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FRIDAY, SEPTEMBER 30, 2005
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EDITORIAL

Cost of cruise ship deal is only tip of FEMA iceberg

Washington lawmakers are getting a sinking feeling about hurricane relief spending.

The government is paying Carnival Cruise Lines $236 million to provide six months of housing for evacuees aboard three luxury cruise ships.

If the ships held their capacity of 7,116 evacuees for six months, the cost would translate into $1,275 per week per evacuee — more than twice the typical vacation cruise rate of about $600 per week, according to congressional aides.

"When the federal government would actually save millions of dollars by foregoing the status quo and actually sending evacuees on a luxurious six-month cruise, it is time to rethink how we are conducting oversight," Sens. Barack Obama, D-Illinois, and Tom Coburn, R-Oklahoma, said in a joint statement.

Exacerbating the cruise ship fiasco is that the ships house only a fraction of their capacities. The Ecstasy, which holds 2,544 passengers, has 625 boarders. Carnival's Sensation, with a capacity of 2,579, is carrying 820. Only 342 evacuees are staying on the 1,800-passenger Holiday, docked in Mobile.

And here's the kicker on the Carnival deal: Because the cruise line is headquartered in Miami but incorporated in Panama, it pays only a fraction of the taxes a typical U.S. company would pay on income. Carnival paid $3 million in income taxes last year on $1.9 billion in pre-tax earnings. That's about one-seventh of one percent. The typical effective income-tax rate for a U.S. company is about 25 percent.

The Carnival deal is an example of the hasty, inefficient and expensive manner in which the Federal Emergency Management Agency has administered the recovery effort. The no-bid, no-oversight manner in which FEMA is awarding contracts is enough to make Garry Trudeau's "Doonesbury" character Ambassador Duke leave his sweetheart gig in the Iraqi desert, where he has made millions in gold bullion, for the more lucrative waters of the Gulf Coast.

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