- The Washington Times - Friday, September 16, 2005

In his nationally televised speech Thursday night, President Bush took an important step in the right direction, offering an ambitious agenda for rebuilding the places in Louisiana, Mississippi and Alabama that were devastated by Hurricane Katrina. Speaking in the middle of New Orleans’ French Quarter, Mr. Bush vowed to rebuild that city and go forward with “one of the largest reconstruction projects the world has ever seen.” He offered proposals which included tax breaks for businesses that invest in rebuilding the region and stipends to evacuees for education, health care and job training.

The president’s speech was a step in the right direction. Perhaps the most important thing is what Mr. Bush did not talk about. The president did not delegate authority to an appointed “czar” to manage the recovery effort, signalling that he intends to remain actively engaged — appropriately so — in overseeing the rebuilding of the Gulf Coast.

Right now, the only thing that appears certain is that the recovery effort will be expensive. White House officials say that the $51.8 billion approved last week for Katrina will only fund the relief effort through the first week of October. The next bill is expected to cost more than $50 billion, and the total price tag for post-Katrina relief and recovery efforts is expected to reach $200 billion — surely a conservative estimate. Mr. Bush has said that federal funds “will cover the great majority of the costs” of repairing public infrastructure in the disaster zone. By way of comparison, the Marshall Plan for the recovery of Europe following World War II would cost about $100 billion in today’s dollars.

It is hardly surprising, then, that the political left and political right are daunted by dollar signs when it comes to rebuilding after Katrina. But there can be little doubt that the area must be rebuilt, and that the region damaged by the hurricane is one of the poorest in the country and could not possibly pay rebuilding costs on its own. Hence the need for a leading federal role in paying for the recovery. There are three ways to finance this initiative —through raising taxes, cutting other federal spending or taking on more debt.

Looking for wasteful pork-barrel spending to cut from other areas of the budget, as suggested by Sen. Tom Coburn, is an excellent idea, and one we support. But it remains to be seen whether the savings from such an effort would be enough to pay for the recovery. So the question becomes whether it makes more sense to finance the rest through tax increases or taking on new debt. Tax increases are invariably bad public policy; they would probably destroy working-class jobs and jeopardize the recovery. The least bad course of action would be to use deficit spending to pay for whatever cannot be financed through spending cuts elsewhere in the federal budget.

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