Preeminent economist and social commentator Thomas Sowell once described the welfare state as “the oldest con game in the world. First you take people’s money away quietly and then you give some of it back to them flamboyantly.”
Sowell’s words were brought to life in recent weeks by the United States Government Accountability Office’s audit of the FEMA hurricane disaster relief boondoggle. Indeed, it seems that government’s flamboyant generosity was matched only by the flamboyance with which it was exploited by recipients.
According to the June 2006 audit, debit cards provided to those displaced by Hurricanes Katrina and Rita were used to purchase all manner of adult entertainment, jewelry, vacations, spirits, and the services of a divorce lawyer in Houston, among other things. The auditors add their seemingly deadpan conclusion that such expenses were “not necessary to satisfy legitimate disaster needs.”
In addition, the audit details millions of dollars of likely fraud, waste and abuse stemming from the government’s disaster relief efforts, citing everything from $1.5 million in lost debit cards, to paying $20,000 to a Louisiana prisoner reporting his post office box as damaged property. The audit also revealed that FEMA did not validate the identities of those registering for assistance, nor did they validate claims of damaged property. Reports from CNN and the Associated Press noted that there was so much information missing GAO auditors could not be certain how many people “double-dipped,” and at what cost to the taxpayer.
It is an interesting lesson for all who believe compassion is measured by government spending. Lawmakers arrogantly compel each of us to generously support their philanthropic efforts, often spending the money with a glaring lack of accountability. Who should have been surprised that in its haste to show its big heart, the government lost millions of dollars in debit cards and fraudulent payments?
Interestingly, only days after the FEMA audit made headlines, the Giving USA Foundation reported that Americans donated more than $260 billion in 2005, missing the inflation-adjusted all-time high set in 2000 by less than $300 million. And for those who would assume that charitable giving was the result of natural disasters, the report noted that relief for natural disasters like the hurricanes, the tsunami in Asia and the earthquake in Pakistan generated significant giving, but accounted for only $7.37 billion – less than 3 percent of total giving.
So what can these stories teach us? First, that Americans are charitable when they perceive a real need. Class warfare rhetoric to the contrary, the reality is that most people do not begrudge helping others, but chafe at the idea of government directing philanthropic efforts to determine who and what will receive our tax dollars.
Second, private charities compete with one another, and those that squander donors’ generosity will eventually find themselves unable to attract new donors. The government does not have this problem. The government’s “donors” are taxpayers compelled to give generously of the fruits of their labor. There is no regard for whether government “charity” comports with the taxpayers’ values, much less whether the spending is effective or efficient.
Therein lies the third lesson: people give from the heart while government gives to get political credit. Flamboyant redistribution of wealth underlies every appropriations debate whether earmarking funds for social welfare programs or pork barrel spending for Alaska’s famed “bridge to nowhere.”
Had a charity’s name, instead of FEMA, been splashed across the news for such appallingly bad oversight and sheer waste there is little doubt their donations would dry up and lawsuits filed against the managers. Government, however, lives to tax and spend another day.
Mary Katherine Stout is the director of the Center for Health Care Policy Studies at the Texas Public Policy Foundation, a non-profit, non-partisan research institute based in Austin.