The proposed Democratic spending plan would provide $20 billion more in subsidies for American Indian programs. Education, health care, and other services on reservations have been appallingly mismanaged for decades. New subsidies may help but they won’t get at the core problems resulting in reservations being among the poorest places in America.

The fundamental issue is the lack of individual property rights on reservations, which undermines incentives for investment and entrepreneurship. Other problems include excessive regulations and mismanagement by federal and tribal bureaucracies, as I examined in this study.

A new Wall Street Journal piece examines the lack of homeownership on Indian lands, and it reinforces these points on property rights and bureaucracy.

It usually takes a few months to write a mortgage. It once took Juel Burnette four years.

Mr. Burnette runs the Sioux Falls branch of 1st Tribal Lending, one of the few firms that specialize in making home loans on Native American reservations. The byzantine process winds through two federal agencies and tribal governments before it even reaches the banking system. Most lenders don’t even attempt it.

Mr. Burnette tells aspiring homeowners to buckle up. “We talk through the hurdles with them,” he said.

America’s tribal lands, home to more than a million people, are often credit deserts, lacking the access to capital necessary to make homeownership a reality for the Native Americans who desire to live on them.

Traditional mortgages in the U.S. are secured by two valuable pieces of collateral: the home itself and the land on which it sits. But in Indian Country, swaths of land are held in trust, preventing lenders from staking a claim if the homeowner stops paying.

The great majority of land on reservations is held in “trust,” meaning that individuals do not have firm legal control. As the story suggests, that kills normal mortgage markets. The federal government offers Band-Aids to get around the problem, but they run into the usual Indian-land problems of excessive bureaucracy and regulation:

There is a workaround, but it is complicated. Obtaining the necessary approvals can take years, even for borrowers working with experienced lenders like Mr. Burnette.

… For Mr. Burnette’s borrowers, the Section 184 process is often filled with stops and starts.

It took more than a year for T.J. Plenty Chief to get a lease to build a home on North Dakota’s Fort Berthold Reservation. He spent about four months obtaining the various approvals from the BIA and his tribes, the Mandan, Hidatsa and Arikara Nation.

But then he learned that the lease wasn’t written in a way that would be acceptable for a federal guarantee on his loan from HUD. He had to go back through the approval process again, which finished late last year.

… The underwriting process comes with its own hurdles. Appraisers are scarce in the rural areas where many reservations are located, Mr. Burnette said. Contractors often lack the special certifications required by Section 184 construction loans.

… The next year, Wells Fargo stopped making Section 184 loans due to the complexities of the program and other factors, according to a bank spokesman.

For further insights on the problems facing Indian reservations, see my study here, Naomi Schaefer Riley’s book here, and the writings of PERC scholars here.