Thursday, Apr 19, 2018
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Bush insists tax increase not planned; spending cuts expected to pay for reconstruction

WASHINGTON In a nod to conservatives raising concerns about how to pay for the enormous costs of rebuilding the hurricane-ravaged Gulf Coast, President Bush insisted yesterday he would not raise taxes to pay for reconstruction but would look instead at cutting unnecessary spending.

At a news conference with Russian President Vladimir Putin, Mr. Bush refused to put a price tag on the reconstruction, which some experts have estimated at $200 billion or more a figure the White House neither disputes nor confirms.

It s going to cost whatever it costs, Mr. Bush said. We re going to be wise about the money we spend. It means we re going to have to make sure we cut unnecessary spending. It s going to mean that we maintain economic growth, and we should not raise taxes. He made his comments on a day when his reconstruction plan, outlined in a nationally televised speech Thursday night, met with a storm of questions and confusion over its cost and organization.

In Congress, some Republicans expressed worry about the cost of Hurricane Katrina relief efforts. Sen. Tom Coburn (R., Okla.) contended it is inexcusable to pour money into the reconstruction effort without reining in federal spending.

Democratic lawmakers criticized the administration for using the reconstruction effort as a laboratory for ideological experimentation by including school vouchers and other politically charged proposals.

We are concerned by Bush Administration initiatives thisweek waiving wage protections, environmental safeguards, and protections for veterans, minorities, women, and the disabled, Senate Minority Leader Harry Reid (D., Nev.) and House Democratic leader Nancy Pelosi (D., Calif.), said in a joint statement.

Mich. Rep. John Dingell (D., Dearborn.), whose district includes Monroe County, said the speech was an important first step to tell Gulf Coast communities we stand together as Americans. But he said Mr. Bush in the wake of Katrina has cut wages of workers who will rebuild New Orleans and other hurricane-ravaged areas of the Gulf Coast and given large contractors big, no-bid contracts and grandiose credit-card limits to be paid for by the taxpayers.

We know these contractors well. We ve become familiar with them because of their long-standing relations with the Bush-Cheney team.

Democrats continued to push for an independent probe of the slow federal response to Katrina, saying a panel created by House Republican leaders would be a sham.

Lawmakers of both parties are concerned about possible waste, fraud, and abuse in the rush to send federal relief dollars to the Gulf Coast region. A number of lawmakers are urging Mr. Bush to appoint a federal coordinator to oversee the reconstruction. Mr. Bush vowed Thursday night auditors will make certain taxpayer money is not wasted. But a number of lawmakers noted they are not even certain some of the $62 billion authorized so far won t end up being wasted.

It simply makes sense to have a single individual accountable to the President, Congress, and the public for the cleanup, reconstruction, and appropriate use of taxpayer funds, Sen. Pete Domenici (R., N.M.) said.

Sen. George Voinovich (R., Ohio) said: What we do now may very well set a precedent for future natural disasters.

Mr. Bush was asked about whether Congress should change the law forbidding U.S. soldiers not attached to the National Guard to patrol U.S. streets during a natural disaster. He said he did not want to prejudge the bipartisan committee that Republicans want to set up in Congress to investigate how Katrina was handled. But, he said, he wants Congress to seriously consider that sometimes a storm or pandemic is so overwhelming that only the U.S. military is equipped to act.

He said he needs to know if, for example, avian flu hit this country, Do we have the proper response mechanism? Does the federal government have the [authority] necessary to make certain decisions? And this storm will give us an opportunity to review all different circumstances to make sure that, you know, the President has the capacity to react.

Sen. Mike DeWine (R, Ohio) agreed, saying, This problem has got to get fixed.

The main questions, however, revolved around the cost of the cleanup and rebuilding effort. At a White House briefing yesterday, no official including spokesman Scott McClellan, Al Hubbard, director of the National Economic Council, or Claude Allen, the President s domestic policy adviser was able to give even a ballpark estimate of what the rebuilding effort might cost.

Asked who will pay for the cost, Mr. Hubbard said taxpayers will. He added that the cost will swell the national budget deficit, which the White House projected at $333 billion for this fiscal year before the hurricane. The war in Iraq, which has cost about $200 billion so far, also is not part of the President s budget this year. Mr. Hubbard sidestepped the issue of whether the President would continue to push for his plan to make his 2002 tax cuts permanent, but Republicans already have sidelined the plan waiting to see how the economic picture develops.

So far, the only details the White House has spelled out involve three major initiatives: a Gulf Opportunity Zone, which is to include tax incentives and loans for businesses; worker recovery accounts to give evacuees up to $5,000 for six months for expenses like job training and child care, and an urban homesteading act to rehabilitate and provide federally owned property in stricken areas to people with no homes or apartments.

The White House released a sparse list of the cost of these proposals, with $2 billion to rehabilitate about 1,000 houses in foreclosure to the U.S. Department of Housing and Urban Development and provide trailers. The list earmarks $2 billion for giving evacuees with no other means the $5,000, and $2 billion for small-business education loans, up from a ceiling of $1.5 million per loan to $10 million. An unspecified amount for the Department of Education would pay schools that took in evacuated children up to $7,500 per student. Congress has appropriated $62 billion for immediate disaster relief. White House budget director Josh Bolten said FEMA has been spending about $2 billion a day but says that figure should begin to decline.

Contact Ann McFeatters or 202-662-7071.

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