Veronique de Rugy of AEI writes a piece for Tech Central Station today on the UASI grants – a topic covered extensively on this site last week (scroll down if you click on the link). Her main point is that the Department’s enhanced risk-based formula is a substantial improvement on previous formulas: an argument with which I definitely concur, with the exception of Las Vegas’ inexplicable ranking as a “not high risk” city.
But she makes a second point, one which I heard her previously make in an event at the Heritage Foundation last year, that I disagree with strongly. She argues:
However, a fundamental question remains. Why should DHS hand out a considerable portion of its budget in preparedness grants to state and local governments? The mission of DHS is first and foremost to prevent another September 11th, not to subsidize local projects. States and local communities should be in charge of most of their preparedness efforts. Local control would guarantee more cost-effective policies, and it would end the dangerous illusion that has captivated this country since September 11th, that checkbook security is anything more than politics as usual.
I’ll tell you why. First, a key precondition for effective resource prioritization for homeland security activities (including preparedness) is a strong baseline understanding of the terrorist threat. This baseline understanding derives from intelligence, which is inherently a federal responsibility. After all, Michigan doesn’t have its own CIA, and Arkansas doesn’t have its own National Counterterrorism Center. State and local governments (with the exception of New York City) lack the capabilities to really understand the threat and prioritize investments based upon a solid understanding of terrorist tactics and capabilities.
The existence of these intelligence capabilities at the federal level means that only the federal government is in a position to make fully-informed resource allocation decisions based on threat, vulnerability and risk. States have a role in this process, in terms of identifying their assets and baseline capabilities, but they are not in a position to know how much they should spend and in what areas they should be allocating homeland security funds. If left on their own, this lack of information is likely to lead to underinvestment in preparedness and other homeland security capabilities.
Second, the nation’s critical infrastructure and terrorist attacks cross state lines. As we saw in the energy blackout of 2003, disruption in one small area can have regional or national effects. The existence of these network effects makes the protection of certain types of infrastructure – energy, telecommunications, rail, aviation, etc. – a responsibility that can only be optimized at the federal or industry-wide level. In addition, the consequences of certain types of attacks – dirty bombs, biological attacks, etc. – could easily cross state lines. If a state makes its own narrow decisions about investments in preparedness and infrastructure protection, then that state will invest only up to the point where the costs are in equilibrium with the benefits of protection that accrue to the state – not factoring in the additional nation-wide benefits that might accrue outside the state into the investment equation. And in that scenario all states underinvest in security, and a classic market failure occurs.
For both of these reasons, I think it’s a misguided idea to suggest that states should bear their own responsibility for funding preparedness activities. But other than this one issue, I heartily agree with the other conclusions reached in the essay.