Center for American Progress

Progressive Vision for Reconstruction of the Gulf Coast

To: Interested Parties

From: Robert Gordon, Jennifer Palmieri, Bracken Hendricks, Ana Unruh Cohen & Karen Davenport

President Bush was right to accept full responsibility for the federal government’s failure to respond adequately to Hurricane Katrina. In the aftermath of the storm, Americans were overwhelmed by the sense that there was no leadership, no accountability, and no safety net for the hurricane’s victims. The federal response set a new low for bureaucratic incompetence.

President Bush’s responsibility lies not only in the administration’s response to Katrina, but in pursuing a political, ideological agenda that has dramatically widened the divisions between the “haves” and the “have nots” and made it harder for the Americans living paycheck to paycheck to stay afloat, let alone get ahead.

Today, we are seeing in stark terms the impact of a governing philosophy that has used the people of our country as “human subjects” in a massive experimental rollback of a century of progress. The administration’s ideological blinders prevented them from making good choices for the American people; they have failed to meet either our critical long-term or short-term needs. The history of this administration has been to dismantle the institutions that protect our citizens, privatize essential budget services, cut budgets when resources were desperately needed, roll back protections of every sort, and cut accountability for public outcomes.

Conservative ideologues view government as the enemy. Progressives believe government has a responsibility to respond to the real pressures and real concerns that everyday Americans face each day. We believe in a government that is responsive in times of distress, a government that is efficient and effective at meeting critical needs, a government that gives people the tools they need to get ahead and succeed, a government that makes all of America stronger and better off.

In the days and weeks to come, we must rebuild the Gulf Coast in a manner that will not repeat the man-made crisis that followed this tragic act of God. But we must also put in place real protections for working Americans. We need immediate protections to provide decent housing, and long-term protections to expand the availability of affordable housing. We need immediate protections such as measures to ensure oil companies aren’t gouging consumers in the wake of catastrophe, and long-term protections that will reduce our dependence on oil. We need immediate protections such as extending Medicaid relief to displaced flood victims, and long-term protections to restore our safety net by offering a reliable program of health insurance that will ensure people always get the coverage they need. We need to put in place real protections against predatory lending, abusive bankruptcy reform that hurts citizens in times of disaster, and safeguards against abusive contractors who take advantage of the public payroll.

To address rising gas prices, the Center for American Progress has proposed a bold, balanced, and far reaching strategy – not just to ramp up domestic oil supplies as industry demands, but to help consumers and reduce demand. The initiative will provide lower income Americans with immediate relief from rising gas prices, while helping to reduce our dependence on oil by helping American automakers design new line of hybrid vehicles among other things.

In an administration that has used accountability as a ruse for rolling back investment in critical services and agencies vital to our national security, it is time to look at what accountability really means—leadership that does the right thing, and truly faces the American people when its vision and execution have failed. We have not yet seen accountability of this sort

The Bush Approach to Gulf Reconstruction: A Conservative’s Ideological Playground

The Bush administration’s plan to rebuild the Gulf unfortunately resembles its plan to rebuild Iraq: inflexible ideological commitments block commonsense steps, the winners are the contractors, and the losers are the ordinary people we are supposed to be helping.

Ideology Instead of Progress. For example, displaced and poor Katrina victims could obtain housing—sometimes in middle-income neighborhoods near jobs—through the use of existing Section 8 Housing Choice Vouchers. This was the approach the Clinton administration used to help house the displaced victims of the 1994 Northridge earthquake in California. The Bush administration has worked to cut funding for Section 8 for years. Already there is a shortfall of 100,000 vouchers in the Section 8 program because of the funding shortfalls caused by the Bush cuts.

The administration’s primary housing initiative for the Gulf is to create massive new mobile home and trailer parks that may, in the long run, reproduce the concentrated poverty evident in New Orleans. Victims could immediately obtain health care through Disaster Relief Medicaid, the approach successfully taken after September 11. But because the administration is campaigning against Medicaid—and has delayed, but not dropped, the demand for $10 billion in cuts—it has yet to agree to provide this aid. Instead, it has pursued approaches, like state-waivers or individual tax credits, that suit conservative ideology but will be far slower, far more complicated, and far less fair to victims. Tonight, we can expect to hear more off-the-shelf, conservative approaches that could not pass Congress absent a disaster and that have not worked in the past.

Contractors Win. Meanwhile, the contracting rules for Katrina represent the same toxic stew that led to abuses in Iraq, where billions of dollars of money for reconstruction were misspent. First, there will be massive no-bid contracts, many totaling in the tens of millions of dollars or more. Second, concern about abuse and lack of oversight is so great that even congressional Republicans have expressed concern about how the spending will be monitored. The administration’s current plan is for the inspector general of the Department of Homeland Security (DHS) to oversee the contracts. Political operatives forced out DHS’s prior inspector general and it is uncertain whether political pressure will not be brought to bear on this IG as well. Finally, friends of the president and former top officials like Joe Allbaugh continue to advise contractors. It is a prescription for ongoing abuse.

People Lose. While the post-Katrina Gulf represents a paradise for contractors, it is a nightmare for ordinary workers who lack the protections of prevailing wage laws that have existed since the Great Depression. In the Gulf, prevailing wages under the Davis-Bacon Act will never make people rich: A laborer in New Orleans would receive $10.40 per hour in wages and fringe benefits. But the Bush administration’s suspension of the Davis-Bacon Act can and will drive down wages beyond government contracts and perpetuate the poverty so vivid on our television screens in the last two weeks. By suspending the act, contractors will be able to effectively set low wages since they will be a large percentage of the employers in the region. An administration that has thus far failed to veto a single spending bill bloated with earmarks, or to cut a single dime from tax cuts directed at multimillionaires, now proposes to squeeze out a few more pennies by cutting wages for people who today have nothing. This may be consistent with four years of budgeting. It is still wrong.

Ordinary people don’t only lose on contracts. Today, price gouging is occurring both at the gas pump, where charges have reached $7 a gallon —and at the check-casher, where victims without bank accounts can be required to fork over up to 10 percent of their relief checks. Yet the Bush administration has done precious little to stop this profiteering.

Watch for the elimination of more protections for workers and consumers in the coming days. As Republican Mike Pence said in today’s Wall Street Journal, "The desire to bring conservative, free-market ideas to the Gulf Coast is white hot." The Gulf reconstruction should not be a conservative’s ideological playground.

Progressives’ Path: Tools for the Gulf Coast to Rebuild and Renew

Progressives have better ideas to help reconstruct the Gulf built on basic American principles.

Give Katrina’s victims the tools to build their lives over the long term. Renewing the Gulf is not just about bricks and mortar, or just about food, shelter, and clothing. It is about enabling people who have worked and cared for their families throughout their lives the chance to do so once more in healthy communities. And that will require an active government role.

  • Maximize employment of Katrina victims in reconstruction projects. To date the Labor Department has authorized only 40,000 new jobs; Katrina cost at least 400,000 jobs nationwide. See CAP’s new brief by Thomas Kochan.
  • Ensure that workers also obtain marketable skills useful for future employment by providing training and apprenticeships to Katrina’s victims. See CAP’s new brief by Allida Black.
  • Guarantee adequate health care to all of Katrina’s victims in the short run by expanding the Disaster Relief Medicaid program, fully financed by Washington. In the long run, only a comprehensive health care reform guaranteeing coverage to all Americans is a solution. See CAP’s new Medicaid brief by Karen Davenport.
  • Enable Katrina victims to save. While providing paper checks to Katrina victims who lack bank accounts, efforts should be undertaken to open low-cost bank accounts for individuals so that they need not pay check-cashing fees and can begin to save for the future. Over the long run, greater support for community development financial institutions is critical.
  • Guarantee that Katrina victims—and all Americans—who work full-time will not raise their children in poverty by raising the minimum wage and expanding the EITc= The erosion of the minimum wage has sharply undermined that promise.
  • Clean up toxic pollution post-Katrina in a transparent, thorough way. The Environmental Protection Agency (EPA) is just beginning tests to ascertain the extent of pollution post-Katrina, but the tests already suggest widespread and serious challenges. Parishes around New Orleans contain numerous sites that use toxic chemicals, as well as innumerable other sources of pollution. The EPA must work with citizens to ensure that public health is protected.

Integrate the Gulf’s poor—residentially, economically, and otherwise. As housing expert Bruce Katz of the Brookings Institution has pointed out, before Katrina, about one in five poor people in New Orleans, and one in three poor African-Americans, lived in neighborhoods with poverty rates above 40 percent. Concentrated residential poverty undermines hope and opportunity. The Bush administration risks reproducing these conditions by building concentrations of tens of thousands of trailers and mobile homes (300,000 total), then leaving residents in them for months on end. There is a better way, built on the goal of integration.

  • Expand the Section 8 housing voucher program to provide for Katrina’s victims.
  • Reinstitute initiatives like Moving to Opportunity that are explicitly geared toward economic residential integration.
  • Improve mass transit in areas where displaced residents have relocated so that residents who cannot afford cars still have access to jobs.

Stop disaster profiteering. There is a grave risk of profiteering at the expense of public funds and at the expense of victimized citizens. To avoid it:

  • Ensure vigorous oversight of the contracting process from outside the Bush administration and elected officials in Congress—either through a new oversight board, the General Accounting Office, or another entity.
  • Undertake vigorous enforcement of laws against price gouging by oil companies, gas stations, and financial institutions.

Put America’s financial priorities back in order. We must spend whatever is necessary to rebuild the Gulf and rebuild the lives of Katrina’s victims. But unless we reorder our financial priorities, that spending threatens to drag down our entire nation—by driving up interest rates even more than they are already rising, and by requiring cuts to other critical priorities from student aid to scientific research. Shockingly, congressional Republicans continue to advocate for repeal of the estate tax and enactment of a reconciliation package with $70 billion in tax cuts and $35 billion in cuts to services, including $10 billion in Medicaid cuts. Better priorities are clear:

  • Drop repeal of the estate tax.
  • Drop the current reconciliation package and start over.
  • Revisit and eliminate indefensible spending in recent legislation, including:
    • $1.5 billion in the energy bill for a drilling consortium based in Tom DeLay’s district at a time when the oil industry is raking in record profits and advertising its deep water drilling prowess on television.
    • $223 million in the highway bill for a bridge to a virtually uninhabited Alaskan island.
    • $44 million in the corporate tax bill (FISC/ETI) for importers of ceiling fans.

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.

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