Saturday, September 17, 2005

Paying for Katrina

As reported widely, President Bush plans to spend $200 billion on the federal effort to recover from Katrina. However, he plans to do that not by increasing taxes but by spending less on other things. I wonder exactly how he plans to do it?

I don't want to see taxes increased. We're already seeing the economic improvement and increase in government revenue that follow tax cuts, and increasing taxes now would be harmful. But considering that $200 billion is about 10 percent of annual government income, there are going to have to be serious spending cuts to come up with the money.

Thoughtful people have pointed out that Congress is certainly among the institutions that share blame for the slow response to the Katrina disaster. It will be interesting now to see if they can behave like adults in helping to find money to pay for it. How about, for example, the huge amount of pork now greasing the transportation bill? Will the corpulent worthies on Capitol Hill be willing to give up some of their pet projects? Or will they insist on keeping them, given that this is their principal way of buying votes?

And one more thing. Anyone who understands American politics knows that Louisiana in general and New Orleans in particular are famous for more than charm, Spanish moss, and jazz. It's one of the most corrupt political environments in the U.S. Who's going to be watching the money?


Anonymous B said...

Hi Tom,

Thank you for mentioning the money situation. That's been talked about very little in all of this. I am appalled at how weakly every level of government responded and am tired of the incessant finger-pointing. Here's a tip guys: you ALL screwed up. And I want an accounting of where my money's going before I pony up any more. Stopped by to say my blog has moved (the old one is likely gone the way of the wind).

11:35 AM, September 17, 2005  
Blogger Amal said...

Tom, mentioning adults and congress in one sentence is an oxymoron. The two are exclusive of each other or so it seems. They are so busy being partisan and scoring points off of each other, it is a wonder they get anything done.

9:34 PM, September 17, 2005  
Blogger Esther said...

Your last sentence echoes my own thoughts. Who is keeping track of this money and making sure it gets to the people? Especially considering the corruption that was already rampant in NO. Great post!

12:12 AM, September 18, 2005  
Blogger MaxedOutMama said...

Unless they do this by establishing an independent commission that is heavily and continuously audited by the GAO, this is going to become a huge boondoggle.

Yesterday Mayor Nagin was already campaigning on the platform that NO should get the lion's share of the money coming to LA.

7:54 AM, September 18, 2005  
Blogger profmarcus said...

Fareed Zakaria in Newsweek takes an interesting view...

"Whatever his other accomplishments, Bush will go down in history as the most fiscally irresponsible chief executive in American history. Since 2001, government spending has gone up from $1.86 trillion to $2.48 trillion, a 33 percent rise in four years! Defense and Homeland Security are not the only culprits. Domestic spending is actually up 36 percent in the same period. These figures come from the libertarian Cato Institute's excellent report "The Grand Old Spending Party," which explains that "throughout the past 40 years, most presidents have cut or restrained lower-priority spending to make room for higher-priority spending. What is driving George W. Bush's budget bloat is a reversal of that trend." To govern is to choose. And Bush has decided not to choose. He wants guns and butter and tax cuts."

12:27 PM, September 18, 2005  
Anonymous Anonymous said...

I was wondering the same things Tom. How are we going to pay for this? Are we sure we want to?

4:10 PM, September 18, 2005  
Blogger Tom Carter said...

ProfMarcus, I agree with Fareed Zakaria, as I often do. The only thing worse than the tax-and-spend approach to government favored by some Democrats is Bush's cut-taxes-and-spend approach. I agree with tax cuts in general (without getting into specifics like the inheritance tax) because it seems pretty clear that they generate more federal tax income and help improve the economy. It looks like Bush has been trying to please conservatives by cutting taxes and please liberals by funding every program in sight. Seems pretty stupid to me.

We don't really know how much federal tax money is going to be required--$200 billion is a very vague guess. And no doubt it will generate some economic growth and some tax revenue. But there's still going to be a huge shortfall, it would seem.

Anonymous, I understand your question. I don't know the answer. It would seem to me, though, that if federal taxpayers are going to bear the brunt of the cost, then all of us (meaning the federal government) ought to have a very big voice in how New Orleans is re-built--and maybe where.

1:55 AM, September 19, 2005  
Anonymous The Bastard said...

He can start cutting the $161,000 he currently pays his top assistants.

2:04 AM, September 20, 2005  
Blogger Bruce -- Harper Blue said...

While I don't agree with you about the original tax cuts, I think otherwise we chime off each other. Louisiana politics did not occur to me.

I've linked the original post into my own entry at Harper's Mews, as a Supplemental.

Peace be to you.

8:27 AM, September 21, 2005  

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