USA Today is reporting that the Federal Emergency Management Agency (FEMA) overpaid victims of Hurricane Katrina by $485 million.
Federal law requires the government try to reclaim that money, which FEMA is trying to do, but with less that stellar results—gathering only about $15.6 million so far, or 3 cents for every dollar allegedly overpaid.
Normally, this is where we might step in and complain about the inherent inefficiencies of government. And it is inefficient.
But maybe in this case, FEMA needs a break--a tiny one.
The problem is that immediately after Katrina, the federal government started going through its normal procedures for handing out disaster relief—procedures established to minimize the potential for fraud and misappropriation of funds.
That usually entails a bidding process to ensure the lowest price and checking on the potential vendors, among other things.
All of those procedures take time, and if you will remember the critics weren’t cutting FEMA much slack. They wanted to know within a few days why emergency relief wasn’t already in New Orleans, why transportation wasn’t available for those stranded, why temporary housing wasn’t yet available.
The political pressure was so intense that the government largely set aside the normal procedures and started handing out money to almost any company willing to provide products and services and to any individuals claiming to have sustained loses.
Within a few days we started hearing news stories of people claiming to be hurricane victims using their government-provided, pre-funded cards to buy expensive, designer purses. The taxpayer takes the hit, Washington gets the blame.
Clearly FEMA and the administration made lots of errors responding to the Katrina catastrophe. But do we really want folks that dependent on DC bureaucracies? A bit more self-help: stronger local government, more flexibility in self-insuring against disasters—especially in the high-risk Gulf Coast—would diversify the risk, what common sense always dictates you should do.
But it’s also clear that the critics want it both ways: They want the government to respond immediately to disasters, helping anyone asserting victim status to get their lives back in order. And yet they want to enforce anti-fraud measures too, when you can’t possibly do both. A little respect for federalism and reliance on market forces can work wonders, even in a catastrophe. The government is best relied on when the task is to rescue; turn to the private sector when the task is to restore.