September, 1996

SECTION: FEATURE

LENGTH: 5374 words

HEADLINE: FEMA Money! Come & Get It!;
Reinventing disaster, Bill Clinton has turned the decrepit FEMA agency into
another arm of his permanent campaign.

BYLINE: James Bovard;
James Bovard, the author of Lost Rights and Shakedown: How Government Screws
You From A to Z, is the 1996 Warren Brookes Fellow at the Competitive Enterprise
Institute.

BODY:

"Disasters are very political events."
--FEMA Director James Witt, congressional testimony, April 30, 1996
The American Spectator, September, 1996


When massive flooding struck the Midwest in July 1993, Bill Clinton cut short
his Hawaii vacation to visit the flood victims in Iowa. In the words of ABC
News's Brit Hume, Clinton journeyed to the region to play the role of
"comforter_almost the national chaplain to those in distress." Both the New York
Times and USA Today showed the merciful president on their front pages hugging a
woman as she cried on his shoulder. Clinton backed up that mercy with money,
promising Midwesterners $2.5 billion in aid from the Federal Emergency
Management Agency (FEMA) and other federal programs. He later increased his
offer to more than $4 billion--but when asked if his generosity would mean
higher taxes, Clinton emphatically denied it. "No, no," he announced. "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."

The response was typical Clinton, and typically deceitful--government can
give away billions of dollars and yet not burden taxpayers. The president has
used that approach nowhere more than with FEMA, which under his administration
has become renowned for its generosity. Whether paying for snow plowing in West
Virginia, or offering cut-rate insurance to flood zones, or announcing the
spending of almost $800,000 in response to arson attacks on Southern black
churches, FEMA is giving new meaning to the term "walking around money."
The American Spectator, September, 1996

In the minds of the Clinton administration, FEMA's generosity is reinvented
government at its finest. "FEMA is now a model disaster relief agency," Clinton
declared in February, "and in some corners thought to be by far the most
successful part of the Federal Government today." The agency even won the 1996
Federal Public Service Excellence Award--presented by Reinvention Man himself,
Al Gore. The Washington Monthly is calling FEMA's recent performance "the most
dramatic success story of the federal government in recent years."

What's been reinvented at FEMA, however, is the idea of federal giveaways as
a political tool. No president has exploited the political possibilities of the
agency as shrewdly as Clinton has. His FEMA even began a newspaper, Recovery
Times, to be distributed to residents of federally declared disaster areas. As
Clinton told constituents in the June 17, 1996 West Virginia edition of the
paper:
I assure you that in the weeks and months to come, your government will continue
to support you in your efforts to rebuild your lives and communities. We will
be with you, along with our state partners, for as long as it takes to help you
on the road to recovery.

That road is paved with FEMA gold.

FEMA was the brainchild of Jimmy Carter, who announced plans in 1978 to form a
The American Spectator, September, 1996

federal agency to cope with disasters. Before 1950, other than sporadic flood
and other disaster relief provided by Congress in special appropriations bills,
there was no consistent federal relief effort. That year, however, Congress
passed a law giving the president the power and discretion to determine when a
disaster had occurred and how much aid Washington would provide. From that point
on, federal disaster involvement slowly expanded until March 30, 1979, when
President Carter, spurred to action by the Three Mile Island nuclear debacle,
issued an executive order to create FEMA. The new agency was to be an amalgam of
the Civil Defense Preparedness Agency, the Federal Disaster Assistance
Administration, the Federal Preparedness Agency, the Federal Insurance
Administration, and the National Fire and Control Administration.

Within just five weeks, the Washington Post was reporting that the new agency
was already a shambles: "The air is thick with memos, counter-memos and
criticisms alleging that the new anti-disaster agency is on the verge of
becoming a disaster itself."

From 1979 to the late 1980's, FEMA stumbled from one boondoggle to the next.
It carried out the Environmental Protection Agency's infamous buyout of all the
homes in Times Beach, Missouri--after the EPA had mistakenly concluded that
trace elements of dioxin in some of the dirt in town were a deadly threat.
Press coverage of FEMA during these years was pretty much summarized by this
The American Spectator, September, 1996

1984 New York Times headline, "A Disaster Agency's Image Disaster." For a time,
the agency was headed by Louis Giuffrida, an Ed Meese crony who gained brief
notoriety for accepting $2,000 in free tickets to attend a George Bush
fundraiser--tickets purchased by a FEMA contractor who then billed the agency
for the expense.

In 1988, the last year of the Reagan presidency, Congress enacted the
Stafford Disaster Relief and Emergency Assistance Act, which stipulated that
requests for federal assistance be based on a finding that the incident "is of
such severity and magnitude that effective response is beyond the capabilities
of the State and the affected local governments and that federal assistance is
necessary." That act was to set the stage for the flow of money to come, for
neither federal law nor FEMA regulations provided a clearer definition of a
disaster; the new vague language meant that a disaster was whatever an incumbent
politician said it was.

Not surprisingly, the "disaster rate" multiplied almost overnight. The number
of declared disasters and emergencies rose from an average of twenty-five a year
from 1983 to 1988 to an average of forty-one a year from 1989 through 1994. In
1992, the Bush administration set a record for the number of disaster
declarations with forty-eight--almost three times more than in Reagan's last
twelve months.
The American Spectator, September, 1996

But the event that truly transformed the agency into a federal behemoth was
Hurricane Andrew, which devastated southern Florida in August 1992. Though the
storm left an estimated 160,000 people homeless, and destroyed or damaged 82
,000 businesses, Gov. Lawton Chiles initially refused to request federal aid to
clean up the $30 billion worth of damage (far greater than the figure for the
Northridge, California earthquake of 1994). It was not until Bush Transportation
Secretary Andrew Card implored Chiles to request FEMA assistance that the
governor asked for the region to be declared a disaster area.

Bush honored the request, but the agency proceeded to bungle the relief
effort. For several days, thousands of people were left searching for food and
water. Victims of the storm quickly resorted to gallows humor, posting makeshift
signs in front of their ruined homes: "What do George Bush and Hurricane Andrew
have in common? They're both natural disasters." Even a visit to Florida by FEMA
board member Marilyn Quayle was not enough to reverse public opinion.

The political debacle for Bush gave rise to calls to abolish FEMA, which
resonated with the apathy and incompetence that doomed much of his
administration. Bush had treated the agency as a political dumping ground;
Wallace Stickney, Bush's FEMA chief, apparently got the job largely as a result
of being a neighbor and crony to John Sununu. Bush failed to see what could be
won or lost politically by taking the agency's mission seriously--a typical
The American Spectator, September, 1996

lack of savvy for his presidency.

Just as typical has been his successor's shrewd manipulation of the FEMA
machine. Clinton had a reputation as governor of Arkansas for responding rapidly
to emergencies, and was far too smart a political animal to pass up the chance
to distribute money, buy votes, and accrue great photo opportunities in one fell
swoop. He has elevated the agency head, James Lee Witt, to cabinet status,
insuring Witt--and thus an image of Clinton's generosity and compassion --high
visibility in the national press.

A small businessman who later became the chief judge in Yell County, Arkansas
, Witt has been a regular on NBC's "Today" show, and frequently comments on
public events that have nothing whatsoever to do with disaster relief. Witt
opined that the South's recent church burnings "have struck at the very fabric
of our nation," and he recommended all-night vigil prayer services as a way to
"eliminate some of this." In July he flew to New York to be the president's
"eyes and ears" during the recovery of the victims' bodies of TWA Flight 800.
When a GAO report last May urged FEMA to tighten its spending guidelines, Witt
responded: "The more FEMA attempts to tighten eligibility by closely prescribing
every possibility, the more we will appear bureaucratic and inflexible." The
agency likes to boast of its therapeutic value; in an agency flyer promoting
FEMA's "significant accomplishments," the first achievement listed is
The American Spectator, September, 1996

"increas[ing] the comfort level of citizens around the country_"

Clinton's magnanimous therapy, however, has been far more than just a PR
gimmick; his administration has delivered over $25 billion in disaster aid, $7
billion of it from FEMA alone. Dozens of federal agencies have jumped on the
disaster bandwagon, ranging from the Small Business Administration (with its
notorious low-interest disaster loans that have a 30 percent default rate) and
the Veterans Administration to the Department of Health and Human Services
(which sends its experts in to provide "crisis counseling") and the Army Corps
of Engineers.

In 1993, just his first year in office, Clinton broke Bush's record by
declaring fifty-eight disasters, and FEMA will almost certainly set another mark
this year, having already named fifty-one of them. A press release from the
agency last February proudly noted that, in the first six weeks of 1996, Clinton
had declared twenty-seven disasters--six times more than the average for the
last twenty years, and three times more than the highest previous period over
the last twenty years (1978). If Bob Dole somehow tightens the presidential race
this fall, one can almost expect Clinton to begin declaring "major disasters" in
key eastern states, where road surfaces will be endangered by a deluge of
falling leaves.
The American Spectator, September, 1996

It's no accident that Clinton has been able to derive political advantage
from FEMA: the agency employs roughly ten times as many political appointees as
other agencies its size. The agency has about 2,700 employees, as well as 7,000
workers on standby who can be called in case of a declared disaster. (This does
not include its use of AmeriCorps "volunteers," who, for example, were brought
in after the Oklahoma City bombing to distribute kneepads to rescue workers, or
, after the Northridge, California earthquake, to go from door to door informing
area residents of the benefits they could claim.)

Proud as it is of reinventing government, the administration likes to talk up
its modernizing of FEMA. Agency director Witt told a 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." Clinton himself bragged in February, "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." (A
toll-free number doesn't solve all problems, however. Though FEMA has
established one in the wake of the Southern church fires, about the only advice
the agency has to offer is that churches get deadbolt locks for its doors, use
better lighting, and install sprinkler systems.)
The American Spectator, September, 1996

Its speed in doling out the goodies, however, masks the fact that FEMA is in
a state of virtually total financial and bureaucratic chaos. A 1995 report from
FEMA's Inspector General 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." The
report went on to add: "Many accountants and analysts did not know what their
jobs entailed, and questioned their own value to the operation."

The report also noted that the money FEMA has been so quick to give away is
routinely misused. Money passed on to a local government to repair a parking lot
was used to purchase computer equipment instead; funds to fix damaged roads and
utility lines were spent instead to build a school septic system--a project that
had nothing to do with the disaster that generated the federal aid. Perhaps
most shocking, the report noted the agency routinely permits local government
beneficiaries to keep any unspent funds.

If local governments claim to have difficulty paying their small share of
cleanup and relief costs, FEMA will provide them with a Community Disaster Loan.
According to the 1988 federal disaster act, however, if a local government's
revenues are insufficient to meet its budget three years after the disaster,
then FEMA must forgive the debt. Local governments, in other words, have strong
incentives not to cut spending.
The American Spectator, September, 1996

As a result, roughly 90 percent of all Community Disaster Loans have been
forgiven--at a cost of over $150 million to U.S. taxpayers. Some governments
even take the low-interest loans and buy higher-interest federal Treasury bills.

Not surprisingly, the agency's generosity can slow a local community's
response to disasters. Jeffrey Tucker, an editor at the Mises Institute in
Auburn, Alabama, described FEMA's effect in the days after Hurricane Opal hit
the city last year:

Everything was being cleaned up--the city government going crazy--then it turned
out that we might be eligible for disaster assistance. And everything came to a
halt. The city stopped doing anything--everything froze--this went on for weeks.
Trees were still in the streets. Why? Because FEMA people were coming through to
determine whether we needed aid. And in order to get aid, we had to leave the
place looking trashed. Then--FEMA decided that it was a disaster.

But, instead of starting to cleanup then, the city delayed further cleanup
until it received FEMA money. The first half of the cleanup occurred in the
first 24 hours--and the aid from FEMA simply made local government bigger. (1)

The American Spectator, September, 1996

Just as with welfare, FEMA's free help tempts communities into becoming
dependent on the feds rather than remaining self-reliant. Before Clinton took
office, for example, only one blizzard had ever resulted in federal
intervention. Now snow is routinely a "major disaster" that requires FEMA's
involvement; this winter alone, Clinton labeled sixteen states "major disasters"
due to snow. Vernon, Connecticut, was given a FEMA emergency relief grant of
$40,023 this past June to help the city cope with the cost of the preceding
winter's storms. Yet the total cost for snow removal last winter amounted to
$258,000--about $8.60 per person in the 30,000-population town, which is
probably less than what the average householder would pay a 12-year -old to
shovel out his driveway after a good snowfall.

Because the town had only budgeted $104,516 for snow removal, however, it
claimed to be overwhelmed by the heavy costs. What lesson did the town managers
deduce from FEMA's generosity? As the Hartford Courant reported, the "optimistic
town council has already set the proposed 1996-97 snow-removal budget at
$69,383, the lowest level in 15 years." Some local officials may believe that
having a low budget for snow removal--which is then exceeded--will make it
easier for them to shake their tin cup in FEMA's direction.

And, in predictable bureaucratic fashion, those towns that make a genuine
effort not to be dependent on federal money virtually disqualify themselves
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from ever receiving it in the event of a real disaster. Buffalo got hit with 36
inches of snow in one day last December--a heavier burden than any of the areas
that were labeled disaster areas in the following months. But the city's request
for FEMA assistance was denied. Rep. Jack Quinn (R-N.Y.), the Republican from
Buffalo, complained: "I got the impression that because we were good at what we
did in terms of snow removal, we were almost penalized because of it."

Yet while the Clinton administration could afford politically to snub Buffalo,
it felt much more obliging about California after an earthquake rocked the
Northridge region in January 1994. California is a key state in Clinton's
re-election campaign--so FEMA swung into high gear to prove to constituents that
the president was on their side. More than 400,000 southern Californians
received FEMA checks averaging $2,800. Thousands of unsuspecting homeowners
received checks for $3,450 out of the blue. When the Los Angeles Times broke the
story of these unsolicited "accelerated disaster housing" payments on February
3, 1994, FEMA announced that same day that it would stop sending money to people
who had not requested aid. However, FEMA spokesman Morrie Goodman denied any
mistakes were made: "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." He defended the policy: "We felt, as an agency, it was
better to send the check than to wait until we had inspectors out there." Forbes
reported last year that of these unsolicited checks, "6,590 went to families
The American Spectator, September, 1996

whose homes weren't even damaged enough to be covered." Although FEMA eventually
asked for the checks to be sent back, a spokesman says the agency can't say how
many were returned.

FEMA also permitted many homeowners to double-dip--that is, to collect both
insurance payments for home damage as well as 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 largesse naturally drew other agencies into the orgy of big spending.
In the aftermath of the Northridge quake, the Department of Housing and Urban
Development sent a pack of officials to the region with thousands of Section 8
certificates, good for 18 months of nearly-free housing for low- and moderate
-income families. The vouchers entitled families to up to $1,391 a month to rent
a four-bedroom apartment. One woman proclaimed, "This is like Christmas," after
using her certificate to move into a luxurious apartment complex with a heated
swimming pool, four spas, six tennis courts, and two air-conditioned racquetball
courts. Other voucher recipients, according to the Los Angeles Times, moved into
"the Churchill, a Mid-Wilshire district high-rise that bills itself as a luxury
facility and offers an outdoor pool, Jacuzzi and a small gymnasium with
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weightlifting equipment."

Although the Times warned of a "financial aftershock" once the subsidies ran
out, Congress and HUD repeatedly extended them for short periods of time.
Finally, this May the Republican Congress made the temporary subsidies
permanent--thereby providing a long-term windfall to those who had made the
least effort to get off the dole. The Times also reported that one voucher
recipient had quit her job because she could no longer get from her new
subsidized apartment to her office without a car.

FEMA matched HUD's largesse by bankrolling "repairs" at colleges and other
educational institutions when little or no damage was done. The Los Angeles
Times reported, "If a single ceiling tile fell from a classroom, or a single
light fixture was jarred loose, the entire [school or college] campus could
qualify for more quake-proof ceilings or lights, courtesy of FEMA's mitigation
fund. In L.A., many schools fit that bill."

Prior to 1989, FEMA would only provide financial assistance to government
agencies and public institutions to repair damage done during a declared
disaster. Yet, as an Inspector General report noted last year, FEMA has "made
some major changes to its regulations which may have increased the Federal cost
of disaster assistance. For example, the definition of 'current codes' was
The American Spectator, September, 1996

changed to mean those codes adopted prior to project approval by FEMA versus
those codes that were in effect at the time of the disaster. Also, FEMA changed
its regulations to reflect that a facility is eligible for replacement when the
cost to repair disaster-related damages exceeds 50 percent of the cost of
replacing the facility."

While this may sound like an unimportant point, it has proved to be a bomb
beneath the federal budget. FEMA has created a golden opportunity for "code
racketeering" by local and state governments--raising their standards after a
disaster and sending the bill to Washington for the upgrades. FEMA now routinely
bankrolls lavish new upgraded buildings to replace buildings that received a
trivial amount of damage. The IG noted, "Based on damage repair costs in recent
years, FEMA program officials now estimate upgrading costs to be between 50 and
1,000 percent (the majority being at the higher end) of the cost of repairing
actual disaster damage." For example, it would have cost FEMA only $1.1 million
to repair quake damage to the University of Southern California Psychiatric
Pavilion. Because code upgrades cost $44 million, however--more than half the
price of the building itself--the agency constructed an entirely new pavilion,
at a taxpayer cost of $64 million. Several representatives of private insurance
companies interviewed by the inspector general expressed astonishment at FEMA's
policy.
The American Spectator, September, 1996

According to a just-issued Inspector General's report, FEMA has also paid
lavishly for repairs at profit-making sports stadiums and tony golf courses.
After the Northridge quake, FEMA gave $5.5 million to repair the scoreboards at
the California Angels' Anaheim Stadium, and $88 million for repairs and upgrades
at the Los Angeles Coliseum. In the wake of flash floods, FEMA in 1993 provided
"$871,977 to repair erosion, cart paths and sprinklers at the Indian Wells Golf
Resort in California and $246,102 to fix the fairways, greens, and cart paths at
the Palm Springs Golf Course." Such a visible and spend-happy presence in the
state has led to FEMA becoming almost a part of the local psyche. When Los
Angeles held earthquake drills after the Northridge disaster, one comedian
quipped: "The FEMA office even practiced processing bogus claims." When the Los
Angeles Times sponsored a contest last year for the Top Ten Reasons David
Letterman should move his TV show to Los Angeles, one of the top submissions
read: "Two words: FEMA money!"

Perhaps the most egregious violation of common sense that FEMA commits, however,
is its penchant for encouraging people to build homes in unsafe areas. The
agency regularly bails out those whose homes are destroyed in dangerous climes.
As an 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
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thrust their habitat into wildfire zones; FEMA follows the fire trucks."

One of FEMA's highest-visibility operations is the National Flood Insurance
Program (NFIP). FEMA is running a national television advertising campaign
(titled "Cover America") encouraging people to sign up for NFIP, in which
viewers are told: "We can't replace your memories, but we can help you build new
ones." 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 or on mountain tops. In reality,
certain places are a hundred times more likely than others to be flooded. Yet
FEMA generally charges a uniform insurance rate across the nation.

In essence, NFIP amounts to a type of anti-environmental socialism. "The
greater the coverage we can achieve," director Witt has said, "the healthier the
flood insurance program will be, and there will be less of a burden on the
disaster program." According to one career employee at the agency, however, "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." Adds Beth Milleman of Coastal Alliance, an environmental activist
group: "What disaster relief and flood insurance wind up doing is giving
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people the financial means to build or rebuild in exactly the same spot that we
know is disaster prone. And it is no strings attached nine times out of ten."

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 from the U.S. Treasury 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, FEMA is essentially massively subsidizing most of
the people who buy the policies--and the more policies that FEMA sells, the
greater the financial crash-and-burn will be when Mother Nature catches up with
the agency.

Until then, Bill Clinton will continue to score easy political points with
his extravagant giveaways. Congressional Republicans have been completely
toothless in opposing FEMA's politicization, having neither the gumption nor the
willpower to challenge the barrage of "snow disasters." About the only eruption
from the Grand Old Party came from Pennsylvania Governor Tom Ridge- -who threw a
public anti-Clinton snit when he wanted a bigger portion of his state declared a
flood and snow disaster zone. (Such political fortitude has led him onto the
short list of running mates Bob Dole is considering.)
The American Spectator, September, 1996

The GOP's failure to fight against Clinton's transformation of FEMA into what
amounts to a re-election office marks 1996 as even more likely a year of
Republican defeat. Indeed, in crucial California, FEMA last summer took out a
three-year lease of office space in Pasadena. And the administration keeps
finding ways to give grants to the state, and thereby keep its "compassion" in
the news. On July 17, Leon Panetta, James Lee Witt, Los Angeles mayor Richard
Riordan, and L.A. Board of Supervisors chairman Mike Antovich announced $264
million in new FEMA grants for the city's government buildings and private
hospitals, including $126 million to upgrade city hall. No emergency there, of
course--but without vocal Republican opposition, Clinton was able to spin the
announcement into yet another tale of his administration's effectiveness and
even patriotism: "Los Angeles City Hall is not simply the offices of the mayor
and city council, but a nostalgic icon of the city, rich in history and a symbol
of one of America's most important cities. I'm pleased that the federal
government can help in the effort to restore this beautiful building." (In the
words of the Los Angeles Times, the generous federal aid "could mean a fancier
project than envisioned.")

Meanwhile, when genuine disasters do strike, Clinton continues to see them as
contributing to his political good health; after the explosion of TWAFlight 800
, he announced plans to push Congress to allow FEMA to respond to "airplane
crashes." A disaster for you means a chance for him to spit-shine his image as
The American Spectator, September, 1996

First Comforter. As he told a group of disaster workers in February:

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.

"Nearly worth" losing your home for the chance to shake Bill Clinton's hand?
No wonder he wishes that "spirit" would "capture" America. By throwing around
tens of millions of taxpayer dollars, the First Comforter may even get his wish.

(1.) After Tucker's boss, Llewellyn Rockwell, wrote an op-ed in the Los Angeles
Times criticizing the adverse effects of FEMA's intervention, Morrie Goodman,
the agency's director of public communications, went ballistic. He called Tucker
and declaimed, "I gave you a $100,000 grant" to study emergency warning systems
in Alabama last year. (The grant, in fact, had been given to Auburn University.)
After Tucker wrote about Goodman's call, Goodman left a message calling him "a
very sick and dangerous human being." In due course, a Witt-appointed
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management review board recommended that Goodman should be removed from office.
In response, Witt simply moved Goodman to a new post- -director of strategic
communications--where he continues to draw his $100,000+ salary. Meanwhile, FEMA
continues to list him as director of the Office of Emergency Information and
Public Affairs.