Rebuilding the Gulf Coast in the wake of Hurricane Katrina: domestic policy initiatives

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"Just as the Iraq War has been a Petri Dish for the neoconservative foreign policy agenda, rebuilding the Gulf Coast in the wake of Hurricane Katrina could prove to be the mother of all testing grounds for a passel of active Heritage Foundation's domestic policy initiatives," Bill Berkowitz wrote September 15, 2005. He continued, "Washington, DC's most prestigious and influential right wing think tank has been rocking and rolling since Hurricane Katrina devastated New Orleans and the Gulf Coast." [1]

According to the Heritage Foundation's Edwin Meese III, Stuart Butler and Kim R. Holmes, "the key to successfully rebuilding the Gulf Coast is to 'encourage creative and rapid private investment through incentives and reduced regulation, and to channel long-term education, health, and other assistance directly to the people and areas affected so that they can control their future.'" [2]

Six weeks after Katrina hit the Gulf Coast, the New York Times quoted Robert Greenstein, director of the liberal Center on Budget and Policy Priorities as saying, "We've had a stunning reversal in just a few weeks. ... We've gone from a situation in which we might have a long-overdue debate on deep poverty to the possibility, perhaps even the likelihood, that low-income people will be asked to bear the costs. I would find it unimaginable if it wasn't actually happening." [3]

In contrast, "conservatives say the storm, in exposing the depth of poverty, gives them a chance to push their own solutions to the problem, like school vouchers or subsidies to help poor people accumulate assets." Robert L. Woodson, president of the conservative National Center for Neighborhood Enterprise, told the New York Times, "What we've done for the poor hasn't worked. ... People are going to say, 'How did these people get into this circumstance in the first place?' It gives us an opportunity to really turn over a new leaf." [4]

Specific Proposals

Conservative proposals advanced in the wake of Katrina include: [5]

"It's a given that the Bush administration, which tried to turn Iraq into a laboratory for conservative economic policies, will try the same thing on the Gulf Coast. The Heritage Foundation, which has surely been helping Karl Rove develop the administration's recovery plan, has already published a manifesto on post-Katrina policy. It calls for waivers on environmental rules, the elimination of capital gains taxes and the private ownership of public school buildings in the disaster areas. And if any of the people killed by Katrina, most of them poor, had a net worth of more than $1.5 million, Heritage wants to exempt their heirs from the estate tax," Paul Krugman wrote in the September 16, 2005, New York Times. [6]

"Some new measures are already taking shape," the Wall Street Journal's John R. Wilke and Brody Mullins wrote September 15, 2005. "In the past week," they said, "the Bush administration has

  • "suspended some union-friendly rules that require federal contractors pay prevailing wages"
  • "moved to ease tariffs on Canadian lumber"
  • "allowed more foreign sugar imports to calm rising sugar prices"
  • "waived some affirmative-action rules for employers with federal contracts in the Gulf region"

Additionally, they wrote, "Republicans are working on

  • "legislation that would limit victims' right to sue"
  • "offer vouchers for displaced school children"
  • "lift some environment restrictions on new refineries"
  • "create tax-advantaged enterprise zones to maximize private-sector participation in recovery and reconstruction"

On September 14, 2005, they wrote, the House of Representatives "overwhelmingly passed a bill that would offer sweeping protection against lawsuits to any person or organization that helps Katrina victims without compensation."

On October 11, the New York Times reported, "Even as he was calling for deep spending cuts last week, Representative Mike Pence, Republican of Indiana, who leads the conservative caucus, called tax reductions for the prosperous a key to fighting poverty. 'Raising taxes in the wake of a national catastrophe would imperil the very economic growth we need to bring the Gulf Coast back,' Mr. Pence said. 'I'm mindful of what a pipe fitter once said to President Reagan: "I've never been hired by a poor man." A growing economy is in the interest of every working American, regardless of their income.'" [7]

Gasoline for America's Security Act of 2005

Operation Offset

Bush Proclamation on Suspending Minimum Wage

President Bush signed a proclamation September 8, 2005, which suspended the minimum wage -- "Within a Limited Geographic Area in Response to the National Emergency Caused by Hurricane Katrina" -- on "every contract in excess of $2,000, to which the Federal Government or the District of Columbia is a party, for construction, alteration, or repair, including painting and decorating, of public buildings and public works of the Government or the District of Columbia that are located in a State or the District of Columbia and which requires or involves the employment of mechanics or laborers shall contain a provision stating the minimum wages to be paid various classes or laborers and mechanics. ...

"And, as to such contracts to be performed in such jurisdictions, I do hereby suspend, until otherwise provided, the provisions of any Executive Order, proclamation, rule, regulation, or other directive providing for the payment of wages, which provisions are dependent upon determinations by the Secretary of Labor under section 3142 of title 40, United States Code."

This includes: 6 counties in Alabama, 3 counties in Florida, 65 parishes in Louisiana, and 81 counties in Mississippi.

"In a [September 9, 2005] WebMemo entitled 'President's Bold Action on Davis-Bacon Will Aid the Relief Effort', [Heritage Foundation] Senior Research Fellow Ronald D. Utt applauded Bush for suspending provisions of the Davis-Bacon Act applying 'to federally funded construction projects in the Gulf Coast areas hit by Hurricane Katrina'," Berkowitz wrote.

"Utt wrote that the president 'is to be commended for showing the courage to take this important but controversial stand... eliminating the 'prevailing wage' clause [which] should lead to a more efficient and lower cost recovery.' Finally, without a hint of irony as to which entities will actually capitalize on the disaster, Utt praises the president for showing courage 'in denying the politically powerful labor unions the unfair benefits they would otherwise have reaped from others' misfortune.'"

Legislation to Overturn Wage Cut Bill

On October 20, 2005, Representative George Miller (D-California) "introduced a new bill to overturn President Bush's wage cut for Gulf Coast workers. This time, Republican leaders in Congress cannot ignore it," Miller said.

"Every single House Democrat, 37 House Republicans, and one House independent are on record opposing the President's Gulf Coast wage cut - a clear majority of the House of Representatives. But Republican leaders in the House have refused to allow a vote to overturn the wage cut. Now it looks like they have no choice."

Comments on Bush's Bill

Representative John D. Dingell (D-MI) said on September 15, 2005, "'With a stroke of the pen, in one of his first Katrina directives, the President cut the wages of the workers who will undertake our largest reconstruction project since the Civil War.'"

Josh Marshall commented in his September 15, 2005, Talking Points Memo: "That cuts right to the heart of the matter. The president's first major initiatives were deep wage cuts for the people who will do the reconstruction."

Bush's Proposed Initiatives September 15, 2005

In his address to the nation on the evening of September 15, 2005, President George W. Bush "asked Congress to pass three initiatives, including a Gulf Opportunity Zone to inspire investment and job creation; Worker Recovery Accounts to help evacuees with job training and child care expenses; and an Urban Homesteading Act to encourage home ownership." [8][9]


  • Commenting on Bush's September 15, 2005, speech, Charles at the Mercury Rising Blogspot wrote: "So, watch the money. It very likely will end up mostly in the pockets of the already-wealthy." He said:
  1. "a Gulf Opportunity Zone. This sounds like regulatory rollback.
  2. "incentives for 'job-creating'. This sounds like a subminimum wage, elimination of unions, or possibly outright socialism.
  3. "investment tax relief for small businesses. Payoffs to contributors? In the business world, 'small businesses' can do up to $30 million in revenue and employee 1500 people. And as we learned from the LATimes, land values are soaring, indicating people do not need incentives. They sense that this will be a big payoff to contributors, not justice for the urban poor.
  4. "loans and loan guarantees for small businesses. See above.
  5. "Urban Homesteading Act. One small problem: the land is already owned. So what does this mean?"

Gulf Opportunity Zone (GO Zone)

President Bush vowed in his September 15, 2005, address "to rebuild this devastated city and the rest of the Gulf Coast with 'one of the largest reconstruction efforts the world has ever seen.'"

Bush parroted the Heritage Foundation suggestion that "'New Orleans and other affected areas' be declared 'Opportunity Zones'." Bush said in his address:

"I propose the creation of a Gulf Opportunity Zone, encompassing the region of the disaster in Louisiana, Mississippi and Alabama. Within this zone, we should provide immediate incentives for job-creating, investment tax relief for small businesses, incentives to companies that create jobs, and loans and loan guarantees for small businesses, including minority-owned enterprises, to get them up and running again."

"Businesses in the GO Zone would be eligible for the benefits through 2007." [10]

Related Links

Worker Recovery Accounts

Bush said in his September 15, 2005, address:

"I propose the creation of Worker Recovery Accounts to help those evacuees who need extra help finding work. Under this plan, the federal government would provide accounts of up to $5,000, which these evacuees could draw upon for job training and education to help them get a good job and for child care expenses during their job search."

Urban Homesteading Act

Bush said in his September 15, 2005, address:

"I also propose that Congress pass an Urban Homesteading Act. Under this approach, we will identify property in the region owned by the federal government, and provide building sites to low-income citizens free of charge, through a lottery. In return, they would pledge to build on the lot, with either a mortgage or help from a charitable organization like Habitat for Humanity."

Related Links


  • "Katrina will suck away workers, materials and funds that otherwise could have been gone to other, potentially more productive uses elsewhere in the country." --Martin Wolk, MSNBC, September 9, 2005. [11]
  • "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." --Center for American Progress, September 15, 2005. [12]
  • "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." --Center for American Progress, September 15, 2005. [13]
  • "Few deny the need to rebuild; the debate is how. But the nexus between the revolving door and the push for privatizing the process means that many decisions will be in the hands of corporate consultants and contractors—hands whose grip on the government is now so tight that they are close to being able to—as Grover Norquist so aptly put it —'shrink government down to the point where it can be strangled in a bathtub.' The problem for the rest of us, of course, is that this kind of strangulation of government services won't make things any cheaper." --Charlie Cray, Tom Paine.Common Sense, September 13, 2005. [14]
  • Senator Nancy Pelosi (D-California) has "expressed concern that Bush's vision of a rebuilt New Orleans will be a gentrified city that will be too expensive for many displaced residents to live. And she warned that the president will try to suspend labor laws that guarantee relief workers the prevailing wage, and will instead offer no-bid contracts to large companies that will earn big profits by paying only the minimum wage," Marc Sandalow wrote in the September 15, 2005, SF Gate.

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