For Immediate Release March 30, 2011

Contact:  Leslie K. Paige 202-467-5334 Luke Gelber 202-467-5318

CAGW Issues Weekly Spending Cut Alert: Community Development Block Grants

(Washington, D.C.) –Today, Citizens Against Government Waste issued its weekly spending cut recommendation aimed at the Department of Housing and Urban Development’s Community Development Block Grants (CDBGs). In the 1970s, many American cities suffered from destitution and blight. For a variety of reasons, such as rent control and lousy local governance, America’s urban centers looked very different than they do today. In 1974, large swathes of New York’s South Bronx burned to the ground on national television. Many people felt that the federal government should try to help.

Accordingly, President Gerald Ford asked Congress to establish the CDBG program in an effort to revitalize low-income areas in cities across the country. The money was intended for infrastructure investments, housing rehabilitation, job creation, and public services, all of which were to benefit low- to moderate-income families. The result has been more than $100 billion ineffectually given away to local governments. Cities such as Buffalo and Los Angeles have received hundreds of millions of dollars in CDBG grants over the past 37 years, with little to show for it. Even President Obama, a former Community Organizer, has recommended reducing CDBG funding because “the demonstration of outcomes [is] difficult to measure and evaluate.”

Tellingly, the CDBG formula for eligibility does not even take a community’s average income into account. Past grants have included $25,000 for construction of the Music Conservatory of Westchester, N.Y. (one of the wealthiest counties in the nation) and $500,000 for “streetscape improvements,” also in Westchester. Further, beneficiaries of CDBGs are often served by other state, local, for-profit, and non-profit programs.

“CDBGs are a classic example of a well-intentioned government plan that, in practice, amounts to throwing money at a problem and ignoring the results,” said CAGW President Tom Schatz. “The program’s defenders, who often argue that these grants create growth and reduce poverty, suffer from the same delusions as rain makers who believe they affect the weather, or witch doctors who believe they keep bad spirits away.”

CDBGs are included in CAGW’s Prime Cuts database, a compendium of 763 waste-cutting recommendations that would save taxpayers $350 billion in the first year and $2.2 trillion over five years. Eliminating CDBGs would save taxpayers $3.9 billion in one year and $19.5 billion over five years.

Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. The Spending Cut of the Week calls attention to a federal program that is wasteful or duplicative.