Katrina victims to receive $2K debit cards... how's that going to work?

[Slacker]

http://www.breitbart.com/news/2005/09/07/D8CFH5F00.html

The federal government plans to begin doling out debit cards worth $2,000 each to adult victims of Hurricane Katrina, The Associated Press has learned.

Homeland Security Department Secretary Michael Chertoff descibed the plan in a conference call with state officials Wednesday morning. The unprecedented cash card program initially will benefit stranded people who have been moved to major rescue centers such as the Houston Astrodome.

What about people in smaller shelters? And private residences? How do they avoid fakes?

I’m not intending to criticize, I’m just trying to imagine how they’ll pull this off. I hope they do. Any thoughts?

[Whack-a-Mole]

Who knows? Presumably they will setup some kind of registration database where people wanting a card have to show a photo ID and proof of residence in the affected areas and will only be issued one card. But as with any system it will doubtless have flaws and there are doubtless people out there who will try to work the system and get more than their share. Hopefully the system will minimize the number of people who get away with something like that.

In Florida last year FEMA paid for some 300 funerals while the coroner down there only attibuted ~180 deaths (IIRC) to the hurricane(s). Clearly their system could use improvement and they were taken to task over this (and other issues). Hopefully they have improved it but given their performance so far I cannot say I am confident.

[Bongmaster]

Its a nice idea in principal but its so open to abuse its almost certainly going to happen.

[Shagnasty]

The burden of proof needs to be set pretty low to reach those that should qualify. My friend Jim just moved to the 9th Ward of New Orleans a month ago. He traveled here to Boston just before Katrina hit. His apartment was completely destroyed and he has no papers. His driver’s license expired while he was stuck here so he had to trade his Louisiana license in for a Massachusetts one. Now, he has no proof that he lived in New Orleans even though he has been there for 10 years. I am sure that he can’t locate his lanlord. How does he prove it to get his card?

Likewise, I have read that 40% of New Orleanians were renters. I am that most didn’t carry papers with them and many probably don’t have a driver’s license. What about students? Some lived there year-round like I did. Are they residents? What about long-term visitors?

The low standard of proof means that there will be tons of fraud. I don’t know how to avoid it without denying aid to those who should qualify.

[dalej42]

@Shagnasty

The low standard of proof means that there will be tons of fraud. I don’t know how to avoid it without denying aid to those who should qualify.

I’m sure there are a multitude of ways to prove residency. Even if the leasing papers or driver’s license is gone. Many employers will still be able to print out copies of pay stubs from before the storm. An unemployed person would be receiving checks from Baton Rouge and can get back copies of statements. There are also credit card statements, utility statements (if generated outside the city), possible selective service registration, and many other ways to prove identity.

[percypercy]

The employers may not be able to print out pay stubs if their computers are in New Orleans, possibly underwater. I know my sister was worried because she didn’t have her computer backups with her. Some, obviously, will be national employers, but local employers are in the same state as their employees. I know the owners of Cafe du Monde were considering how to get back down to the main store so they could pay their employees.
-Lil

[Squink]

FEMA to Halt Debit Cards, Use Bank Deposit

The federal government’s relief agency said Friday it will discontinue its program to distribute debit cards worth up to $2,000 to hurricane victims, two days after hastily announcing the novel plan to provide quick relief.
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The Federal Emergency Management Agency said it will scrap the program once officials finish distributing cards this weekend at shelters in Dallas, Houston and San Antonio, where many of the evacuees were moved. No cards will be issued to victims in other states.

[CantUseMyRealName]

@Shagnasty

Likewise, I have read that 40% of New Orleanians were renters. I am that most didn’t carry papers with them and many probably don’t have a driver’s license. What about students? Some lived there year-round like I did. Are they residents? What about long-term visitors?

Hopefully many of these people registered to vote, because that is one of the easiest ways to confirm residency.

[rocking_chair]

shagnasty, should your bud jim have his expired d.l. he should have an id number on there. that number when plugged into the computer should have his info for nola.

states and commonwealths rarely change those numbers. also his s.s. number should be able to track his work history in nola.

[RaftPeople]

I had to laugh when I heard this plan. I’m picturing a bunch of people walking around the Superdome with debit cards, looking for stores that are open, or ones that even have eletricity.

Now, maybe in reality this is a good idea, but it sure made me laugh.

[Huerta88]

Surprise, surprise.

Breaking News, World News, US and Local News - NY Daily News - New York Daily...

[Squink]

It seems the voucher program for refugees isn’t the only post Katrina initiative that might cause problems.
Katrina Expense Accounts Draw Criticism:

Lawmakers and watchdog groups worry that allowing federal employees to charge up to $250,000 on their government-issued credit cards for Hurricane Katrina-related expenses will lead to a repeat of past abuses.
…
About 250,000 federal employees have government credit cards, which typically have a purchase limit of $2,500. At the request of the Bush administration, Congress increased the credit line to $250,000 as part of a massive Katrina recovery bill approved last week.

[Huerta88]

http://wnd.com/news/article.asp?ARTICLE_ID=46361

[Mtgman]

One of the problems with some of these cards is their tax free status.

1. Are purchases made with a FEMA debit card or FEMA vouchers exempt from Texas sales and use tax?

Yes, goods and taxable services may be purchased tax free with FEMA debit cards or FEMA vouchers. Retailers should keep documentation that the items were purchased with FEMA debit cards or vouchers. Because these are federal government purchases, no further documentation is necessary.

If a taxable item is purchased with a combination of a FEMA voucher or debit card and with cash or personal credit or debit card, the retailer should collect tax on the amount of the purchase that was paid for with personal funds, but not on the amount of the voucher or FEMA debit card.

2. Are purchases made with a Red Cross voucher exempt from Texas sales and use tax?

Yes, evacuees from the states devastated by Hurricane Katrina are not required to pay Texas state and local sales taxes on taxable items purchased with a Red Cross voucher. Retailers should show the amount of the Red Cross voucher on the invoice, deduct that amount before computing the sales tax, and keep a copy of the voucher to substantiate the sale to the Red Cross on behalf of the individual. Exemption certificates are not required on these purchases.

So this is a “get out of taxes free” card as well as a source of instant cash. Buying an $800 Louis Viuttan handbag would save you ~$65 - $70 in taxes. I’m guessing that’s a hell of a temptation. A windfall of cash and tax-free status. In some cases other citizens may be offering cash(which could then be used for alcohol and tobacco) to save themselves some money on taxes. This used to happen all the time when food stamps were be issued as vouchers with cash value and item restrictions. The use of Electronic Benefits cards has pretty much stopped this minor type of fraud, but I wouldn’t be suprised if it popped up again in the case of the debit cards.

In the meantime a lot of things the evacuees need can’t be purchased with plastic at all, like deposits for utilities or housing.

I don’t think the debit card idea was well thought-out. Handing out food stamp accounts would probably meet most of the needs. For example, Texas has an electronic benefits card program which could probably be pressed into service, along with local Women Infants and Children(WIC) programs which provide vouchers for diapers, children’s clothing, blankets, and other necessary non-food items. Vouchers, not exchangable for cash, could be provided for things like utility and housing deposits. As long as people understand that more aid which can be used for more things with more discretion will be coming as the paperwork gets straightened out I think there will be grumbling but it would be tolerable.

Enjoy,
Steven