The Cut in Antiterrorism Grants to New York and Washington, D.C.--Posner

The Department of Homeland Security will be distributing some $700 million this coming year to American cities for antiterrorism measures. The amounts allocated to New York and Washington, which are generally regarded as the prime U.S. targets for a terrorist attack, are about 40 percent lower than the current year's allocations, and this has engendered indignation on the part of officials of those cities. Other large cities have seen their allocations cut sharply as well. In part the change in allocations is due to the fact that Congress cut the overall amount of money for this program, but in larger part it is because of a deliberate decision to shift money to smaller cities. Michael Chertoff, the Secretary of Homeland Security, defends the shift on two grounds: that the money should be used to build physical capacity to respond to terrorism rather than to fund recurring expenses such as salaries of emergency-response personnel, and that New York, Washington, and a few other major cities have received the lion's share of the grants since the beginning of the program because they are the prime targets but their urgent needs have been attended to and it is now time to attend to the needs of the lesser targets. The interesting policy questions are, first, should the federal government be making such grants to cities, and, second, what should be the basis for deciding how large a grant to make to each city? Taking the first question first, there is no doubt that the federal government and not just states and municipalities should spend money to protect the nation from terrorist attacks, since, as we know from the 9/11 attacks, an attack on a city (or on any other major target) has consequences far beyond the state in which the city is located. But should the government finance defensive measures by the cities or should it spend the money itself? The argument usually heard for the grant approach is that the locals know better their vulnerabilities and how best to reduce them. But the argument is weak because while the locals do know a great deal about the competence of their response personnel, they know little about terrorist threats--terrorist plans, methods, preferred targets, and so forth. Moreover, when a pot of federal money has to be divided up among state or local governments, pork-barrel politics are bound to distort the allocation. Concern with this problem led DHS to employ anonymous committees of local security and emergency-response officials to vet the grants, but partly because of their anonymity and partly because such officials are only quasi-professional, this version of peer review was not highly credible. Furthermore, the locals may use the federal money simply to replace the expenditures they would otherwise have made on antiterror measures. Suppose a city wants to spend $10 million on such measures and would spend it out of its own funds, but it gets a grant of $10 million from DHS. Then it may simply reallocate the $10 million in its own funds that it would have spent on such measures to some unrelated program. To the extent that such reallocations occur, the $700 million DHS program, with all its entailed paperwork, peer reviews, and political controversy, is not a security measure at all but just a general federal subsidy of local government. Notice, moreover, that the less of its own money the city spends, the less secure it is against terrorist attacks, and it can use the lack of security to argue for an increased federal grant next year! All this said, probably some sort of grant program makes sense simply because optimal antiterrorism measures require enlisting local facilities and personnel, and cities may underspend on these because the benefits will accrue in part, maybe major part, to other, perhaps far distant, cities; that is the externality point with which I began. I am puzzled why the program should favor communications equipment, computers, emergency vehicles, pathogen detectors, containment shields, and other capital goods over salaries; effective antiterrorism measures tend in fact to be labor-intensive. Becker, however, suggests an explanation in his comment. Moving to the second question, how should the amount received by each city be determined, one encounters baffling problems of measurement. Ideally, one would like the grant moneys to be allocated in such a way as to maximize the excess of benefits over costs. The costs are relatively straightforward, but the benefits are not. The benefits of an antiterrorism measure, for each potential target, depend on (1) the value of the target (not just in terms of financial loss, of course) to the United States, (2) the likelihood of its being attacked, (3) the likely damage to the target if it is attacked (which requires consideration of the range of possible attacks), and (4) the efficacy of a given measure to prevent the attack or reduce the damage caused by it. (2) and (3) are probably the most difficult to estimate accurately, because to do so would require extensive knowledge of the plans, resources, number, location, and motivations of potential terrorists. But (4) is very difficult too, because the effectiveness of increasing the number of policemen, or of installing surveillance cameras on every block, or of increasing the number of SWAT teams, or of taking other measures of prevention or response, is extremely difficult to assess in advance. About all that can be said with any confidence is that cities and other targets that are near the nation's borders (including coastlines) are probably more likely to be attacked than cities and other targets that are well inland, that larger cities are more likely to be attacked than smaller ones because the larger the city the easier it is for a terrorist to hide and move about in it without being noticed, that attacks on large cities are likely to kill more people and do more property damage than attacks on small ones, that among coastal cities New York and Washington probably are the prime targets because of their symbolic significance, but that to neglect the defense of the small inland cities would simply make them the prime targets, and that an attack on such a city might sow even greater fear nationwide than another attack on a large coastal city by making people feel that nowhere is safe. But no numbers can be attached to these probabilities. They belong to the realm of uncertainty rather than of risk, to borrow a useful distinction made by statisticians: risk can be quantified, uncertainty cannot be. This analysis suggests that more antiterrorism resources should indeed be allocated to the large coastal cities than to other potential targets, but that is the pattern even after the recent cuts. What seems indeterminate is the precise amount of money that should go to each city. That makes one wonder why DHS was willing to incur the political pain of drastically altering the existing grant pattern.

Comments

[Collestro]

I live in Florida and was outraged at the way FEMA handed out money for things we should buy. I went to N.O. for Jazzfest and was shocked at how little was done. The Federal Government can't help us with a simple storm, they will be equally ineffective in the event of another terror attack.

Local communities need to recognize that they are on their own. We need to build strong fire departments, with healthy volunteer components. We need healthy local government surpluses and we need to slash the ?homeland? security budget to near zero.

[W]

The interesting policy questions are, first, should the federal government be making such grants to cities, and, second, what should be the basis for deciding how large a grant to make to each city?

1. No. This is obviously vote-buying for the 2006 mid-terms.
2. The size of the grant is likely based on the risk of losing that state's Republican seat in 2006.

[W]

State's or district's, rather.

[Matt Gerken]

If we accept that 2,3, and 4 are difficult, if not impossible to calculate with efficiency, what is government to do? If the funds are used as subsidies as you have noted, is abolishing the grants altogether a wise alternate route? Or is there a better way of allocating funds? One would think that the need (at least with the current state of world affairs) for security trumps the wish to keep government small and effective, but at what cost or risk level does this cease to hold true?

[robert]

Infirmities aside (the responder, above, makes a good point that allowing localities to spend the money is tantamount to possible vote-buying by the adminsitration for the upcoming midterm elections), it seems that the federal government should nonetheless spend the money in question. This is predicated on the idea that fighting terrorism is a national, rather than local, interest. As such, the resources of the federal government should be marshalled and spent, as appropriate, in response. To unduly politicize the defense of our country against terrorism is a prescription for disaster. Recognizing that waste, fraud and abuse will always exist at every level of government, the defense of our country--the end for which the funds in question are the means--is too important to be left to local politicians and their strictly parochial concerns.

[Arun Khanna]

A part of the anti-terrorism funding should be used for training student visa officials in U.S. consulates in anti-American high hate countries like Pakistan and Turkey. Terrorism supporters on university campuses increase the possibility of individuals engaging in random acts of terror on American soil.

[Richard]

How about introducing competition in providing homeland security? Letting the government do it is just like duplicating the failure of our educational system in our large urban areas. I don't think regardless of the grant system you would feel comfortable in having Daley or Stroger provide your security. Let's hire GE and let them protect the country.

[N.E.Hatfield]

How much has NYC & DC received to date? Is not the rest of the country in jepordy? I know some Local Emergency Response Commanders who are still waiting for MOP Suits & training. Luckily they haven't been hit yet by a WMD attack - yet.

Sounds like sour grapes on the part of NYC & DC to me. The pie is only so big and everyones got to wait their turn.

[Collestro]

Robert,

Fighting terror is a national responsibility. Responding to a terror attack is a local one. My state has sixty-seven counties. Our share would be $200,918.48. The Yankees incurred some cost in collecting that money, and certainly there are costs in handing it back out again. We would be better off if you just left the money here.

[Bernard Yomtov]

That makes one wonder why DHS was willing to incur the political pain of drastically altering the existing grant pattern.

What poitical pain?

Don't confuse ineffective, though accurate, criticism with political pain. NY and DC are solidly Democratic. The Administration doesn't care what they think. It was happy to take an opportunity to show its supporters elsewhere that it is willing to stick it to those big-city liberals.

[James]

The comment above has the key. Don't assume that the Federal Government will do this job any better than it does any other. Protection of monuments, provision of emergency services and such like would be better done by the states themselves, leaving the Federal Government to pursue truly national issues such as border defence, tracking suspects and sorting out the mire that is Iraq. My views on the latter are set out at my blog http://cricketandcivilisation.blogspot.com/
Fewer terrorists might be recruited if the US is seen to leave that country in a better shape than it is now.

[richard]

How about auctioning the rights to hunt down Osama? It could be a new reality TV show. Included in this right would be the right to have a national betting pool. The government would charge a flat fee plus a percentage of the pool. People could bet on which episode they get him, which team gets him or the combination (which team on which episode). This would introduce competition into the activity, like bounty hunters in the old west. The result would be Osama would be dead and it could be a money making enterprise which could be used for other purposes, like homeland security or reductions in taxes. We may get other foreign armies involved in the process. Perhaps the Hungarians or the IDF would be more efficient than ours?

[James]

That post probably belongs more on the privitisation of the military thread that was running a few days ago on this blog. In fact the Government _did_ contract out Osama hunting, to the Afghan warlords. They came unstuck by doing so. Had just a fraction of the soliders in Iraq been deployed to Afghanistan before the Tora Bora campaign, there's a good chance Bin Laden would have been caught. As it was, they ignored the point that the factors which led to the Taliban collapsing in one part of the country (bribeable warlords, conventional war of sorts already going on), were not really applicable in the case of Bin Laden near the Pakistani border.

[GRG]

These comments make sense. The 'grants' to cities should clearly depend on the vulnerability of major resources of the city, the likelihood of terrorist attack, and the potential damage to the city. If you read the Feds response, grants were handed out by the quality of the grant proposal. (or perhaps the quality of the political gain of the grant).

This is typical Fed grant policy. It is an exercise in clerical paperwork, rather than a strategic plan. Little Rock may have a wonderful grant writer, but much less potential of terrorist attack than New York. Who gets the grant? Little Rock of course.

It probably won't happen, but the Feds clearly need to develop a formuula that predicts potential damage and disperse grants this way. The dispsement of funds should be more about risk, then about an 11th grade essay contest (grant writing).

This is not to excuse excessive slopiness in gratn writing or program planning. But if you have ever written a grant request, you realize quickly that much of it is bureaucratic CRAP.

I live 1000 miles from New York. I don't like New York getting tons of Fed money for all the 'projects'. But, I would have to be an idiot, and very selfish, not to recognize that New York is the most frequent and most vulnerable target (along with DC) of terrorism.

If New York's grant isn't up to 'par', then the Feds need to work with them.

This isn't your typical academic exercise in 'grantsmanship' (read academic crap). This is life and death from real threats.

[N.E.Hatfield]

Quick test: What do you get when mix FO with AN? Political Extremism and its move into action can happen anywhere at anytime. The whole country, not just a few big cities need to be prepared. Its only a matter of time and I don't think we want to get caught saying "Wha happened!" again.

[GRG]

To answer a couple posts:
1. In no way should anyone think that the states, or municipalities can fight terrorism better than the Feds. Come on, why don't we go back to being independent states again? (the original 13 states pretty quickly found out that the pirates need Fed interventions centuries ago).

Terrorism is an International threat that knows no national boundries. Go down to your local fire department and ask them to explain the geopolitical realities of the Middle East.

Although I agree that local authorities know the nuances of delivery of emergency resources, and the local infranstructure better than the Feds, locals cannot appreciate the entire threat without the expertise that SHOULD be available when the experts are pooled in DC for the Feds.

It seems ludicrous to say that Arkansas can better fight international terrorism than the DHS/Pentagon.

The problem is the delivery of the resources and the intelligence in a nonpolitcal, common-sense, and effective way to the various states and cities.

Here is where the states can make impact by demanding to be involved in these funding decisions.

2. Let a private company like GE fight terrorism??? Maybe Microsoft can handle computer terrorism (although they cannot prevent trojan horses on my computer), but would you want Enron, Tyco, or even General Motors in charge of The 'War' on Terror? Imagine dialing a help line during a terror attack. People would be on-hold or pressing option 3 for THE FRIGGIN PLANES ARE CRASHING INTO THE BUILDING!

For national security we are stuck with the Feds (who in reality do a pretty good job thus far in defending our homeland freedoms). However this is dependent on good leadership and wise judgements...which is where I have issues.

[richard]

Who thinks monopolies are efficient or innovative producers?
What about the $ spent by FEMA that has been in the news? How did they do?
You think the Feds will be OK if we have "good leadership and wise judgements." When I go to the store to buy laundry detergent, I don't get into nor have to care about their corporate governance.

[GRG]

Richard I don't quite understand your points.

I do think in the case of government, that good leadership is tantamount to the effective use of funds....this includes both elected and appointed leaders. We have an opportunity to replace those elected leaders, and indirectly the appointed leaders.

Then the leadership must exercise good judgement in utulizing the resources they have. What else is there?

I don't see the analogy with buying soap. Good products are produced by well managed producers (as with Govt).

If you buy crappy soap you lose 5 bucks, and move to another brand.

If the Feds manage the threats against this country in a crappy way thousands lose their lives...

[richard]

http://www.guardian.co.uk/usa/story/0,,1797511,00.html

[N.E.Hatfield]

richard, As for your box of "soap" you'd better be worried about corporate governance. There's something called the Pure Food and Drug Act (a governmental control mechanism of product quality). If the corporate governance isn't there; who knows what's in that box. Maybe pure hydoxide, it'll clean well, dissolve the hide right off your bones. ;) That's why the act was issued in the first place; unscrupulous corporate governance in the relentless pursuit of profit.

[GB]

Your sentence that "risk can be quantified, uncertainty cannot be" is particularly interesting, because insurance company pay-outs are, of course, a combination of risk and and uncertainty. You might not be able to quantify uncertainty, but there are confidence intervals about assessments of risk, and these confidence intervals can help create a spread at which people willing to take either side of the bet.

There is a Sorosian reflexivity to the problem that makes it difficult to analyse, however, and market solutions fail in the case of terrorism. If we had different local markets for one-year terrorism insurance policies, and then allocated sums based on the the different prices, terrorists would study the market for opportunities, and arbitrageurs would even the markets out in the expectation that the government would ultimately step in to balance the risks. However, if it takes longer for terrorists to plan an operation than it does to immunize an area against them, there might be a compelling argument for temporarily softening targets and then abruptly hardening them, as a way to divert terrorist resources.

[Robert Nanders]

Thought I'd mention that the spam bot filter could be discriminatory; as soon as Mr. Ed finishes his typing lessons, you could run into some problems.

"The interesting policy questions are, first, should the federal government be making such grants to cities, and, second, what should be the basis for deciding how large a grant to make to each city?"

I think the "of course!" answer to the first question is nieve - yes, something should be done, but by whom? I count investors as more able judges of what's important than politicians or media-anchors, for example. And as already noted, any use of the Fed's power to appropriate and redistribute money invites abuse - I'd like to see that problem minimized, not maximized.

And since it's a given that it will, nevertheless occur, the second question I'd answer is that the money should be distributed by population count to ever municipality and non-incorporated locale for discretionary use in counter-terrorism. Alternatively, perhaps more pleasantly, distribute it according to the proportion of taxes shouldered by municipality.

In short, put the money taken from the people back as close to them as possible, presuming that you won't give it right back to them in the first place, or heaven forbid, abstain from the taking altogether.

[N.E.Hatfield]

Bob, just one flaw in your analysis in terms of redistribution based on ability to pay, you end up with well financed and develped areas and pockets of desolation. Are we not one Nation?

[GRG]

Robert Nanders offers an interesting (and simple) solution for distribution of anti-terrorism monies -- population or resource based distribution.

Thus the various ways of distributing these monies would include:
- grants (or essay writing contests)
- population based
- politically based (we need votes in S Carolina, not New York City)

It seems to me that someone in Govt has a regression equation that can integrate the factors Possner presents above. This would factor in population, value, resources, vulnerability, etc. Each state (or metro area) would then be given a vulnerability score. Monies could be doled out according to such a score (making it as objective as possible..ha!).

Within an area, agencies could propose defense mechanisms, which would meet an overall STRATEGIC PLAN as ennunciated by DHS.

Say there are 100 million dollars in the kitty. NYC has a score of 34, which means it receives 34 million. Based on the strategic plan 50% of this would go toward communications, 35% to local defense barriers etc. Local proposals would then determine who does what.

The key would be a national strategic plan, to build a backbone of defense against terrorism. Monies to local Govt would flesh out the plan. Kinda like the Interstate system.

Perhaps this is the way things went?????

[Watches]

I think it's very bad that a few people can do this so short after 9/11 we have not forgotton what happend that day and we need to boost the spending for our security yes wildlfe is imposrtent but not as much as human life!