Democrats’ plan for race-based housing aid draws lawsuit threats, charges of reverse discrimination

A Democratic proposal that would give Black people more federal aid than White people to make down payments on homes is bringing charges of reverse racism and threats of lawsuits.

Rep. Maxine Waters, California Democrat, proposed the race-based down-payment program to be included in President Biden’s $3.5 trillion package of health care, clean energy and anti-poverty programs that he dubbed “human infrastructure.”

Housing advocates are demanding that Democratic leaders follow Ms. Water’s lead. They say her proposal would finally deal with the inequality that White people are far more likely to own homes than Black people and other minorities. They point to a study by the liberal Urban Institute that shows the homeownership gap has widened since the 1960s.

The study found that 72% of White families and 42% of Black families owned homes in 2017. That 30-point gap was up from 27 points in 1960.

Ms. Waters, a former chairwoman of the Congressional Black Caucus who now chairs the Financial Services Committee, said she would like the federal government to give $20,000 grants for down payments to people if neither they nor their parents own a home.

White prospective homebuyers would be eligible for the $20,000 grants, but people of color would be more likely to fit the criteria.

Particularly alarming to critics is that Ms. Waters would give another $5,000 in down-payment assistance to members of a “socially disadvantaged group.” The legislation defines the group as those “identifying as Black, Hispanic, Native American, or Asian American, or any combination thereof.”

The proposal ignited another political flashpoint over Democrats’ efforts to address historic racial inequities by creating programs open only to minorities.

In May, the Wisconsin Institute for Law & Liberty, a conservative legal nonprofit, sued the Biden administration for prioritizing COVID-19 relief funds for bars and restaurants owned by minorities.

In June, a Florida federal court judge granted a preliminary injunction blocking another Biden administration relief program that forgave loans of Black farmers.

To opponents such as Sen. Patrick J. Toomey of Pennsylvania, the top Republican on the Committee on Banking, Housing and Urban Affairs, Ms. Waters’ plan is tantamount to a form of racism that discriminates against White people.

“Whether they are handing out aid to ‘socially disadvantaged farmers’ or providing additional down-payment assistance to minority homebuyers, Democrats seem intent on fighting ‘racial inequity’ by discriminating on the basis of race,” said Amanda Gonzalez Thompson, a spokeswoman for Mr. Toomey and other Republicans on the banking committee.

Dan Lennington, a deputy counsel of the Wisconsin Institute for Law & Liberty, said there is a “100%” guarantee that his firm will consider suing if Ms. Waters’ proposal passes.

“Helping out first-generation homebuyers is a good, racial-neutral way to solve a problem. But adding the term ‘socially disadvantaged’ makes the $5,000 benefit a racial classification that would be subject to strict scrutiny by federal courts,” Mr. Lennington said. “If challenged in court, the agency implementing this policy would have a difficult time justifying this program, and we would anticipate significant litigation.”

Ms. Waters did not respond to The Washington Times’ repeated requests for a response to the criticism. She has said that making it easier for minorities to buy homes is key to dealing with the racism of the nation’s past.

“It’s very important to recognize that our nation’s history is marked by grave injustices against people of color, from the enslavement of people of African descent to the displacement and subjugation of native people, to the internment of Japanese-Americans, to the exploitation and mistreatment of immigrants and migrant workers, to name some examples,” she said at a Financial Services Committee hearing in March.

“It is an unfortunate truth that such injustices persist today, including in the form of barriers that systematically exclude people and communities of color from fair access to housing and homeownership,” she said. “All of these barriers have drastically curtailed opportunities for communities of color to build wealth and thrive in our society.”

It’s unclear whether the proposal has enough support within the House Democratic Caucus to make it into the $3.5 trillion bill, which will have to pass the narrowly divided House and Senate with only Democratic votes.

None of the 19 members of the Blue Dog Coalition, a group of centrist and conservative House Democrats, responded when asked about their support of Ms. Waters’ down-payment benefit.

Another study by the Urban Institute suggested that Ms. Waters’ plan would help close the homeownership gap for minorities, though it would also do it without the extra $5,000 doled out based on race.

The institute’s data pinpointed generational wealth as a significant barrier to minority homeownership.

The median wealth of the parents of White people ages 18 to 34 was $215,000, considerably more than the $14,397 of the parents of young Black adults.

The parents of Hispanic people of the same age had $34,980 in wealth.

As a result, young minorities are far less likely to be able to get help from their parents for down payments, the study said.

Without the additional $5,000 bump to members of disadvantaged groups, the study estimated that disproportionately more minorities than White people would be eligible for the federal down payment under Ms. Waters’ proposal.

Of the more than 4 million people who would be eligible, 36% would be Black. The Census Bureau says Blacks make up 13.4% of the American population. Just 30% of Whites, who make up 76% of the population, would be eligible for the program.

David M. Dworkin, the president of the National Housing Conference, a coalition of affordable housing groups, supports Ms. Waters’ proposal.

Mr. Dworkin said past discrimination, including redlining that prevented Blacks from getting home loans, led to disparities across generations, even though the Fair Housing Act of 1968 outlawed redlining.

If a Black family did not own a home, he said, they couldn’t pass one to the next generation or help their children make a down payment.

“It’s not good enough to say people are not discriminated against today,” he said. “There’s a multigenerational impact of past discrimination that we should all be responsible for addressing.”