Are We Ready for the Next 9/11?

If power companies invested in infrastructure the way DHS and Congress fight terrorism, a New Yorker wouldn't be able to run a hairdryer but everyone in Bozeman, Montana, could light up a stadium. Efficient expenditures concentrate limited resources on the most cost-effective initiatives; not every need is worth funding, and the greatest priorities and risks must be addressed first. But because Congress is more interested in politics than security, it gives every threat, every state, and every interest group a share of the homeland security pie, regardless of risk.

It doesn't take a security expert to realize that some anti-terror expenditures are more cost-effective than others. Simple cockpit barricades, which the airline industry has now installed at relatively low cost, can prevent all 9/11-style attacks. In contrast, the burgeoning U.S. system for screening the bags of every airline passenger has already cost $18 billion during the last four years but will do little to prevent 9/11-style hijacking. Nor does the screening system prevent the destruction of airplanes, since it doesn't systematically check carry-on bags or air freight for explosives.

Another example: Congress insists that DHS hand out ever greater portions of its budget to "first responder" programs--essentially federal funds for state and local police and fire departments. But as James Carafano has shown in a 2005 study for the conservative Heritage Foundation, a dollar spent on preventing the next terror attack is vastly more cost-effective than a dollar spent recovering from it.

That's not to say it isn't prudent to prepare for an attack. But federalizing first-responder programs accentuates the incentive problems that already plague the political process. When such programs are a state responsibility, legislators have a strong incentive to accurately assess the risk and potential damages to their states. They have to decide whether to spend more on homeland security or on other accounts. When these programs are funded at the federal level, by contrast, a congressman from Wyoming has no incentive to admit that his state is not a likely target or that if it ever were a target, the damages would be limited. He has no incentive to turn down federal money and even less incentive to volunteer taxpayers' dollars for other states.

To make matters worse, Congress provides every state with a guaranteed minimum amount of grant money regardless of risk. As a result, rural, less-populated areas receive a disproportionate amount of money. Of the top 10 grant recipients, only the District of Columbia also appears on a list of the 10 places most at risk of attack.

The theory underlying the grant distribution formula is that terrorists could strike anywhere. That's true. But not every target is equally likely or equally important. By trying to protect us everywhere, Congress ensures that we're adequately protected almost nowhere.

The lack of risk-based funding, combined with the absence of federal terrorism preparedness standards or a goal to guide the expenditure of funds, has resulted in some ridiculous uses of terrorism preparedness grants. We've seen $63,000 spent on a decontamination unit that is stored in a warehouse in rural Washington because the state does not have a hazardous materials team to use it; $350,000 spent by a small volunteer fire department in Virginia on a custom-made fireboat; $1.5 million spent by Grand Forks County, North Dakota (population 70,000), to buy decontamination tents, a semi-armored van, two trailers equipped with gear for responding to weapons of mass destruction, and more biochemical suits than there are police officers to wear them; $500,000 spent by Outagamie County, Wisconsin (population 165,000), to buy chemical suits, generators, rescue saws, disaster response trailers, emergency lighting, and a bomb disposal vehicle; and $557,400 spent by North Pole, Alaska (population 1,570), on homeland security rescue and communications equipment.

The waste of homeland security funds does not occur exclusively in low-risk cities. Washington, D.C., incontestably one of the most at-risk areas in the country, used the region's first wave of homeland security aid as "seed money" for a computerized car-towing system Mayor Anthony Williams had promised for three years to help combat fraud by private towing companies. The city also used $100,000 in homeland security money to fund the mayor's popular summer jobs program.

The department's spending has been the subject of many audits, none of which found systemic fraud or abuse. Indeed, many of the questionable purchases made with DHS funds were allowed by department guidelines. To end the discussion there, however, ignores the larger point that the system for disbursing homeland security funds is based on warped priorities. While the audits did not find systemic problems, some of their specific recommendations reinforce the impression that the system is a joke. The DHS inspector general's audit of first-responder grants declares that "efforts to monitor and measure the impact of first responder grants needs to be improved." The inspector general's report on the Port Security Grant Program notes that many grants were given to projects that "appeared to be for a purpose other than security against an act of terrorism."

Spending $58,000 on a rescue vehicle capable of boring through concrete to search for victims in collapsed buildings in Colchester, Vermont (population 18,000), may be permitted by DHS guidelines, but are those guidelines appropriate? And while there may be ways to justify spending homeland security funds in this location, does anyone really believe that Vermont, North Dakota, and Wisconsin are the front lines of the war on terror?

Instead of stopping the flow of money to low-risk areas, Congress created another pot of grant money called the Urban Area Security Initiative. The program's backers said it would allocate money based on an objective evaluation of risks and that political considerations would not be allowed to intrude.

So what happened? In early 2003, Congress announced that it would pay $100 million in Urban Area Security Initiative money to seven high-risk cities--New York, Washington, Los Angeles, Seattle, Chicago, San Francisco, and Houston. Immediately, members of Congress started receiving calls from urban officials who felt they had been unfairly left out. The list of qualifying cities started to expand. By May 2003, the number of most-at-risk cities had grown from seven to 30. That was followed by an increase in funding from $100 million to $700 million. Today more than 80 cities and mass transit agencies, including Indianapolis, Louisville, and Columbus, are getting extra homeland security cash out of an $830 million budget.

4. Preventing Yesterday's Attack

Inappropriate security spending is often a knee-jerk reaction to the news of the day. The surest way for a mode of transportation to get a boost in federal funding is to be attacked by terrorists.

Within days of 9/11, Congress ordered a federal takeover of airport passenger screening and created a 45,000-employee bureaucracy. Protecting the country against hijackings became the priority, and the Transportation Security Administration (TSA) became the key player.