Congress Scrambles to Deal With Katrina ‘Sticker Shock’

Times Staff Writer

So much money is at stake in Hurricane Katrina rebuilding that even the watchdogs are at issue in the dogfight over how best to spend the federal largess.

Republicans and Democrats have rushed forward no fewer than seven proposals, each purportedly the best way to scrutinize plans for the $63 billion set aside for recovery efforts -- a sum expected to grow soon.

For the record:

12:00 a.m. Oct. 12, 2005 For The Record
Los Angeles Times Wednesday October 12, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 50 words Type of Material: Correction
Hurricane Katrina -- An article in Sunday’s Section A about congressional proposals to increase oversight of spending to rebuild after Hurricane Katrina said Halliburton was among companies that received no-bid contracts for reconstruction. In fact, Halliburton’s contracts were competitively bid. Also, the article referred to Halliburton Co. as Halliburton Corp.

But in typical Washington fashion, watchdog groups say, some proposals for scrutiny will actually weaken oversight, and competition among them might delay monitoring. Spending now approaches $300 million a day.

“We have so much money going to so many different agencies that I think there is great opportunity for misuse of funds and mismanagement and even, unfortunately, fraud,” said Rep. Jim Kolbe (R-Ariz.), who has proposed designating a special inspector general for Katrina spending. “We need to move as quickly as possible.”

The sudden interest by a Congress not known for its commitment to oversight is a reflection of the ballooning cost of hurricane relief, lessons learned from Iraq and growing unease in Republican circles about recent political scandals, according to politicians and analysts.


The oversight proposals -- which include a spending czar or expanding the role of the inspector general overseeing Iraq’s reconstruction -- coincide with corruption accusations against high-ranking Republicans.

Rep. Tom DeLay (R-Texas) was indicted recently by a Texas grand jury on felony charges related to campaign financing, forcing him to step down as House majority leader. The Pentagon’s inspector general, Joseph E. Schmitz, resigned last month amid accusations that he quashed investigations of powerful political appointees of President Bush. And the Bush administration’s top contracting official, David H. Safavian, was indicted Wednesday on charges that he lied to investigators about a 2002 golfing trip with top GOP lobbyist Jack Abramoff, who was indicted in August on unrelated federal fraud charges.

And the bill for Katrina is expected to grow by billions, according to several Hill sources.

“There is sticker shock,” said John Hart, a spokesman for Sen. Tom Coburn (R-Okla.), who has proposed creating a chief financial officer responsible for all relief spending. “It comes after Iraq. We have a time of war, rising deficits, Medicare and Social Security” shortfalls.

Watchdog groups said the need for additional oversight for Katrina rebuilding -- one of the largest such government programs in U.S. history -- was unquestionable. Total hurricane damages might top $200 billion.

Already, congressional officials have raised concerns about a deal to pay Carnival Cruise Lines up to $236 million to house hurricane evacuees. Questions also surround no-bid contracts given to politically connected firms such as Halliburton Corp.

Much of the money to rebuild has been approved with no clear plans for how it will be spent.

“The early indicators are not good,” said Beth Daley, a spokeswoman for the Project on Government Oversight. “It looks like FEMA is doing a very poor job of spending money wisely.”

Several oversight proposals focus on strengthening the roles of inspectors general, the officials assigned to federal agencies to prevent waste, fraud and abuse.

But with legislative delays, “time is wasting on these things,” said a U.S. official observing the process. “If we don’t get down there soon, all the water will have drained out of New Orleans and so will all the money.”

Hurricane legislation already passed has added $15 million to Homeland Security Inspector General Richard L. Skinner’s office. Homeland Security has coordinated much of the relief effort.

Skinner told a congressional panel last week that he and counterparts in several agencies were working together, with 300 auditors and investigators committed to the effort.

Skinner signaled that he wanted more money but thought it unnecessary to create additional fraud watchdogs. A proposal by Rep. Kendrick B. Meek (D-Fla.) would give Skinner another $15 million, plus 40 more employees.

“We need to call out some of these contractors that have been abusive,” said Meek, the ranking minority member of the Homeland Security oversight subcommittee. “People are very frustrated throughout the country by story after story of contractors taking advantage of the American taxpayer.”

But other Republicans and Democrats have said they oppose expanding Skinner’s bureaucracy for a temporary event like the hurricane.

In addition, some critics worry Skinner cannot effectively oversee all of the involved agencies, which include the Army Corps of Engineers and the Federal Emergency Management Agency.

Several people have instead proposed expanding the duties of the special inspector general for Iraq, Stuart W. Bowen Jr., who monitors reconstruction efforts there.

That would allow for a quick start-up and oversight across all the agencies, and Bowen’s role would end at the completion of hurricane rebuilding, proponents said.

“Our legislation would put a cop on the beat,” said Sen. Joe Lieberman (D-Conn.), who is cosponsoring the bill with Sen. Susan Collins (R-Maine). “It would also let everyone know that this cop is on the beat now.”

Senate Majority Leader Bill Frist (R-Tenn.) has sent a letter to Bush asking for the creation of a “centralized” inspector general to oversee hurricane recovery.

Some critics oppose any new inspector general role to stop waste, saying that such proposals would waste money. Robert White, a spokesman for Rep. Thomas M. Davis III (R-Va.), dismissed the need for a “super-inspector general.” Davis has proposed a bill to coordinate the activities of various agency inspectors general.

“We have [inspectors general] on the ground,” White said. “These are people that have the expertise and have been doing the job.”

But other politicians said more had to be done to stop trouble before it happened. Generally, inspectors general audit contracts after they are executed and attempt to recover money lost through fraud.

Coburn’s idea for a chief financial officer is designed to prevent fraud, Hart said. And Rep. Henry A. Waxman (D-Los Angeles), long at the forefront of fraud and waste issues in Iraq, has suggested creating an independent commission of overseers to review contracts.

Steven L. Schooner, a procurement expert at George Washington University Law School, said such oversight was urgently needed. He said cutbacks in federal contract administrators had made it difficult for the government to supervise contractors’ performance.

“Anything that the administration does that’s proactive is a far better investment than doing post hoc” investigations, Schooner said. “The U.S. government is woefully unprepared to engage in capital construction projects on this scale.”