Government Spending

Take Community Block Grants to the Chopping Block

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Should the federal government be involved in micromanaging city planning activities? And should it be using billions of dollars in funds collected from taxpayers across the country to target tiny projects in a few select areas? If your answer is no, I'm sorry to say you're too late: It's been engaged in this sort of targeted special interest spending for years through the Community Development Block Grant program.

But that program may now be in line for the chopping block. And, in a completely unexpected turn of events, the folks who get money from the program don't want to see its funding reduced.

Should we be worried? Woeful? Distressed? Here is your in-no-way biased opening line from today's Washington Post story on the proposed cuts:  "Community development block grants have been a vital source of federal anti-poverty money for decades, supporting affordable housing, job training and an array of other programs serving low-income communities." No deck-stacking here!

Anyway, the program is apparently (un?)worthy enough that both Democrats and Republicans are looking to cut it back. The question now is how much:

When President Obama, in his 2012 budget, proposed cutting funding for CDBGs, as they are known, by about $300 million, local officials across the country worried about their already-battered finances.

Then House Republicans offered their take on the nearly $4 billion grant program.

Not only did they urge cutting the program by more than half, to $1.5 billion, they also endorsed making the cuts in the middle of the current fiscal year, part of the $61 billion in proposed cuts that have helped set up the budget battle.

Here's an idea: Let's get rid of the entire program. As Cato's Ted DeHaven explains, it encourages wasteful spending, contributes to the fattening of our federal bureaucracy, and allows multiple layers of government to slice out a cut for themselves through administrative spending:

The city of Utica spent CDBG funds on a variety of improper uses, such as $902,799 on a marina and $255,158 on ski chalet renovations. The city of Troy used $1.6 million to lure a hockey team to the city. And Niagara Falls and Lockport used $12 million to build an amusement center, which shut down after just six months of operation.

Even if CBDG funds went entirely to "worthy" projects, federal funding is still an inefficient way to foster local economic development because of the excessive bureaucracy that results from funneling money through multiple levels of government.

Federal administration costs are about 5% of the value of CDBG grants, with local and state governments taking a 17% and 8% cut, respectively. A large share of the CDBG budget disappears before any actual work is done.

In the end, the program is basically a way to funnel money to narrow private interests. It's corporate welfare disguised as community development. According to the helpful primer at Downsizing Government, "the ultimate beneficiaries are usually private businesses and organizations working on particular projects, such shopping malls, parking lots, museums, colleges, theaters, swimming pools, and auditoriums"—in other words, places where federal funds clearly don't belong. 

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  1. The city of Utica spent CDBG funds on a variety of improper uses, such as $902,799 on a marina and $255,158 on ski chalet renovations.

    Fwiw, Utica has *very* nice crack houses.

  2. “Community development block grants have been a vital source of federal anti-poverty money for decades, supporting affordable housing, job training and an array of other programs serving low-income communities.”
    Which is why the march of progress has uh, progressed unabated. Year after year, the poor have gotten lower unemployment, increased real income, better school scores, less crime, life expectancy reaching thousands of years, better looking women, more free porn, and wangs growing as huge as Redwoods.
    We only have 7 people left in this country who are poor, thanks to community block grants! Lets not stop before we reach our goal of zero poverty!

    1. Yet, I bet some lefitst will claim that doing something is better than nothing, even if that something is exacerbating the problem. But then they can just blame that on “eevul corpurashunz!”

      1. exacerbating the problem

        No need to use crude language.

  3. By the time the money got filtered down to our city here, it totaled all of $35,000 to spread to our local nonprofits. And the county just set up guidelines that the groups had to get a minimum of $10,000 because it costs $8,000 (!!!) to process the forms for the federal funds, so that tells you how much siphoning off is going on. Only three local groups get any money from this program at all.

    What really kills me though (and I’m trying to figure out the best way to editorialize about this) is that our community is in the middle of one of the proposed high speed rails (but will not actually have a stop here) looking for billions in federal loans (that will never be repaid after it is a miserable failure).

    So to me I find it even stranger that Obama is suggesting cuts to this program at all given how much he wants to funnel into the train crap. It does not play very well in the communities affected (probably even if they grasp how little money they actually are getting from this)

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