Community Development Block Grants have no role in fighting coronavirus

The unprecedented spending in the $2.2 trillion CARES Act signed into law by President Trump on March 27, 2020, is supposed to be directed solely to help the nation get through the coronavirus pandemic. Unfortunately, the legislation includes unrelated and wasteful spending, like past emergency spending bills responding to floods, hurricanes, tornadoes, terrorist attacks, and other disasters, none of which were as devastating to the entire nation as the coronavirus.

The laundry list of costly and unrelated provisions are part of the effort to take advantage of the crisis “as a tremendous opportunity to restructure the government to fit our vision,” which House Majority Whip James Clyburn (D-S.C.) announced on March 19.

One clear example of unnecessary spending is the $5 billion appropriated for the Community Development Block Grant Program (CDBG). The request for the program in H.R. 6379, the bloated House version of the CARES Act, was $15 billion, nearly five times the fiscal year 2020 appropriation of $3.4 billion. The Senate version of the bill had no CDBG money. The compromise was $5 billion, a 47 percent increase over the $3.4 billion annual budget.

The CDBG program was created in 1974 to provide flexible spending to revitalize low-income areas of cities across the country through housing rehabilitation, infrastructure investment, job creation, and public services. Numerous reports demonstrate that the more than $100 billion already spent on the program has been short on results. The CDBG funding formula fails to account for a community’s average income, so Greenwich, Conn., one of the wealthiest towns in the country, gets money. A September 2012 Government Accountability Office (GAO) report found that “some cities with higher unemployment rates received less funding per unemployed person than other cities with lower unemployment rates.”

Every president elected after the creation of the CDBG program has proposed spending cuts, reforms, or termination of the program, yet every effort has failed. An Autumn 2017 City Journal article by Stephen Malanga noted that President Jimmy Carter cited “frivolous” spending in the CDBG program during his election campaign but then expanded it after the election. President Clinton’s transition team was concerned with the mismanagement of antipoverty programs, yet nothing happened, even after an April 27, 1999 GAO report found weak management controls and no assurance that the CDBG program was being managed effectively or meeting its objectives.

During the George W. Bush administration, the Office of Management and Budget used its Performance Assessment Rating Tool to determine that the CDBG’s purpose is unclear, money is not directed properly, outcome measures are not available, and spending transparency is lacking. Significant cuts and CDBG program reforms were proposed but like prior efforts, they went nowhere.

Former President Obama recommended reducing CDBG funding because of the difficulty in measuring and evaluating outcomes. President Trump’s budgets between FYs 2018 and 2020 recommended eliminating the entire CDBG program.

In fiscal years 1999 and 2000, there were 782 earmarks for the CDBG program, costing taxpayers $451.4 million. These projects are emblematic of the hundreds of millions of dollars that have been wasted in the CDBG program since its inception.

The Congressional Research Service has analyzed provisions of the CARES Act. The April 6, 2020 report on CDBG funding noted that $2 billion will be spent under the conventional formula, $1 billion will go outside of that formula, and $2 billion will be allocated based on factors defined by HUD at the discretion of the secretary. In other words, a potential slush fund.

The HUD Office of Inspector General issued 14 reports on the use of CDBG funds by state and local governments in 2017 and 2018, mostly related to disaster grants like those being funded in the CARES Act. Only two of the grantees used the money appropriately.

Four years after $19.7 billion in CDBG money was appropriated for Louisiana and Mississippi following Hurricane Katrina, the GAO reported that the funding was difficult to deliver, along with “misunderstandings, confusion, and program delays.” HUD determined that “the CDBG program is not a formal part of the government’s disaster recovery programs.” Yet, the same mistakes are being repeated with the $5 billion appropriation in the CARES Act.

Despite years of attempting to kill or reform the CDBG program, it has survived, and somehow House Democrats believe it is vital to helping the country recover from the devastation wrought by the coronavirus. Instead, it will only add to the economic misery of the American people.

Tom Schatz is president of Citizens Against Government Waste.