Rebuilding Gulf Coast forces closer look at tax cuts, war, pork

Friday, September 23, 2005

It is the federal government's responsibility to rebuild New Orleans and the rest of the Katrina-ravaged Gulf Coast.

President Bush has guaranteed it will happen -- "whatever it costs."

He -- like the rest of us -- knows the price tag is projected at $200 billion or more.

Accordingly, the president should admit that even the world's richest nation cannot undertake the largest reconstruction project in its history while also maintaining tax cuts and fighting wars in Iraq, in Afghanistan and on terror at home and around the globe.

Bush continues to play a game of budgetary charades by not including several enormous expenditures in the federal budget. These include rebuilding the South, the war in Iraq and interest payments on our exorbitant national debt.

He is treating the bill to fix the damage wrought by Hurricane Katrina as the rest of us might respond if unexpectedly forced fix a furnace or replace a damaged car tire: We were not planning on it. We had not budgeted for it. So we just pay the bill and the problem goes away.

But to fix such problems, we must either have the money, pay on credit or borrow.

The same is true of the U.S. government. And the nation does not have a spare $200 billion burning a hole in its pocket.

The cost of reconstructing the Gulf states, therefore, is sure to further inflate our massive budget deficit and national debt, which already have the country far too reliant on and beholden to foreign investors -- including the Chinese, Japanese and Saudi Arabian governments.

The federal budget deficit for 2005 is projected at $331 billion -- the third-largest ever -- and the national debt is now $7.94 trillion, about $2.2 trillion more than when Bush was elected in 2000.

Each year's deficit spending adds to the federal debt, which is passed on to future generations.

Taxpayers will pay about $208 billion for the fiscal year starting Oct. 1 just to cover interest on the debt. For comparison's sake, that $208 billion is more than 25 times next year's $8.2 billion budget for the U.S. Environmental Protection Agency.

The interest payments on the national debt go to investors who loan us money by buying U.S. Treasury bonds. Foreigners now hold an astonishing 46 percent of the Treasury's debt, affording them way too much influence over our economy.

Our ability to finance our federal deficit, after all, depends in large part on foreigners who determine demand for U.S. Treasury bonds. If certain nations were to sour on the bonds, interest rates would have to increase to keep foreign investment coming in. The money to pay the increased interest would come from the government's only source -- taxpayers.

It is time for Bush to show he understands the nation's economic plight and start putting its financial house in order.

To start, he should look at his tax cuts, which disproportionately benefit the wealthy and never should have been enacted.

Given the nation's worsening economic health, the cost of Katrina and the likely cost of repairing damage caused by Hurricane Rita, most of the Bush tax cuts, scheduled to "sunset" in 2010, should be repealed now.

It is fiscally irresponsible and plain ridiculous that Bush and some in the Republican-controlled Congress are pressing for the tax cuts to become permanent.

Bush also should find federal spending cuts to offset the money that he has already acknowledged will be needed to rebuild the Gulf Coast. Even many influential Republicans see billions of dollars in possible cuts that could be made, especially in the recently passed transportation bill. It includes some 6,300 local pork projects, perhaps the most infamous being the $200 million "bridge to nowhere" in Alaska that would serve an island with only 50 residents.

There are countless other boondoggles in the federal budget, such as the tax dollars the government gives each year to the Rock and Roll Hall of Fame and Museum in Cleveland, whose funding should be redirected to relief and reconstruction following Katrina and possibly Rita.

Many other expenditures are already on a list that came out of a recent White House review of the federal budget that identified at least $90 billion being spent on programs deemed to be "ineffective, marginally adequate or operating under a flawed purpose or design."

A pork-filled federal budget and the president's decision to enter into war are clearly incompatible with natural disasters that devastate large parts of the South.

Further, the nation's daunting budget deficit is in large part a result of the war and Bush's tax cuts.

By beginning a withdrawal from Iraq, even a gradual one, and by repealing the tax cuts, the administration probably would find plenty of money to help rebuild the Gulf Coast.

And if Bush and Congress were to reclaim billions of dollars they have allocated to foolish, irresponsible government spending, they just might discover the country has all the money it needs to rebuild after Katrina.