Julián Castro and the Political Legacy of the Housing Bust

President Obama has nominated Julián Castro, the mayor of San Antonio, to serve as his next HUD secretary. Karen Tumulty and Katie Zezima of the Washington Post report that a cabinet appointment represents a political Plan B for Castro, as Plan A was for a Texas gubernatorial bid in 2018 that now seems like a longshot and, more to the point, would come too late to enhance Castro’s national stature in time for the 2016 presidential election, when a young Latino Democratic politician might prove an attractive vice-presidential candidate. Castro’s decision speaks to a larger dilemma facing Democrats in the post-Obama era. National Journal’s Josh Kraushaar has observed that while the Democratic coalition is more racially diverse than the GOP coalition, Republicans have done a somewhat better job of promoting black and Latino candidates to statewide office. Moreover, while nonwhite Democratic elected officials tend to represent majority-minority constituencies, where local electorates are to the left of the national electorate, and indeed to the Democratic primary electorate, and where incomes are lower than the national average and families are more fragmented. Nonwhite Republicans, in contrast, generally represent multiethnic constituencies. This in turn means that Republicans, in theory, have more black and Latino candidates who might plausibly run for national office in the near future.

Yet there is another reason Castro’s nomination is worthy of note. The housing portfolio is extremely politically important, not least because of its impact on Latinos.

Among conservatives, there is a widespread belief that the GOP position on immigration policy is central to the party’s lackluster performance among Latino voters. That is, many on the right, and in particular many influential Republican donors and lawmakers, are convinced that if Republicans were perceived as friendlier to immigrants and comprehensive immigration reform that would grant legal status to unauthorized immigrants, Latinos would be more likely to back GOP candidates. Sean Trende has cast doubt on this thesis. His basic argument is that Latino voters are less Republican than white voters because they tend to have lower incomes than white voters. “Ultimately,” Trende writes, ” the GOP doesn’t need more Republican Hispanics so much as it needs more middle-class Hispanics,” which seems like a good guide to policy — and a political reason, as opposed to a substantive policy reason, for why conservatives ought to favor an immigration policy designed to shield low-income foreign-born Latino citizens and their children from labor market competition from new immigrants with similar skill levels.

The right has, however, neglected an issue that really does matter to a large number of winnable Latino voters, namely the lingering after-effects of the housing bust. In 2011, the Pew Hispanic Center found that median household wealth among Latino households fell by 66 percent from 2005 to 2009, a median that masks the fact that some Latino families, concentrated in states like California, Arizona, Nevada, and Florida, saw their accumulated housing wealth wiped out completely. Though we are in the midst of a modest housing market recovery, there are many households, and indeed many Latino-heavy regions, that have yet to fully bounce back. The scarring effects of the bust will be with us for some time. Glenn Hubbard was one of relatively few conservative policy thinkers to embrace the idea of leveraging the federal takeover of the GSEs (a takeover that, incidentally, he opposed) to reduce the debt burdens facing responsible borrowers seriously, and a major political opportunity was lost. Latino voters burdened by underwater mortgages have found it harder to climb into the middle class and to stay there, and one assumes that they’ve been more receptive to calls for a larger government and more redistribution as a result. I can’t say whether Castro is attuned to this opportunity, as he hails from Texas, where the impact of the housing bust was muted. But one hopes that conservatives will come to recognize that the politics of housing wealth are at least as important, if not more important, to America’s political future as the politics of immigration.

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

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