Like HUD's Section 8 rent voucher program, CDBG was a creation of the Nixon administration in the 1970's. Both programs were intended to make federal housing and development funding seem less like welfare from above, by giving those who received it more control over how funds were spent. Section 8 was aimed at tenants and landlords. CDBG at entire communities. Often in the name of urban revitalization. The "block" in "block grant" refers to a block of money. Politicians at local levels are very fond of CDBG-- precisely because it comes in a lump sum and can be used for a wide variety of purposes. With the overall criteria being that end results prove beneficial to low and moderate income urban residents.

Soft Centers

"Urban revitalization has become the scam of the day for an entrenched class of cross party, cross state, political and business grifters...Economic development funds pass back and forth between them: the money barely touches ground. If, at the end of it all, real improvement in blighted cities resulted, the frauds and cronyism would be more acceptable. But revitalization dollars are almost exclusively used to buy political power and to prop up and inflate the investments of the politically connected. With less and less social quid pro quo. Even the middle class has gotten into the act, jockeying for neighborhood gentrification dollars, while tolerating political corruption, deterioration of the wider urban landscape and the formation of an entrenched underclass."

I wrote those words in the Summer of '02, in a piece called "Home Towns USA". At that time a number of northeast politicians and public contractors from midsize urban centers were in the process of being investigated and/or indicted in corruption cases connected to development deals and the misuse of federal funds. The pols were a bi-partisan bunch. The urban areas they served were former industrial centers. With downtowns that were being turned into contained corporate and government enclaves by massive infusions of HUD funds, tax breaks and other types of public subsidies. Most also had a few upscale New Urban neighborhoods juiced with smaller helpings of the same. Plus a goodly number of moderate and low income blue collar nabes picking up government crumbs while sliding downward into slums. A slide being hastened by FHA backed mortgage fraud flips and Section 8 tenant dumping. Meanwhile, low or no income slums that had already hit bottom were places where city services rarely reached and drug thugs ruled. Yet according to pols and their spokesfolk, revitalization was always just around the corner. In the meantime, slum dwellers needed to stand up and be counted. In order to keep the entire city eligible for federal programs such as CDBG.

To the credit of law enforcement agencies and officials (usually but not exclusively federal) almost all the pols and players investigated/indicted around the time "Hometowns" appeared were convicted. In some areas investigations are ongoing. Springfield, Massachusetts being one example. Where a four year federal investigation seems to involve almost anyone ever in office. Or at least, anyone who ever held a HUD buck and/or used the phrase "economic development".

But despite the satisfying sight of so many putrid public servants being marched off to jail, little has changed. Pols and their assorted cronies go on playing the revitalization game. It's enough to make you think that what really needs revitalization is revitalization itself.

Chewy Chews

Overlapping economic development programs, which often work at cross purpose, do create problems. At local as well as federal levels. For instance, development agency overlap has been cited as a factor (one of many) in the dismal condition of Buffalo, New York. Plus, the more bureaucracy, the more chances for corruption. As for cost cutting, one billion could probably be shaved off CDBG easily. Eliminating CDBG collateralized development loans to corporations would be a good place to start. As would ceasing to fund the real estate interests of affluent New Urbanites. And how about cleaning up contractor fraud in CDBG backed home rehab programs and limiting eligibility solely to the elderly and the disabled poor?

Alas, it's unlikely Bush's CDBG reforms will proceed down such paths. Mainly because his idea of reform is tied to his vision of an "ownership society" funded by public money. Which under different names has been the social policy of numerous recent presidents both Republican and Democrat. One that involves the transmutation of other people's income into other people's assets. To the benefit of those most able-- and willing-- to work the system of government owned ownership. Hence, any cuts in CDBG will probably come out of the tiny part that actually reaches the genuinely disadvantaged. Which should knock about $22.50 off the federal budget. But John Q. Taxpayer shouldn't count on spending his zillionth of a CDBG cent: Bush will have a tough chaw getting Congress to pass any CDBG cuts, whether they come via a program transfer to the Department of Commerce or not.

The Bon-Bons

DeStefano is no lone warrior. The United States Conference of Mayors is planning to descend on Washington en masse. Stern statements are being issued. Back in 1998 the Conference issued another stern statement. In the form of a policy resolution "Supporting Efforts To Fight Waste, Fraud And Abuse In All Federal Programs". The support resolution criticized Congress for funding an Urban Fraud Initiative by HUD's Inspector General aimed at investigating fraud and abuse in HUD programs (including CDBG, Section 8 and FHA insurance) in the cities of San Francisco, Baltimore and New Orleans. The Conference of Mayors said the Inspector General had "no credible or objective basis" for selecting those cities-- and that racism was behind the move since the mayors of those cities were black. But the Conference resolution was not entirely negative. It also commended the Department of Justice and FBI for terminating the investigation and for agreeing to jointly manage any future ones.

Perhaps the Conference of Mayors had a point. Though the cities targeted in the 1998 Urban Fraud Initiative did have major HUD scandals (Baltimore for instance, became known as "Flip City" due to rampant FHA insured mortgage fraud) many municipalities run by white mayors have equally soiled records. Plus housing frauds in Baltimore have continued to brew despite the administration of white Martin O'Malley. And while it's true a number of white mayors-- including prominent members of the U.S. Conference-- have gone to jail over the last few years, other corruptoids have doubtless slipped through the net. So in the name of racial equality and in support of fighting waste, fraud and abuse in all federal programs, why not launch a full scale investigation into the use of all federal funds by all mayors in all cities across the nation? And then move on up the ladder to county and state officials? A costly initiative to be sure, but the potential for taxpayer savings would make it a far smarter investment than the one we're making in Iraq.

Which reminds me: until that experiment in foreign revitalization began draining our coffers, President Bush stood waist deep in the HUD muddy. Pouring it out to the boys on board just like any other prez. While assuring the public that a few more bucketfuls would turn post-industrial blightscapes into Candy Land.

Carola Von Hoffmannstahl-Solomonoff

"By pursuing an ownership society...President Bush seems determined that we do not head farther down the road to serfdom but instead get on the expressway to economic freedom."

Jack Kemp, former Secretary of the U.S. Department of Housing and Urban Development (HUD) co-founder of Empower America and foremost advocate of HUD's Enterprise Zones. January, 2005

"We'll all be planning that route/We're gonna take real soon"

Surfing USA, The Beach Boys, 1963

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