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CNN Wolf Blitzer Reports

September 11, The Money Maze

Aired January 07, 2002 - 19:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)

WOLF BLITZER, CNN ANCHOR: Tonight, a special edition of WOLF BLITZER REPORTS: "September 11, The Money Maze".

UNIDENTIFIED FEMALE: My husband and I grew up together. I was 16, he was 17.

BLITZER: Thousands of lives were lost on September 11. Thousands of others were shattered as families were ripped apart, widows and orphans left with no way to pay the bills.

Americans rushed to help, donating more than a billion dollars to more than a hundred charities. But almost four months later, questions about how much of that money has actually reached the victims.

UNIDENTIFIED FEMALE: Rob will never come back. That will never change. So why do I have to keep reapplying?

BLITZER: The federal government has also set aside billions to compensate the families.

KENNETH FEINBERG, SPECIAL MASTER, GOVERNMENT 9/11 FUND: The average award, before collateral offsets, is about $1.65 million tax free.

BLITZER: But how do you put a value on a human life? I'll ask Kenneth Feinberg, the man in charge of the government's fund.

(END VIDEO CLIP)

BLITZER (on camera): Good evening. I'm Wolf Blitzer reporting from Washington.

Tonight, a special look at a story none of us could have imagined, some of us still can't believe: how the incredible generosity of Americans -- who gave well over one billion dollars to charities aiding victims of September 11 -- has led to frustration, delays, anger, controversy, now even Congressional hearings.

For those who've lost loved ones, it can be a bewildering maze: they can turn to the federal government's September 11 victim compensation fund, or national charities such as the United Way or Red Cross.

There are resources devoted specifically to New York-area firefighters, police officers and other public employees, and around the country, at least 100 other charities with September 11 programs.

How much does that all add up to? Over the next half hour, we'll look at the September 11 money maze.

It all began because Americans wanted to help the victims. Peter Viles of CNN Financial News has the story. He joins us now live from New York. Peter.

PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT: Wolf, this money maze, as you call it, has been frustrating not just to the families of the -- the families of these victims but to the thousands or even millions of Americans who have tried to give money to those families in a burst of generosity that began just hours after the trade center here was attacked.

(BEGIN VIDEO TAPE)

UNIDENTIFIED FEMALE: I'm looking for my brother, his name is Brian Monahan. He was in the second building on the 98th floor.

UNIDENTIFIED FEMALE: He has a tattoo of -- a Superman tattoo on his left ankle.

UNIDENTIFIED MALE: I just want to hear my son's voice.

VILES: It was awful to hear those stories and to see those hand- made posters, but Americans did something about it: they gave, and they gave in huge numbers, hoping to comfort those families.

But then something strange and unsettling happened: for whatever reason, the money and the families couldn't find each other. So we met widows who were grateful.

LIZ MCLAUGHLIN, WTC WIDOW: I know if my husband Rob had died any other way, under any other circumstances, that I would not have this kind of support.

VILES: But who were also tired, and angry.

LIZ GILLIGAN, WTC WIDOW: It's -- very frustrating. It's --I feel angry, because the information to access all these charities is not filtering down clearly to the families.

VILES: Part of the problem was that so many charities raised so much money, and then they refused to coordinate their efforts. The result was a mass of red tape, overlapping bureaucracies.

ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: Charities, like all other organizations, don't necessarily like to deal with their colleagues, share their toys, share their funds, share their resources. And so we had to overcome that.

VILES: It took public outrage, Congressional hearings, threats of law suits, the ouster of the president of the Red Cross.

UNIDENTIFIED FEMALE: I have made the difficult decision to retire from the American Red Cross.

VILES: Finally, three weeks ago, some of the charities did promise to work together.

SPITZER: I don't want to say it's fixed in that there is no longer frustration, anger and -- and serious work to be done, but I think we've made enormous progress at least in getting all the charities together.

VILES: But the charities are still very much separate, and much of the money has not been spent. To date, more than 100 charities have raised an estimated $1.5 billion. At least $542 million has been disbursed. Now, if that money went directly to victims, each family would receive $180,000.

But that number is a fiction. Nobody knows how much has gone to the victims' families, because tens of millions have been spent elsewhere: feeding and sheltering volunteers, untold administrative costs.

Here's the breakdown: the Red Cross has raised $667 million and has given out $349 million; the September 11th Fund $380 million raised, $130 million distributed; the Twin Towers Fund, mainly for police and firefighters: $141 million raised, $48 million distributed. Another firefighter charity: $105 million raised, $15 million handed out.

Then there is a government fund that will dwarf all that charity money, Congress promised the families billions of dollars, provided they agree not to sue the airlines; but how much money for each family?

Under a complicated and somewhat controversial formula, some will receive millions, others fear they will get nothing from the government.

(END VIDEO TAPE)

VILES: With all the attention focused on this problem over the past couple of months, the fundamental situation for the victims hasn't changed all that much. What they really want out of all this is some certainty and some simplicity in dealing with the charities. And so far, Wolf, they just cannot seem to get it.

BLITZER: All right. Peter, stand by. I want to bring you back later in this program.

But meanwhile, private charities have raised an estimated billion and a half dollars, yet families of those who died on September 11 describe themselves as being in a bureaucratic black hole. They're receiving some funds, but just a fraction of what's available.

As CNN's Hillary Lane found, the process of getting through to the charities can be frustrating and painful.

(BEGIN VIDEO TAPE)

UNIDENTIFIED FEMALE: This is a gift. The flag was a gift from New York City.

HILLARY LANE, CNN CORRESPONDENT; There are reminders Rosanna Stabile honored to have in her home.

ROSANNA STABILE, WTC WIDOW: My husband and I grew up together. I was 16, he was 17.

LANE: And there were painful reminders she wishes would go away.

STABILE: I dread to go to the mailbox, because I never know what I'm going to find.

LANE: Seemingly endless requests for information: proof of employment, marriage, children, death. Stacks of bills to pay, phone calls to more than 200 agencies -- each with its own set of rules.

STABILE: You saw how long I was on just with the Salvation Army and I didn't get to speak to anybody. Some days I just don't want to handle it. That's why there is pile over there. Some days I'm strong enough and I make my phone calls and sometimes I sit here until 2:00 in the morning trying to everything in order so I can make my phone calls the next day.

EDNA ORTIZ, WTC WIDOW: It's not that I -- you're not -- you don't want to do it. It's that it's very difficult to do it. And however grateful you are, it's heartwrenching.

LANE: Edna Ortiz brightens when she talks about her husband, Javier (ph). His coworkers sent e-mails describing what he did on September 11.

ORTIZ: He tried to help. He stayed behind he made sure every -- a lot of people got out. But he stayed behind. He was a hero, I think as much as any firefighter or any policeman out there.

I am a victim of the World Trade Center. And I lost my husband.

LANE: Now Edna spends five to six hours a day on phone calls and applications. She is exhausted but cannot sleep. She suffers panic attacks when she goes outside alone.

ORTIZ: It feels like reliving that day. It feels like a pain in my heart that I can't explain. It's just...

LANE: Just to pick up the phone...

ORTIZ: It's overwhelming. Even to turn around and pick up the phone and make a phone call and actually speak to one right this very moment, it's not possible.

UNIDENTIFIED FEMALE: What they can do is they can apply for the September 11 fund.

LANE: In late November, the Red Cross gave victims' families six months of living expenses, but other charities require them to reapply every week or two, or drop off bills in person.

UNIDENTIFIED FEMALE: Rob will never come back. That will never change. So why do I have to keep reapplying?

LANE: Liz McLaughlin was a full-time mother. She now spends ten hours a day tracking charity funds. She thinks donors would not have wanted it that way.

UNIDENTIFIED FEMALE: They gave so much money to help people. And I don't think they intended it to be months and months of applications and a lot of tears and I think really at this point you've got to just divide it up and give it out.

LANE: We went along with Liz on the 25-mile drive to the Family Assistance Center, a trip she's made at least eight times in the past three months. We went inside together. No cameras allowed.

Visiting just two agencies took nearly an hour and a half. Despite the workers' good intentions, the volume of cases led to confusion and misinformation.

MCLAUGHLIN: We have a lot of volunteers. And as things -- a lot of things change almost every day with some of these charities and some of these government groups, it's -- it's really -- it's nearly impossible for anybody to keep track of it.

LANE: So Liz carries all her original documents and she brings a 32-page printout of contacts and notes. Even so, bills she submitted to the Salvation Army in October weren't paid until December. Her car insurance was canceled, the telephone turned off.

Like many agencies, the Salvation Army says it's overwhelmed sending out 500 times as many checks as normal. It has since boosted its staff by 50 percent.

STABILE: The deposit for my daughter's hearing aid that was supposed to be paid by the Salvation Army. I went to the doctor's office the other day and they still had not received it. I would appreciate a call back.

LANE: Rosanna Stabile and hundreds of others have suffered similar problems and worse. The Family Assistance Center lost all of her information in the computer and Edna Ortiz's, too. She's resubmitting all her paperwork but has already missed out on needed assistance. For families, the delays are unimaginably frustrating but there's a greater cost.

ORTIZ: I have not had a chance to mourn my husband yet. I have not had that opportunity to be able to close the door and shut out the world for just a period of time where I can just feel what I need to feel. STABILE: Sometimes I don't have time to think. And sometimes -- sometimes that's good. I don't know what's going to happen six months from now when all this hopefully paperwork gets in order, and maybe everything will come and then maybe then the reality will hit me.

LANE; Today, New York City moved the Family Assistance Center downtown. Families of the victims have said they are grateful that the center still remains open because it allows them to visit many agencies under one roof. But still, some say coming downtown -- especially here, so close to ground zero -- will make a difficult process even more painful.

Hillary Lane for CNN, New York.

(END VIDEO TAPE)

BLITZER: To many of us, it's an equation that seems impossible to solve. Just what is the value of a human life? And is one person's life really worth more than another? Up next, I'll speak to the man who's been asked to find those answers. As the government's so-called special master, Kenneth Feinberg sits right in the middle of the money maze.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Turning now to something that continues to confound us all: how do you put a value on a human life? That is, an economic value? It's been called, quote, "the impossible calculus of loss," and the federal government is right now employing that calculus, trying to determine how much money it should pay out to each of those 3,000 families. Let's call again on Peter Viles of CNN Financial News, live in New York for some more on that -- Peter.

VILES: Well, Wolf, this is an issue that juries in this country in wrongful death lawsuits deal with all the time, but never on this scale. You've got thousands of victims, which means you have thousands of families. You also have at stake literally billions of dollars in federal money.

(BEGIN VIDEO TAPE)

VILES: When the government finally crunched the numbers and made an offer to the families of those murdered on September 11, the offer sounded generous.

FEINBERG: The average award, before collateral offsets, is about a $1.65 million, tax free.

VILES: Millions of Americans heard that, or saw the number in headlines. There's only one problem: the headlines were wrong.

BEVERLY ECKERT, WTC WIDOW: All through the holidays, we kept hearing about how families, the average family, was going to get $1.6 million dollars from the fund, but the public didn't hear about how so many families would get nothing. VILES: The $1.6 million number is the average starting point. The government then deducts life insurance, pensions, 401(k)s, death benefits. Under this formula -- and it's not yet final -- families of dead firemen, because of their pre-existing generous benefits, would receive nothing from the government fund.

ECKERT: This is unfair, it's wrong and it needs to be changed.

VILES: But let's back up for a second.

FEINBERG: One million, six hundred fifty thousand dollars, tax free.

(END VIDEO TAPE)

VILES: Where did the $1.6 million figure come from? Now, this may sound harsh, but Ken Feinberg did something that juries often do in wrongful death cases. He assumed that your life right now is equal to your future earnings, the amount of money you will make before you die.

There are other variables. To prevent huge awards, the government doesn't count income above $240,000 a year. As for pain and suffering, everyone is treated equally: a quarter-million for every death, plus another $50,000 for every dependent.

So under Feinberg's formula, the more you make, and the younger you are, the more the government would pay your family before all those deductions.

Take two fathers of two: a 30-year-old investment banker making $175,000 a year. His family would receive $4.35 million. A 50-year- old janitor making $30,000 a year, less than a sixth of that, $696,000.

Now remember, you still subtract life insurance and pensions from both numbers.

Kristen Breitweiser's husband was young, successful and very well-paid. But he was responsible, too. He had life insurance and a retirement account.

(BEGIN VIDEO TAPE)

KRISTEN BREITWEISER, WTC WIDOW: I have run the numbers and at this point, for me, I'm not going to go into the fund. It -- it doesn't make sense for me to go into the fund, because I will owe the government money.

VILES: Breitweiser feels penalized for her husband's responsibility. She also believes $50,000 doesn't begin to address her daughter's emotional pain and suffering.

BREITWEISER: My two-and-a-half-year-old will spend the rest of her life in history classes, going into food stores, going into Barnes & Noble, flipping through the cable channels, and coming across the exact moment of her father's death.

These children will not only see it once, will not only witness it once, they will witness it over and over and over again, their entire lifetime. And I feel that $50,000 for that, it's unacceptable. It's just wrong.

(END VIDEO TAPE)

VILES: As you can see, a very emotional issue. We should say the victims generally give Ken Feinberg credit for at least listening to their complaints about formula. And he has indicated, Wolf, that he is going to be flexible and perhaps change the formula so that all of these families will at least receive something from the federal government fund. Wolf.

BLITZER: Peter, given the complexities of private charities, the federal government, can the average person do the paperwork, get through this bureaucratic maze, or do they have to go out and hire lawyers and accountants?

VILES: You know, we've followed this for some time. And I would have to say the bad news is, I don't think that would be a wise thing for young widow to do, to try to figure all of this out.

Now, the good news is, is that there is free legal advice available. The American Bar Association, for one, is offering free legal advice to these families as they try to get through this maze.

BLITZER: Peter Viles, thanks for all your excellent reporting. We appreciate it very much.

And joining me now to talk about compensating the victims is Ken Feinberg, the special master or the administrator of the government's fund, signed into law by President Bush shortly after the September 11 attacks. It's meant to provide money to thousands of victims.

Mr. Feinberg, thank you so much for joining us. You've heard the complains about this, how you've come up with this value of a human life. What do you say?

FEINBERG: I agree with Peter. In one sense you can't place a value on human life. What the law does in this country and what this statute does in creating this fund is to attempt to provide some level of compensation to people who need the funds in order to begin -- literally begin -- to recover from the horror of September 11.

The law has done that for a couple of hundred years in this country. The law will continue to do it. But the idea that we could ever place a value on a human life other than in some technical legal sense, I think, is an impossibility.

BLITZER: So by saying you that you're going to weigh how much the potential income of someone could have been as opposed to someone making a lot less, that will play into this figure. Is that fair?

FEINBERG: That -- that is not only fair it's done every day in this country by juries all over the country. And I would say this: when I lay out this scheme that takes into account compensation and future revenue earnings, that, Wolf, is in the statute. The statute passed by Congress created a formula that I must follow.

Now, I have a great deal of discretion in individual cases to vary that formula, but the formula, which takes into account variables such as future earnings, non-economic loss, collateral offsets like insurance, those are variables laid out in the statute passed by Congress.

BLITZER: So when you are responding to woman in there whose husband was a good financial planner, left life insurance, had a good pension, she's going to wind up getting virtually nothing from the federal government.

FEINBERG: Well, from the federal government she may get a vastly reduced amount. I wouldn't say she'll get nothing.

BLITZER: What will she get?

FEINBERG: Well, let's take the non -- the economic and non- economic loss under the program that I'm administering. Let's then deduct specifically her collateral offsets.

Peter refers to pensions. I'm not sure those are collaterally offset. 401(k)s, I'm not sure those are collaterally offset. How much of those pension and 401(k) contributions were made by the individual victim? Those won't be collaterally offset.

I agree that individuals have got to think this through and really do some careful analysis. Come in and talk with me. Let's sit down. Let's see exactly, at the end of the day ,what that computation will demonstrate.

BLITZER: If individuals decide to accept money from you, from the federal government, they can still receive money from these private charities, right?

FEINBERG: That's absolutely true.

BLITZER: No deductions whatsoever?

FEINBERG: No charitable offsets whatsoever. We made that determination early on. Whatever you get from charity is separate, whole and apart from that program.

BLITZER: But they do give up their right to sue.

FEINBERG: That's right. That's the tradeoff in the statute. The statute says you can either go into this program and receive a check within 120 days -- no bureaucratic red tape, no delay, no black hole -- come in. We are obligated within 120 days to cut you the check.

Or if you prefer -- I think an unwise choice, by the way -- you can litigate against the airlines, but under rules and conditions set out in the statute which makes that litigation option very, very unappealing.

BLITZER: But why do some of these people who desperately need funds have to wait 120 days?

FEINBERG: Well, they may not have to wait 120 days. That's a maximum. We have already cut checks for the first dozen people who walked in seeking emergency benefits of $50,000.

We will continue to process the claims as fast as we receive them. We do need some basic information about income stream and revenue in the future years so that we can compute the award. We can do it matter of days assuming we get the information.

BLITZER: And they go through all that -- the paperwork and everything like that. Ellen Goodman, the columnist, writes the other day in the "Washington Post" and other newspapers -- she writes this: "Families of the victims from Oklahoma City, Pan Am 103, even of anthrax, are asking why lives lost in one terror attack are more worthy of a fund than those of another."

FEINBERG: I can't make that distinction. Don't ask me that. Congress, when it passed that law, made it very clear that it would treat victims of September 11 differently from Oklahoma City, the African embassy bombings, anthrax et cetera. If people ask me can I make that distinction, my answer is I can't. But I'm not asked to. Under the statute, only September 11 is covered by the law of land.

BLITZER: So that's outside of your realm of...

FEINBERG: That's outside the realm. There is nothing I can do about it.

BLITZER: Another columnist writing in the "Los Angeles Times" writes this. "In the name of sympathy and fellowship, tax-paying families across the country are creating a new class of millionaires. Our collective national grief is many-fold larger than the sum of its tragic parts."

FEINBERG: Well, that's the other side of it, you see. That's the taxpayer side questioning whether or not this precedent is a good idea. My answer is to both sides of that argument.

What we are trying to do is make sure that the family survivors are -- are compensated to the extent -- either through life insurance, their own pension, their own private sources of income -- or through this program. To make sure one way or another that they are provided for.

BLITZER: OK. We only have a few seconds left. But God forbid if you had a loved one who died on September 11, what would you be doing right now? What advice would you give yourself?

FEINBERG: I can't begin to respond to how I would be able to act if something horrible like that happened to me. I try and put myself in the shoes of these family members. It's impossible. It is simply impossible. There is no argument they make to me that I don't find appealing, compassionate, with great feeling. All I can do, is try in a small way, and compensate these people.

If I was in their shoes I guess -- I guess -- I would be eager to participate in this program, but I don't begin to speak for them. They have needs and concerns and biases that I can't begin to appreciate.

BLITZER: Ken Feinberg, you've got a tough job. Good luck.

FEINBERG: Thank you very much.

BLITZER: Thank you very much.

And coming up, we'll shift gears. Some powerful players converge on Afghanistan. Find out who and what their agenda entails when we come back.

(COMMERCIAL BREAK)

BLITZER: Welcome back. Here's a quick look at the latest developments.

Nine United States senators are seeing war-ravaged Afghanistan for themselves. On the latest stop of an Asian tour, the delegation arrived at the Bagram Air Base and met with the Afghan leader, Hamid Karzai. Just hours later, the British prime minister, Tony Blair, arrived for talks with Mr. Karzai and a meeting with U.S. and British troops.

And jury selection began today in the capital murder trial of a Texas mother, charged with killing three of her five children. All five of Andrea Yates' children were drowned in the family bathtub six months ago. Yates has pleaded not guilty by reason of insanity.

That's all the time we have tonight. Please join me again tomorrow twice, at both 5:00 and 7:00 Eastern. Until then, thanks very much for watching. I'm Wolf Blitzer in Washington. "CROSSFIRE" begins right now.

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