Limiting Government’s Role

Times Staff Writers

Two days after Hurricane Katrina slammed into the Gulf Coast, the Department of Housing and Urban Development announced plans to issue emergency vouchers aimed at helping poor storm victims find new housing quickly by covering as much as $10,000 of their rent.

But the department suddenly backed away from the idea after White House aides met with senior HUD officials. Although emergency vouchers had been successfully used after the 1994 Northridge earthquake, the administration focused instead on a plan for government-built trailer parks, an approach that even many Republicans say would concentrate poverty in the very fashion the government has long sought to avoid.

A similar struggle has occurred over how to provide healthcare to storm victims. White House officials are quietly working to derail a proposal by leading Republican and Democratic senators to temporarily expand Medicaid. Instead, the administration is pushing a narrower plan that would not commit the government to covering certain groups of evacuees.


As President Bush tackles the monumental task of easing the social problems wrought by Katrina, he is proving deeply reluctant to use some of the big-government tools at his disposal, apparently out of fear of permanently enlarging programs that he opposes or has sought to cut.

Instead of depending on long-running programs for such services as housing and healthcare, the president has generally tried to create new, one-shot efforts that the administration apparently hopes will more easily disappear after the crisis passes. That has meant relying on the Federal Emergency Management Agency, which has run virtually all of the recovery effort.

“FEMA can help fill some immediate needs after a disaster, like giving grants to help people repair their roofs or pay for temporary housing,” said John P. Sucich, a former senior FEMA official who oversaw the recovery from the 1989 Loma Prieta earthquake. “But it is not the agency to turn to to ensure the kinds of continuing help that families need to begin putting their lives back together.

“That’s what the rest of government is for,” Sucich said.

At least in the case of housing, critics say that the president’s unwillingness to rely on existing programs could raise costs. Instead of offering $10,000 vouchers, FEMA is paying an average of $16,000 for each trailer in the new parks it is contemplating. Even many Republicans wonder why the government would want to build trailer parks when many evacuees are now living in communities with plenty of vacant, privately owned apartments.

“The idea that -- in a community where we could place people in the private housing market to reintegrate them into society -- we would put them in [trailer] ghettos with no jobs, no community, no future, strikes me as extraordinarily bad public policy, and violates every conservative principle that I’m aware of,” said former House Speaker Newt Gingrich, a Republican.

“If they do it,” Gingrich said of administration officials, “they will look back on it six months from now as the greatest disaster of this administration.”

Defenders of the president’s approach say it will help Katrina’s victims without sticking taxpayers indefinitely with higher costs for social programs.

“Once you begin to expand any entitlement, it’s very hard to pull back,” said Grace-Marie Turner, a health policy analyst and president of the conservative Galen Institute.

Turner raised particular concerns about the bipartisan Senate Medicaid plan, which would expand who could get coverage and require Washington to pay the full cost of the program, including amounts normally covered by states, for up to 10 months. If the plan were adopted, she said, “then every state that has reason to declare an emergency will want full federal funding for Medicaid as well.... It would be very hard to say no.”

The administration’s hesitancy to rely on well-established social programs goes beyond housing and healthcare.

When White House officials realized the full dimensions of the hurricane disaster, one of the first actions they took was to announce that FEMA would give storm victims $2,000 cash grants. Originally, the money was supposed to have come in the form of debit cards, but when the agency was unable to smoothly issue these, it switched to checks. But there has still been trouble, which some experts trace to the agency’s -- and the administration’s -- unwillingness to turn to the government’s existing system for giving out aid.

“If FEMA had used the ... state welfare offices and unemployment agencies, they’d have been a lot better off,” said William L. Waugh Jr., a disaster specialist at Georgia State University and a board member of the national accreditation group for emergency managers.

“The agency was not designed, and has never been very good at anything but immediate emergency services,” Waugh said. “It’s been particularly bad at delivering continuing social services like cash assistance.”

Some critics of the administration are calling on it to substantially expand the existing system of unemployment assistance to funnel money to people uprooted by the storm. In the past, extensions of unemployment benefits, once signed into law, have been difficult to end.

The administration has been planning to give assistance almost exclusively through FEMA, which has the authority to distribute $26,200 per household in cash, rental assistance and home repairs. If even half of families displaced by the storm collect, the agency could end up paying out tens of billions of dollars. But once the amounts were paid, that would be the end of the government’s obligation.

With Medicaid, the White House is negotiating state-by-state deals to cover storm victims rather than agreeing to uniform rules for covering them -- another effort to avoid setting a precedent that might permanently expand a program.

The administration is advancing the state-by-state approach as an alternative to a bipartisan proposal drawn up by Sens. Charles E. Grassley (R-Iowa) and Max Baucus (D-Mont.), which has been endorsed by prominent Republicans and Senate leaders of both parties.

That plan would expand Medicaid for poor storm victims uniformly in all states where they are now located, at a cost of as much as $8 billion over the next five months. It would open the program to some people not normally covered, such as childless adults of working age, and would require Washington to pay for all of the care instead of splitting the costs with states, as it normally does. In addition, the government would provide subsidies for privately insured people meeting certain requirements.

By contrast, the administration approach generally would not expand coverage beyond people who were already eligible for Medicaid.

Administration officials say that some victims without other forms of health insurance would have to seek free care at hospital emergency rooms, a practice the government normally discourages because of the cost. The administration has promised to obtain more funding to compensate hospitals that provide the free care.

In addition, the administration approach would not increase the share of costs that the federal government would pay for Medicaid, even temporarily.

The administration position has opened a growing fissure between Bush and other Republicans. On Wednesday, Mississippi Gov. Haley Barbour, a Republican who is usually supportive of the White House, said the Senate Medicaid plan was “what we need.” Sen. Trent Lott (R-Miss.) has also sided with the Senate plan.

Mark B. McClellan, director of the Centers for Medicare and Medicaid Services, the federal agency that runs the two huge government health insurance programs, defended the administration stand. He said the Senate plan could prove cumbersome to implement.

“All that would take a lot of time,” he said. “What we are talking about here works off the existing system they have in place, so it doesn’t face those kinds of new delays and uncertainties.”

In the case of housing, experts said that Washington could have relied on an existing model for how to house people after a disaster: its response to the 1994 Northridge earthquake.

The earthquake significantly damaged 55,000 residential structures and left 20,000 people homeless. But within days, Congress had approved more than $200 million in Section 8 emergency housing vouchers. HUD used these especially to help low-income displaced people pay market-rate rents for nearby apartments.

Within months, virtually all of those affected by the disaster had housing.

“We were learning a lot about how to help families use vouchers to move out of bad neighborhoods when the earthquake occurred, and we applied those lessons quite successfully to people displaced by the earthquake,” said Margery Austin Turner, a senior HUD official during the Clinton administration who is now with the Urban Institute, a centrist Washington think tank.

HUD appeared to be heading in the direction of emergency vouchers in the first days after Katrina. It posted a “recovery plan” on its website that led off with a call for a new voucher program. But after a White House meeting two days after the hurricane struck, HUD officials replaced that plan with one that said the agency’s first job was to reopen HUD field offices in the region.

Despite the fact that vouchers are generally favored by conservatives, the Bush administration has repeatedly sought to cut or limit the regular Section 8 voucher program. Unlike other vouchers, which generally act as a cap on what the government is required to provide, the value of housing vouchers rises with increases in the rental market. Under the program, qualifying tenants pay 30% of their income in rent, with the government paying the difference between that sum and market-rate rents.

“With so many other resources out there, we believe we have enough to respond to the needs right now,” HUD Deputy Chief of Staff Scott Keller said last week. Asked what resources he was referring to, Keller said FEMA trailers.

The federal government may yet provide emergency vouchers. The Senate has approved a $3.5-billion proposal that would provide one-year, $10,000 vouchers to more than 350,000 families. A House committee is working on a similar but narrower plan to help 50,000. Administration officials promise an announcement on disaster housing soon.

Draft documents circulating Thursday on Capitol Hill suggested that money for vouchers in the administration plan would come from HUD’s existing budget, rather than through a request for new funds. That would mean, in effect, that poor residents elsewhere in the country would be subsidizing the housing of those from the disaster area.

FEMA has continued to order trailers to house storm victims. FEMA press secretary Eugene Kinerney provided a list of what he described as “firm orders” for more than 100,000 units and said that the agency was in the midst of negotiating deals for about 100,000 more.