I’m a little late to this, but Mark Thoma asked yesterday, in reponse to a Times column by Sudhir Venkatesh, whether we ought to scrap HUD and build an agency focused on regional poverty and inequality issues.

The short answer is that HUD’s mission should be changed, that blowing it up probably isn’t necessary, and that some of the things HUD does are actually pretty good, including HOPE VI.

I think a regional focus is appropriate, but what’s really needed is a housing agency that focuses on housing and transportation together, because the two are inextricably linked. A cheap house miles away from everything isn’t cheap, and an expensive house within walking distance of lots of things might be a steal. We shouldn’t assume that the resurgence of central cities means that inner city poverty programs are unnecessary, either. Lack of affordable housing in the middle will remain an enormous problem.

The two big challenges for fighting poverty are: 1) reducing, as much as possible, geographic segregation of socioeconomic groups, and 2) the tendency to choose affordability over proximity among the poor, which significantly affects expected income. The best way to do both these things is to tie housing construction and land-use to transportation options, and to improve low-cost transportation options. It’s absolutely possible that the best housing policy for the poor is to fund transit at an appropriate level.