The Fort Lauderdale Sun-Sentinel is running a series of reports on waste associated with the Federal Emergency Management Agency. Here is one article that summarizes some of the wasteful outlays:
A South Florida Sun-Sentinel investigation
has found that the Federal Emergency Management Agency in five years
poured at least $330 million into communities that were spared the
devastating effects of fires, hurricanes, floods and tornadoes.
In the country's
poorest, inner city neighborhoods, disaster assistance is considered an
entitlement. Taxpayer money meant to help victims recover from
catastrophes instead has gone to thousands of people who suffered
little or no damage, including:
$5.2 million to Los Angeles area residents for the 2003 wildfires that burned more than 25 miles away.
$168.5 million to Detroit residents for a 2000 rainstorm that the then-mayor doesn't even remember.
$21.6 million in clothing losses alone to Cleveland-area residents for
a 2003 storm that brought less than an inch and a half of rain.
And there are descriptions of outright fraud:
In impoverished neighborhoods from California to the Carolinas, from
Florida to Michigan, the newspaper found the same patterns. Residents
call FEMA assistance "free money," "easy money" and "mobility money."
Scamming FEMA is widely known and openly discussed.
In Cleveland's recreation centers, barbershops and day care centers,
residents said people hauled old clothes and furniture into their
basements and told FEMA the items were damaged by flooding from the
2003 storm. City officials documented 73 homes with minor damage, yet
the federal government gave 28,500 Cleveland area residents $41.4
million.
Julie Cobb, 37, whose southeast Cleveland neighborhood received $6.6
million from FEMA, said "everybody was talking about it on the bus."
"All you had to do was tell FEMA stuff was ruined and they'd send you a
check," Cobb said. "If you had a little water in the basement, you
could throw some stuff down there and get some money for it."
In Cleveland's recreation centers, barbershops and day care centers,
residents said people hauled old clothes and furniture into their
basements and told FEMA the items were damaged by flooding from the
2003 storm. City officials documented 73 homes with minor damage, yet
the federal government gave 28,500 Cleveland area residents $41.4
million.
...
"All you had to do was tell FEMA stuff was ruined and they'd send you a
check," Cobb said. "If you had a little water in the basement, you
could throw some stuff down there and get some money for it."
...
On front porches and in grocery stores, word spread of a government handout that came without hassles.
"Oh, man, it's easy," Elias Chaney, 49, of Baton Rouge, said
neighbors told him. "Get you a new TV. Get your own sofa set. Ain't no
red tape."
Baton Rouge residents told the Sun-Sentinel of
neighbors ripping siding off their homes to fake storm damage and then
repairing it after FEMA inspectors left. Chaney said he knew of people
passing broken televisions from one applicant to another, each claiming
the TV and telling the government it had been ruined by the storm.
In my Principles of Micro class recently I talked about two problems with central planning: 1. central planners may not have the "right" incentives to act in the public good and/or in an efficient manner; 2. central planners don't have the requisite information to act in the public good and/or in an efficient manner. The stuff described by the Sun Sentinel shows both of these problems are at work in FEMA.
The sad thing about this is that FEMA officials know that fraudulent claims are widespread and those making the claims know that they probably won't get in trouble for making fraudulent claims. That's about as good a recipe for waste as there is. But as long as the FEMA officials have little incentive to not give out money to people making what they believe to be fraudulent claims, this sad story will be played out again and again and again.
Here is a link to the Sun Sentinel's series.
