February 14, 2005:
CDBG stands for Community Development Block Grant; a program
administered by the U.S. Department of Housing and Urban
Development (HUD). CDBG is painted by its supporters as a great
big heart wrapped in red, beating for blighted cities. Reality
is something different.
Like HUD's Section 8 rent voucher program, CDBG was a creation
of the Nixon administration in the 1970's. Both programs were
intended to make federal housing and development funding seem
less like welfare from above, by giving those who received it
more control over how funds were spent. Section 8 was aimed at
tenants and landlords. CDBG at entire communities. Often in the
name of urban revitalization. The "block" in "block grant" refers
to a block of money. Politicians at local levels are very fond
of CDBG-- precisely because it comes in a lump sum and can be
used for a wide variety of purposes. With the overall criteria
being that end results prove beneficial to low and moderate
income urban residents.
"Urban revitalization has become the scam of the day for an
entrenched class of cross party, cross state, political and
business grifters...Economic development funds pass back and
forth between them: the money barely touches ground. If, at the
end of it all, real improvement in blighted cities resulted, the
frauds and cronyism would be more acceptable. But revitalization
dollars are almost exclusively used to buy political power and to
prop up and inflate the investments of the politically connected.
With less and less social quid pro quo. Even the middle class has
gotten into the act, jockeying for neighborhood gentrification
dollars, while tolerating political corruption, deterioration of
the wider urban landscape and the formation of an entrenched
I wrote those words in the Summer of '02, in a piece called
"Home Towns USA". At that time a number of northeast politicians
and public contractors from midsize urban centers were in the
process of being investigated and/or indicted in corruption cases
connected to development deals and the misuse of federal funds.
The pols were a bi-partisan bunch. The urban areas they served
were former industrial centers. With downtowns that were being
turned into contained corporate and government enclaves by
massive infusions of HUD funds, tax breaks and other types of
public subsidies. Most also had a few upscale New Urban
neighborhoods juiced with smaller helpings of the same. Plus
a goodly number of moderate and low income blue collar nabes
picking up government crumbs while sliding downward into slums.
A slide being hastened by FHA backed mortgage fraud flips and
Section 8 tenant dumping. Meanwhile, low or no income slums that
had already hit bottom were places where city services rarely
reached and drug thugs ruled. Yet according to pols and their
spokesfolk, revitalization was always just around the corner. In
the meantime, slum dwellers needed to stand up and be counted.
In order to keep the entire city eligible for federal programs
such as CDBG.
To the credit of law enforcement agencies and officials (usually
but not exclusively federal) almost all the pols and players
investigated/indicted around the time "Hometowns" appeared were
convicted. In some areas investigations are ongoing. Springfield,
Massachusetts being one example. Where a four year federal
investigation seems to involve almost anyone ever in office.
Or at least, anyone who ever held a HUD buck and/or used the
phrase "economic development".
But despite the satisfying sight of so many putrid public
servants being marched off to jail, little has changed. Pols and
their assorted cronies go on playing the revitalization game.
It's enough to make you think that what really needs
revitalization is revitalization itself.
As part of his 2005 budget plan, President Bush has proposed
reorganizing some federal economic development programs. In order
to cut costs by eliminating duplication of purpose-- since a
number of development programs exist under the aegis of several
different agencies. One of the programs Bush wants to reorganize
is CDBG: his plan is to take CDBG out of HUD's hands and place it
in those of the Department of Commerce. In the process, reducing
this year's CDBG $4.7 billion budget by roughly $1 billion.
Overlapping economic development programs, which often work at
cross purpose, do create problems. At local as well as federal
levels. For instance, development agency overlap has been cited
as a factor (one of many) in the dismal condition of Buffalo,
New York. Plus, the more bureaucracy, the more chances for
corruption. As for cost cutting, one billion could probably
be shaved off CDBG easily. Eliminating CDBG collateralized
development loans to corporations would be a good place to start.
As would ceasing to fund the real estate interests of affluent
New Urbanites. And how about cleaning up contractor fraud in CDBG
backed home rehab programs and limiting eligibility solely to
the elderly and the disabled poor?
Alas, it's unlikely Bush's CDBG reforms will proceed down such
paths. Mainly because his idea of reform is tied to his vision
of an "ownership society" funded by public money. Which under
different names has been the social policy of numerous recent
presidents both Republican and Democrat. One that involves
the transmutation of other people's income into other people's
assets. To the benefit of those most able-- and willing-- to work
the system of government owned ownership. Hence, any cuts in CDBG
will probably come out of the tiny part that actually reaches the
genuinely disadvantaged. Which should knock about $22.50 off the
federal budget. But John Q. Taxpayer shouldn't count on spending
his zillionth of a CDBG cent: Bush will have a tough chaw getting
Congress to pass any CDBG cuts, whether they come via a program
transfer to the Department of Commerce or not.
A cherce assortment of urban pols, some facing cherce charges,
are already clamoring that cuts in CDBG would bite out their
bottom and put them back in the box. In the Hudson Valley section
of New York State, Mayor Joseph DeStefano of Middletown is a
prime example of a sullied bon-bon on the CDBG war-path. A 52
count federal indictment for alleged misuse of HUD backed
development loans for crony deals involving Middletown's economic
development director hasn't stopped DeStefano from proclaiming:
we need more CDBG. What you mean `we' Kemosabe?
DeStefano is no lone warrior. The United States Conference of
Mayors is planning to descend on Washington en masse. Stern
statements are being issued. Back in 1998 the Conference issued
another stern statement. In the form of a policy resolution
"Supporting Efforts To Fight Waste, Fraud And Abuse In All
Federal Programs". The support resolution criticized Congress for
funding an Urban Fraud Initiative by HUD's Inspector General
aimed at investigating fraud and abuse in HUD programs (including
CDBG, Section 8 and FHA insurance) in the cities of San
Francisco, Baltimore and New Orleans. The Conference of Mayors
said the Inspector General had "no credible or objective basis"
for selecting those cities-- and that racism was behind the move
since the mayors of those cities were black. But the Conference
resolution was not entirely negative. It also commended the
Department of Justice and FBI for terminating the investigation
and for agreeing to jointly manage any future ones.
Perhaps the Conference of Mayors had a point. Though the cities
targeted in the 1998 Urban Fraud Initiative did have major HUD
scandals (Baltimore for instance, became known as "Flip City" due
to rampant FHA insured mortgage fraud) many municipalities run by
white mayors have equally soiled records. Plus housing frauds in
Baltimore have continued to brew despite the administration of
white Martin O'Malley. And while it's true a number of white
mayors-- including prominent members of the U.S. Conference--
have gone to jail over the last few years, other corruptoids
have doubtless slipped through the net. So in the name of racial
equality and in support of fighting waste, fraud and abuse in all
federal programs, why not launch a full scale investigation into
the use of all federal funds by all mayors in all cities across
the nation? And then move on up the ladder to county and state
officials? A costly initiative to be sure, but the potential
for taxpayer savings would make it a far smarter investment
than the one we're making in Iraq.
Which reminds me: until that experiment in foreign revitalization
began draining our coffers, President Bush stood waist deep in
the HUD muddy. Pouring it out to the boys on board just like any
other prez. While assuring the public that a few more bucketfuls
would turn post-industrial blightscapes into Candy Land.
Carola Von Hoffmannstahl-Solomonoff
"By pursuing an ownership society...President Bush seems
determined that we do not head farther down the road to serfdom
but instead get on the expressway to economic freedom."
Jack Kemp, former Secretary of the U.S. Department of Housing and
Urban Development (HUD) co-founder of Empower America and
foremost advocate of HUD's Enterprise Zones. January, 2005
"We'll all be planning that route/We're gonna take real soon"
Surfing USA, The Beach Boys, 1963
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