The memo from Kash to Congress had five options for paying for President Bush’s proposed Katrina relief. Serious conservatives such as Bill Polley have a sixth as in his “What are our Fiscal Limits”. For example, Bill notes that the Federal government should avoid Bush’s tendency to reward his cronies with taxpayer funds.
Even as the Administration wants to use Katrina as another excuse to reward his cronies with taxpayer funds, it appears that the plan to save costs by setting up trailer park housing for the displaced victims. Even Newt Gingrich is unhappy:
Even many Republicans wonder why the government would want to build trailer parks when many evacuees are now living in communities with plenty of vacant, privately owned apartments. “The idea that – in a community where we could place people in the private housing market to reintegrate them into society – we would put them in [trailer] ghettos with no jobs, no community, no future, strikes me as extraordinarily bad public policy, and violates every conservative principle that I’m aware of,” said former House Speaker Newt Gingrich, a Republican. “If they do it,” Gingrich said of administration officials, “they will look back on it six months from now as the greatest disaster of this administration.” Defenders of the president’s approach say it will help Katrina’s victims without sticking taxpayers indefinitely with higher costs for social programs. “Once you begin to expand any entitlement, it’s very hard to pull back,” said Grace-Marie Turner, a health policy analyst and president of the conservative Galen Institute.
An extreme version of Option Six would be to have no Federal assistance for the area struck by Katrina. While Brad DeLong has promoted Rich Lowry to the Stupidest Man Alive, Donald Luskin is making a comeback as wants us to cheer up as the Katrina disaster was not as bad as the 1906 earthquake in San Francisco:
The official death-toll in San Francisco in 1906 was 478. But a century of research puts the number far higher. Gladys Hansen, retired chief archivist of the City of San Francisco, who has spent a long lifetime studying the quake, puts the verifiable death-toll above 3,000. Despite early fears that the New Orleans death-toll could reach 10,000, it now appears, thankfully, that the actual count will be only a fraction of San Francisco’s.
So, let me get this straight. The actual death toll during the San Francisco earthquake was supposedly six times the official death toll, but Luskin knows for a fact that the number who will have died as a result of Katrina must be far less than what has already been reported here. His clairvoyance continues:
Damage from the San Francisco quake and fire is estimated at $400 million, not adjusting for inflation. That represented 1.4 percent of America’s gross domestic product at the time. To exceed that fraction of present-day GDP, damage from Katrina would have to reach $170 billion. Given the current frenzy in Washington, that much money may end up getting thrown at New Orleans over the coming years. But it well exceeds even the wildest estimates of actual damages.
I wonder if Mr. Luskin realizes that real GDP is substantially higher now than it was in 1906 so 1.4% of GDP today is much higher than 1.4% of GDP in 1906 – even inflation adjusted. A reasonable assumption is that real GDP today is 25 times what it was a century ago so by Mr. Luskin’s own estimates, inflation-adjusted damages from the 1906 earthquake would be $7 billion. Even the most optimistic (that is, lowest) estimate of actual damages would put the figure much higher than $7 billion. But even taking his relative perspective into account, how can he be so sure that “damages” will be less than $170 billion – even if he means only the damage to physical property. Lost wages from the displacement of the citizens of New Orleans and general human suffering do not seem to be factored into these figures.
The reference to the 1906 earthquake that hit San Francisco must have motivated this from Stephen Moore:
We all want to see New Orleans rebuilt, but it does not follow that this requires more than $100 billion in federal aid. Chicago was burned to the ground in 1871; San Francisco was leveled by an earthquake in 1906; and in 1900 Galveston, Texas, was razed by a hurricane even more ferocious than Katrina. In each instance, these proud cities were rebuilt rapidly and to even greater glory – with hardly any federal money.
Of course, Mr. Moore should admit that Galveston never returned to its former glory as Houston displaced it as the center of commerce in east Texas. Moore also seems to think like Luskin that only property was damaged:
When President Bush announced last Thursday that the feds would take a lead role in the reconstruction of New Orleans, he in effect established a new $200 billion federal line of credit. To put that $200 billion in perspective, we could give every one of the 500,000 families displaced by Katrina a check for $400,000, and they could each build a beach front home virtually anywhere in America
How much will it take to fund to house and feed the displaced and to clean-up the environmental damage is something Mr. Moore does not address. Also see this comment from Max Sawicky.
Moore also seems to think cutting Federal spending across the board is costless:
Congressman Todd Aiken of Missouri complains that Congress was forced to vote on the $62 billion first installment of funds “even though we knew a lot of the money may go to waste.” Mr. Aiken and several dozen other House conservatives proposed an amendment to the $62 billion hurricane relief bill that would offset at least some of the emergency spending by cutting other government programs a meager 2.5 cents out of every dollar that federal agencies spend. Was the amendment defeated? No. The Republican leadership would not even allow it to come to a vote, on the grounds that there was no waste which could be easily identified and cut. Dozens of other reasonable proposals to offset Katrina’s tidal wave of deficit spending have been similarly repelled. Mike Pence of Indiana suggested a one-year delay on the multitrillion dollar new prescription drug benefit for senior citizens. For 220 years, seniors have managed without this give-away; one more year of waiting would hardly be an act of cruelty.
And I’m rather shocked that a libertarian is complaining about how people spend their funds – assuming the following is even true:
It’s only been 10 days since reconstruction funds were voted out of Congress, but there are already stories of misspending. For example, the Louis Vuitton store reported selling two monographed luxury handbags for $800 each, both paid for by women with FEMA’s $2,000 emergency disaster relief debit cards.
But Mr. Moore may be correct that this White House is squandering taxpayer funds to give profits to its favorite companies in no-bid contracts that couple with the “Gulf Coast Wage Cut” (hat tip to Joshua Marshall. But I thought this version of “trickle-down economics” was championed by the op-ed pages of the Wall Street Journal.
Mr. Moore is also correct about the devastation caused by the Galveston Hurricane of 1900 as Mark Thoma notes. Let’s hope Rita is not so cruel. Our prayers are with the residents of the Gulf.