Here’s what Biden can do on his own about racial inequality — and where he’ll need Congress to act
(CNN) — President Joe Biden on Tuesday laid out his most comprehensive plan yet for shrinking the nation’s longstanding racial wealth gap, the latest step in his promise to infuse more equity in government policies and in the rebuilding of the economy after the coronavirus pandemic.
Some measures — including changes to deal with housing discrimination and directing federal support to small businesses — he can take on his own, but many of his proposals require congressional approval that could be very tough to secure.
That includes pouring tens of billions of dollars into communities of color to improve transportation infrastructure, develop more neighborhood amenities, build and rehabilitate affordable housing and support small businesses. Allof these proposals are contained in Biden’s massive infrastructure package, called the American Jobs Act.
That package has run into trouble in Congress, with members of both parties concerned about its roughly $2 trillion size — as well as about the corporate tax increases that would be used to pay for it. The White House is currently negotiating with a group of Republicans in hopes of finding agreement on a smaller package — with the latest GOP proposal coming in at $928 billion.
The massive wealth divide between Black and White families is currently in the spotlight because of the 100th anniversary of the Tulsa Race Massacre, one of the worst acts of racial violence in US cities. The typical non-Hispanic White family had a net worth of $188,200 in 2019, while the typical non-Hispanic Black family’s wealth was $24,100, according to the most recent Federal Reserve Bank data.
There are many reasons for the gap, including a big difference in home ownership — a key vehicle to building wealth. About 74% of Whites owned homes in the first quarter of 2021 versus 45% of Blacks, according to the US Census Bureau.
What executive actions Biden will take
Combating housing discrimination. The President is charging Secretary of Housing and Urban Development Marcia Fudge with leading a first-of-its-kind interagency initiative to address inequity in home appraisals. The effort will include carrying out potential enforcement under fair housing laws, regulatory action, and the development of standards and guidance in partnership with industry and state and local governments.
To allow the more vigorous enforcement of the Fair Housing Act, the agency also will publish two rules aimed at combating practices that contribute to systemic inequality. The rules would reinstate the agency’s discriminatory effects standard and the requirement that municipalities that receive agency funding show that the money’s use does not further discrimination.
These efforts are aimed at reversing efforts by the Trump administration to weaken Fair Housing Act protections and stem from an executive memorandum Biden issued in January that focused on redressing the federal government’s history of discriminatory housing policies.
The moves are a “welcome step” and go part of the way to addressing structural divides in the housing market that have developed over decades, said Michael Neal, senior research associate at the Urban Institute. He would also like to see downpayment assistance, particularly for the historically disadvantaged.
Directing federal contracts to small businesses. In addition, Biden wants more federal purchasing to be made from small, disadvantaged businesses, many of them minority-owned — though it could take years to have an impact. His goal is to increase the share of contracts going to them by 50% by 2026.
The President can direct federal agencies to conduct outreach to smaller businesses and reduce barriers that exist for them to compete in federal contracts. It’s unclear whether he will need Congress to pass legislation that changes some of the rules.
Biden has already set in motion a process to alter federal purchasing rules when he signed an executive order in January. It set a 180-day deadline to change how domestic content is defined and measured for qualifying products as well as increase the required threshold in an effort to boost American manufacturing. Biden also hired the first Made in America Director, Celeste Drake, to help implement the federal procurement process and focus on reaching small businesses and minority entrepreneurs.
What Biden will need Congress to do
Create a $10 billion Community Revitalization Fund: The fund would target economically under-served areas and support community-led civic infrastructure projects that develop neighborhood amenities, revitalize vacant land and buildings, spark new local economic activity, provide services, promote civic engagement and build community wealth.
Invest in transportation infrastructure: The President wants to establish grants totaling $15 billion that would target neighborhoods where people have been cut off from jobs, schools and businesses because of previous transportation investments. The funding would support planning, removing or retrofitting infrastructure that creates barriers to communities.
Increase affordable housing: Biden is calling for the creation of a Neighborhood Homes Tax Credit to attract private investment in the development and rehabilitation of affordable housing for low- and moderate-income buyers and owners.
Expand housing choices: The President is asking lawmakers to establish a $5 billion grant program for jurisdictions that take concrete steps to eliminate land-use and zoning barriers to producing affordable housing and that expand housing choices for people with low or moderate incomes.
Invest $31 billion to support minority-owned small businesses: Biden wants to provide $30 billion to the Small Business Administration to increase access to capital for the smallest companies, develop new loan products to support small manufacturers and businesses that invest in clean energy and launch a Small Business Investment Corporation to make early stage equity investments, placing a priority on small firms owned by socially and economically disadvantaged individuals. It would also establish a $1 billion grant program through the Minority Business Development Agency aimed at helping minority-owned manufacturers access private capital.
What else Biden could do
Several policy experts say canceling student debt would help close the racial wealth gap because Black Americans are more likely to take on student debt and then struggle to repay it. More than 200 advocacy groups, including the Center for Responsible Lending and the American Federation of Teachers union, called on Biden to use his executive powers to cancel student debt on day one of his administration.
Dozens of Democratic lawmakers, including Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren, also called on Biden to take action and cancel $50,000 per borrower. The move would be unprecedented, but a memo from lawyers at Harvard’s Legal Services Center and its Project on Predatory Student Lending says the Department of Education has the power to do so.
Biden has resisted the pressure so far but has said he would support a move by Congress to cancel $10,000 per borrower. It’s unlikely that legislation would pass the Senate where Democrats have a razor thin majority.
Taking executive action does not appear to be off the table, though. Biden directed Education Secretary Miguel Cardona to write a memo on the president’s legal authorities to cancel debt, White House Chief of Staff Ron Klain said in an interview with Politico in April.
Biden did not include a student debt cancellation provision in his $1.8 trillion American Families Plan, which calls for making community college free and expanding Pell Grants for low-income college students, or in his proposed budget. NAACP’s National President Derrick Johnson criticized Biden for failing to address the student loan crises, which he said was at the core of the racial wealth gap.