Outside the Beltway

The Hurricane Katrina Goldmine

Steve Verdon · Thursday, August 24, 2006 · 10 comments

This article from the Cato Institute paints a very depressing image of President Bush’s bail out for New Orleans and the areas affected by hurricane Katrina. Calling President Bush, Franklin Delano Bush, based on this seems inaccurate in timing only given that President Bush has expanded spending at a rate that would have left Republicans sputtering in rage if President Clinton had tried it.

Franklin Delano Bush promised a gigantic federal relief effort–one that would go far beyond the traditional idea of disaster relief. He didn’t just promise to clean up debris, or provide temporary housing, or even rebuild New Orleans and coastal Mississippi. He promised that federal taxpayers would pay for the education of displaced children in both public and private schools. And that Medicaid would pay for health care for evacuees. And that taxpayers would give displaced workers cash grants of $5,000 each.

Sweeping streets of debris is one thing. Sweeping promises are another. Bush promised that rebuilt communities “must be even better and stronger than before the storm.” Oh, and he promised to cure poverty, inequality, and racism along the Gulf Coast.

The president didn’t tell us what all this would cost, but experts have been suggesting a figure of $200 billion. That would be about twice what American taxpayers spent (adjusted for inflation) on the Marshall Plan to rebuild all of Western Europe after the devastation of World War II. As Stephen Moore wrote in the Wall Street Journal, with $200 billion you could give each of the 500,000 evacuated families $400,000. That would surely be the largest cash transfer program in history. And it raises the question: What’s the federal government going to do that costs $400,000 per family?

$400,000 per family!?!?! Damn I want a Hurricane to destroy my house and neighborhood too. Where do I sign up for a disaster of similar magnitude? Let me see, I could be completely debt free and with a significant chunk of change left over with which to either buy a new house or invest and wait for housing prices to come back down. Or simply rebuild my current house, after all, I’d still own the land and that is the bulk of a house’s price.

Bush’s speech came just two weeks after Hurricane Katrina swept through Louisiana and Mississippi, revealing the incompetence of federal, state, and local governments. Clearly no serious thought has been given to what ought to be done for the future.

Yeah, and by promising such a huge bailout for this incompetence at all levels of government it has the consequence of ensuring that we will still have incomptent federal, state and local governments. Brilliant.

Just another example of how the Republican party has become the second party in favor of big government. What is the difference between Republicans like President Bush and Democrats? Besides gay marriage, stem cells, abortion, and the war in Iraq I can’t see much difference anymore.

Update: In comments Anderson felt that my sarcastic comment about the $400,000/person transfer was too callous. The wording was deliberate. I wrote it that way to point out the problem with these kinds of bailouts. They encourage precisely the kind of behavior we don’t want to encourage such as builiding your house behind a levy below sea level. Not only is this risky in that you can lose your house and even your life, afterwards the rest of us are stuck bailing you out financially. Granted people are not going to get a check for $400,000. However, there is the $5,000 grants to displaced workers. On top of that houses will be rebuilt, schools will be paid for (both public and private) and all of this will be done with my money, my neighbors money, and so forth.

Anderson also points out the misery that Katrina has caused. Fine, but doesn’t the government bear some of the responsibility for this? After all, it was the government, at all levels, that failed in providing relief before, during, and after the hurricane. And if a large part of the relief money is going to be squandered away, again, isn’t that again the responsibility of the government? After all, it is the government spending the money.

And all that squandered money also hurts the rest of us. That money and the resources it could purchase are no longer available for legitimate government tasks such as making sure terrorists don’t execute another attack on this country. Or maybe revamping our immigration and border control situation/apparatus. This idea is captured in Chris Edwards’ comments,

Government failures before and after both Katrina and 9/11 illustrate a fundamental problem with the federal government: It runs such a vast empire that policymakers spend little time making sure that basic government functions work. With regard to New Orleans, experts knew that the levees in the city operated by the Army Corps of Engineers were inadequate, but the problem was not addressed. Louisiana was no doubt complacent because it assumed that the levees were Washington’s responsibility.

As the federal government has expanded into state, local, and private activities, members of Congress are overwhelmed with minutiae on schools, roads, housing, and hundreds of other nonfederal issues. There is almost no time left for members to focus on more critical issues such as national security and disaster planning.

Was the comment callous? Sure, but so was the way in which President Bush handled the issue relief and relief spending. Was there any regard given to future disasters like a hurricane that is a catagory 4 or 5 that actually makes landfall squarely on top of New Orleans? No, probably not. Was there any concern to the impact on the deficit, interest rates and future taxes? No, probably not. Was there any concern given to how else that money could have been used, or at least a part of it? No, probably not. Does anybody in the Bush Administration still care about improving disaster responsiveness amongst local, state and federal agencies? No, probably not.