nonprofit groups involved at the local level to better people's lives, the individuals who go to work, keep their families together, and serve as role models for the neighborhood's children -- this is the social capital that is the foundation and indispensable part of healthy neighborhoods. I believe we should allow local communities to fashion their own solutions to the problems they face, and have the federal government support these efforts instead of impeding them. I believe that well-performing public housing authorities should be given greater latitude in how they administer their programs. And I believe that where the system has failed, as it has in many of our chronically-troubled housing authorities, we are wrong when we do not move aggressively to end the status quo. There are a number of members of this Subcommittee, on both sides of the aisle, who wish to take strong action on these matters, and I look forward to their input in shaping this legislation. I would also like to take the opportunity to let the Subcommittee members know that we will have two more hearings on H.R. 2, on March 6th and March 11th. At these hearings, we will hear the Administration's views, as well as the views of various groups with interest in this legislation. I thank you all for being here today, and look forward to your comments. ### Testimony of David Kuo before U.S. House of Representatives Committee on Banking and Financial Services Thank you, Mr. Chairman and members of the subcommittee for the opportunity to address this subcommittee on such an important issue. It is an honor to be part of this discussion an honor to be part of this panel. My name is David Kuo and I am Executive Director of The American Compass a start-up charitable organization dedicated to raising money for and the profile of small charities that serve the poor. I must say two things at the outset. First, I am anything but an expert on housing matters. In fact, I am probably not even conversant on the technicalities of the issue. Second, in reading through the bill summary, I am impressed by both the thoughtfulness and ingenuity embodied in it. I hope that it is given the opportunity to prove its worth. What excites me most about the bill is its unique amalgamation of diverse principles of what has come to be called "effective compassion." History and experience both suggest that efforts and programs which are at once challenging - making moral demands of both givers and recipients personal - where people are engaged and involved in each others lives - and spiritual - treating people as though there were more than social security numbers with arms and legs - are the most effective and efficient in meeting the needs of the poor. This bill seems to embody those principles and that is profoundly exciting. That is the extent of my policy analysis of this bill. While most of my professional life has been spent on the policy, political, and analytical side of things, what I want to talk about briefly today is observations from a different perspective. You see. in the past year I left the political and policy worlds behind and tried to get into the matter of social service reform and community restoration from a completely different angle - I started a small charitable group. And so I'd like to share a few thoughts from the point of view of a policy wonk turned charity guy. In approaching these issues in the past, my world view was fairly defined. Everything about government was bad and everything about the private sector was good. My rather naïve belief was that eliminating governmental involvement and turning social services over to the private sector. would magically solve all our problems becoming efficient, effective, and energetic in meeting the needs of the poor. Our communities would be strong and everyone would be happy. I overstate but you get the point. Then I discovered one of the great secrets of American social policy since WW2: namely the degree to which governmental services are already privatized. Companies and charities from Jiffy Lube to Lutheran Social Services are today delivering services in areas like child protective services, corrections, environmental clean-up, transportation, job training, and welfare. And that is literally just the tip of iceberg. So pervasive is this trend that it is virtually impossible to name any major post-world war 2 social program where at least 25 percent of the program is not handled by the private sector. In programs like Medicaid, large chunks of the budget are spent by huge corporations like Unisys that help run the program for states. And even in more explictly welfare-related programs, at least 15-20 percent of social service dollars are contracted out to private sector religious groups. This is both good news and bad news. Good because the private sector is already involved. Bad because the private sector is already involved. For the reality is that while government is a ripe and easy target -- and one that frequently deserves to be hit -- to say that government alone has caused the community problems we now read about, hear about, and see on a daily basis is to reject the hard truth that much of the private sector has been there every step of the way -- fully complicit in perpetuating a welfare state that promised everything and delivered little. The question of community renewal therefore becomes not simply a question of changing the governmental role - which I still believe needs fundamental change -- it is a question of changing the private sector as well. A question of challenging our own assumptions and frequently our own rhetoric. For I am convinced that one of the main obstacles to community restoration, to responsibility building to civil renewal is the private sector itself. Today there exists a private poverty clite as strong and as entrenched as any government program ever was. We as conservatives need to be at the leading edge of both critiquing this situation and providing real and viable alternatives to it. We all know and have heard of the elite. They are regularly represented here on Capitol Hill. They have lobbyists, they get big chunks of government money, they have by and large pure motives and an earnest desire to help people. The problem is that their approach to vexing social problems like homelessness, poverty, and dependency are no different from the governmental mentality of the past several generations. They have grown accustomed to the highways and byways of life. They support the same types of organizations that they have supported for decades. They have cornered the market of social service. And they stand in sharp contrast to the best of civil society. While my experience with housing related organizations is small, there are thousands of groups and tens of thousands of individuals that are literally transforming lives in miraculous ways. There names are not as familiar to us as Red Cross, United Way, or Catholic Charities, but what they are doing is nothing short of miraculous. These organizations are invariably small, provide personal care, are grounded in their communities, challenge both the giver and the recipient and they are for the most part faith-based. They are the hope of reform but are currently cut off from the channels of support that are now used to perpetuate the status quo of charity. One of the most pressing questions we have to answer is how do we get communities to fundamentally reassess their approaches to aid? What we need is a business-edge to charity. We need to be able to examine bottom-lines and analyze our giving from that perspective. |