Archive - Hurricane Katrina and the Aftermath

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Friday, September 30, 2005

Disaster Reconstruction: How Effective Are Tax Breaks?

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.

Posted by Becky Lewis, 02:09:19 PM

Katrina trumps No Child Left Behind
The Washington Post is reporting on the Dep't of Education's decision to ease NCLB regs for schools affected by Katrina:

'No Child' Rules to Be Eased for a Year

Under pressure from hurricane-stressed states, Education Secretary Margaret Spellings announced yesterday that the agency will for one year relax academic accountability standards under the administration's signature education initiative, allowing schools affected by hurricanes Katrina and Rita to...

[Via washingtonpost.com - washingtonpost.com - US government, national security, science and national news and headlines.]

Posted by Robert Shull, 11:46:51 AM

Thursday, September 29, 2005

No-Bid Contracts: a No-Good Idea
Be sure to check out the latest article from two GW law professors on efforts to make no-bid contracts and other erasures of procurement law the rule rather than the exception in natural disasters and other crisis events. From the abstract:

As Hurricane Katrina relief efforts grow into the billions of dollars, the U.S. Congress is considering additional legislation to liberalize procurement, including H.R. 3766, co-sponsored by Representatives Kenny Marchant and Tom Davis. In these comments on the proposed legislation, Professors Christopher Yukins and Joshua Schwartz asked whether the proposed changes, which would eviscerate competition for most procurement related to disaster relief, are truly necessary. Professor Yukins suggests that, though it might in some circumstances be necessary to dismantle the federal regulatory regime to accommodate a wave of new firms in the federal market, there is too little evidence yet to support such radical measures. Professor Schwartz argues that there is no basis, empirically or analytically, for any effort to undo the careful protections afforded by the federal procurement system.

Click here to download the articles.

Posted by Robert Shull, 11:35:51 AM

Wednesday, September 28, 2005

Katrina's Unnatural Disaster
The Center for Progressive Reform has released a comprehensive report detailing how the systemic failures of the federal government to heed past calls for health, safety and environmental protections contributed to the magnitude of devastation in New Orleans. The report also examines policy decisions related to emergency response that led to the dismal failures of FEMA to adequately evacuate, shelter, rescue and relocate storm victims. From the report:

It is clear even at this early stage that the Hurricane Katrina tragedy is not a .wakeup call, as some have described it; rather, it is a consequence of past wake-up calls unheeded. By any reasonable measure, government failed the people of New Orleans. Hurricane Katrina was a natural disaster of enormous proportion, but its tragic consequences have been made even worse by an unnatural disaster--the failure of our government adequately to anticipate, prepare for, and respond to the devastation that the hurricane brought.

The report concludes with an analysis of "how and why poor policy-making and short-sighted planning guaranteed that Katrina visited disproportionate suffering on New Orleanians who were poor and African-American."

The full report is available at: http://www.progressivereform.org/Unnatural_Disaster_512.pdf

Posted by Genevieve Smith, 02:01:47 PM

President Signs Bill, Congress Begins Work on Long Term Reli
On Friday, President Bush signed The Katrina Emergency Tax Relief Act of 2005 (H.R. 3768), a bill that includes a number of charitable incentives designed to provide immediate relief to victims of Hurricane Katrina. This week, Congress is expected to begin consideration of longer-term relief legislation designed to help rebuild parts of the Gulf Coast.

Posted by Jennifer Lowe, 09:33:27 AM

Tuesday, September 27, 2005

Calls for Fiscal Sanity Grow Louder

Amid misguided and mostly rhetorical proposals for cutting other areas of the budget to pay for Katrina relief (while continuing to cut taxes further), there is a strong and growing number of media outlets, political leaders, policy experts, and regular citizens who are demanding fiscal sanity return to the nation's capital.

USA Today, the paper with the country's largest circulation, joined the ranks of those calling for a reassessment of the president's tax cuts. The paper specifically called out those lawmakers whose support of reckless tax and budget policies have caused many of the fiscal problems we have today. The paper editorialized:

The current hypocrisy is that lawmakers who participated in the spending, borrowing and tax-cutting binge that put the nation in hock are now clamoring for spending cuts to offset storm costs...Their case would also be stronger if they would be willing to revisit recent tax cuts. The first law of holes is: When you're in one, stop digging. It would be the height of irresponsibility, for instance, to cut estate taxes when natural disasters, the Iraq war and surging health care costs are exploding the deficit.

Posted by Adam Hughes, 03:31:45 PM

Donor Intent Restrictions Stymie Charities
From the Washington Post:

Much of the $1.1 billion donated to charities to help the victims of Hurricane Katrina may be unavailable to assist those affected by Hurricane Rita because of legal limits on how the organizations can use the money.

Rita is widely expected to cause significant damage along the Gulf Coast when it slams into the Texas shoreline late today or early tomorrow. But laws in most states requiring charities to honor donors' intentions will hamper the charities' ability to use money raised for Katrina victims to aid survivors of Rita, relief organizations and legal experts said yesterday.

Posted by Jennifer Lowe, 01:22:25 PM

White House May Ask for 1 Billion for 9 Nonprofits
The White House is drafting a plan that would provide more than $1-billion to nonprofit organizations to help resettle Hurricane Katrina survivors in cities across the country, reports CNN. The nine charities being considered to help with the resettlement process have experience helping refugees who have immigrated to the United States, and at least half are religious charities.

Also, Kathleen Blanco, governor of Louisiana, wants to create a nonprofit group that would act as a clearinghouse for information and assistance to the 1.3 million Louisiana residents affected by the Katrina and Rita hurricanes, reports the Associated Press. The Family Recovery Corps would rely on federal money and some donations and would work with the Federal Emergency Management Agency and the American Red Cross and other charities to assist people who lost their homes in the storms.

Posted by Jennifer Lowe, 01:17:13 PM

Faith Groups To Be Reimbursed for Katrina Aid
According to the Washington Post, the Federal Emergency Management Agency said yesterday that it will use taxpayer money to reimburse churches and other religious organizations that have opened their doors to provide shelter, food and supplies to survivors of hurricanes Katrina and Rita. This is after weeks of prodding by the Red Cross and Republican Lawmakers.

FEMA officials said it would mark the first time that the government has made large-scale payments to religious groups for helping to cope with a domestic natural disaster.

Some groups are already tallying up expenses, while others are reluctant to apply for the funds. They are worried that their other fundraising will dry up if they are seen to be taking federal hand-outs.

Either way, FEMA's decision not only crosses the line between seperation of church and state, it also demonstrates the inequality that Congress and the Administration in the way secular and non-secular groups are treated.

There is no denying that religious groups make a contribution - both in the aftermath of Katrina and in providing a range of other social services - but why should non-secular groups break the bank assisting with the Katrina aftermath - or any disaster in the future, for that matter - when they know that they are not going to be reimbursed for their efforts?

Interesting decision...

Posted by Jennifer Lowe, 12:21:13 PM

Charity Leaders Offer Various Views on Donations
Interesting article in the Chronicle of Philanthropy about where the donations are going and what they should be used for.

Posted by Jennifer Lowe, 10:48:29 AM

Monday, September 26, 2005

CARE To Be Re-introduced in Senate and House
Senator Santorum and Senators Lieberman have announced that they will propose a new CARE Act on Tuesday, September 27. This bill will be a freestanding piece of legislation containing key portions form the earlier CARE Act. A draft bill and a Dear Colleague letter has been circulating through Senate offices since Friday. Provisions of this new CARE Act include the non-itemizer tax deduction, the IRA rollover provision, the corporate tax deduction for certain food donations, corporate tax deduction for donated books, $150 million for the Capital Compassion Fund for capacity building, and over $1 billion additional funding for the Social Services Block Grant.

The Charity, Aid, Recovery, and Empowerment (CARE) Act was first proposed in both the 108th and the 109th Congress. While it received significant bipartisan support, the bill became mired in partisan politics. The CARE Act was reintroduced as part of an existing bill the MORE Act (S. 6).

Earlier this month, certain provisions of the CARE Act were incorporated into the Katrina Emergency Tax Relief Act of 2005 (H.R 3768). Unfortunately, the hurricane relief bill is only a a short-term quick-fix limited in scope and duration.

This new CARE Act will be a stand-alone bill incorporating many of the old CARE Act provisions - and unlike the hurricane relief bill, the new CARE Act will address the long-term needs of the charitable sector, by improving incentives for charitable giving.

Additionally, a companion bill will be introduced shortly in the House by Reps. Blount (R-MO) and Ford (D-TN).

Posted by Jennifer Lowe, 05:42:46 PM

FEMA Lets Volunteers Numbers Wither
Interesting article in the Washington Post about FEMA allowing their volunteer corps to wither on the vine. Volunteers are FEMA's lifeblood, allowing them to rescue individuals and families and clean up disaster areas.

To read the article, FEMA Lets Reserves Wither, Hurting Response

Posted by Jennifer Lowe, 04:06:53 PM

Friday, September 23, 2005

FEMA Report Vague on how Money is Being Spent

By law, the Secretary of Homeland Security must provide Congress with weekly reports detailing how FEMA is spending Katrina relief funds. The first report was sent to Congress September 15, and the second was sent yesterday. According to Rep. David Obey (D-WI) -- ranking member on the House Appropriations Committee -- the second report sent to Congress has virtually no details in it, much like the first report.

Obey said, "We asked for specific information on how they are awarding contracts and who contracts are going to. Instead of telling us who is doing what and how, we got a few spreadsheets." In order to get spending details, Obey and Senate ranking member Robert Byrd (D-WV) had specifically sent a letter to the OMB. Their requests, however, were not heeded, and their letter never answered. Instead of knowing how the money is being spent, Obey said, "We don't know what the administration is doing because they don't know what they are doing. We don't know where the nearly $16 billion FEMA's allocated went, we don't know what they're planning to do with the $44 billion they've got left."

Posted by Becky Lewis, 04:52:59 PM

2001 & 2003 Tax Cuts to Cost $225 Billion This Year

In an op-ed in today's Washington Post, E.J. Dionne, Jr. notes that although Republicans claim to be fiscally conservative, "our federal purse strings are in the hands of fiscal radicals." Spending in the aftermath of Hurricane Katrina does have lawmakers on both sides of the aisle worried about potentially massive deficits. Some have been claiming a desire to take a fiscally responsible approach to spending, however cutting budgets while ignoring the costs of tax cuts is, in the long-run, not fiscally responsible at all.

As was posted yesterday in the blog, members of the House Republican Study Committee proposed drastic funding cuts in order to offset Katrina spending; cuts that would -- as Dionne said -- take "$80 billion from Medicare and $50 billion from Medicaid over five years and suggest reductions in school lunches, rent subsidies for the poor and foreign aid, among other things." He goes on to point out, however, that the amount of money the 2001 and 2003 tax cuts is costing our country this year alone amounts to $225 billion -- which could more than cover the expected costs of dealing with Katrina.

It doesn't, however, look like the Republican leadership is interested in pursuing this route to offset the costs of Katrina. Yesterday Bush pledged to join in on efforts to identify cuts elsewhere in the federal budget that can offset the expenditures for disaster aid, saying "I'm going to work with Congress to prioritize what may need to be cut." Cutting programs is the opposite of what needs to be done. In fact, many are arguing that a perpetual underinvestment in the infrastructure of our country is what allowed this disaster to spiral so radically out of hand in the first place.

Posted by Becky Lewis, 02:52:41 PM

Senate To Consider Medicaid Bill Soon; House Skeptical

The Finance Committee's Medicaid bill should be on the floor of the Senate by September 26, according to Committee Chair Charles Grassley (R-IA). The bill is expected to be considered under a unanimous consent procedure.

The administration does not favor the bill, as they believe the appropriate way to deal with the situation should be to pass state-by-state waivers. The House is also "unenthusiastic" about the prospect of the federal government providing 100 percent of funding for Medicaid and Children's Health Insurance Program costs through 2006 in LA, AL, and MS. Chairman Grassley, despite House and administration concerns, remains undeterred in his efforts to move forward with the legislation. He said legislation ensures that Katrina victims receive assistance similar to that given to New York after the Sept. 11 terrorist attacks, and stated, "The president made the statement that the storm did not discriminate and we're not going to discriminate. So why would he want to do something different for Louisiana than he did for New York."

Posted by Becky Lewis, 11:50:56 AM

Thursday, September 22, 2005

NGA Backs Finance Committee's Medicaid Plan

The National Governor's Association sent a letter to the Chair and Ranking Member of the Senate Finance Committee, Sens. Grassley (R-IA) and Baucus (D-MT), in which they gave their approval of the committee's plan to expand Medicaid coverage to victims of Hurricane Katrina. The letter stated that the plan, which will provide 100 percent federal funding of Medicaid to hurricane victims, would be "critical to help these individuals put their lives back together and retain some sense of stability." The cost of the bill is currently uknown, however the Congressional Budget Office is working on scoring it and should have a figure soon.

In endorsing the Medicaid plan the National Governor's Association went against the administration, which has stated that victims' healthcare needs can be met by individual states using administrative Medicaid waivers. Some Republican Senators on the Finance Committee also have concerns about the bill as well, partly because lawmakers are growing increasingly concerned about Katrina-related spending. Sen. Grassley acknowledged these roadblocks and plans to talk to colleagues who many stand in the way of the bill.

Posted by Becky Lewis, 06:20:04 PM

Labor: Limited Waiver of Affirmative Action in Fed Contracts
The Homeland Security website has what it calls the List of Government Waivers and Dispensations Authorized for Hurricane Katrina Response, but don't rely on it as a comnprehensive list of all regulatory protections waived or weakened in the name of Katrina. For example -- layers under layers deep in the Dep't of Labor website is a notice that DOL is waiving some affirmative action requirements for federal contracts, including requirements for job postings targeted to reach veterans and the disabled.

The waiver lasts for three months, but it is also subject to extension.

Posted by Robert Shull, 12:03:59 PM

Kudos Are Right, But Main Point Is Wrong
Michael Tanner of CATO begins a recent article giving kudos to the charities who responded to the devestation of Hurricane Katrina.

"While the response to hurricane Katrina has uncovered failures of government at every level - federal, state, and local - it has also revealed again the amazing generosity and effectiveness of America's private charitable efforts."

Tanner is right in giving kudos to the great works that groups like the Red Cross and the ASPCA are doing to help people and animals that are victims of Hurricane Katrina.

He also gives props to corporations that are opening thier wallets. "American business is doing its part, too. Wal-Mart, so reviled by the American left, not only donated $20 million in cash, 1,500 truckloads of free merchandise, and food for 100,000 meals, it promised a job for every one of its displaced workers no matter where in the country they end up. At least 90 corporations have donated at least $1 million each, many far more than that. Many companies in Louisiana and Mississippi have promised to continue paying their workers, even if their stores or businesses were wiped out."

However, his article continues on to advocate against the government as a first reponder. More of like a second responder.

Why?

"[P]rivate charity has long been recognized as more effective and efficient than government welfare programs. Local churches and community groups are the best positioned to understand the needs in their respective areas, and can direct money or services to where they are most useful. Private charities are generally far more flexible than government agencies, which are frequently bogged down in red tape and regulations."

While nonprofits may be more flexible than government entities, it does not mean that the government - at any level - should abstain from their responsibilty to protect its citizens. In New Orleans, the people depended on the government to ensure the levees were in place, work, and would be adequately maintained. But the government failed them. And now the Red Cross must clean it up.

On August 31, President Bush implored people to make donations to the Red Cross. And people did - to the tune of 1.06 billion dollars. But when disaster strikes, we should not have to rely on the generosity of individuals that are living paycheck-to-paycheck to begin with.

The nation's charities have done a stunning and stellar job after Katrina. But the government shouldn't shirk their responsibility just because the American people are willing to open up their hearts and their wallets.

Posted by Jennifer Lowe, 11:23:34 AM

GOP Uses Katrina As Excuse To De-Fund Government

The Republican Study Committee (RSC), a conservative group of House Republicans, has released a 24-page proposal they are (not so) cleverly calling "Opperation Offset," which details $500 billion in budget cuts they are proposing to reduce the overall cost of Katrina relief and reconstruction. The proposal has created friction among Republicans in Congress because the RSC wants to institute cuts that rehash policies they have promoted for years, including significant cuts to NASA, Amtrak subsidies, the Corporation for Public Broadcasting, the Peace Corps, foreign aid, the Earned Income Tax Credit, the national park system, community health centers, agricultural subsidies, and many, many more. Other Republicans believe proposals making up the majority of the cuts, such as delaying the Medicare prescription drug benefit by one year or repealing earmarks in the recently passed transportation bill are not realistic and might divide conservatives and moderates.

Republican Party politics aside, this proposal is indicative of the "starve the beast" mentality that promotes huge tax cuts and then severe budget cuts to balance the budget. The result, unfortunately, is a dramatically decreased ability of the government to invest in communities and infrastructure. As was seen after the hurricane, these cuts do have consequences. The RSC's policies promote a short-term goal of shrinking government instead of a long-term investment agenda that will make the country more secure.

Posted by Adam Hughes, 10:33:25 AM

FBI Investigating Katrina Web Scams
"FBI Director Robert Mueller said Wednesday that the FBI has launched 31 investigations of websites that may be falsely claiming to raise money to help victims of Hurricane Katrina," USA Today reports. "Mueller said the FBI, with the help of legitimate relief organizations, has checked out 3,000 of 4,600 websites that are soliciting donations to help displaced people."

Posted by Jennifer Lowe, 08:50:43 AM

Katrina Tax Legislation Sent to Bush
"A $6.1 billion tax-relief bill to aid in recovery from Hurricane Katrina cleared Congress, amid laments over the deficit but no clear direction from Republicans beyond creating World War II styled bonds to finance the debt from the disaster," the Wall Street Journal reports. "The House gave its approval on a 422-0 vote, and the Senate sent it on to President Bush for his signature last night without a roll call."

INCENTIVES FOR CHARITABLE DONATIONS:

Encourages cash donations by individuals. Under current law, individuals may deduct charitable donations up to 50 percent of their adjusted gross income. Deductions for charitable donations are further limited by the phase-out of itemized deductions. Under the proposal, cash donations to charities are exempt from the 50-percent income limitation and the phase-out of itemized deductions if the donations are made before January 2006.
Encourages cash donations by corporations. Under current law, corporations may deduct charitable donations up to 10 percent of their taxable income. The proposal waives the 10-percent income limitation for cash donations related to Hurricane Katrina if the donations are made before January 2006.
Modifies tax treatment when using a personal vehicle for charitable work. Under current law, individuals may claim a tax deduction for the costs associated with using a personal vehicle for charitable work. The deduction is calculated by using a mileage reimbursement rate of 14 cents-per-mile. The reimbursement rate for business use is set periodically through IRS guidance and currently stands at 48.5 cents-per-mile. The proposal sets the mileage reimbursement rate for charitable contributions at 70 percent of the standard business mileage rate. If the individual is a volunteer and is reimbursed for the use of the personal vehicle, the proposal ensures that the individual does not have to pay income tax on the reimbursement. Both provisions are effective through December 31, 2006.
Encourages charitable donations of food inventory. Under current law, C-corporations may deduct the cost of food inventory donations. The value of the deduction is equal to the lesser of two times the basis or basis plus one-half of the added value. The proposal extends the current-law deduction for food donations to S-corporations, partnerships and sole proprietors through the end of the 2005 calendar year.
Encourages donations of educational books to public schools. The proposal allows a charitable deduction through the end of the 2005 calendar year for donations of educational books to public schools. The value of the deduction is equal to the lesser of two times the basis or basis plus one-half of the added value.

The IRA Rollover has been jettisoned. For a summary of the legislation that has been sent to the president.

Posted by Jennifer Lowe, 08:45:05 AM

Wednesday, September 21, 2005

Blaming Katrina on Environmentalists
The blame game for the massive failures that left over 1,000 (and still counting) dead has targeted the environmental movement. A special report from the Center for Progressive Reform demolishes the arguments in that blame game. The Army Corps of Engineers had opted to pursue one of two options for levee construction before being sued for having failed to conduct an environmental assessment -- which, when the Corps finally conducted it and other analyses, inspired the Corps to choose the other option. The CPR report concludes with this:

The right wing attempt to blame the environmentalists, while politically convenient, is completely rebutted by the facts. It is beyond dispute that the EIS litigation would have only temporarily delayed the Corps from pursuing the [one of two levee construction options that it had been considering -- an option that the Corps ultimately decided not to pursue]. We also know that the Corps decided to switch to the [second] option because it believed that it was the better policy. This switch also responded to broad-scale local public opposition to the [first] option. In any case, the [first] option would not have prevented the flooding in New Orleans even if it had been completed. Neither . . . option was designed to protect New Orleans from more than a category 3 hurricane. Moreover, the [first] option, had it been completed, would not have stopped the flooding that occurred along the ship canal.

What goes without saying is that even if the delay from the lawsuit had any consequence for the devastation of Katrina, the fault still would lie with a federal government failure to do what it was supposed to do under the law.

Posted by Robert Shull, 06:42:49 PM

More On Cost of Rebuilding; Congress Passes Tax Bill

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.

CNN.com: House Passes Tax Breaks for Hurricane Katrina Victims

Posted by Becky Lewis, 12:08:19 PM

Katrina Tax Legislation Deal Reached
Top House and Senate tax writers Sept. 20 reached a deal on a package of tax incentives (H.R. 3768) intended to help provide the victims of Hurricane Katrina cash, housing, and employment.

Senate aides said the measure would be on the floor Sept. 21. A House Ways and Means Committee news release also said a floor vote would occur Sept. 21.

There are charitable contribution provisions in both the House and Senate bills. Find out more about here.

Posted by Jennifer Lowe, 11:31:43 AM

Tuesday, September 20, 2005

Watcher: September 20, 2005
Federal Budget

Posted by Becky Lewis, 04:19:33 PM

Monday, September 19, 2005

House GOP Reps Urge Bush to Cut Budget Further

Last week, twenty-one Republican members of the House sent a letter to President Bush, in which they urged him to cut non-defense discretionary spending to offset additional spending dealing with the hurricane aftermath. The letter said, "Congress and the President have a historic opportunity to show the American people that we are not afraid to make hard choices on cutting current federal spending when a national disaster requires investment of tens, possibly hundreds, of billions of dollars."

Cutting spending elsewhere in the budget, most likely for supports and programs benefiting low-income Americans is certainly not a hard choice for Congress as they continue to push the completion of reconciliation bills cutting entitlement spending simply to offset the cost of new tax cuts or the rich. Perhaps Congress and President Bush should be sincere in their claims to be able to make hard choices and call upon those Americans who can best afford to pay to shoulder just a tiny bit more of the burden through choosing not to pass new tax cuts for the wealthy this year. Cutting non-defense discretionary programs to pay for emergency hurricane relief funding is akin to robbing Peter to pay Paul and continues to concentrate the burden on low- and middle-income Americans.

Also, Reps. Hensarling and Flake, members of the conservative Republican Study Committee, sent a letter to Speaker Dennis Hastert and Majority Leader Tom DeLay, in which they suggested that the 2006 implementation of the Medicare prescription drug benefit be delayed in order to contain costs, which are expected to sky-rocket with all of the post-Katrina spending. In reality, though, these costs should be dealt with by promoting an agenda based on shared sacrifice -- not on cutting money further from the budget so that people don't have access to the services they rely upon. It's time the President to call for a renewal of shared sacrifice in rebuilding the Gulf Coast through our tax code.

Posted by Becky Lewis, 06:18:24 PM

Voinovich Calls for End to Tax-Cutting Fervor

Senator George Voinovich (R-OH) joined his voice with other Republicans who are seeking to re-evaluate plans to pass additional new tax cuts after Hurricane Katrina. Voinovich told reporters at a press conference this afternoon he believed the government needed more money to pay all of its priorities and obligations and because of that hoped "we won't hear any more about making tax cuts permanent."

While Voinovich did not call for specific tax increases, his decision to speak out against the accepted and irrational GOP policy of "starving the beast" through tax cuts at any time shows great vision and leadership. Let's hope other in Congress, Democrats and Republicans, follow his lead.

Posted by Adam Hughes, 06:07:35 PM

Aspen Institute: Charities Will Lose With Bush Budget

Congressional GOP leaders and the administration have, since Katrina hit, made a point of singling out charitable organizations and nonprofits for the important role they play in helping people in need. President Bush, in his address to the nation Sept.15, said, "I ask the American people to continue donating to the Salvation Army, the Red Cross, other good charities and religious congregations in the region." Bush, and other Congressional leaders, however, are undermining the abilities of the charitable sector to effectively provide help by continuing to push forward with budget cuts that harm nonprofits, as well as push for repeal of the estate tax, which would have adverse effects on nonprofits and the charitable sector as well.

Federal budget experts at the Aspen Institute have found in a recent report that FY '06 federal budget proposals reflect a trend of shifting responsibility for a number of social programs from the federal government towards the charitable sector.

In The Nonprofit Sector and the Federal Budget: Fiscal Year 2006 and Beyond, they found that the budget proposed by Congress would cut funding for programs of interest to nonprofit groups by $40 billion between FY '05 and FY '10. The President's budget proposal is even more harmful; it would cut these same programs by $71.5 billion over the time period.

Posted by Becky Lewis, 05:57:29 PM

Repeal Advocates Will Stop At Nothing...

Advocates of estate tax repeal have been scrambling in the weeks following Hurricane Katrina since a vote on repeal was postponed in the Senate and the repeal agenda has been knocked off the front burner in Congress. But now it appears those forces have reached a level of desperation not yet seen in this debate.

Time.com reported over the weekend that Senator Jeff Sessions (R-AL) and other pro-repeal advocates are scouring the Gulf Coast for victims of the Hurricane they can take advantage of to further their political goals of repealing the estate tax. The article quotes Sessions as saying, "If we knew anybody that owned a business that lost life in the storm, that would be something we could push back with."

Senator Sessions - a Senator from one of the states hardest hit by Katrina - and others involved in pushing such misguided priorities of favoring a few millionaires at the expense of the public good after a natural disaster of these proportions need to re-evaluate their positions. It's even more despicable to be seeking to take advantage of someone who lost their life in such a tragedy to further political agendas. Senator Sessions should be concentrating on helping all those whose lives were ruined in Alabama after the hurricane - not just a handful of multi-millionaires.

Posted by Adam Hughes, 05:56:33 PM

The Costs of Rebuilding

In his remarks to the nation Sept. 15, President Bush said the federal government would be responsible for "the great majority" of the costs of repairing public infrastructure in the Gulf Coast. Government spending in the aftermath of the disaster could reach proportions not seen since the country was hit by the Great Depression, and many are predicting spending could top $200 billion.

Economic analysts are predicting the deficit for FY 2006 could easily out-do the record deficit of $412 billion reached last year. Deficit spending is not always necessarily harmful; in fact if done correctly it can serve to revitilize regions of the country all while spreading the cost over a number of years. However, the problem with extreme deficit-financed spending right now is that the government will be borrowing all while continuing to uphold -- and push for more -- tax cuts for the rich. As this New York Times editorial points out, "The problem is that the United States was deep in hock before Katrina." The fact that tax cuts are on the agenda as well as massive spending is "breaking the bank for our descendants, while impairing our ability to borrow responsibly today."

If the government plans on taking a fiscally responsible approach while spending "unprecedented amounts" in the aftermath of Katrina, they will need to cease pursuing tax cuts for the wealthy by allowing the dividends and capital gains cuts to expire in 2008 (instead of extending them), and they will also need to suspend some tax breaks scheduled to go into effect in 2006 (for more on this, see this CBPP report). The priorities of the administration and Congress need to change, or else current and future tax payers can expect to be hit with a large bill -- a bill either in the form of higher taxes and/or severe cuts in government programs.

Posted by Becky Lewis, 12:11:20 PM

Friday, September 16, 2005

IRS Katrina Guidance
From the IRS website:

Citizens seeking to make donations to help Hurricane Katrina victims should seek out qualified charities, the Internal Revenue Service said today.

People who have a specific charity in mind can make sure that it is a qualified charity by searching an IRS-approved list available on the IRS Web site. IRS.gov has an on-line search feature that allows people to find qualified charities. Some organizations, such as churches and governments, may be qualified even though they are not listed.

The IRS does not endorse any charity. However, the Federal Emergency Management Agency has urged citizens to make cash donations to volunteer agencies with whom it is working. The government’s official Web portal, FirstGov.gov, also contains disaster-relief information.

In addition, the IRS has prepared Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, that may be helpful for people who want to make contributions or who want to form a new charity.

“We encourage citizens to make sure their contributions are put to the best use possible to help Hurricane Katrina victims,” said IRS Commissioner Mark W. Everson. “The IRS will do everything possible to assist both taxpayers and charities in this difficult time.”

The IRS also issued these following reminders to citizens and charities:

• IRS Disaster Relief main page
• Publication 78, lists charities with tax-exempt status, and a searchable on-line version is available through IRS.gov
• Publication 526, Charitable Contributions, provides information on making contributions to charities
• Taxpayers may claim a deduction for contributions to charitable organizations only if they itemize deductions on Schedule A of their Form 1040. They should retain proof of the contribution and, if the amount is $250 or more, must obtain an acknowledgement from the charity for the amount to be deductible.

Posted by Jennifer Lowe, 05:41:05 PM

Rep. Obey Calls Administration Reports on Spending "Useless"

In the most recent emergency supplemental bill for relief funding for the victims of Hurricane Katrina, the House and Senate included a provision that required the administration to provide weekly reports on how the money was being spent by FEMA and the Army Corps of Engineers. The Office of Management and Budget sent Congress the first of those reports late last night.

Today, the ranking minority member of the House Appropriations Committee David Obey (D-WI) called the report "useless" and reiterated the need for detailed information, saying, "Congress is spending an unprecedented amount of money on disaster relief, requiring unprecedented diligence to avoid waste, fraud and abuse. We need specific information to ensure accountability."

Posted by Adam Hughes, 04:24:55 PM

What About Taxes?

Last night President Bush unveiled his initial ideas about plans for reconstruction of the Gulf Coast in the aftermath of Hurricane Katrina. The president did not mention how much he expected this to cost, how he thought the country should pay for it, or what sacrifices he expected citizens to make to help out with the efforts. Congress has already approved over $60 billion for emergency relief efforts, with another emergency supplemental expected sometime in October. The large amount of existing spending plus vague, but potentially costly plans for reconstructions has some members of Congress once again worried about deficits.

Before the president addressed the nation last night, fiscally conservative members of the House and Senate held a press conference with government watchdog groups asking the President to reign in federal spending for Gulf Coast states decimated by Katrina. Sens. Tom Coburn (R-OK), John McCain (R-AZ), Jim DeMint (R-SC), and Rep. Mike Pence (R-IN) led the calls for fiscal restraint. Sen. McCain stated, "We know this is a huge bill and we don't want to lay it on future generations and Speaker of the House Dennis Hastert (R-IL) commented after the president's speech, "for every dollar we spend on this, it is going to take a little bit longer to balance the budget."

But cutting relief and reconstruction efforts, or other parts of the budget is not the right answer. It is budget cuts and underinvestment that played a part in making the impact of Katrina so much worse along much of the Gulf Coast. If those conservatives are truly concerned about balancing the federal budget and not passing on debts to future generations (and not simply shrinking the size of government), they need to look at more than simply reducing federal spending - they need to reconsider the incredible number of tax cuts passed over the past five years that have driven government revenues to its lowest level in 50 years. Countless projections and estimates (see here, here, here, and here) show the combination of massive tax cuts and current policies leading to decades of unsustainable, deep, and persistent deficits. In order to truly address consistent budget deficits, and to pay for not only the relief and reconstruction efforts in the Gulf Coast, but also long-term preventative investments in the infrastrucure and people of America, the President and Congress must reverse some of the tax cuts passed over the past five years.

Posted by Adam Hughes, 04:01:34 PM

Bush Decision to Waive Wage Protections Could Be Illegal

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.

Posted by Adam Hughes, 01:45:34 PM

Wednesday, September 14, 2005

Grassley Says Estate Tax Repeal Would Be "Unseemly"

Chairman of the Senate Finance Committee Charles Grassley (R-IA) commented today that repeal of the estate tax given current conditions -- and the number of people in obvious need -- would be "unseemly." He said in a conference call with Iowa reporters, "It's a little unseemly to be talking about doing away with or enhancing the estate tax at a time when people are suffering." He went on to say he doubts repeal of the tax will be considered in 2005.

These comments seem to be contradictory to what was posted here earlier today regarding Sen. Jon Kyl's desire to move forward with an estate tax vote. Only time will tell what the Senate will actually have to time to pursue this fall. While repeal of the estate tax would be harmful at any time, it is at least reassuring to have a Congressional GOP leader such as Grassley recognize (and verbalize) that now is simply not the time to be cutting taxes for the wealthy.

Posted by Becky Lewis, 05:00:21 PM

Tuesday, September 13, 2005

Know What's In the Toxic Goop?
If you haven't seen it already, be sure to check out OMB Watch's page of environmental data on potential toxic sites in New Orleans, courtesy of OMB Watch's Information & Access department.

Posted by Robert Shull, 02:07:54 PM

Did Politics Warp FEMA Priorities?
Under the provocative headline "Did FEMA 'Buy' Votes for Bush?," IPS asks if political considerations influenced FEMA's priorities -- in particular, the disparity between FEMA's response in Florida (politically valuable) and Louisiana (not). Here's an excerpt:

As Michael Brown resigned his post as head of the Federal Emergency Management Agency (FEMA) Monday following a relentless beating in the press for his mismanagement of Hurricane Katrina relief and rescue efforts, details on FEMA's past missteps began emerging.
Possibly the most egregious of these largely under-reported fiascos was the revelation that FEMA made 31 million dollars in questionable payments to residents of Florida's Miami-Dade County for damage from Hurricane Frances in September 2004, even though the storm caused only minimal damage in that area.
J. Robert Hunter, director of insurance for the Consumer Federation of America, who was a top federal flood-insurance official in the 1970s and 1980s, said that the Frances overpayments "are questionable given the timing of the election and Florida's importance" as a battleground state. Hunter was Texas insurance commissioner in the 1990s under then-Gov. Ann W. Richards, a Democrat.

Posted by Robert Shull, 12:26:29 PM

Medicaid Package for Hurricane Victims Will Help For Now

Finance Committee Chairman Charles Grassley (R-IA) and ranking member Max Baucus (D-MT) are planning to introduce a health care package to assist victims of Hurricane Katrina. The package will expand Medicaid eligibility and provide 100 percent federal reimbursement for Medicaid coverage to states who have seen an influx of displaced persons.

Baucus said new Medicaid provisions were needed to provide health care to victims who have lost homes and jobs. The devastation from Hurricane Katrina has plunged thousands of people into unemployment and poverty, resulting in a huge increase in the number of people who are now eligible for Medicaid. At the same time, hospitals and clinics -- especially in the south -- are being flooded with people in need of medical care, which is putting a growing burden on the already-fragile public health infrastructure of many major cities.

Well before this natural disaster took place, hospitals and clinics across the country struggled to take care of local patients who didn't have insurance to cover all medical costs. Congress, in fact, included instructions in the budget resolution for $10 billion to be cut from mandatory programs under the jurisdiction of the Senate Finance Committee (like Medicaid).

While the date for reconciliation has been pushed back, Majority Leaders Bill Frist (R-TN) and other Congressional GOP leaders are saying they want to go ahead with cuts to these entitlement programs. Those cuts would put cost strains on states not directly impacted by the disaster, ultimately leaving taxpayers to foot the bill. So, while this Finance Committee health care package will help alleviate some of the burdens for now, keep in mind that many in Congress still want to move forward with severe cuts to Medicaid, perhaps in the very near future.

Posted by Becky Lewis, 11:44:27 AM

Senate Rushes to Address Katrina Relief

The Senate this week may rush through a Katrina tax-relief package.

For individuals, the package would exempt taxes on debt that is forgiven and waive the penalty tax on early retirement-plan withdrawals. Other incentives include a tax credit to encourage employers to hire Katrina evacuees, and for companies in the disaster zone to temporarily retain evacuees on their payroll. For people who house evacuees, the legislation would provide an additional $500 personal exemption for every dislocated person not already included on a taxpayer's return. A slew of other provisions would encourage donations of books, food and cash.

The Senate might consider two other hurricane-related bills this week to adjust federal flood insurance and welfare laws. Both measures have cleared the House.

The tax package's total cost could run between $3 billion and $7 billion, early estimates show. The benefits would be temporary, with most expiring at the end of this year.

The House Ways and Means Committee will consider its own slate of hurricane-related tax relief, but aides cautioned that the House's priorities could differ somewhat.

In a bipartisan statement issued Friday, Ways and Means members said that in coming weeks they would look at tax relief for individuals along with changes to unemployment, child support and foster care laws. Future legislation would address rebuilding incentives similar to the New York City revitalization efforts after the Sept. 11, 2001, terrorist attacks, the statement said.

For the press release

For a summary of the legislation

Posted by Jennifer Lowe, 11:30:08 AM

Some Charities Concerned About Donations in Wake of Katrina
Some charity officials in Southern California have started to run into fund-raising problems since Hurricane Katrina hit the Gulf Coast, and many others fear a drop in donations to non-relief causes, the Los Angeles Times reports. The Red Cross in Riverside County, for example, has had to lay off several employees because all gifts are earmarked for Katrina relief. Other groups have had to delay or cancel fund-raising events. Several charity officials say donations were already down because of ties to the South Asian Tsunamis.

Posted by Jennifer Lowe, 10:40:48 AM

Donations Pour In For Katrina Disaster

Americans have contributed at least $739-million to help victims of Hurricane Katrina.

The pace of giving is unprecedented in American history. In the 10 days after the 2001 terrorist attacks, Americans donated $239-million to charitable causes, and in the nine days after the tsunamis hit, major American relief groups raised $173-million.

Still, the contributions do not yet come close to the total amount raised in the wake of those disasters. After the 2001 terrorist attacks, charities raised more than $2.2-billion and U.S. charities have collected nearly $1.3-billion for the tsunamis.

The American Red Cross, in Washington, has raised far more than any other charity, taking in $578-million. By comparison, two and a half weeks after the South Asian tsunamis, the Red Cross had raised a little more than $173-million.

"It's overwhelming," says Sarah Marchetti, a spokeswoman for the Red Cross. "People are just pouring their hearts out, and making a donation is an expression of that."

For the entire article

Posted by Jennifer Lowe, 10:38:11 AM

Frist Sets Oct. 26 Deadline for Budget Cuts

Senator Frist (R-TN) and Senate Budget Chariman Judd Gregg (R-NH) announced today the deadline for the budget committee to report a bill cutting entitlement programs by $35 billion would be pushed back to October 26. The original deadline for the spending cuts to be reported was this coming Friday, September 16.

While Frist and Gregg did not mention the other two parts of the reconciliation package this year (yet another tax cut bill costing approximately the same as the amount of money approved so far by Congress for hurricane relief, and legislation to raise the country's debt limit by $781 billion), many suspect the deadlines for those bills will move back by a similar period to late October, early November.

Yet it isn't entirely certain the tax cut bill will move forward this year. The delay in the spending reconciliation bill and the fact Frist did not directly address the tax cut legislation may signal tax cuts primarily benefiting upper-income Americans in the aftermath of Hurricane Katrina are politically untenable. This would threaten the extension of a number of provisions of President Bush's tax cut package. Below is a chart of a few of the most likely to be included in the bill this year should Congress proceed.

Posted by Adam Hughes, 10:30:22 AM

Monday, September 12, 2005

Sunset Over New Orleans
A subcommittee of the House Government Reform Committee is holding a hearing Sep. 21 on the House version of a White House proposal to give itself fast-track, take-it-or-leave-it authority to reorganize government and to force programs to plead for their lives every 10 years. Read more about that proposal here.

With New Orleans and the Gulf Coast in mind, imagine how that would play out:

FEMA could be forced to stop every 10 years and divert scarce resources into explaining to the Sunset Commission why it must be allowed to continue to exist.

The White House proposal calls for automatic death of programs, regardless of the Sunset Commission's decision, if Congress fails to act in time to save the program. A provision in the White House proposal would exempt programs "related to enforcing" health, safety, civil rights, or environmental regulations from the automatic expiration provision. Assuming that all of FEMA's programs are "related to enforcing" safety regulations (which is not immediately obvious) -- FEMA would still be forced to divert resources into justifying its continued existence before the Sunset Commission, which would also be empowered to demand the production of information for that review and potentially drown the agency in paperwork.

Meanwhile, no exemption exists from the work of the Results Commission -- the White House's name for the vehicle that would grant it almost unchecked power to reorganize government. The Results Commission pieces of the proposal could empower the White House to shatter apart all the different programs in FEMA and send them to many separate agencies, or bury FEMA -- once an independent agency, now a sub-unit of the Department of Homeland Security -- so deep into the bowels of government that it would be rendered even more ineffective than some recent news reports suggest FEMA has been.

Posted by Robert Shull, 07:57:41 PM

Friday, September 09, 2005

Monthly Budget Review Predicts Higher Deficits

The Congressional Budget Office released their Monthly Budget Review this week, in which they noted that for the first eleven months of this fiscal year (which ends Sept. 30), the government ran a deficit of $352 billion. For various reasons, including that fact that corporate receipts were up due to specifics in certain expiring tax laws, this deficit is $85 billion less than the deficit run at this time last year. These facts have allowed President Bush to claim that he is on track to cutting the deficit in half by 2009 (one of his many campaign promises).

The reality is, the Hurricane Katrina disaster will affect deficit levels for 2006. The CBO report states that deficits will not be greatly affected for FY 2005 because we only have one month to go; however they do mention "substantially greater costs will be incurred in fiscal year 2006."

It looks like we can expect deficits to be on the rise again in the year to come. The administration is not to blame for the fact that the disaster will have a negative effect on the FY 2006 deficit. However, the administration is to blame for our deficits being so high in the first place. In 2004 the budget deficit was $412 billion, and most of that was due to Bush's massive tax cuts. Now we are being forced to engage in deficit-financed spending because of the recent disaster, and the administration can claim that they had no control over what is sure to be a very high deficit figure next year. If not for their prior policies, however, our deficits would have never been so high in the first place.

Posted by Becky Lewis, 05:36:30 PM

Cuts Delayed For Month; Might Be Gone For Good

House and Senate GOP leaders have decided to postpone budget deadlines for cutting entitlement programs and passing additional tax cuts for at least a month. Republicans also announced an intention to postpone another difficult issue of raising the statutory debt limit by $781 billion until after the Columbus Day recess in mid-October.

But the bills may be more than simply delayed. In an unexpected twist, the reconciliation bills that will outline the budget and tax cuts may loose their fast-track protections. The Senate parliamentarian believes the delay in the deadline for the bills could allow Democrats to offer amendments, seek consessions from Republicans, or even filibuster the bills.

Posted by Adam Hughes, 05:29:42 PM

Santorum to Hold Hearings
On Tuesday, September 13, 2005 at 10:00 am, the Senate Finance Committee’s Subcommittee on Social Security and Family Policy will hold a hearing titled, “Charities on the Frontline: How the Nonprofit Sector Meets the Needs of America’s Communities.” The hearing will take place in Room 106 Dirksen Senate Office Building

The Subcommittee, which is chaired by Senator Rick Santorum (R-PA), is expected to focus on the importance of the U.S charitable sector, the sector’s response to Hurricane Katrina and the need for Congress to enact the charitable giving incentives contained in the CARE Act. While charitable reform is not the focus of the hearing, we expect a number of Senators to ask questions related to the Senate Finance Committee’s reform proposals. The following witnesses will testify:

Luke Hingson, President, Brother’s Brother Foundation, Pittsburgh, PA

Major George Hood, Director of National Community Relations and Development, The Salvation Army, Alexandria, VA

Dr. Bob Reccord, President and CEO, North American Mission Board, Southern Baptist Convention, Alpharetta, GA

Dr. William G. Gale, Senior Fellow, The Brookings Institution, Washington, DC

Dr. Eugene Steuerle, Senior Fellow, Urban Institute, Washington,

Posted by Jennifer Lowe, 01:26:12 PM

Charitable Incentives Provisions
Senate Finance Committee Chairman Charles Grassley (R-IA) is now looking to attach charitable reform and incentive proposals to two major pieces of legislation that Congress will consider in the coming months. One expected legislative vehicle is a relief bill to aid victims of Hurricane Katrina that will move quickly starting next week. According to Senate Finance Committee staff, some of the provisions being discussed for the relief bill include funding for information sharing between federal and state governments, funding for electronic filing and incentives for donations of food and books (similar to those contained in the CARE Act).

Budget reconciliation legislation, expected to move in October, is the other legislative vehicle being considered by Chairman Grassley. Grassley and Senator Rick Santorum (R-PA), sponsor of the CARE Act in the Senate, met this week and discussed attaching the CARE Act (including the IRA charitable rollover provision) and charitable reform proposals to the budget reconciliation bill. Senate Finance Committee staff are still trying to determine what reform proposals will be included in the legislation, though they have indicated that a number of the proposals will mirror recommendations included in the Panel on the Nonprofit Sector’s final report.

Posted by Jennifer Lowe, 01:23:44 PM

Donate A Day!
Department of the Treasury and Internal Revenue Service officials announced today special relief intended to support leave-based donation programs to aid victims who have suffered from the extraordinary destruction caused by Hurricane Katrina.

Under these programs, employees donate their vacation, sick or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims of Hurricane Katrina.

Under Notice 2005-68, employees can forgo leave in exchange for employer cash payments made before January 1, 2007, to qualified tax-exempt organizations providing relief for Hurricane Katrina victims. Employees do not have to include the donated leave in their income. Employers will be permitted to deduct the amount of the cash payment.

Posted by Jennifer Lowe, 08:07:53 AM

Thursday, September 08, 2005

Americans Demand Focus on Domestic Policy
USA Today is reporting the results of the latest Pew poll, in which a majority expresses its desire for a renewed focus on domestic policy:

More than half of Americans now say it is more important for the president to focus on domestic policy — the first time since Sept. 11, 2001 that domestic matters have been viewed as a higher priority than the war on terrorism in polling by the Pew Research Center.
Two-thirds said the president could have done more to get relief efforts going quickly, according to the survey.
The slow-moving response to the hurricane appears to have shaken American confidence in the government's ability to deal with a major disaster. Four in 10 said the response to the hurricane has made them less confident about the government's ability to handle a major terrorist attack.
Almost six in 10 in the Pew poll, 58%, say they have felt depressed because of what's happened along the Gulf Coast. Pew polling indicates that at no point during the Iraq war has that high a percentage of people said they were depressed because of the war.

The findings should not be all that surprising: majorities consistently report that they believe the government has an important role in protecting public health and safety. Meanwhile, those same majorities have been witnessing, with horror, the results of government's failure to fulfill that role.

Posted by Robert Shull, 05:31:59 PM

Reconciliation To Be Delayed

Democrats have been pushing for leaders of the House and Senate budget committees to suspend or substantively change prior plans for the budget reconciliation process. While it is not clear whether this will happen, it is certain that the budget reconciliation deadline will at least be delayed, although for an indeterminate amount of time. Under the budget resolution passed in April, the reconciliation process would have resulted in:

Taking $35 billion from expected mandatory spending over five years;

Enacting $70 billion in tax cuts over five years; and

Raising the federal government's debt ceiling by $781 billion.

The deadlines which had been set for the actions mentioned above were September 16, September 23, and September 30, respectively.

Now it appears those deadlines will be extended for at least a few weeks, although the House and Senate Budget Committee Chairman Jim Nussle (R-IA) and Judd Gregg (R-NH) seem eager to not postpone reconciliation indefinitely.

Nussle stated, "We should not be distracted by this or anything else to continue our efforts to reform government. That's what reconciliation is about, it's about reforming government." Gregg chimed in with similar sentiments, calling the idea of indefinite suspension of reconciliation "blatant politics," and noting, "The view is we're still going to execute this reconciliation package in a timely manner." Democrats in the Senate and House are continuing to argue that the ultimate goals of reconciliation process would conflict with the needs of the victims of Hurricane Katrina, and should thus be suspended or drastically reconsidered.

Posted by Becky Lewis, 12:42:53 PM

Tax Panel Work Postponed For Now

The President's Advisory Panel on Tax Reform has delayed work because of the recent disaster. They were initially scheduled to hold two meetings in Washington, D.C. on September 8 and 15. It was unclear exactly what was to be discussed at those meetings.

The Panel has been working since January to make recommendations to the Treasury Department regarding the tax code. Their deadline for making recommendations was July 31, however it got pushed back to September 30 a few months ago, and now appears to be pushed back for an indeterminate amount of time. They are, however, planning to meet via teleconference September 23, during which they will most likely discuss when (and if) they will move forward to submit a report to the Treasury any time soon.

Posted by Becky Lewis, 11:59:45 AM

Committees Get to Work; Soc. Security Tabled For Now

Congressional tax committees have set to work and are looking into how tax policy can be used to help victims of the recent disaster, both immediately and in the long run. Chairman of the Senate Finance Committee Charles Grassley (R-IA) told reporters in a morning news conference that his committee would be looking into relief efforts associated with past natural disasters in order to determine which policies have been effective. Then, they will look into applying similar policies to help those affected by Katrina.

Meanwhile, in the House the Chairman of the Ways and Means Committee, Bill Thomas (R-CA), is apparently exploring a three-phase approach addressing the initial humanitarian concerns, followed by infrastructure concerns, and finally long-term reconstruction. The first measure, which could move as early as September 8, deals with getting money to individuals through TANF (Temporary Assistance for Needy Families). The measure would remove a lot of red tape and provide immediate assistance for a number of families.

Also, it is pretty clear that any sort of work on Social Security legislation is off the table now that Congressional leaders have their hands full dealing with the disaster. Sen. Olympia Snowe (R-ME) told BNA News Services that "Major issues are overtaking a number of issues like Social Security. It's hard to foresee a legislative agenda addressing the long-term issues associated with Social Security this fall." Grassley made similar comments, telling reporters that his top priority this fall will be disaster-related measures, the Roberts nomination, budget reconciliation legislation and appropriation bills, and then Social Security.

Posted by Becky Lewis, 11:16:12 AM

Wednesday, September 07, 2005

Bipartisan Group Calls For A Delay in Cuts

Four U.S. Senators sent a letter to Finance Committee Chair Charles Grassley (R-IA) yesterday, requesting that he "indefinitely delay consideration" of addressing entitlement cuts in reconciliation this year. The letter mentioned how important it is not to cut "numerous programs available to help meet basic needs," such as food stamps, Medicaid, housing and education.

Notably, two Republican Senators, Gordon Smith (R-OR) and Olympia Snowe (R-ME) sent this letter, along with Sens. Jeff Bingaman (D-AZ) and Blanche Lincoln (D-AR). While it is important that these Senators are standing up to protect these important programs in a time of extreme need, it is sad that it took a national tragedy of such large scale in order for many to recognize the importance of strong and well-funded social safety net programs.

Posted by Becky Lewis, 05:18:02 PM

Chronicle of Philathropy Tracks Donations for Katrina
The Chronicle of Philanthropy is tracking donations for Hurricane Katrina, if anyone is interested in how much is being given, to which charities, and in the case of institutional donors, by whom. See: http://philanthropy.com/free/update/2005/09/2005090501.htm

Posted by Jennifer M. Lowe Davis, 03:11:30 PM

$51.8 Billion Package Requested By President

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.

Posted by Adam Hughes, 02:35:19 PM

Democrats Urge Suspension of Budget/Tax Cuts

The Democratic leaders of the House and Senate, along with the ranking Democrats on the House and Senate Budget Committees are urging the GOP leadership in congress to suspend consideration of the budget and tax cuts outlined in this years budget resolution as the country continues to assess the impact of, and future needs for the recovery from, Hurricane Katrina. House Minority Leader Nancy Pelosi (D-CA), Senate Minority Leader Harry Reid (D-NV) and Sens. Kent Conrad (D-ND) and John Spratt (D-MO) sent a letter to their Republican counterparts today expressing the need for a re-evaluation of national priorities in the wake of this tragedy.

The letter states, "The budget resolution - including its reconciliation instructions - is a fundamental statement of our policy priorities. Hurricane Katrina will require a rethinking of these priorities."

With concerns already mounting about the increase in deficits caused by emergency funding for the victims of the hurricane, it will become more difficult for Republican leaders to justify cutting many programs survivors are likely to depend on while at the same time extending tax cuts that primarily benefit the wealthiest Americans and undermine the government's ability to provide more relief and recovery resources to the Gulf Coast region in the months and years ahead.

Posted by Adam Hughes, 02:10:53 PM

New Charities Get Expedited Process In Katrina's Wake
The Internal Revenue Service will provide an expedited review and approval process for new organizations seeking tax-exempt status so they can provide relief for victims of Hurricane Katrina, it said Sept. 6 in a news release (IR-2005-93).

While encouraging people to use existing organizations currently working on immediate aid efforts, IRS said it anticipates new charities will form to address the numerous and more specific needs of disaster victims.

"We want to make sure we do all we can to help charitable organizations get up and running so they can begin providing the assistance the victims of this terrible disaster so desperately need," IRS Commissioner Mark Everson said in the release. New organizations should apply for tax-exempt status by filing IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, writing at the top "Disaster Relief, Hurricane Katrina." The IRS will give the applications expedited attention to ensure they meet legal requirements, the release said.

"Just as we did after Sept. 11, we will put these applications at the head of the queue and turn them around promptly," Everson said.

However Everson noted that existing charitable organizations, including churches, are frequently able to administer relief programs more efficiently than newly formed ones because they already have fund raising and distribution infrastructure in place.

For more information, see the IRS website

Posted by Jennifer Lowe, 10:06:20 AM

Tuesday, September 06, 2005

Devastation Forces Reconciliation Reconsideration

CongressDaily reported today that the recent Hurricane Katrina devastation is "making GOP leaders think twice about moving ahead with a $34.7 billion package of entitlement spending cuts outlined by the FY06 budget resolution." Congressional Republicans are coming under a good deal of fire from Democrats, who are arguing that now is not the time to be cutting social programs, with so many people in need.

Majority Leader Bill Frist (R-TN) said ""We will keep reconciliation on track for now," and added that scheduling decisions would be subject to a "day-to-day evaluation." There is a possibility that a reconciliation package could be amended and scaled back either in committee or on the floor.

Posted by Becky Lewis, 05:49:08 PM

Shifting the Focus Away From Tax Cuts

The New York Times ran an editorial on Saturday, "Katrina's Assault on Washington," which highlighted the fact that our political leaders are often more interested in promoting an agenda full of tax cuts than in promoting responsible investment and shared national sacrifice. This approach, the editorial argues, must change. The editorial says, "If [political leaders] respond by passing a few emergency measures and then falling back on their plan to enact more tax cuts, America will have to confront the fact that it is stuck with leaders who neither know, nor care, how to lead."

The recent disaster should be a wake-up call that it pays to invest money in our communities. This administration's focus on tax cuts over investment has left agencies and programs underfunded, and has, in a way, made it more difficult for us to respond to the what has happened on the Gulf Coast. The Center on Budget and Policy Priorities expands upon this in their recent statement on the challanges Congress faces now in the wake of the hurricane.

Posted by Becky Lewis, 03:27:55 PM

Charitable Legislation Slated for October
After a brief emergency session to consider funding for hurricane relief last week, Congress begins its busy fall schedule today. While Senate Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT) are still expected to introduce charitable legislation this fall, the busy September schedule may push back the introduction of the bill until October. Grassley is also a member of the Senate Judiciary Committee, which will now be considering appointments for two vacancies on the Supreme Court after the death of Chief Justice William Rehnquist.

Posted by Jennifer Lowe, 03:23:09 PM

Estate Tax Vote Delayed For Now

Despite reports on Friday that the Senate would go ahead with the estate tax vote this week -- even in the wake of Hurricane Katrina -- it appears Frist has decided to postpone the vote for now.

The vote was delayed partially because of the efforts of Minority Leader Harry Reid (D-NV), who pressured Frist to call off the vote on tax cuts. In his statement, Reid said a vote on the estate tax would be "a travesty on top of a tragedy."

Bloomberg News: Estate Tax Vote Put Behind Katrina

Posted by Becky Lewis, 10:22:04 AM

Friday, September 02, 2005

Questions About the Army Corps and Cost-Benefit
As we just posted below, it appears from the PART assessments of the Army Corps of Engineers that USACE has been employing cost-benefit analysis in its internal decisions about projects and priorities. Has cost-benefit analysis -- a game rigged against the public interest -- distorted priorities in USACE and contributed to the failure to protect New Orleans and the rest of the Gulf Coast areas affected by Hurricane Katrina?

Here are some questions to ask USACE:

How were "benefits" measured?
Did the benefits monetize -- i.e., substitute a cash equivalent for -- human lives?
If so, do the cash equivalents for human life operate on the "willingness to pay" principle -- under which the lives of the poor could count less than the lives of the wealthy?
Did USACE use any measures such as life years saved or statistical life years -- measures in which the elderly (who have fewer "life years" remaining) count less than the young -- with the effect that areas with older populations would matter less than areas with younger populations?
Did benefit measures depend on number of lives affected -- and, if so, was there any effort to account for census understatements (from which rural populations might be less well calculated than wealthier populations, thus potentially skewing prioritization in favor of wealthier areas)?
Were benefits calculated in terms of property values -- meaning that some coastal areas (such as Louisiana, Mississippi, and Alabama) could count less than others (such as California)?
Are cost measures skewed by cost differentials (from labor, etc.) in different parts of the country?
Was the Clinton-era executive order for environmental justice -- intended to prevent unwitting environmental racism in federal government decisions -- applied in any USACE decisions in which cost-benefit analysis was also used?
When calculating benefit measures such as lives spared from damage reduction or prevention efforts, did USACE include projections about poverty and its effects on the numbers of people who would (and could) take prevention efforts into their own hands vs. the numbers of people structurally disabled from self-help?

More info:

OMB Watch Regulatory Policy Program Cost-Benefit Analysis Page
Center for Progressive Reform Perspectives on CBA
Pricing the Priceless - monograph on CBA by law professor Lisa Heinzerling and economist Frank Ackerman

Posted by Robert Shull, 07:58:35 PM

Frist Will Go Ahead With the Estate Tax Vote

Congress Daily reported this afternoon that despite the devastation with this week's hurricane and flooding, Majority Leader Bill Frist (R-TN) plans to go ahead with the Congressional schedule as previously planned, which means that there will be a vote on the estate tax on Tuesday.

According to Congress Daily, Frist rejected a request from Minority Leader Harry Reid (D-NV) to suspend work on the tax bill. The Senate will, therefore, move forward with their vote to repeal the estate tax. Repeal of the estate tax would gut levels of federal revenue and would hurt charities by taking away an incentive for people to give. It seems as though in a time of national devastation -- as we are experiencing right now -- it is awfully bold of Frist and Congressional leaders to move ahead with legislation that would take more money away from federal coffers (which is used to invest in national infrastructure), and instead make a move to further pad the pockets of the wealthy. Disgraceful.

Sen. Baucus (D-MT), who has been the Democrats' key negotiator on the estate tax, issued the following statement regarding the vote:

“I am supportive of working on repealing the estate tax, but now is not the appropriate time. The nation is calling out for the Senate to act to help those in need. We have passed an emergency spending bill, but the emergency has not subsided. People are still homeless. New Orleans is still buried in dark water. Our work is not finished. Instead of moving to the estate tax when the Senate is back in session, I encourage my colleagues to concentrate on the victims left in Hurricane Katrina’s wake.”

Posted by Becky Lewis, 05:15:17 PM

Congress Passes $10.5 Billion Relief Package

Although Congress will be taking steps toward what House Majority Leader Tom DeLay (R-TX) called a "comprehensive, long-term response to the Katrina disaster," they began the process today by passing a $10.5 billion relief package to go towards immediate aid for hurricane victims. The bill passed the Senate yesterday and passed the House by voice vote today.

The funds will finance food and emergency shelter, medical care, debris removal, and cash payments to hurricane victims.

New York Times: Congress Approves $105B in Katrina Aid

OMB's Supplemental Request

Posted by Becky Lewis, 03:32:05 PM

PART of the Problem in New Orleans
There are plenty of signs that the Bush administration failed to invest in projects that could have prevented the devastation in New Orleans — see this recap from the Center for American Progress for more. For another way in, be sure to look at the White House’s assessment of Army Corps of Engineers programs, using OMB’s Program Assessment Rating Tool (PART).

First, a recap of PART itself: PART is supposed to be a tool for performance measurement that, theoretically, generates data on program effectiveness that can then be fed back into program management reforms and budget decisions. In actuality, PART is a simplistic one-size-fits-all process that provides a technical veneer for very political decisions. In addition to creating fine-sounding rhetorics of results to justify slash-and-burn budget decisions, PART is a vehicle for sending signals to program managers to make policy adjustments that receive the White House seal of approval (whether or not those decisions are actually authorized by the law governing a program). Learn more with this introductory issue brief.

Check out the FY05 and FY06 PART assessments for the Army Corps of Engineers. Relevant programs PARTed:

Coastal Storm Damage Reduction Program: praised for using cost-benefit analysis in prioritizing construction projects. As John Woodley, Jr., Principal Deputy Assistant Secretary of the Army for Civil Works testified, the Corps “had numerous projects ongoing and insufficient funding to continue all of our projects at an efficient level” [in other words, too little funding to meet all the pressing needs] and therefore asked for construction funds “to be strictly prioritized by remaining cost to remaining benefit, and that is a measure that takes into account the benefits that are yet to be gained from a project compared to the remaining costs that are needed to be invested to reap those benefits.” [Testimony available on Westlaw at 2005 WL 82731 (F.D.C.H.).] We need more details about these cost-benefit analyses — after all, as one TV commentator has observed, “"If this [level of disaster] were to happen in California, okay, fine. There's a number of incentives to sort of rebuild that area. Imagine trying to do that in rural Mississippi.” Or in any other poor area where the benefits of damage reduction could count for less than damage reduction in a more prized coastal area. The program was rated as “Results Not Demonstrated” — a grade that OMB explains officially as an indeterminate score, meaning that there is insufficient information upon which to assess program results, but that the White House often invokes as meaning failure to produce results. The program was slated for successive budget cuts in the FY04, 05, and 06 budgets.

Emergency Management Program: The White House knew that the program was underfunded and relied excessively on supplemental funding, which forced the Corps to redirect funds from other projects until supplemental funds came through. Just the same, the White House asked for a dramatic budget cut for FY06.

Flood Damage Reduction Program: rated “Results Not Demonstrated.” One place the program lost points on its PART assessment was the question, “Is the program optimally designed to address the interest, problem or need?” OMB’s response: no, because — based on the OMB bean counter’s opinion, not any real evidence — the Corps “should put more emphasis on non-structural solutions and avoid designing projects to provide 100-year protection where it may not be economically feasible.” Another “failure”: “When formulating proposed investments, the Corps assumes schedules that do not reflect likely funding constraints. On the bright side, the budget examiner noted, “Recently, the Corps has adopted a performance measure where it compares the estimated costs of completed projects with the projected benefits to ensure that the project’s benefit cost ratio is maintained.”

Posted by Robert Shull, 03:10:32 PM

Thursday, September 01, 2005

Congress To Return Early To Pass Hurricane Relief

According to various news reports, Congress will cut its summer recess short and return to Washington, DC either tonight or tomorrow to pass emergency relief legislation for the areas affected by Hurricane Katrina. The aid package will be approximately $10 billion and cover the entire area of the Gulf Coast, including parts of Florida, Mississippi, Louisiana, and Texas. It is possible the legislation would be negotiated by a small group of congressional leaders and passed by unanimous consent - a procedure often used for bills with no opposition.

The $10 billion amount will not begin to scratch the surface of what will be necessary. The Federal Emergency Management Agency - the federal agency charged with coordinating relief efforts after disasters such as this - is currently spending approximately $500 million per day in its relief efforts, which are not yet at full force.

Congress Weighs Emergency Session on Hurricane Aid

Congress Prepares $10 Billion Aid Package

Posted by Adam Hughes, 05:14:32 PM

Assistance for Katrina - Donations to Nonprofits Pouring In
From The Center for American Progress:

IF YOU ASK, THEY WILL RESPOND: Shortly after the attacks of 9/11, Sen. John McCain complained, "After 9/11, people wanted to serve and they were told to go shopping or get on an airplane.... That's not the answer they wanted to hear. This is an opportunity to serve." Americans have demonstrated time and again that, in the face of tragedy, they will respond with true compassion. Already, the Red Cross has announced that it has collected $21 million in donations for the victims of Katrina, "a figure comparable to the response for tsunami victims following the devastation in Asia earlier this year." "The outpouring of support has been amazing," said Kara Bunte, a spokeswoman for the Red Cross. "People are now starting to see the images on TV and want to help." Americans also responded with amazing compassion in the two months following 9/11, providing approximately 1.6 million blood donations and contributing over $1.3 million to charities and relief agencies. Americans can and will do more to sacrifice; they simply need a president who will ask.

Posted by Jennifer Lowe, 01:06:43 PM

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