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4-year scandal of the 9/11 billions (Where did the money go?)
NY Daily News ^ | 12/03/04

Posted on 12/04/2005 6:40:07 AM PST by Libloather

4-year scandal of the 9/11 billions
How massive fed aid got eaten by waste & lax rules

This series was reported and written by the Daily News Investigative Team: RUSS BUETTNER, HEIDI EVANS, ROBERT GEARTY, BRIAN KATES, GREG B. SMITH and Assistant Managing Editor RICHARD T. PIENCIAK


President Bush stands with Firefighter Bob Beckwith at Ground Zero on Sept. 14, 2001, the day after promising massive aid to the city.

No science behind number

Just two days after the terrorist attack on the World Trade Center, with the nation still in deep collective shock, President Bush met in the Oval Office with Sens. Chuck Schumer and Hillary Clinton.

Schumer gave the commander in chief first-hand details of our city's devastation and the horror, then told him New York needed at least $20 billion to recover and rebuild.

Without hesitation, Bush agreed.

So whatever happened to the President's promise, which was later increased to $21.4 billion? And, what happened to the money we did get? Did it go to those who needed help the most? Or did some of it end up lining the pockets of the wealthy, the well-connected and hucksters who played the system?

Four years after 9/11, it is time to lift the veil of our collective sorrow and examine without sentimentality or fear of political incorrectness what was done with the generous commitment underwritten by American taxpayers.

Today, the Daily News Investigative Team begins an in-depth examination of the federal government's Sept. 11 disaster recovery program for New York City.

The 9/11 tragedy brought out the best in most of us — the countless acts of heroism, the passionate outpouring of volunteerism and the unprecedented generosity of a grieving nation.

It turns out that the huge and sudden influx of billions of dollars in federal disaster recovery aid also brought out the worst in others — to a degree that is sad and disheartening.

To be sure, the financial assistance given to New York City after the Sept. 11, 2001, terrorist attacks delivered tremendous benefit to countless citizens and businesses, small and large.

But a four-month Daily News investigation of the $21.4 billion disaster recovery package reveals that major elements of the aid process were procedurally flawed — from the determination of how much money was supposedly needed, to how it was distributed, to how it was actually spent and ultimately, to how little oversight there was over the spending. In effect, no one was watching.

As a result, 9/11 recovery aid was used to finance a plethora of projects that taxpayers elsewhere could be forgiven for characterizing as old-fashioned pork-barrel spending.

Hundreds of millions of dollars were spent on projects that seemingly had nothing to do with 9/11 and lower Manhattan.

Programs were plagued with so many loopholes that millions more ended up being given to recipients who did not fit the full intent of the particular program.

Still more millions went to help projects already in the works before 9/11 or on the drawing board with no prior funding source.

Huge contracts were given to companies and organizations linked to the very officials tasked with deciding how to spend the money — creating, at a minimum, the potential for multiple conflicts of interest.

Substantial sums were given to companies to stay in lower Manhattan even though they had no intention of leaving.

In many cases, original eligibility rules were expanded, and deadlines extended, so that virtually no one was ineligible. Vast numbers of applications were filed during the final weeks of signup periods.

Rules for some aid programs were so loose and broadly drawn that otherwise honest people grabbed their little piece of the 9/11 money pot — like the thousands of New Yorkers who took advantage of FEMA by obtaining free air conditioners, air purifiers, air filters and/or high-efficiency vacuum cleaners.

The gold rush also attracted businesses and organizations that followed all the rules for obtaining relief but didn't necessarily need free money to survive. Then there's the city Department of Education. It did such a poor job of keeping track of how it spent its $32 million share of Project Liberty grief counseling funds, that four years later, the feds are still withholding $26.8 million. Finally, The News found that program after program was designed, then redesigned, with a singular goal: spend every dime.

For example, in August 2002, the Empire State Development Corp. revised the formula for its Business Recovery Grant program to make the maximum awards available to more companies. Based on the old rules and the spending rate at that point, the recovery grant program never would have spent its full allotment.

WHO GETS WHAT

Because the amount of money was established before the scope of the need was determined, Congress had to guess how best to distribute the funds among federal agencies. Technically, virtually all of the money has been allocated, but significant amounts have yet to be spent. Gov. Pataki wants to use $2 billion worth of unused, expired Liberty Zone benefits to help pay for a rail link connecting Kennedy Airport to lower Manhattan.

Another chunk of leftover cash, $125 million in unused workers' compensation funding, has been a lightning rod for a New York vs. Red States battle. Republicans had wanted to recoup those funds while the New York delegation has argued that the money is desperately needed to fund medical services for the legions of heroic workers who are plagued with chronic illnesses they say were caused by working at Ground Zero. A tentative deal has been struck to restore the funds.

Although some police, fire and security projects in the city were paid out of the $21.4 billion, the federal 9/11 disaster recovery aid did not include New York's share of anti-terrorism legislation that paid for multibillion-dollar improvements in our nation's security.

The federal recovery aid also does not include the $7 billion paid out by the Victim Compensation Fund.

CHANGING THE RULES

For 9/11, longstanding disaster aid rules were turned on their head.

Take the $8.8 billion dispensed through the Federal Emergency Management Agency — 40% of the overall aid package.

Under the Stafford Act, which governs federal disaster relief, victims typically first apply to the Small Business Administration for loans. If rejected, applications are generally made to FEMA. That rule was dropped in New York.

Additionally, for the first time, FEMA paid 100% of claims across the board, instead of splitting it 75%-25% with the locality. Also, instead of reimbursing all qualified claims, for the first time FEMA aid was capped — at $8.8 billion. Since the money "had" to be used, the rules had to be changed — such as the deadline extensions and loosened eligibility requirements.

Because of the need for immediate work orders, city procurement rules went out the window; there were many no-bid contracts.

And considering the size of the aid package — the same as the estimated 2003 gross domestic product of Afghanistan — there was little aggressive monitoring or oversight for fraud and misappropriation.

There was no incentive to do so, either. The local political effort focused on getting every penny of Bush's promise, getting the money faster, extending application deadlines, expanding access and easing eligibility requirements.

But in the end, what did all that speedy and forceful effort mean for one of New York's main disaster recovery goals — the rebuilding of Ground Zero?

With fighting over the International Freedom Center, the Drawing Center, the sanctity of the twin towers' footprint — with sparring between the governor and the mayor over stalled development at the site, along with angry words from victims' families and other special interests — Ground Zero remains the big loser.

Additional research by Ellen Locker

No science behind number

The magic number of "$20 billion" that President Bush first said he would give New York was actually pulled from thin air, a figure born of politics and compassion rather than actuarial calculation and meaningful analysis.

Sen. Chuck Schumer (D-N.Y.) came up with the number in an effort to match the amount of emergency money being planned for anti-terrorism security across the country — legislation that made no specific mention of New York.

"To ask for more than $20 billion — more for New York than for all the military and the rest of the country — would seem excessive," Schumer told the Daily News. "But to ask for less than $20 billion would be derelict in my duties as a New York senator. So I figured, 'Let's match it, $20 billion for the rest and $20 billion for New York.'"

Schumer remembers Bush asking, "New York really needs $20 billion?"

"At least that, Mr. President," Schumer replied.

"You got it," said Bush.

As Schumer later recalled, "I got up out of my chair, and I almost went over to hug him, but I realized he was the President, so I patted him on the back."

From the moment the Oval Office meeting of Sept. 13, 2001 ended, come hell or high water, New York City was going to get its $20 billion.

Displays of machismo by Bush, Gov. Pataki and then-Mayor Rudy Giuliani also played a part in the recovery-aid equation.

Bush said an attack on New York was an attack on America. A message had to be sent to the terrorists that we would not cower — lower Manhattan had to be rebuilt.

Pataki and Giuliani said that in order to guarantee the area's future as a business capital, it was important to rebuild bigger and better — a phrase that became one of the mantras of the 9/11 recovery.

Simple replacement was not going to be good enough.

For a while, there was talk that the $20 billion was only a down payment. On Oct. 9, 2001, with Giuliani's support, Pataki announced a credulity-straining $54 billion rebuilding plan that included funding a high-speed passenger rail service between Manhattan and Schenectady — 170 miles upstate. The plan quickly died.

Over time, the rest of the nation gradually lost its political and emotional sympathy for New York. The White House budget director accused New York legislators of playing a "moneygrubbing game."

In March 2002, Bush announced a final overall aid package of $21.4 billion. But the number bounced around until the White House, city Controller William Thompson and others said the package had fallen to $20.8 billion because of "program adjustments."

In fact, it will be years, if ever, before the final tally can be calculated. There will probably always be unresolved issues regarding the value of tax benefits included in the overall aid package.

Originally published on December 3, 2005


TOPICS: Crime/Corruption; Culture/Society; Extended News; Government; News/Current Events; Politics/Elections; US: New York
KEYWORDS: 4year; 911; billions; clinton; federalspending; go; hillary; ll; loot; money; scandal; schumer; september12era; where
Can't wait for the stats to come in from New Orleans...
1 posted on 12/04/2005 6:40:08 AM PST by Libloather
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To: Libloather

I don't begrudge the people or businesses in New York that were affected recieving some relief. What gauls me is the government calloused disregard for protecting every other taxpayer's interests.

It's almost as if the government's main goal was to squander as much money as possible. While this money gets wasted, other projects go lacking for 'enough' funds.

What I'd also like to see is a complete airing of what the Red Cross received and how, when and to whom it disbursed the funds.


2 posted on 12/04/2005 7:01:17 AM PST by DoughtyOne (MSM: Public support for war waining. 403/3 House vote against pullout vaporizes another lie.)
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To: Libloather

This investigation Is not telling "Who, What, Where" the
20 Billion went.

I want names and agencies.

Hillary and Schumer used ome money for their CAMPAIGNS !!


3 posted on 12/04/2005 7:01:24 AM PST by Zenith
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To: Libloather
The magic number of "$20 billion" that President Bush first said he would give New York was actually pulled from thin air, a figure born of politics and compassion rather than actuarial calculation and meaningful analysis.

Sen. Chuck Schumer (D-N.Y.) came up with the number in an effort to match the amount of emergency money being planned for anti-terrorism security across the country — legislation that made no specific mention of New York.

Nothing surprising there, Schumer pulls everything he says right out of his A$$.

4 posted on 12/04/2005 7:01:47 AM PST by El Gato
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Comment #5 Removed by Moderator

To: Libloather

Someone posted a column two days ago on it... will try to find it.


6 posted on 12/04/2005 7:16:34 AM PST by AliVeritas (''I'd rather have Jihadis in front of me than Democrats behind me.'' Go GOP!)
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To: Baynative

Wow... time to do some checking... again.


7 posted on 12/04/2005 7:17:47 AM PST by AliVeritas (''I'd rather have Jihadis in front of me than Democrats behind me.'' Go GOP!)
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To: Libloather
The 'spend every last dime' mentality is everywhere.
Here in my WV county, a $7500 Homeland Security grant (one of many) was recently received. They proposed to buy Kevlar vests, (anti?) ballistic helmets and shatterproof face shields for the sheriff's dept. The bill for these items came to about $6300. Said one of the county commissioners, "...we'll find something to spend the rest on."
8 posted on 12/04/2005 7:21:12 AM PST by Roccus
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To: DoughtyOne

What I want to know is:

WHO authorized the applications submitted by
New York CITY businesses and private citizens?
(No one just fills out an application to
the US Congress for monies!)

Did any of this money go to businesses or
private citizens OUTSIDE New York City?

Into WHOSE bank accounts were ANY and ALL
these monies credited?

The way this stupid article reads, either:
Schumer procured the monies and he was
responsible for allocating it...
OR
GWB personally wrote all the checks, leaving
the PAY TO line blank!

Both scenarios are stupidly naive. Congress
voted on these monies. I would suggest that
AS USUAL, Congressmen relied on their YOUNG
political assistants to read the fine print
and advise them as to HOW they should vote.
Personally, I'm tired of elected representatives
sitting on their buttocks and earning big bucks
for exerting as little mental energy as possible.


9 posted on 12/04/2005 7:37:56 AM PST by Grendel9 (uick)
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To: Libloather
Then there's the city Department of Education. It did such a poor job of keeping track of how it spent its $32 million share of Project Liberty grief counseling funds, that four years later, the feds are still withholding $26.8 million. Finally, The News found that program after program was designed, then redesigned, with a singular goal: spend every dime.

Trying to make LA look good.

10 posted on 12/04/2005 7:51:36 AM PST by ncountylee (Dead terrorists smell like victory)
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To: Roccus
The 'spend every last dime' mentality is everywhere.

You got that right. Often there are policies that reinforce this tendency as well - for example, if you don't spend ALL of your grant money, next time around, the granting agency (government OR private) will give you less. So anything leftover at the end of the cycle is wasted in order to keep the gravy flowing strong.

The "spend every last dime" mentality is also true for the personal finances of many...fortunately (sometimes I think 'unfortunately') we live in countries where waste is not particularly painful.

11 posted on 12/04/2005 8:23:35 AM PST by M203M4
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To: DoughtyOne
It's almost as if the government's main goal was to squander as much money as possible.

Just a year after that Bernanke gave his helicopter money speech.

12 posted on 12/04/2005 8:27:21 AM PST by palmer (Money problems do not come from a lack of money, but from living an excessive, unrealistic lifestyle)
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To: palmer

"...a helicopter drop of money."


13 posted on 12/04/2005 8:35:08 AM PST by DoughtyOne (MSM: Public support for war waining. 403/3 House vote against pullout vaporizes another lie.)
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To: Libloather; albertp; Allosaurs_r_us; Abram; AlexandriaDuke; Americanwolf; Annie03; Baby Bear; ...
At least for the time being, I'll be pinging the list every so often, hopefully not more than once or twice a day if that.



Regarding this story, I wonder how much more efficient the 'aid' would have been if government had not been involved? What if the people were left to furnish their own aid?


Libertarian ping! To be added or removed from my ping list freepmail me or post a message here.
14 posted on 12/04/2005 10:25:19 AM PST by traviskicks (http://www.neoperspectives.com/french_riots.htm)
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To: traviskicks

Schumer remembers Bush asking, "New York really needs $20 billion?"

"At least that, Mr. President," Schumer replied.

"You got it," said Bush.
---

Thanks Mr. President for spending money that is not yours. Very constitutional of you.


15 posted on 12/04/2005 10:27:21 AM PST by traviskicks (http://www.neoperspectives.com/french_riots.htm)
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To: Libloather

40+ years ago NYC initiated their desire to secede from the nation. Now is a good time to re-kindle their desires.


16 posted on 12/04/2005 11:38:22 AM PST by JoeSixPack1
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To: DoughtyOne

This should not be a big surprise. Government is big, clumsy, slow and inefficient. The bigger the government, the clumsier, etc........


17 posted on 12/04/2005 11:43:45 AM PST by Bernard (You can either deal with your situation or be a liberal about it.)
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To: DoughtyOne
"It's almost as if the government's main goal was to squander as much money as possible."

Almost? What do you mean, almost? Must be a typo. Fixed your mistake here:

It's almost as if The government's main goal was to squander as much money as possible.

18 posted on 12/04/2005 10:14:40 PM PST by LibertarianInExile (Cowards cut and run. Marines never do. Murtha can ESAD, that cowardly, no-longer-a-Marine, traitor.)
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To: Libloather
"The federal recovery aid also does not include the $7 billion paid out by the Victim Compensation Fund."

When & why did we start assuaging loss with money?

I want to know one thing: Do all first-responders have a communication system that allows them to work cohesively? Does it work in the highest skyscraper or the lowest tunnel?
If not, all the nat'l and local NY politicians should dangle from the business end of a hangman's rope.

19 posted on 12/04/2005 11:27:51 PM PST by thegreatbeast (Quid lucrum istic mihi est?)
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To: traviskicks

And we forget the $15b kiss that he gave the airlines.


20 posted on 12/04/2005 11:29:14 PM PST by thegreatbeast (Quid lucrum istic mihi est?)
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To: Libloather

Politicians are vile, evil creatures. I can't believe some folks actually rally behind them, when they should only be tolerating them.


21 posted on 12/05/2005 9:07:58 AM PST by GSWarrior
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