From the Smoking Gun comes this story about how FEMA distributed ATM cards were “abused”. Here is a list of items that were bought,
- .45 calibre pistol–$1,300
- Gentlemen’s club–$1,200
- Diamond engagement ring–$1,100
- Gambling–$1,000
- Bail Bond–$1,000
- Traffic tickets–$700
- Tatoo–$450
- Massage Parlor–$400
- Alcoholic beverages–$200
- Condoms–$150
Now I know that most people are going to be upset or even “outraged” that people would buy things like this. However, if you are a “Reagan Republican” or often make arguments that “people know best how to spend their money on themselves” then I think you are being rather hypocritical. Heck, and after all that looting and what not in New Orleans, I think buying a .45 calibre pistol isn’t that unreasonable. The bottom line is that these people are spending the money as they think best. That I or somebody else thinks it is inappropriate is somewhat of a hard call to make since we don’t know the circumstances in which these people found themselves. For example, while a family living in their car with little food to eat might spend the money on securing shelter and food, a guy who is staying at Chez Mom & Dad might find that spending the money on strippers, booze, or a trip to the local massage parlor results in a larger welfare benefit.
Now, if you are upset that it is money the federal government is handing, in other words, part of that money is your money, then perhaps it is time to reconsider these kinds of government programs. This doesn’t bother me in the slightest. After all there even if these people are being “stupid or unwise” in spending the money in this way, I’m not terribly keen on trying to legislate behavior. After all, look at your own personal life and consider if some of your expenditures are ill-advised. Was it really a bright idea to put the $3,000 58 inch flat screen television on your credit card? After all, by the time you pay it off the actual price of that television might be approaching $6,000 or $7,000.1 You could have bought a much more modest television for a tenth the cost and invested the rest for your retirement, your child’s education, or something that isn’t so selfish.
What I think is actually far more disturbing is the problem with fraud.
For example, using falsified identities, bogus addresses, and fabricated disaster stories, we applied for disaster assistance over the telephone and obtained $2,000 expedited assistance payments.
[snip]
In one specific case example, 17 individuals, some of whom shared the same last name and current addresses, used 34 different SSNs that did not belong to them and addresses that were bogus or not their residences to receive more than $103,000 in FEMA payments.
[snip]
Consequently, FEMA issued $2,000 debit cards to over 60 registrants who provided SSNs that were never issued or belonged to deceased individuals. We also found that FEMA made multiple expedited assistance payments to over 5,000 of the 11,000 debit card recipients. That is, FEMA provided the registrant both a $2,000 debit card and a $2,000 check or electronic fund transfer.
[snip]
Our audits and investigations of 20 case studies demonstrate that the weak or nonexistent controls over the registration and payment processes have opened the door to improper payments and individuals seeking to obtain IHP payments through fraudulent means. Specifically, a majority of our case study registrations—165 of 248—contained SSNs that were never issued or belonged to deceased or other individuals. About 20 of the 248 registrations we reviewed were submitted via the Internet. Further, of the over 200 alleged damaged addresses that we tried to visit, about 80 did not exist. Some were vacant lots, others turned out to be bogus apartment buildings and units.
I imagine that the fraud aspect of the story will get lost in all the rhetoric about how the money was spent.
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1Yeah, I know some people might put the television on the credit card to get some ancillary benefit then pay off the balance with the next statement. That isn’t what I’m talking about, so please don’t bring up this example.
