On September 28 the Senate Finance Committee held a hearing looking at various tax incentives and how they will assist in Gulf Coast reconstruction operations. Governors Blanco of Louisiana, Barbour of Mississippi, and Riley of Alabama testified, and while they did not agree on preferred tax incentives, they all requested some form of tax benefits ranging from zeroing out capital gains taxes on investments to accelerated depreciation to various bond programs.

Other witnesses, however, questioned the use of tax cuts as an effective method of providing post-disaster relief.

• Daniel Doctoroff, the Deputy Mayor for Economic Development and Rebuilding for New York City who helped direct post-9/11 operations, told the Committee that in his experience tax provisions were a cumbersome method for delivering disaster assistance. He argued that benefits are provided only if businesses and economic growth respond to predicted forecasts, and mentioned that Congressional appropriations were a much better way of addressing relief and rebuilding needs.
  
  
• George Yin, Chief of Staff for the Joint Committee on Taxation, also voiced skepticism regarding the effectiveness of tax incentives. He testified that tax breaks are particularly ineffective when addressing the needs of low-income earners, particularly because would-be beneficiaries are not aware of many of the tax provisions or how to obtain them. Also, low-income earners stand to receive less in tax benefits overall because they have less-taxable income.

Along with deficits rising, it appears the ratio of CEO pay to worker pay is also rising. As this United for a Fair Economy report highlights, CEO pay has shot up over the past few years, and now, while the average CEO makes $11.8 million per year, the average worker makes $27,460 per year. The ratio has spiked from 301-1 to 431-1.

Perhaps even more unsettling news is that 46 large companies who made more than $30 billion in profits in 2003 paid absolutely no income taxes that year. Also, the report notes that the CEO's presiding over the most underfunded pensions had salaries that were, on average, 72 percent more than other CEO salaries.

Congressional GOP leaders and the administration often mention the "strong economy" we are currently experiencing. It is important to remember that while the economy may look strong for some, it is not strong for many of the workers who are earning a disgracefully low minimum wage.

Last Friday, General Accountability Office Comptroller David Walker strongly urged a "strategic, long range, and integrated" examination of tax expenditures to test their relevance and priority during a time when the federal budget is experiencing increasing strains. His comments came during the unveiling of a new GAO report recommending that the OMB and the Treasury take steps to ensure greater transparency of, and accountability for, tax expenditures.

Walker emphasized to reporters, as he has in the past, the importance of putting the nation on a more "prudent and sustainable course for the long term." He insisted that doling out tax preferences has an impact on the government's bottom line, and at a time when we are experiencing high deficits, it is important to reevaluate some of those expenditures.

Many Republican leaders in the House and Senate are worried about the costs of rebuilding after Katrina, even though President Bush has promised, and rightly so, to devote all the funds needed to help the devastated region. Republicans who are worried about excessive deficit-financed spending are pushing for the costs will be offset (most are suggesting by cutting the budget elsewhere). To appease them, OMB Director Josh Bolten said Tuesday that the administration would consider offsets, but did not offer any details about what would be cut and by how much. As Stan Collender correctly points out (subscription required), any offsets proposed by the administration would to little, if anything, to reduce the amount Katrina relief spending will add to the deficit, and the national debt. Because President Bush refuses to even consider not extending or rolling back some of his first term tax cuts, it will be future generations who will be paying for reconstructing the Gulf Coast.

The federal government is required by law to pay at least 75 percent of the cost of rebuilding public infrastructure after a disaster (1988 Stafford Act). To comply, Congress -- besides approving about $64 billion in emergency spending -- has agreed on a tax-relief bill to expand deductions this year for victims. The final bill was scored by the Joint Committee on Taxation as costing $6.1 billion over 10 years. Congress hopes these targeted tax cuts will spur employment of low-income workers on the Gulf Coast.

In addition, President Bush signed three bills today to help in the aftermath of the disaster. The bills waive Pell Grant and other federal student loan requirements for displaced college students and expand Temporary Assistance to Needy Families eligibility for victims.

As many surely know by now, the White House decision to suspend its obligations under the Davis-Bacon Act to require a fair minimum wage for contractors working on the reconstruction and recovery efforts in the aftermath of Hurricane Katrina will have a direct and drastically negative impact on many of the very victims of the hurricane. Some have noted the irony of this decision given that the hurricane's devastation was compounded by years of poverty and low-wages throughout the Gulf region. In response, Representative George Miller (D-CA) introduced legislation to overturn the wage cuts instituted by the president last week.

But what many might not know is that Bush's decision to waive the protections could be illegal. The Federation of American Scientists' Secrecy News revealed a Congressional Research Service report issued yesterday concluding that the president may have acted illegally in waiving those wage protections. CRS states that the September 8 presidential declaration was "an anomaly," and it did not follow "the historical pattern of declaring a national emergency to activate the suspension authority."

The report concludes, "The propriety of the President's action in this case may be ultimately determined in the courts."

The Davis-Bacon Act prohibits the federal government from undercutting prevailing wages in areas where the federal government is contracting for work. The administration is required to ensure that its contracts establish minimum wages for workers that comport with the prevailing wage of the area.

The Associated Press is reporting President Bush will request $51.8 billion in additional emergency relief funding for Hurricane Katrina from Congress. As the cost of the Federal Emergency Management Agency's daily operations in the Gulf Coast climbed to over $700 million, it became clear the previous emergency supplemental approved last week for $10.5 billion would not last long. The request could be approved by Congress as early as tomorrow.

The second supplemental request will include $1.4 billion for the military and $400 million for the Army Corps of Engineers, which is working to repair breaks in the levee system around New Orleans. The remaining $50 billion will go to FEMA.

This is unlikely to be the last emergency funding for this disaster, as Congressional leaders and recovery experts are expecting the total damages to cost upwards of $150 billion. In addition, yesterday, the Congressional Budget Office (CBO) released a report examining the economic repercussions of Hurricane Katrina to Congressional leaders. The CBO found the economic effects of the disaster could be as severe as a one-percentage point drop in econonmic growth and the possible loss of up to 400,000 jobs by the end of 2005.