Disaster Relief Blows Away

April 5, 2013 Thomas Schatz

Adding taxpayer insult to personal and business injury, hundreds of millions of dollars have been squandered in an effort to help those affected by the unprecedented storm. Audits by the Government Accountability Office (GAO) and the Department of Homeland Security showed that 900,000, or 36 percent of the 2.5 million applicants who received aid under FEMA’s emergency cash assistance program, such as the $2,000 debit cards handed to evacuees, were provided to individuals with false names and addresses, or duplicate or invalid Social Security numbers. More than 25,000 mobile homes ordered for Katrina victims could not be used because the Federal Emergency Management Agency’s regulations prohibit them from being set up in flood plains. FEMA contractors charged $438 for rooms in New York City and $375 for beachfront condos in Panama City, Fla. The Justice Department indicted more than 200 people for scamming funds intended for disaster victims. Many of those were trying to illegally obtain emergency aid, particularly the $2,000 debit cards that were handed out with few questions asked or evidence of identification.

At a February 12, 2006 hearing on the audits, Sen. Susan Collins (R-Maine) accused FEMA or handing out money first and asking questions later, which was an “invitation to unscrupulous behavior.” The hearing also cited the sale of Meals-Ready-to-Eat on eBay as part of a separate GAO report.

While one of the excuses about the squandering of money on Katrina relief was the need to immediately help evacuees who had nowhere to go, that story cannot be used for the latest revelation of wasted disaster funds.

The Department of Housing and Urban Development’s inspector general (IG) reported that about $700 million provided to the Louisiana Road Home program, part of the Community Development Block Grant (CDBG) program, which was supposed to help Hurricane Katrina victims protect their homes from future floods, cannot be found. ABC News reported yesterday that HUD IG Albert Montoya said in an interview that “We have $700 million that we can’t account for and that certainly did not go to elevating homes and preventing future damage from storms.” The ABC report noted that more than 24,000 homeowners who received grants of $30,000 each could not show that they used the money to do anything to their homes. Montoya blamed both the individual homeowners and the state of Louisiana, although HUD is ultimately responsible for ensuring that federal funds do not go to waste.

CAGW Vice President of Policy and Communications Leslie Paige appeared live earlier today on FoxNews.com to comment on the IG report. She called on taxpayers to maintain a sense of outrage about these kinds of wasteful expenditures even so long after the fact, and said that caution should be exercised for expenditures related to Hurricane Sandy, as well as future disasters. She specifically suggested avoiding lump sum payments and requiring documentation.

Sen. Tom Coburn (R-Okla.) wrote a blunt two-page letter to HUD on April 1 calling on the agency to avoid repeating the mistakes made with Katrina relief when money is provided to victims of Hurricane Sandy. Congress provided more than $16 billion of CDBG money as part of the Sandy relief bill. CAGW has been a frequent critic of the CDBG program.

While the Sandy relief bill at least contains provisions intended to avoid waste, fraud, abuse and mismanagement, the inherent ability of the federal government to spend the taxpayers’ money without being concerned about efficiency, performance or results is bound to lead to more profligate spending for disaster relief. Simply being less wasteful with the money being spent now or in the future than the government has been with past disasters is not enough – there should not be any waste, otherwise the damage is compounded as taxpayers become indirect victims of such events.