investment, forced them to give it away for free, and left them to deal with the catastrophic results.
This has had perverse unintended consequences. For example, a few months ago I interviewed one landlord, libertarian policy analyst Jen Sidorova, who has left several of her rental units empty given the moratorium.
“I had to basically bail out my own property because [my renters] knew they could just stay and not pay,” she said. “I have one tenant [out of four units] that is still paying. For the two units I have vacant, I actually am not renting them out. I think that’s another problem with the moratorium: Landlords are going to hold their units because there’s no way in [expletive] I can afford supporting other people.”
So, too, the moratorium has left an enormous $21 billion tab in unpaid rent built up. Whenever the order finally expires, crushing bills will come due. They will either bankrupt delinquent renters, leave landlords in the lurch, or, unfortunately, be passed on to taxpayers via a bailout.
The longer the eviction moratorium continues, the more this dysfunction magnifies. Of course, that only gives politicians more incentive to expand it into perpetuity to avoid having to face the fallout from their poor policy decisions. The ultimate loser from such cowardice, though, is American taxpayers. Remember that next time you hear the word “temporary” attached to a proposal for a new government program.