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Article published Aug 30, 2007
Katrina collects a bundle
August 30, 2007
By Audrey Hudson and Sean Lengell - The flow of federal dollars to the Gulf Coast two years after Hurricanes Katrina and Rita devastated the region already exceeds what the U.S. spent on the Marshall Plan to rebuild Europe after World War II.
President Bush and Congress have committed more than $127 billion in resources and tax relief for the region — significantly more than inflation-adjusted $107.6 billion directed to 16 countries in Europe between 1947 and 1951.
"We dumped billions into Europe, but it was prepared to deal with it and used it to create a viable new economy," said Fred L. Smith Jr., president of the Competitive Enterprise Institute.
"At the moment, Louisiana's economy is very regulated and politicized; it's like pushing stones uphill while molasses flows downhill," Mr. Smith said. "The challenge is to make sure aid to Louisiana is matched or surpassed by their own self-help efforts, the need to incentivize and liberalize its economy and political rules."
Residents in New Orleans and the Mississippi towns hardest hit by the storms have generally expressed gratitude for the outpouring of help from across the nation, but remain frustrated by the delays in rebuilding their communities.
"I took a lot of heat from people who really expect the federal government to not just send help, but to make sure the help gets to the people who need it," said Rep. Bennie Thompson, Mississippi Democrat and chairman of the House Homeland Security Committee after returning last night from a town meeting in New Orleans on the second anniversary of Katrina.
"It's nice for people to come down here, but there is some resentment against all of the Washington people who come down here and give lip service, and go back to Washington and do nothing."
More than $96 billion has been distributed or is currently available to states to rebuild houses and schools, repair damaged infrastructure and to provide shelter for hurricane victims, among other uses.
Washington also provided about $13 billion in tax relief, and has spent more than $7 billion to get New Orleans area's levees back to pre-storm levels. Another $7 billion will be spent on the flood-protection system.
"We felt like we were fortunate that our request [for funding] was heard," said Bryan McDonald, Mississippi Gov. Haley Barbour's director of hurricane recovery and renewal.
Still, the rebuilding process has gone slower than anticipated.
"We had hoped to be much farther along," said Mr. McDonald. "There is still plenty of recovery to be done."
Many federally funded, state-administered recovery programs have yet to be fully implemented. And New Orleans' struggle to define and fund plans for neighborhood redevelopment have shaken confidence about the city's short-term future.
New Orleans Mayor C. Ray Nagin favors a "market-driven" recovery of the city, while critics say he hasn't made the tough decisions necessary to get planning for the city's future moving into high gear.
Some in Louisiana have accused the federal government of giving Mississippi a disproportionate share of aid compared with Louisiana.
"This community is grateful for the help. But Louisiana's losses were dramatically higher than any other state's and thus deserving of greater compensation," said an editorial in yesterday's Times-Picayune of New Orleans.
"In reality, Mississippi has gotten a larger share of federal aid."
The paper said the city's reputation for financial shenanigans may have contributed to the disparity, but that it should not be penalized for its past.
But the city's reputation remains a concern.
The Homeland Security Inspector General office reported to Congress earlier this month it had uncovered nearly $400 million in questionable or unsupported costs associated with the recovery effort.
The Senate Homeland Security Committee conducted an eight-month investigation that "uncovered massive and unacceptable fraud, waste and abuse of taxpayer dollars" including "$1 billion in improper and potentially fraudulent payments" by the Federal Emergency Management Agency and "millions of dollars in payments were paid in the name of individuals incarcerated in prisons."
The Justice Department says 764 persons nationwide have been arrested on charges of fraud in 680 cases in the recovery efforts. The U.S. Attorney's Office Southern District of Mississippi leads the nation with about 150 people charged.
The cases include a wide array of charges including bribery, making false claims with federal and state agencies, and even attempts to defraud the Red Cross — charities have donated nearly $4 billion, according to the Chronicle of Philanthropy.
"Pretty much every program that provides disaster relief, we're seeing fraud," said David R. Dugas, a Justice spokesman with the Middle District of Louisiana, where about 125 hurricane-fraud charges have been reported — the second most in the country.
Mr. Thompson's committee has held oversight hearings on waste and fraud and says future hearings will focus more on contract fraud than public-assistance fraud.
"Very little attention is being paid to contract fraud; the only answers we get are that [the inspector general] is looking at everything," Mr. Thompson said.
The Bush administration has promised to continue to partner with local and state governments to finish rebuilding New Orleans — and to improve ways to protect the city from flooding.
"I'm confident that the people of New Orleans understand and recognize that they want to be more responsible and be smart in how they rebuild," said Don Powell, federal coordinator for Gulf Coast Rebuilding, on Tuesday. "But I don't have to tell you about the economic importance of New Orleans and what the port is to the entire nation."
