Storm Exposed Disarray at the Top

"We definitely did worry about it," recalled Richard A. Falkenrath, who served as a White House homeland security adviser at the time DHS was being formed. "We knew we should do no harm to the disaster management side. The leadership of the White House knows the political significance of disasters."

From the day it came into existence on March 1, 2003, the department of 180,000 employees and a nearly $40 billion annual budget was tasked by a presidential directive with developing a comprehensive new plan for disasters. The National Response Plan was supposed to supersede the confusing overlay of federal, state and local disaster plans, and to designate a "principal officer in the event of an incident of national significance." An accompanying new National Incident Management System would integrate all the cascades of information.

"The problem was, who was in charge on 9/11? Who the hell knew? They kept asking and asking. You needed some clarity," Falkenrath recalled. "It was supposed to pull it all together. . . . But FEMA was grousing about that; they thought it was taking things away from them."

Focus on Terrorism

In creating the department, President Bush made one of its central missions "all-hazards preparedness," operating on the philosophy -- as the government has for at least the past two decades -- that most disaster preparation is the same, whether the crisis is natural or manmade.

Yet DHS in reality emphasized terrorism at the expense of other threats, said several current and former senior department officials and experts who have closely monitored its creation, cutting funding for natural disaster programs and downgrading the responsibilities and capabilities of the previously well-regarded FEMA. In theory, spending resources on response to terrorism should result in improved response to any disaster, but FEMA's supporters argue that the money was being spent outside the framework of the agency actually equipped to respond.

"The federal system that was perfected in the '90s has been deconstructed," said Bullock. Citing a study that found that the United States now spends $180 million a year to fend off natural hazards vs. $20 billion annually against terrorism, Bullock said, "FEMA has been marginalized. . . . There is one focus and the focus is on terrorism."

The White House's Homeland Security Council developed 15 scenarios for the department to concern itself about -- everything from a terrorist dirty-bomb attack to a Baghdad-style improvised explosive device. Only three were not terrorism scenarios: a pandemic flu, a major earthquake and a major hurricane.

By this year, almost three of every four grant dollars appropriated to DHS for first responders went to programs explicitly focused on terrorism, the Government Accountability Office noted in a July report. Out of $3.4 billion in proposed spending for homeland security preparedness grants in the upcoming fiscal year, GAO found, $2.6 billion would be on terrorism-focused programs. At the same time, the budget for much of what remained of FEMA has been cut every year; for the current fiscal year, funding for the core FEMA functions went down to $444 million from $664 million.

New leaders such as Allbaugh were critical of FEMA's natural disaster focus and lectured senior managers about the need to adjust to the post-9/11 fear of terrorism. So did his friend Michael D. Brown, a lawyer with no previous disaster management experience whom Allbaugh brought in as his deputy and who now has the top FEMA post. "Allbaugh's quote was 'You don't get it,' " recalled the senior FEMA official, who spoke on the condition of anonymity. "If you brought up natural disasters, you were accused of being a pre-9/11 thinker." The result, the official said, was that "FEMA was being taxed by the department, having money and slots taken. Because we didn't conform with the mission of the agency."

"I'm guilty of saying, 'you don't get it,' " Allbaugh said. "Absolutely." The former FEMA chief said he had encountered bureaucratic resistance to thinking about a "monumental" disaster, such as Katrina or 9/11, rather than the more standard diet of "tornadoes and rising waters."

But experts in emergency response inside and outside the government sounded warnings about the changes at FEMA. Peacock said FEMA's traditional emphasis on emergency response "all went up in smoke" after 9/11, creating a "blind spot" as a result of a "police-action, militaristic view" of homeland security. When it came to natural disasters, "It was not only forgetting about it, it was not funding it."

Jack Harrald, director of the Institute for Crisis, Disaster, and Risk Management at George Washington University, said FEMA's natural disaster focus was nearly liquidated. "We ended up spending a lot of money on infrastructure protection and not the resiliency of the actual infrastructure," Harrald said. "The people who came in from the military and terrorist world thought we had the natural disaster thing fixed."