Add one more misery, one more scandal to all the miseries and scandals that have plagued the Gulf Coast since Hurricane Katrina. Of course, there haven't been enough. This one, which only started to emerge in the national media this week, concerns the rate at which recovery money has been distributed to the people who most need it.
In a word, slow. Very, very, very slow. Scandalously slow.
In the months after Katrina, Congress rapidly authorized an emergency recovery package. Though less than what people down here were hoping for, it was nonetheless substantial, allegedly $110 billion. A year and a half later, a little over $50 billion of that has been spent, meaning that there is about $60 billion of approved money sitting in the Federal Reserve while hundreds of thousands of people still live in trailers.
And this ratio of 45% is much worse than it appears. When government officials tallied up the $110 billion figure, they included in that total $20-25 billion in payments made to policyholders under the federal flood insurance program. Allow me to clarify that. The federal government considers $20 billion paid to people who paid insurance premiums to be recovery money. When Katrina hit, I had a flood insurance policy in place on my home which covered its entire value. I paid premiums on this policy for four years. According to the government's own figures, by redeeming my insurance policy according to its terms I am in receipt of "recovery money." I am on the dole.
Strip away that $20 billion as any truly honest person would, and the real recovery figure stands at more like $90 billion. Still a lot of money, right?
Yes, but even that number is misleading. The federal government owns a lot of property damaged by Katrina, including a destroyed interstate link over eastern Lake Ponchartrain, Keesler Air Force base in Biloxi, Jackson Barracks in the Ninth Ward New Orleans, and Post Office and federal offices throughout the area. These federal properties are the responsibility of the national government, and the feds would be fixing these properties even if they refused to spend a penny on the citizens of the Gulf Coast. It is dishonest to advertise money spent to fix your own roof as charity. So we ask: Are the billions appropriated to fix the U.S. government's own property added into that $110 billion figure? Oh, yes.
Here is the worst part. Most of the government's obligations as the guarantor of the Federal Flood Insurance Program have been paid out. The government has also been pretty good about paying out money to fix its own properties. This means that the vast majority of funds already paid out are for obligations the government would have had to meet, no matter what.
What hasn't been paid out? In Louisiana, of $7.5 billion slated to help uninsured people who lost everything, $14.4 million, or less than one third of one percent, has been paid out. Money for damaged local government property still sits in the banks. Money to help public schools to recover, to rebuild the shattered health care system in the city, has yet to be spent.
In other words, the money that would make the most difference in the lives of the poor, of those rendered destitute by the storm, comprises the majority of the unspent money. Fine, the Feds have approved and are spending $2 billion to fix the span of Interstate 10 over Lake Ponchartrain. But it has only spent $1.3 billion of the $5.8 billion appropriated for levee repair.
Yes, you read that line right. After Hurricane Katrina, a disaster in which most of the damage was caused by levee failure, the government has only spent about 20% of the money it has to fix levees.
FEMA has only spent $25 billion of the $42 billion given it. The E in FEMA stands for emergency. I always thought there was something about the term emergency that implied hurry up. Perhaps not.
I will site a specific example to show how the delay is not only costing money, but human lives. The city of New Orleans (which has so far received only 14% of the funds promised it) has been experiencing a surge in its murder rate recently. This surge is supposedly a result of turf wars as drug dealers return to the city and attempt to re-establish themselves post-Katrina. New Orleans, in the midst of this crime wave, lacks the resources to properly investigate and arrest suspects in murder cases. The police force is headquartered in a trailer park. By itself, the organizational problems of shuffling arrested individuals, witnesses, and paperwork through a maze of trailers is greatly impeding police work. But there is another problem. The NOPD has lost its crime lab, and this makes prosecution difficult because all evidence in criminal cases has to be farmed out at great expense to other crime labs. This has created an overwhelming case backlog, and unprosecuted criminals end up being released after brief detentions to walk the streets because evidence has not been processed.
New Orleans could really use its money to rebuild its crime lab. But Uncle Sam drags his feet, the city remains broke, and the bodies pile up in the old slum neighborhoods.
Why can't the federal government spend the funds already budgeted? Off the record, officials say it is because we are a bunch of crooks. Fearful that the money will be wasted, the White House drags its feet through endless tangles of red tape, refusing to pay out a dime until every penny is justified in triplicate forms. Louisiana politics is corrupt they say, and the government has to be careful. In a letter written to former Speaker of the House Dennis Hastert and quoted in the Wall Street Journal this past week, Rep. Tom Tancredo of Colorado summed it up this way: "The question is not whether Congress should provide for those in need, but whether state and local officials who have been derelict in their duty should be trusted with that money . . . . Their record during Hurricane Katrina and the long history of public corruption in Louisiana convinces me that they should not."
Taylor Beery, the director of policy for Donald Powell (the Bush-appointed recovery czar) told the Wall Street Journal in a written statement: "Some people see [the regulations that delay disbursement of funds] . . . as overly cumbersome, but . . . there is a reason, and that reason is to ensure that the taxpayer money is spent properly."
I want the money spent properly, too. But spent properly in this case means a whole lot faster. Donald Powell is supposed to be in charge of the recovery effort. That means he needs to be an advocate for the people he is trying to help, not a shameless apologist for the sorry excuse for an executive branch we have in Washington. Not to overly generalize, but this has been G.W. Bush's problem from the start. His appointees do nothing but make excuses for him. No one wants to stand up and admit a mistake, no matter how much suffering or how many dead bodies are involved.
However, it is not just the Bush people who have labeled Louisiana as a nest of crooks. We got a lot of that after the storm. Basically, the argument amounts to: Your local government is corrupt, so we have no intention of helping you. Which I guess would be perfectly fine if the federal government had a check box on the 1040 tax form that allowed us to skip paying taxes when we feel the federal government is too corrupt. After all, if they don't have to help us because they think we are corrupt, it seems only fair that we should not have to help them should we happen to adopt the the same opinion about them.
This "you are too corrupt to merit help" argument is tantamount to my saying, in my capacity as a doctor, that I will not treat a child with leukemia because I did not approve of the behavior of the child's parents. The local government's failure, lamentable as it was, does not mean the people of Louisiana, American citizens every one of them, should be punished for the actions of their leaders. No one votes for corruption. Voters get to choose among the scoundrels on the ballot. As for me, I did not vote for governor Blanco. I did not vote for New Orleans mayor Ray Nagin. I did not vote for the fool that passes for President of St. Bernard Parish, the place I used to live in. For that matter, I didn't vote for George W. Bush either. As a citizen, I did everything I could in the voting booth to keep the current situation from happening. What else am I supposed to do, besides turn assassin?
Yes it is true that Louisiana has a distinguished history of political corruption. But I refuse to believe our history is really all that much worse than anywhere else. The difference is that in Louisiana (and Mississippi also) there is very little big business. We are poor states. In a poor economy, the crooks gravitate towards the money, and the money is in government.
Compare New Orleans to New York. Why would a self-respecting crook go into government in New York City while Wall Street beckons? Is anyone really going to argue that a politician in Louisiana who gives a $3 million contract to his cousin is less honest than a CEO who pays himself $250 million in a year his company loses money?
It defies credulity that the leaders of the federal government, in their little world ringed with lobbyists, political action committees and "think tanks," and in a city crammed with government consulting businesses everyone refers to as "beltway bandits," have the nerve to tell a state with a $26 billion annual budget it is inefficient and corrupt. Congress spends $26 billion every 72 hours. And it spends $110 billion, the entire amount of the Katrina recovery effort, every two weeks.
Why is it that when a Louisiana politician gives a job to his son that is considered a corruption, but when President of the United States decides on his own that the writ of habeus corpus is optional in terrorist court cases, when a company the Vice President used to be the CEO of wins billions in no-bid contracts in Iraq, that is considered honest politics?
I would appreciate it if Louisiana's and Mississippi's critics would just get over themselves and admit that they don't give a damn. If you have to be a heartless scum-bag, so be it. No need to complicate the picture with hypocrisy.
The procedural explanation for the slow rate at which the funds are being paid out is the Stafford Act. Passed 30 years ago to prevent the misuse of federal funds, the Stafford Act is a set of regulations that tightly controls the way federal money is paid out. According to federal officials, the problem is that local officials are slow to comply with the Stafford regulations. Local officials say the rules are so complex and onerous that getting funds is extremely difficult.
Having filled out my tax forms a few times, I find it very easy to believe that federal regulations are excessively complex. It is also hard to forget that, in the days right after Katrina when people were dying as they waited for help to show up, the feds had the same excuse then. Remember? It's not our fault we can't get there. It's those darned local officials. There is nothing for us to do but sit here and watch people die on their rooftops on TV like everyone else.
Recovery money has an expiration date. People can't afford to keep their lives on hold forever. If the federal government promises a business a $50,000 grant and then takes two years to come up with a check, that business is not going to survive. A business owner can't afford to ask his employees and his clients that to wait for a couple of years until the company gets the money to reopen its doors. At some indeterminate point, each business owner will give up and leave.
Yesterday a drug representative came into my office and told me a very sad story about friends of his. These friends lived in Lakeview, an upper class but hard-hit neighborhood in New Orleans. They wanted to rebuild, tried hard to rebuild, but time and time again ran up against red tape. Their insurance wouldn't settle with them, and the government would not approve their grant application. Eventually they gave up, abandoning their home, and don't plan to return.
Here is the cruelest blow of all: the Bush administration has the power to suspend the Stafford Act. This was done after Hurricane Andrew in 1993. It was also done in Manhattan after the 9/11 attacks. It hardly seems fair that an area that suffered even greater devastation than these two and with less financial resources is saddled with the highest administrative burden of all.
It has been 18 months since Katrina, and New Orleans is nearing a crisis stage. Either the federal government is going to step in and do what it said it would do, namely, bring New Orleans back, or the city is going to die. How the richest country in the world, the richest country that has ever been, could allow something like this to happen is beyond me.
All I can honestly say is that, if New Orleans dies, my faith in America dies with it.
Note: I relied on the article "In Katrina's Wake: Where Is the Money?" in the Wall Street Journal Saturday, January 27, 2007 for many of the facts quoted in this essay.