The Community Development Block Grant Program Is Awful and Should Be Cut

HUD program a significant source of corruption and cronyism, and much less about helping the poor


Aleksandar Radovanovic / Dreamstime.com

Yes, President Donald Trump's budget is awful for all the reasons Nick Gillespie explained earlier: This isn't a reduction in the size of government. It's a trick shifting money away from domestic spending to jack up military spending.

But a certain amount of "Oh no, we've chosen guns over butter!" outrage should inspire spit takes from people who pay attention to how federal spending actually plays out in the real world. In particular, a lot of media attention is focused on how Trump's budget proposal eliminates the federal Community Development Block Grant (CDBG) program. Here's how CNN anchor Jake Tapper described it in a Tweet (while linking to New York Times reporting):

The big problem here is that "We help fund Meals on Wheels" is how the government sells the CDBG program, but how it actually operates in the cities and communities that get the money is far different. The CDBG program is chock full of cronyism and corruption and should be eliminated. Much like the corrupt city redevelopment agencies, what actually ends up happening is that this money gets funneled by politicians to friends with connections for various projects that aren't really about helping the poor at all.

Type "Community Development Block Grant corruption" into Google and the very first match is this critique of the program by the Reason Foundation from 2013. Victor Nava described the program as a breeding pit for "waste, fraud, and corruption." Nava's piece focuses on corrupt CDBG expenditures in Honolulu, Hawaii, and Pine Bluff, Arkansas. He notes:

[I]n June, HUD found that the City of Pine Bluff, Arkansas improperly spent nearly $200,000 in CDBG funds and failed to properly document an additional $279,000 in expenditures. The city is accused of spending more than 20% of CDBG funds on "administrative costs", purchasing properties without redeveloping them, disbursing funds to contractors before receiving bids, and not following federal project documentation guidelines.

Instances like this happen all too often when it comes to the CDBG program, as private interests jockey for every last bit of taxpayer money from the hands smarmy local politicians who are in charge of distributing it. Cuts to the CDBG program, while welcomed, won't end the cronyism and corruption inherent in the program. The best solution is to just eliminate the program. The latest cuts bring us halfway there, so now is the time to just go all the way and end the crony capitalism once and for all.

The money often is not going to Meals on Wheels or even to the neediest communities. As a Reason Foundation analysis also from 2013 shows, wealthier communities get the larger chunks of the money, particularly counties that—what a coincidence!—are in proximity to Washington, D.C.

Here's an example of how this grant money is actually used:

In 2011, Comstock Township, Michigan decided to grant Bell's Brewery $220,000 in CDBG funds to help pay for a two-year expansion project. This is an even more blatant crony capitalist use of community development subsidies. The brewery benefits from the government subsidies at taxpayers' expense, but it also benefits from a financial advantage over competing breweries—such as the Arcadia Brewing Company one town over in Battle Creek and even alternative products such as liquor made by Big Cedar Distilling Inc. down the road in Sturgis, neither of which are receiving any block grant money. Other small craft breweries may struggle to compete with a brewery like Bell's when the government is subsidizing its expansion.

Tad DeHaven has a list of some of the projects that have snagged CDBG funds instead of things that actually help the poor:

  • $588,000 for a marina in Alexandria, Lousiana
  • $245,000 for the expansion of an art museum in Allentown, Pennsylvania
  • $147,000 for a canopy walk at the Atlanta Botanical Gardens in Georgia
  • $196,000 for expanding the Calvin Coolidge State historic site in Vermont
  • $294,000 for a community recreational facility in New Haven, Connecticut
  • $196,000 for the construction of an auditorium in Casper, Wyoming
  • $441,000 to replace a county exposition center in Umatilla, Oregon
  • $98,000 for the Pearl Fincher Museum of Fine Arts in Spring, Texas
  • $245,000 for renovations to awnings at a historical market in Roanoke, Virginia
  • $294,000 for the development of an educational program at the Houston Zoo in Texas

DeHaven also noted how a good chunk of the funds of the program get siphoned out due to administrative costs. A good quarter of the funding goes to the various multi-level government bureaucracies to actually operate the grant process. One of the biggest beneficiaries of the CDBG program are the people who operate the program.

As a small-town newspaper editor I witnessed this reality play out in the real world years ago in the California desert. In the rural community of Barstow, due to the administrative challenges of landing the grants, in the end, the local homeless shelter received somewhere around $2,000 from this program, a pittance that accomplished little. The rest ended up going to the city itself, who used the funds to repave the parking lots for local parks.

Check out this audit from Riverside County, California, for their CDBG expenditures for 2016, and there's neither a meal nor a wheel to be found. Of the $761,744 the county received, nearly all of it went to improve a playground and the sidewalks of a single local elementary school. And note that the reason they were audited by Housing and Urban Development was because they hadn't provided proper documentation of their expenses.

It's truly a shame that Trump's suggestion to cut the program entirely isn't tied to a commitment to push that revenue back to the states to handle. The budget proposal says that these community activities should be handled by states and local governments, which is true, but given that Trump isn't actually cutting the budget at all and merely shifting spending around, they're not getting the funds to do so. That means even the parts of the program that aren't corrupt get hosed because the states won't be getting to keep that revenue to deploy to help the poor.

NEXT: Do Crimes Against Immigrants Deserve More Attention?

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  1. Libertarians don’t want to feed the poor? Shocking.

    But really, Jake Rapper should be embarrassed by his reactionary simplemindedness.

    1. Should be but won’t be. When there’s no downside to saying stupid things… well, you know.

    2. Jake Rapper

      That’s the corniest street name you’ve come up with.

    3. they want to eat the poor…SOYLENT GREEN!!!

  2. Holy shit. I just went to my first local school budget forum type thing. I don’t know what I expected, but fuck, The general message was how terrible it is that we can’t raise taxes and pay teachers and staff more while hiring more teachers and staff. It was just supposed to be a rundown of the damned budget for the county, but I guess these things are just circle jerks between the union reps and county councilors because the first part was the county councilor speechifying and then during “questions” the union reps all got up and speechified, to basically themselves. Everyone had to get up on their soapbox and cry for more tax dollars to flow into their pockets. One SEIU guy no shit did the fake crying thing after saying how the school his daughter goes to changed her life. Fucking christ. I was only there because my boss sent out an email wanting someone there to bring up re-doing our science labs (they’re pretty old and dilapidated), but next time I get an email like that I’m going to have to pass. If it was only one hour instead of over two, it might be more tolerable.

  3. But those people who paved the parking lots, that was shovel-ready employment and government multiplier! They might have been homeless but for those grants!

    1. and shovel less

  4. Can we use this time to delve into how Meals On Wheels spends its funds?

    1. Hey, putting spoilers and rims on all their delivery vans counts as money well spent in my book.

      1. Spoilers? For Meals on Wheels? Is this a revival of the Death Camps?

        1. Hunger Games…

    2. It’s time to get into the 21st century and use drones for delivery.

      But then they’d have to either change their name, or put wheels on the drones.

  5. All those words and all I see is OLD PEOPLE STARVING – ALONE – IN THE DARK!

    1. Literally Hitler. You guys, cutting budgets is the definition of fascism or something.

      Stay woke, everybody

  6. Just ask any progs outraged by this if they are willing to throw a few extra bucks to charity now to help feed the needy. If they genuinely will not give to charity unless the government takes their money and wastes 90% of it first, then they’re insane but at least they’re consistent

    1. Well sure, I’ve done that too. The response you typically get is some faux-principled stand like “I’m not going to enable the budget-slashing by trying to restore the lost funds out of my own pocket!” But really, the real argument is “I’m too cheap to do it on my own so I will force men with guns to take your money from you to serve my interests”.

  7. No meals at all is the logical next step to Michelle’s allowing kids access to only meals they have no interest in eating.

  8. There are no Trump analogues.

  9. “Check out this audit from Riverside County, California, for their CDBG expenditures for 2016, and there’s neither a meal nor a wheel to be found. Of the $761,744 the county received, nearly all of it went to improve a playground and the sidewalks of a single local elementary school.”

    That is not what that audit says, and you didn’t read it very well. Page three clearly shows the funds the county received; in FY 2014 that amount was 7.4 million dollars.

    The $761,744 figure you quote is the amount of spending the county *could not support* as complying with HUD rules and requirements. After the audit, the county found supporting documentation for $717,429 (Page 6). That means that of 7.4 million, the county failed to properly account for $44,000 in expenditures, which is well under 1%.

    The thing might be (Hell, it is) crony capitalism and a waste of funds but the audit does not support your claims of vast waste and inefficiency.

    1. Here is exactly what they said:
      “The County did not always administer its program in accordance with HUD rules and requirements. It incurred $761,744 in program expenses without supporting that these expenses met program eligibility requirements. This condition occurred because the County did not always follow its own policies and procedures in managing its program funds and source documentation to ensure compliance with HUD rules and requirements. As a result, it spent $761,744 in program funds on unsupported costs and placed its projects at risk of not meeting HUD’s national objectives for the program. After we completed our fieldwork, the County provided additional documentation to support $717,439 of the questioned program expenses. However, it was not able to provide documentation for the remaining $44,305 in questioned costs.”

      So… Scott Shackford, you’re either a liar, a fraud, or an idiot. You should be ashamed of yourself. Also all those funds for things spend by the CBDG program look great to me. Call me crazy but I think investing into our communities is a lot better than investing into our military.

      “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.” – President Dwight D. Eisenhower

  10. Why couldn’t the liberal help the poor? Because his hands were stuck in your pockets.

  11. I have a close relative who administers a CDBG program and your assessment could not be more wrong. While there may be some instances of corruption in this program as a whole, it is minor and most certainly not the norm, as you suggest. Everything my relative’s program funds is related to affordable housing and community development. The program gives funding for such things as: a local group home for children, a halfway house, Habitat for Humanity home repair program, a study on fair housing choice, an independent living center, handicapped accessible ramps for the local autism foundation, the city’s heritage society, and the city’s train station. For 2017, their goals are to build more affordable rental housing, housing for the homeless, and housing for individuals with special needs. The funds do not go to the cherry-picked items that you deem frivolous, like parking lots or renovations to awnings.

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  15. All those words and all I see is OLD PEOPLE STARVING – ALONE – IN THE DARK!

  16. Yes, do away with the block grants and see how much of a disaster you will have created. The majority of block grant programs quietly do the work of housing senior and the disabled. Most of the housing that is created for seniors is created by block grants. Affordable housing is the result of block grants. Disabled former professionals, including journalists, who through no fault of their own, exhaust their savings due to illness and job loss can actually get a low income rental apartment because of the block grant. While everyone is espousing abstract political theory there is the practical reality of housing disabled and elderly people. After all, what incentive is there for developers to build low income housing in markets where rents are soaring if it weren’t for the block grant programs?

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