Biden to unveil effort to narrow racial wealth gap

U.S. President Joe Biden speaks about the COVID-19 response and vaccination program at the White House in Washington, May 12, 2021.

Kevin Lamarque | Reuters

WASHINGTON — President Joe Biden will announce on Tuesday new measures his administration is taking to narrow the racial wealth gap.

The announcement will coincide with Biden’s trip to Tulsa, Oklahoma, to commemorate the 100th anniversary of the Tulsa race massacre, one of the worst episodes of racial violence in U.S. history.

Biden will announce an increase in the share of federal contracts for small, disadvantaged businesses; the reversal of two Trump-era housing rules; and the launch of an initiative to address inequality in home appraisals.

The measures represent “a step toward making good on this nation’s ideals and promises with respect to racial equity,” said a White House official Monday during a call with reporters.

On May 31, 1921, white supremacists attacked Tulsa’s Greenwood neighborhood, one of the wealthiest Black communities in America at the time. Countless Black people were killed — estimates ranged from 55 to more than 300 — and 1,000 homes and businesses were looted and set on fire in what remains one of the worst incidents of racial violence in American history.

In the century since the Tulsa massacre, Black Americans have been subjected to discrimination across the U.S. economy, in housing, banking and employment.

The median net worth of white households today is approximately eight times as much as the net worth of Black households, a racial wealth gap that grew wider during the Covid pandemic.

Biden campaigned for president on a pledge to address systemic racism and opportunity gaps in all aspects of American life.

White House officials said the efforts being announced Tuesday are specifically aimed at expanding equity and access to two key wealth generators: home ownership and small business ownership.

This is what Biden will announce:

  1. The creation of an interagency initiative to address inequity in home appraisals, led by Secretary of Housing and Urban Development Marcia Fudge. “Homes and majority Black neighborhoods are often valued at tens of thousands of dollars less than comparable homes in similar, majority white communities,” the White House said. “This effort will seek to utilize, very quickly, the many levers at the federal government’s disposal … to root out discrimination in the appraisal and home buying process.”
  2. HUD will issue two Fair Housing Act rules that reverse efforts by HUD during the Trump administration to weaken protections afforded by the law. “In both cases, HUD is moving to return to traditional interpretations of the Fair Housing Act,” the White House said Monday. The new rules are intended to “clear the way for HUD to more vigorously enforce the Fair Housing Act,” it said.
  3. The administration will announce a goal of increasing the share of federal contracts awarded to small, disadvantaged businesses by 50% over the next five years. Currently, around 10% of federal contracts go to SDBs annually, totaling around $50 billion. An increase of 50% by 2026 would mean an additional $100 billion in federal contracts awarded to SDBs in this five year period, officials said.

Notably absent from Biden’s announcement, however, are any concrete actions on two issues at the heart of the debate over how to advance racial equity in the U.S. economy: student loan debt forgiveness and reparations for slavery.

As a candidate, Biden pledged to use federal powers to cancel thousands of dollars of debt for every student in America. But so far, his administration has not produced a plan or a timeline for how to implement debt forgiveness.

Some economists estimate that student loan debt explains as much as a quarter of the racial wealth gap between Black and white people ages 30-35.

Biden also has not said whether he will support a bill in Congress to provide financial reparations to the descendants of slaves. Instead, the White House says Biden endorses the idea of a commission to study the possibility of reparations.

During his speech in Tulsa, Biden will outline several ways that his signature, $2 trillion infrastructure proposal, the American Jobs Plan, could help to narrow the racial wealth gap.

These include a New Neighborhood Homes Tax Credit, which would offer a tax credit to investors who renovate houses in low-income and blighted areas, where properties often cost more to redevelop than they can sell for.

Another measure that could help shrink the gap is a $15 billion fund for a Reconnecting Neighborhoods Program, which would provide grants to help remove or reconfigure highways that cut through the middle of downtowns in midsize U.S. cities.

But these initiatives are still in the planning phase. The American Jobs Plan has yet to be taken up by Congress as legislation, let alone passed into law. And with only a one-seat majority in the Senate, Democrats have few avenues by which to pass legislation without Republican votes.

The White House has spent the last three weeks negotiating with a group of Senate Republicans in an effort to create a bipartisan infrastructure bill that could pass with majorities in both chambers.

But those talks have stalled, and Biden has come under increasing pressure in the past week to abandon them.

Democrats are increasingly focused on trying to enact the president’s domestic agenda using a budget reconciliation bill, a complex legislative maneuver that requires only 51 votes in the Senate.

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