From Wiki on Deinstitutionalisation:
The consumer or ex-patient movement, began as protests in the 1970s, forming groups such as Liberation of Mental Patients, Project Release, Insane Liberation Front, and the National Alliance on Mental Illness (NAMI).[1]
Many of the participants consisted of ex-patients of mental institutions who felt the need to challenge the system's treatment of the mentally ill.[1] Initially, this movement targeted issues surrounding involuntary commitment, use of electroconvulsive therapy, anti-psychotic medication, and coercive psychiatry.[1] Many of these advocacy groups were successful in the judiciary system. In 1975, the United States Court of Appeals for the First Circuit ruled in favour of the Mental Patient's Liberation Front of Rogers v. Okin,[1] establishing the right of a patient to refuse treatment.
A 1975 award-winning film, One Flew Over the Cuckoo's Nest, sent a message regarding the rights of those committed involuntarily. That same year, the U.S. Supreme Court restricted the rights of states to incarcerate someone who was not violent. This was followed up with a 1978 ruling further restricting states from confining anyone involuntarily for mental illness.
Fancy that - it all happened during Ford's and Carter's tenure.
You pretty much summed up what I was thinking, as I think the “de-institutionalized” make up the vast majority of homeless types. There is no rational reason for anyone to want to live that lifestyle on purpose, even the totally worthless lazy bunch eventually find a way to work the system and get obama phones, TV, a place to live, free food, etc.