Date: 2025-01-15 Page is: DBtxt003.php txt00003075
US GOVERNMENT ADMINISTRATION
MANAGING MONEY IN GOVERNMENT
After 9/11, a Torrent of Money, and Anger
NY Times article from 2002
MANAGING MONEY IN GOVERNMENT
After 9/11, a Torrent of Money, and Anger
NY Times article from 2002
Original article: http://www.nytimes.com/2002/12/30/nyregion/30FEMA.html?ex=1042245960&ei=1&en=4e4df30d9f50ba22
Peter Burgess COMMENTARY... initial comment (circa 2011
I am making this comment almost 10 years after this article was written. The article is quite clear about the chaotic state of 'programming' at the government level in modern society ... especially in programs associated with government in the United States. Some governments elsewhere may be more rigorous in their management of money ... but in the case of the United States tha management of money everywhere in the government sector is a disaster.
I do not believe this incompetence is an accident. Those with power and influence are better served by a Government that has little transparency and accountability. TO BE COMPLETED
Peter Burgess
Peter Burgess COMMENTARY... updated comment (March 2023)
It is fascinating and somewhat disconcerting to revisit things that I started doing a decade ago. I try to focus on the fascinating, and not worry too much about the disconcerting.
I think there is value in learning something from the perspective of time. Some things from the past simply come and go with little of consequence emerging, but other things that were rather modest in scope in years past grow and grow and grow.
At my age I am seriously bothered by how much ignorance and stupidity seems to be in play at all levels of politics, business and society in general. I have been impressed by the progress of science and technology during my lifetime, but at the same time increasingly bothered by the lack of 'progress' in terms of things that are important for people and society in general.
I vaguely remember when I was a student in the 1950s being told that Keynes had been optimistic that modern productivity would enable a modern society to produce all the goods and services that it needed while only working a 30 hour week. Fast forward some 60+ years and modern society now requires the majority of people to work around 60 hours simply to make ends meet. As far as I am concerned this is stupid and unaccceptable, but hardly enybody with power and influence seems interested or capable of doing anything about it. Worse ... the media does not seem very interested in addressing this issue ... to my mind a serious dereliction of duty.
Over the years I have done work in a lot of different places, and, as an accountant, spent some of this time 'following the money'. While water always flow down, wealth rarely does. Rather, wealth seems to flow upwards defying gravity and in the modern world an enormous amount of wealth has become concentrated at the top, with rotten consequences for most of the people on the planet.
The following suggests that there has been a massive amount of incompetence in the management of 9/11 funds intended for good purposes ... or is the incompetence desgigned into the system. More than 20 years later, I expect we will never know.
Peter Burgess
By the NEW YORK TIMES
This article was reported and written by Edward Wyatt, David W. Chen, Charles V. Bagli and Raymond Hernandez.
This article from NYTimes.com has been sent to you by bbracey@aol.com.
December 30, 2002
In the months after nearly 2,800 people died in the terrorist attack that destroyed the World Trade Center, the Bush administration pledged $21.4 billion to address the emergency. The extraordinary allocation of federal disaster relief, while less than local elected officials had petitioned for, was meant to reassure, restore and restart an emotionally and economically ravaged New York City and surrounding region.
More than 15 months later, some $4.5 billion to $5 billion has made its way from Washington to New York. Significant sums of money were made available almost immediately, and they made possible early progress in providing for victims and establishing a sense that the city could rebound.
Roughly $600 million was sent to cover the costs of the monumental task of cleaning up the site. An additional $401 million has been distributed to some 10,000 downtown businesses to keep them afloat. And $493 million in tax-free bonds have been approved to help finance major construction projects, including three residential complexes around ground zero.
But many victims, elected officials, business executives and others are both confused and angry about why, more than a year after the most serious terrorist attack on American soil, less than a quarter of the federal government's promise of financial assistance has been realized, why hundreds of millions of dollars that are in the hands of New York officials have gone unclaimed, and why firm decisions have yet to be made on how additional billions of dollars will actually be spent.
The explanations, based on an examination of financial filings and interviews with government officials, real estate experts, watchdog organizations and downtown residents and business people, are varied.
Some $1 billion of the $21.4 billion in aid, it turns out, will buy insurance for the companies that conducted the cleanup, which they would use to defend themselves against any lawsuits. Aides to some New York elected officials who have tracked the money also believe that some of New York's promised millions have gone to victims and institutions in Pennsylvania and Washington, the other two sites of devastation wrought by terrorists on Sept. 11.
Moreover, federal officials never intended to deliver another huge chunk of the money - some $5 billion to rebuild the transportation network downtown - for years, determined to wait until there was a fully formulated plan. No one doubts that the government will make good on its pledge. But the jobs that such a project would bring and the tangible benefits to the city remain far off.
Further, many businesses and residents were shocked to learn that hundreds of millions of dollars in grants available to them were subject to federal taxes, a fact that both reduced the real value of that aid and discouraged some from taking advantage of it. Many people have also failed to realize that about a quarter of the total aid package - some $5.5 billion - was made up of tax breaks, not real dollars. So the ultimate value of that portion is the subject of great debate, with some economists and real estate experts in the city worried that it is largely an illusion.
Distrust among the government agencies involved in controlling the aid, and self-confessed bureaucratic missteps by the Federal Emergency Management Agency, which is in charge of channeling nearly $9 billion to New York, has also led to delays in payments and disillusionment among potential recipients.
And finally, some of the money has not made its way to New York because local and state officials have not figured out exactly how to take advantage of all the available types of aid. Other bids for financing certain projects - $90 million to help assess the long-term health of thousands of trade center rescue workers, $980 million to reimburse the city and state for the cost of deploying its uniformed forces and future fire department training, have been stalled.
'You can look at the trees, and see many things that should have been done better or quicker,' said Senator Charles E. Schumer, a New York Democrat who has been involved in negotiating the aid packages. 'But if you look at the forest, it's a large and unprecedented sum of money that's basically being used in the way that it was needed and intended. The spending of the money has been far from perfect, but over all, it's been pretty good.'
Determining precisely how much money has made it to New York and actually been distributed is difficult. An examination by The New York Times of the dozens of sources and uses of the promised $21.4 billion in disaster aid found significant disparities in accounting for the money, both among the federal officials handling it and the organizations, people and institutions in New York and the region receiving it.
The White House's Office of Management and Budget has one set of figures for how much has been given, and congressional staff members have a different set, and there is some belief that double counting has occurred. Beyond that, the number of government agencies and organizations involved in the effort is daunting, and the money was appropriated in different pieces of legislation. Indeed, a tabulation by The Times of the total amount pledged by various federal agencies adds up to only $21.3 billion.
Responsibility for definitively tracking where it has all gone remains unclear. For instance, last September, an official with the federal General Accounting Office told New York officials that the O.M.B. appeared to be so uncertain of how much had been spent that it asked the General Accounting Office - an unusual request since it is the O.M.B.'s job to monitor federal expenditures.
But establishing some specific answers and general trends was possible, as was identifying unanswered questions about enormous amounts of money.
It is clear, for instance, that FEMA, after much confusion and repeated complaints, has spent $84 million in its program to provide emergency rent and mortgage assistance. But FEMA says it still has more than $360 million that, absent specific requests by New York officials, has no determined fate.
The Agency Much-Disputed Role In Delivering Aid
Of all the federal agencies involved in New York's recovery effort, none has played a greater or more disputed role than the Federal Emergency Management Agency. The agency, which many officials at local and federal levels now believe was a poor choice to play such a large role in a unique economic disaster, was charged with handling $8.8 billion in aid meant to address multiple needs.
Currently, some $2.3 billion of that total has been paid out, or is close to being claimed by recipients, including roughly $600 million for those involved in cleaning up ground zero, $62 million for the city medical examiner's office and $16.7 million for people who lost their jobs after Sept. 11.
Officials with the agency, after months of requests from elected officials, recently released what they said was the definitive accounting of the agency's money. As part of that listing, FEMA officials said that in addition to the $2.3 billion paid, $6.1 billion has been earmarked for certain programs or projected as the likely costs for a range of efforts. One of those projections, for instance, involves a possible $800 million payment to the Port Authority; another involves the $91 million allocation for an environmental cleanup program.
And finally, the agency said the fate of some $366 million was as yet undetermined.
But while the agency has drawn praise for its prompt and complete payment for the cleanup effort, virtually every other aspect of its performance and its accounting has been the object of criticism and debate - the rate and speed with which it compensated people who suffered economically, its failures to publicize some of its aid programs, and the delayed public disclosures about where its money had gone.
'Is it moving along as expeditiously as we hoped? No,' said Representative John E. Sweeney, Republican from New York, who added that he thought New York officials had often gotten 'the runaround' from FEMA. 'But I think the pressure needs to be constant from Congress.' He added, 'I'm not ready to say that I am absolutely frustrated, but I think the next six months are going to be rather critical.'
For all the acrimony and suspicion, though, FEMA officials have sought to dispel any notion that New York will not get the full amount of money it was promised.
'FEMA will spend the $8.8 billion on this disaster, no question about it,' said Brad Gair, the agency's federal recovery officer in New York. 'It will all be spent.'
For FEMA, which typically tackles hurricanes, earthquakes and ice storms in rural or suburban settings, the terror attack in Lower Manhattan was a disaster without precedent in terms of scale, cost and landscape. And some of the most intense criticism of the agency has grown out of the issue of whether its models for distributing aid work in a situation where much of the damage was not just physical, but economic. The victims, too, were spread over different boroughs and states.
The agency's handling of its program to help people avoid eviction or foreclosure has been a representative problem. The agency has admitted bungling the program, sending out the wrong applications and having people without knowledge of New York's geography review aid requests. When it was revealed that the agency was turning down applicants at a rate never before seen in a disaster, it was forced to adjust its requirements.
To date, some $84 million has been paid out in the program - less than half the $175 million that has been dedicated. And the $91 million program intended to help people clean their downtown apartments has so far paid out only $19 million, in part because eligible residents were unaware of it.
'We feel FEMA has done a good job getting the money out the door,' Mr. Gair said.
The modest amounts paid out in some of FEMA's programs, though, raise the question of whether it is doing enough to distribute the cash. But they have also provoked great curiosity over whether FEMA will make any leftover money available for alternative uses.
The $366 million that by its own account is unallocated could grow by hundreds of millions if its payouts continue to run below projections.
The priorities are myriad for the remaining money. Senator Hillary Rodham Clinton, for instance, wants $90 million to monitor the long-term health of rescue workers who assisted in the trade center recovery effort. Representative Carolyn B. Maloney, Democrat of New York, wants FEMA to live up to its promise to provide $33 million in funds for mental health services in New York's schools.
Mayor Michael R. Bloomberg and Gov. George E. Pataki want FEMA to reimburse the city and the state $980 million for expenses like the cost of deploying uniformed personnel and for future fire department training costs that are not already covered under FEMA regulations.
So far, those efforts have stalled. Further, numerous officials have begun to express alarm about whether FEMA's $8.8 billion will be enough in the end.
Mr. Gair has conceded that New York may have more needs than FEMA can cover.
'New York shouldn't have to choose whether it needs to take care of fire, police or rebuilding its infrastructure,' Mrs. Maloney said. 'Historically, the response to disasters was based on need, and this is the first disaster where it's been based on how much money is available.'
The debate over how much money remains available has focused more on the $21.4 billion, and whether it would prove adequate. After all, that figure was not based on any assessment, but was rather a number that grew out of early conversations between Mrs. Clinton, Mr. Schumer and President Bush days after the attacks.
Securing any additional funds will not be easy, given the concerns over the ballooning federal deficit.
'Part of what we have to do is to show that we're not being greedy, we're not overreaching,' said Mrs. Clinton. 'But if you look at every other disaster, we are being conservative in saying what we need. So I am confident that we will be able to make the case.'
The Bonds Unused Tax Breaks In Uncertain Times
One of the biggest question marks in the federal aid effort is the $5.5 billion Liberty Zone tax package intended to stimulate employment and the construction of new office towers, residential buildings and retail shops in Lower Manhattan.
The $5.5 billion sum, which sounded a lot like cash to anxious New Yorkers back in March, is the value over time of the tax breaks accorded to employers and construction projects that contractors and entrepreneurs might undertake. It was not, and will never be, an infusion of cash.
Now, some state and city officials believe that the package was an ill-conceived device for addressing the damage to the city's economy. They say that the usefulness of the aid is dependent upon the willingness of people to invest in office buildings and other business opportunities at a moment when the future of downtown, and especially the market for office space, is seriously clouded.
To date, there are only four projects in line for a total of $493 million in tax-exempt Liberty Bonds, and three of them are residential complexes. State and city officials, as well as many real estate and business experts, say the tax enticements could not possibly be used by the end of 2004, the deadline established by Congress.
'The jury is out on how much of this will be used and how effective it will be,' Mr. Schumer said.
Even estimating the total potential value of the package has proved difficult. The bond plan was trumpeted as a $5.5 billion funding package when it was announced, but the O.M.B. now puts its value at $5 billion. And a report done for the city by the accounting firm PriceWaterhouseCoopers said that the entire package of tax incentives was worth just $3.8 billion.
'Our number's a more realistic estimate,' one New York government official said. 'But we don't want to appear ungrateful.'
In the weeks after the attacks, Liberty Bonds emerged as a reconstruction tool in meetings between the White House, elected officials, the New York City Partnership and the Real Estate Board of New York. Those involved assumed that the bonds could be used to replace much of an estimated 25 million square feet of office space that had been damaged or destroyed.
The economic stimulus package provides tax credits of $2,400 per employee in 2002 and 2003 for every business south of Canal Street with fewer than 200 employees. One provision allows the city, the state and other agencies to refinance certain debts, while another grants accelerated tax benefits for investment in new office space, equipment and technology.
Finally, the legislation allows the city and the state to issue up to $8 billion in tax-free bonds for developers of office buildings, housing and retail projects below Canal Street. Of that, up to $2 billion in bonds can be used for commercial, but not residential, projects outside Lower Manhattan.
But clearly, the greatest concerns about what the aid will mean in real terms involves the city's current economic climate.
With the economy weak and layoffs sweeping Wall Street, there is little demand for new office towers in Lower Manhattan. Indeed, there is more vacant space in Manhattan now - 46.4 million square feet - than there is office space in all of San Francisco. That has led some officials to question the value of the Liberty Zone benefits as tools for rapidly reviving the downtown economy.
'No one can argue that hard cash for our immediate needs is much better than tax relief that might come later in an amount that might never be quantified,' said Mrs. Maloney. 'Lower Manhattan is economically still reeling from Sept. 11. We need help now.'
The city and state have so far approved the use of the tax-exempt bonds for three residential towers in Lower Manhattan and an office building at Atlantic Center in Brooklyn for the Bank of New York. But in no case has the bond financing been completed, and experts say there is little current appetite for applying for more.
State and city officials say it is clear that they will not be able to use most of the bonds by the 2004 deadline. Recognizing that few commercial projects will qualify, city officials have been working with Mrs. Clinton to see if some of the bonds could be used for residential projects outside Lower Manhattan.
City and state officials say that they will almost certainly ask Congress to extend the deadline beyond 2004. 'If demand perks up, we'll push for an extension of the deadline past 2004,' said a senior state official. 'Otherwise, we'll let it expire and ask them to give us some more cash.'
The Grants Many Are Offered, But Few Are Taken
In devising the aid package for New York, legislators in Washington and rebuilding officials in the city found a way to channel nearly $4 billion through the federal Department of Housing and Urban Development and the Small Business Administration. The housing agency has the power to make block grants of money to address needs of particular urgency if existing conditions pose a serious and immediate threat to a community's health and welfare.
Thus empowered, officials decided that $3.66 billion in grants of various kinds would flow through the two agencies. But only about $690 million, or less than one-fifth of the total, has been paid to downtown businesses and residents.
The most successful part of that financing effort has distributed $401 million to thousands of businesses large and small, giving some an opportunity they otherwise would not have had: the ability to survive in a precarious economic environment. And some $41 million has been used to make grants of up to $14,500 to any family willing to remain in Lower Manhattan for two years. That has at least played some role in helping return occupancy rates in residential buildings around ground zero to what they were before the attack.
But there are a variety of reasons why so much of the allocated money has been unused. Many small businesses felt the application process was too burdensome and confusing, and effectively gave up applying. Other businesses and residents discovered that some of the grants were subject to federal taxes and opted not to pursue the more-diminished amounts of money.
Further, some businesses found that because they were just outside the designated disaster zone, they were ineligible for money that many elected officials in New York believe was clearly intended to help them.
In Greenwich Village, for example, tourism dropped drastically. In Chinatown, restrictions on truck movements halted deliveries to many businesses, particularly garment factories. Businesses in much of those neighborhoods were entitled to grants totaling only a few days' receipts.
A second small-business program, the Small Firm Attraction and Retention Grant program, is scheduled to distribute up to $291 million, but only $18.6 million has been distributed so far. Officials from the Empire State Development Corporation say they are trying to promote the program more to address a lack of applicants.
And even the $41 million used to entice people to stay in Lower Manhattan amounts to a fraction of the money that was allocated for that effort. In all, officials had set aside $280 million for the retention program. But only 8,500 grants have been approved among 28,000 applications that were submitted as of early December. So far, only some 2,000 residents of the 50,000 eligible have actually received the grants.
Charles A. Gargano, the chairman of the Empire State Development Corporation, said so little of the money for attracting companies has reached its intended targets because 'we are in an economic situation where lots of companies are not making moves and are tightening their belts.' However, he added, 'the programs have been successful in helping a substantial number of businesses.'
Rebuilding officials have had an easier time reaching out to big companies. A category of grants intended to benefit companies with more than 200 employees pays cash for a guarantee that a company will move to or remain in Lower Manhattan. That program, with a budget of $320 million, has so far paid 63 grants totaling $215 million.
Yet that program, too, has come under fire from fiscal watchdogs who question the need to pay grants to institutions - like Pace University and the American Stock Exchange - that were at small risk of leaving Lower Manhattan. The program has also had limited success in attracting new companies to downtown.
The distribution of HUD money has been complicated for months by the decision by Congress to use two different agencies to deliver it. Congress gave responsibility for $700 million in aid to Empire State Development, the economic development arm of the Pataki administration. It then opted to direct $2.7 billion through the Lower Manhattan Development Corporation, the special entity set up by Mr. Pataki and former Mayor Rudolph W. Giuliani to oversee the rebuilding effort.
When Empire State Development requested some $800 million in additional money to continue its grant programs and retention efforts, it had to go through the Lower Manhattan organization, which balked and turned over only $350 million. It then angered its counterpart by asking for a full accounting of the money Empire State had already handed out.
As it stands, $1.3 billion of the $2.7 billion given to the Lower Manhattan agency still remains unspent and unallocated. Various people have their eyes on the money, not least Mr. Bloomberg, who laid out an ambitious plan to build housing, revitalize business districts and improve transportation in Lower Manhattan. The mayor said he intended to draw on many sources for that money, among them the development corporation.
The Wish List A Grand Vision And a Hard Reality
The greatest chunk of hard money Washington promised to New York was meant to cover the costs of rebuilding, and perhaps vastly improving, the transportation hub downtown. While most everyone understood the money would come only after perhaps years of planning and preparation, it was viewed as one of the most vital components of aid if New York was to prosper.
But in the end, the package of transportation aid pledged was barely half what local officials desired.
For decades, downtown property owners and economic development officials had argued that the area suffered from a shortcoming that afflicted none of the country's other large central business districts: the lack of a rail connection to the region's major airports. Some also wanted better connections to the suburbs to the east and north enjoyed by Midtown. And there was talk of a grand point of arrival to house the newly connected transportation systems.
Thus, state and city officials went to Washington with a transportation wish list including those and nine other projects, with a total price tag of $7.5 billion. But federal officials balked at some of the efforts, like a new ferry terminal in Hoboken, N.J., that clearly had little relationship to Sept. 11. Other projects appeared to overlap: the Metropolitan Transportation Authority and the Port Authority of New York and New Jersey wanted to build a point of arrival, but their proposed stations were two blocks apart.
A compromise totaling $4.5 billion was reached, but left out some projects on the wish list. Officials in Washington left it to New York to decide which ones. The money was a mix of nearly $3 billion from FEMA and roughly $2 billion more issued as part of a federal Department of Transportation grant.
'You figure out what is best and we are going to help fund that for you,' Michael Brown, the deputy director of FEMA, told New York officials last summer.
Washington is still waiting. In October, Mr. Pataki sent a list of six projects, but no cost projections, to FEMA and the Federal Transit Administration, which will oversee the transit financing.
'We need further clarification defining the scope of the projects and the dollar amounts attached to each,' said Kristi M. Clemens, a spokeswoman for the transit administration.
Rebuilding officials say they are nearing an agreement, and promise that a full transportation plan will be offered early next year.
'The question now is,' said Mr. Schumer, 'are we going to think in a large-scale way that will change the face of downtown, or will we allow the money to be cannibalized into a lot of worthy but smaller-scale projects that ultimately won't change downtown?'
That the money will eventually reach New York may be inevitable, but its delayed arrival underscores how the federal government's emergency commitment to New York is in fact an extended work in progress.