This is a partial transcript from "Hannity & Colmes," April 11, 2006, that has been edited for clarity.

SEAN HANNITY, CO-HOST: We continue our special series that we call "Follow the Money." It’s a special as we head to tax day, April 15. It’s just four days away. And before you send the U.S. government your hard-earned money, well, we want to show you just how that money is being spent, or in this case misspent.

Tonight we take on the response to Hurricane Katrina. A massive disaster, it sparked an unprecedented outpouring of support, but too many government funds and charitable dollars are not getting the people who need it the most.

Now, some of the waste comes from mismanagement. For example, the federal government spent $3 million of your dollars on 4,000 beds that were never used.

And then there’s corruption. The debit cards handed out by FEMA, well, they did not go to all of the people who needed them. At least one was used to purchase — get this — a $1,100 diamond engagement ring.

Now pay attention to the bottom of your screen during this segment, because we’re going to show you other outrageous ways in which your money and money that was intended to help the victims of Katrina actually went down the drain.

Joining us now, the president of the National Taxpayers Union. John Berthoud is with us.

John, we have some of it being spent at strip clubs. We have engagement rings.

JOHN BERTHOUD, PRESIDENT, NATIONAL TAXPAYERS UNION: Strip clubs, engagement rings, tattoos. It was really the second disaster when you look at how money was really horribly mismanaged in this — in this time of great need for the people of Louisiana.

HANNITY: Let’s talk about the most outrageous examples that you found.

BERTHOUD: Well, I mean, you’ve got the federal prosecutors have indicted over 200 people for fraud. This is using — the debit cards are the big story, where these 2,000 debit cards were just handed out willy-nilly apparently. In some cases, people gave phony Social Security numbers, got these debit cards. And have you’ve cited some of the examples of what they ended up spending them on.

I think another larger example would be the $236 million deal with Carnival Cruise Lines, where for, at a going rate of more than a Caribbean cruise, FEMA used these cruise lines to house people that needed housing. It was an outrageous deal. A lot of people in Washington were very upset. The Greeks offered free ships, and FEMA didn’t take them up on the offer. Instead, we paid $236 million to Carnival, and the ship sat half empty.

ALAN COLMES, CO-HOST: John, it’s Alan in Los Angeles. Where does the buck stop here?

BERTHOUD: I think the buck stops at — you know, one of the things, how do we do better is with personnel. I mean, one, I think at top management, we’ve all got to do. Whistleblower groups, taxpayer groups have to do a better job.

COLMES: Where does the ultimate responsibility lie? Who’s the one that who says this is wrong, this is wrong, this is wrong? Who signs off on this? And where should the accountability be?

BERTHOUD: Well, I think the accountability is with the people — the federal government and the people at the top, you know, the political hacks. We’ve got to do a better job kicking them out and getting merit appointment.

COLMES: Who at the top? Chertoff, Brown, who’s already gone?

BERTHOUD: Absolutely. Absolutely. But you can’t also ignore the bureaucracy. And I think, you know, the administration, for as much fault as they deserve, for God’s sake, Michael Brown, they deserve a lot of credit. Because they’re trying to get merit pay so you can get the managers and the employees who are doing a better job, give them incentives so they stick around and you can get the employees who aren’t doing such a good job, they’re not going to get their raises. I think that’s — that’s...

COLMES: How do you have a situation where $20,000 goes to a trucker to deliver ice? The ice never gets there. You have thousands and thousands of pounds of ice ending up in Maine as a result of...

BERTHOUD: I think, you know, in Washington, ever since 9/11, we spent a lot of time and effort reorganizing. You know, we created the Department of Homeland Security. I think we’ve got to go much more at a much lower level, think about individuals, think about, as you say, the Michael Browns of the world. And we’ve also got to think about individuals in the bureaucracy.

If we focus on getting good people into these organizations, you’re going to get dollars spent in a much more efficacious way.

COLMES: And this has happened for years, back to Hurricane Francis, where they gave all kinds of money out without doing any due diligence, right?

BERTHOUD: Absolutely. Absolutely. Millions of dollars were wasted. Washington went into this big uproar: we’ve got to do better. There were lots of admonitions. And Katrina came along, and the same mistakes were made, you know, that we did in Francis.

HANNITY: All right. John, thanks so much for being with it. We really appreciate your time.

BERTHOUD: Thank you.

HANNITY: It’s amazing as we head into tax day that this money has been mismanaged this away.

All right.

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