Consumer watchdogs are warning the public to avoid charitable scams that fraudulently promise donations will go to victims of Hurricane Katrina. It’s good advice, but frankly, we’re just as worried about what happens when the government starts writing checks. Estimates already have put the federal share of post-Katrina costs at more than $100 billion.
Based on recent history, federal officials are likely to waste or misdirect millions.
Item 1: The Associated Press reported Thursday that some of the nearly $5 billion in federal small-business loans given out to help companies recover from the Sept. 11, 2001, attacks went to bewildered recipients far from New York City.
“From Dunkin’ Donuts shops and florists to motorcycle dealers and chiropractors, businesses nationwide said they were unaware their banks had lent them money from the low-interest, government-guaranteed Sept. 11 loan program,” The AP reported. The problem appears to be lax oversight by the Small Business Administration and loose interpretation of the rules by the banks that gave out the money. Congress said yesterday that it plans to investigate.
Item 2: More than $30 million in federal relief money was given to Miami-area residents after Hurricane Frances in 2004 – even though the storm gave Miami only a glancing blow. Other areas in Florida that were hit directly didn’t get as much cash. The much-maligned Federal Emergency Management Agency seems to have been at fault here.
It stands to reason that similar shenanigans could well take place after Katrina.
Opportunists already are circling.
Joe Allbaugh – President Bush’s campaign manager in 2000, a former FEMA director and college roommate of Michael Brown, the discredited current FEMA chief – is now a Washington lobbyist and already is in Louisiana, trying to drum up relief business for clients. (Among them is a division of Halliburton, Vice President Dick Cheney’s former company which is under criticism for billing practices in Iraq. The Halliburton subsidiary already has picked up some Navy reconstruction work in the Gulf.)
Other political ties likely will also play a role in spreading the taxpayers’ largesse. We imagine that Mississippi Gov. Haley Barbour – a former GOP chairman – will be taken care of, and note there are already GOP calls to pass by Louisiana’s Democratic public officials.
One aid package already has been ditched. The $2,000 debit card program was folded yesterday amid concern of abuse.
Looks like there will be plenty of work for government auditors in the next few years.
