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Clinton’s Biggest Disaster Fraud

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President Clinton proclaimed in campaign ads last fall that “my job as American president is to take care of the American people.” Fewer events present more opportunities for the flaunting of compassion and buying votes than do natural disasters. As a result, under Clinton, the Federal Emergency Management Administration (FEMA) has become far more high-profile and generous than ever before.

Whether it is paying for snowplowing in West Virginia or bombarding voters with unsolicited checks in North-ridge, California, President Clinton declared last February: “FEMA is now a model disaster relief agency, and in some corners, thought to be by far the most successful part of the federal government today.” Yet, the primary change at FEMA (which was indeed badly managed under the Bush administration) appears to be a knack of shoveling out as much money and asking as few questions as possible. Rather than a triumph of good management, FEMA has simply been converted into a political cotton-candy operation-and is working overtime to turn the American people and local governments into federal dependents.

Since early 1993, the Clinton administration has delivered a total of over $25 billion in disaster aid, including over $7 billion from FEMA. From the beginning, Clinton understood the political possibilities of disaster relief. In an era when public perceptions are increasingly dominated by the television news, Clinton and his tear ducts have been in the right places at the right times.

In July 1993, massive floods struck the Midwest. ABC’s Brit Hume reported that when Clinton visited Iowa flood victims, he was playing the role of the “comforter”-“almost the national chaplain to those in distress.” The New York Times and USA Today ran a front-page picture of Clinton hugging a 24-year-old woman as she cried on his shoulder. Clinton promised Midwesterners at least $2.5 billion in aid and later upped the ante to over $4 billion.

When Clinton was asked whether the billions of dollars of flood relief would cost more in taxes, he answered,

“No, no. This is a one-shot, one-time expenditure that will slightly increase this year’s deficit. But this year’s deficit will still be much smaller than we thought it was going to be in January so we can manage it.”

This is typical liberal magic economics-the notion that government can give away billions of dollars and yet never cause any burden on taxpayers.

FEMA is the Clinton agency par excellence. FEMA has roughly ten times as many political appointees as other agencies its size-which might explain some of its contempt for safeguarding taxpayers’ money. FEMA symbolizes government workers as knights on white horses, riding to the rescue with the leafblowers scattering federal dollars in every direction. While the agency’s motto, “People Helping People,” is plastered on its publications and headquarters, a more accurate slogan would be, “People Helping People to Other People’s Money.”

In an agency flier entitled “FEMA-Significant Accomplishments-April 1993-September 1995,” the first achievement listed is: “Increased the comfort level of citizens around the country that there is an effective disaster management agency that can help them in a disaster.” FEMA apparently sees itself as national therapist. And the agency allows politicians the chance to play on people’s fears, to encourage people’s dependency, and to portray themselves as the most generous people in the nation.

Last February, Clinton bragged about one of FEMA’s key reforms: “It used to take a month or more for many people to begin receiving relief, and now people can call in to a 1-800 number and see those checks arrive within days.” FEMA director James Lee Witt told the Senate Appropriations Committee hearing on April 30, “The entire application for federal assistance can now be taken using a computer-a virtually paperless process that is more efficient and takes less time.”

But little attention has been paid to the financial chaos lurking beneath the agency’s public sheen. Few agencies show as much disdain for keeping clean financial records as does FEMA. A FEMA Inspector General report last year concluded: “Disaster Relief Fund financial data are often unreliable.

. . . Financial audits of the Fund have not been performed because the systems, records, and lack of controls made the Fund unauditable.” One symbol of the total chaos: “Many accountants and analysts did not know what their jobs entailed, and questioned their own value to the operation.”

After the California Northridge earthquake in 1994, FEMA swung into action by sending thousands of homeowners unsolicited checks of up to $3,450 out of the blue, simply because they lived in zip codes that reportedly had been hard hit. After FEMA’s “generosity” was exposed by the Los Angeles Times , FEMA’s chief spokesman, Morrie Goodman, denied that any mistakes were made in the big giveaway: “Anyone who says an error was made doesn’t know what they are talking about. We received very, very few calls from people who felt they didn’t need the aid.” Goodman explained the agency’s rationale: “We felt, as an agency, it was better to send the checks than to wait until we had inspectors out there,” and suggested that recipients spend the money on things such as “crisis counseling.”

Forbes reported last year:

“Of these [unsolicited] checks, 6,590 went to families whose homes weren’t even damaged enough to be covered. FEMA has asked for the money back; a spokesman says the agency can’t say how many were returned.”

FEMA also permitted many homeowners to double-dip-collect both insurance payments for home damage and a hefty federal grant for the same costs. Investor’s Business Daily reported in May 1994:

“FEMA shelter checks, which subsidize rent for alternative housing and cover up to $10,000 for minor household repairs, have been cut with no questions asked about resident’s property insurance or income.”

FEMA’s haphazard ways with tax dollars have become legendary in southern California. A year after the quake, Los Angeles had a major earthquake preparedness drill; one comedian quipped that, as part of the drill, “the FEMA office even practiced processing bogus claims.”

Clinton declared in a conference call last year to a meeting of state, local, and federal disaster workers:

“Let me also say that I think all of us know that in dealing with these disasters the most important thing is the spirit of the people. I’ll never forget when James Lee Witt and I were in Woodland, Washington, a few days ago. We came upon a 70-year-old man, and he and his wife had lost everything in the flood. He had even lost his hearing aid. And he looked at me and he said, ‘Well, I’m 70 years old and I’ve never had a president shake hands with me before. It was nearly worth losing my home to do that at my age.’ And I thought to myself I wished that spirit could kind of somehow capture America.”

Regardless of how many tax dollars Clinton has to squander in order to get that kind of gratitude, it is a bargain for him. FEMA’s handouts train people to look at politicians as saviors rather than humble servants.

The Clinton administration has stretched the concept of “major disaster” to cover routine events almost never covered before-such as snow. This year alone, Clinton shoveled federal aid to 16 states hit by snow, thereby empowering FEMA to reimburse local governments for the cost of snowplowing. Snow accounts for a large portion of the skyrocketing number of federal emergency proclamations. FEMA implicitly assumes that any local or state government is automatically incapable of plowing the snow on any main highway after a big storm.

Clinton’s passion for maximizing FEMA handouts makes a mockery of his environmentalist pretensions. It would be difficult to find a federal agency that did more to encourage people to scorn environmental common sense. A June editorial in the Vancouver Columbian observed:

“Most of the emergencies FEMA manages result from misguided efforts to take advantage of nature. People build near active volcanoes; FEMA comes in after the eruption. People build along hurricane-lashed seashores; FEMA is ready to save the day. People thrust their habitat into wildfire zones; FEMA follows the fire trucks.”

FEMA is running a national television advertising campaign (titled “Cover America”), encouraging people to sign up for its National Flood Insurance Program. Viewers are told: “We can’t replace your memories, but we can help you build new ones.” FEMA Director Witt told a congressional committee in April that the ads stress that “flooding can happen to almost anyone.” Witt’s observation would be a surprise to many people living in deserts and on mountain tops. Unfortunately, FEMA and the NFIP have long been inducing and enabling people to build homes in areas where their memories get swept away.

The NFIP amounts to a type of antienvironmental socialism. Witt declared: “The greater the coverage we can achieve, the healthier the flood insurance program will be, and there will be less of a burden on the disaster program.” But, according to one agency career employee, “The way they advertise the flood insurance is disgusting. It is a Ponzi scheme-and they have to keep replenishing that sucker because it is running dry.”

The NFIP is amazingly generous: “You are talking of up to $250,000 for property damage coverage for only $300 a year for people living in a flood zone-that is absurd.” Private insurance companies in some cases would charge a $10,000 annual premium for an insurance policy that FEMA gives away for a few hundred dollars a year. FEMA currently faces $250 billion of exposure from NFIP policies. The insurance fund ran out of money earlier this year and FEMA had to borrow $600 million to replenish it. Witt told Congress, “If flooding incidents drop to a more normal level, we expect that we will pay the fund back within five years.”

However, since FEMA is essentially massively subsidizing most of the people who buy the policies, the more policies that FEMA sells, the greater the financial crash-and-burn will be when Mother Nature catches up with the agency. Once a person has flood insurance, the government is happy to come in and pay his damage claims after each annual flood-and most generously never raises the premiums to reflect the government’s true exposure. Sheldon Richman noted in The Wall Street Journal :

“More than a third of total payouts have gone to 3 percent of all claimants, so-called “repetitive loss” cases, since the policy allows for multiple claims without an increase in premium. Most of the money has gone to owners of beachfront homes, not to residents of riverfront areas.”

The proliferation of federal aid for national disasters undermines the concept of property rights. FEMA’s constant bailouts of irresponsible or negligent property owners give politicians and bureaucrats a pretext to extend controls over land use. Ironically, if it were not for the harebrained federal incentives, people would not be foolhardy enough to build in many of the areas where houses have gone up in recent decades.

The political windfall profits that follow a national disaster epitomize how politicians’ and citizens’ interests are antithetical. The more the citizens suffer, the more the politicians profit by throwing money and promises in all directions.

The fact that FEMA would be the Clinton administration’s prize exhibit in its Hall of Good Government is another sign of the bankruptcy of liberalism. FEMA’s expansion symbolizes the proliferation of acceptable political pretexts for one citizen to stick his hand in another citizen’s pocket. FEMA’s popularity is one more sign of the decline of individual responsibility-or even a semblance of respect for such responsibility-in American political culture.

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    James Bovard serves as policy adviser to The Future of Freedom Foundation. He has written for the New York Times, The Wall Street Journal, The Washington Post, New Republic, Reader's Digest, Playboy, American Spectator, Investors Business Daily, and many other publications. He is the author of a new e-book memoir, Public Policy Hooligan. His other books include: Attention Deficit Democracy (2006); The Bush Betrayal (2004); Terrorism and Tyranny (2003); Feeling Your Pain (2000); Freedom in Chains (1999); Shakedown (1995); Lost Rights (1994); The Fair Trade Fraud (1991); and The Farm Fiasco (1989). He was the 1995 co-recipient of the Thomas Szasz Award for Civil Liberties work, awarded by the Center for Independent Thought, and the recipient of the 1996 Freedom Fund Award from the Firearms Civil Rights Defense Fund of the National Rifle Association. His book Lost Rights received the Mencken Award as Book of the Year from the Free Press Association. His Terrorism and Tyranny won Laissez Faire Book's Lysander Spooner award for the Best Book on Liberty in 2003. Read his blog. Send him email.