The American Spectator

Special Report

House Financial Services Committee chairman Barney Frank (D-Massachusetts) lied to Lou Dobbs on national television the other night but no one seems to have noticed.

On the May 18 edition on CNN's Lou Dobbs Tonight, Rep. Michele Bachmann (R-Minnesota) said she was worried about the fact that ACORN and other organizations would "have access potentially to $8.5 billion" in federal funds.

ACORN, which Bachmann noted has received about $53 million in federal money since the early 1990s, has "a pattern of indictment for voter fraud," she said. "It's very concerning. No organization has a right to federal taxpayer money."

During the heated discussion that followed, longtime ACORN ally Frank said, "the notion that they're eligible for $8 billion is nonsense." A moment later Frank, who appeared last year in one of the group's promotional videos on YouTube called "ACORN Grassroots Democracy Campaign," repeated his mantra.

"But it's not $8 billion," he said.

Bachmann, whose provision blocking ACORN from receiving funding in a recent mortgage reform bill was stripped out at the urging of Frank, has previously said that ACORN and other left-wing advocacy groups could have a shot at pocketing up to $8.5 billion this year.

She's correct. I am the researcher who came up with the $8.5 billion figure.

Let's break the $8.5 billion down.

The relevant fiscal provisions are buried deep in the $800 billion-plus stimulus package now known formally as the American Recovery and Reinvestment Act of 2009 or Public Law 111-5 and in the $47.5 billion proposed fiscal 2010 budget for the U.S. Department of Housing and Urban Development.

The stimulus legislation originally set aside $5.2 billion that could flow directly or indirectly into the coffers of ACORN and its liberal friends. The $5.2 billion was chopped down to $3 billion in the version of the bill that President Obama signed into law on February 17. The $3 billion consists of $2 billion in funds set aside for the redevelopment of abandoned and foreclosed homes and $1 billion in Community Development Block Grants (CDBG).

CDBG is good old-fashioned graft. Local politicians of both parties adore CDBG because it is flexible. The program gives them wide latitude when spending grant money and allows local leaders to use federal dollars on local projects that they wouldn't dream of asking local taxpayers to fund. In the words of Heritage Foundation analyst Brian Riedl, CDBG "serves as little more than a congressional slush fund for favored interests...it funds local projects that local governments would not spend their own tax dollars on."

ACORN loves CDBG because it is especially adept at extracting CDBG funds from local governments.

In addition to the $3 billion available in the stimulus package, the proposed HUD budget for the fiscal year that begins October 1 provides $1 billion for the affordable housing trust fund and $4.5 billion in CDBG funds that could in theory find their way to ACORN and other liberal groups.

ACORN acknowledged at page 47 of its 2006 year-end report that it expected to be able to receive funds from "a housing trust fund" that would "make funding available for our development program." The housing trust fund ACORN was hoping for was not enacted until 2008 as part of the Fannie Mae/Freddie Mac rescue bill.

But the funding formula in the legislation enacted called for Fannie and Freddie to contribute to the housing trust fund out of profits, and it doesn't look like the two government-sponsored enterprises will be able to pay into the fund anytime soon. Adding new money to the fund through the HUD budget is an excellent way to roll out the goodies for loyal supporters in left-of-center political advocacy groups such as ACORN.

Moreover, as the Competitive Enterprise Institute's John Berlau wrote on these cyber pages last June 17, there is no guarantee that the trust fund monies will find their way to their intended recipient. The housing trust fund "is almost set up from the beginning to be diverted to purposes other than affordable housing," he wrote.

The legislation contains few safeguards to ensure the money is spent on affordable housing and has so many holes in it that "would allow the money to be easily siphoned off to liberal activist groups such as Association of Community Organizations for Reform Now (ACORN) for lobbying and political campaigning."

Federal lawmakers have known about ACORN's unorthodox financial practices, including its use of government resources to promote legislation and its commingling of funds within its network of affiliates.

A congressional report noted that there was "apparent cross-over funding between

ACORN, a political advocacy group and ACORN Housing Corp. (AHC), a non profit, AmeriCorp [sic] grantee" that is a major affiliate of ACORN.

The government-funded AmeriCorps, which promotes public service, suspended AHC's funding "after it was learned that AHC and ACORN shared office space and equipment and failed to assure that activities and funds were wholly separate."

The report noted that, "AmeriCorps members of AHC raised funds for ACORN, performed voter registration activities, and gave partisan speeches. In one instance, an AmeriCorps member was directed by ACORN staff to assist the [Clinton] White House in preparing a press conference in support of legislation." ("Report on the Activities of the Committee on Economic and Educational Opportunities During the 104th Congress," Report 104-875, January 2, 1997)

It's impossible to figure out where all of ACORN's money goes. As the Employment Policies Institute noted in a report: "Because it operates a virtual self-contained economy, ACORN entities exchange millions of dollars every year for goods and services. The scant financial documents available for public inspection paint a picture of a spider web of ACORN-run organizations that trade loans, leases, payments, and grants."

Congresswoman Bachmann is right to be worried about ACORN getting its hands on federal tax dollars.

Given its long history of electoral fraud and unorthodox accounting practices it shouldn't get even a penny of federal money.