The rent is too damn high—so each year Congress appropriates billions of dollars to address the nation's collective Housing needs. The programs vary from loans to tax credits to straight-up subsidies, but a common feature is that federal taxpayers pony up the dough and then a motley collection of state-level politicians, financing agencies, and housing authorities decide how it's spent. Can you guess where things go wrong?

In theory, oversight is provided by bureaucrats in Washington tracking every dollar and by local leaders increasing their re-election prospects by providing housing assistance to their constituents as effectively as possible. In practice, the feds turn a blind eye to inefficient uses of the funds while local officials gleefully engage in politically advantageous graft, writes Christian Britschgi.

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