Post-Katrina Survey Finds Wariness, Desire for Change

Just a short while ago, the Senate approved by voice vote this morning an extension through December 17 of the current continuing resolution (CR) funding the federal government. Sen. Mary Landrieu (D-LA) did not object to the voice vote, but went on record as voting no on the CR to highlight the plight of many still recoverying from the hurricanes on the Gulf Coast. It is still unclear what this accomplished for the people of Gulf Coast.

This particular CR is especially egregious because it drastically reduces funding for many federal programs, particularly the Community Services Block Grant (CSBG). Sen. Tom Harkin (D-IA) attempted to include an amendment to the CR that would continue funding the CSBG at a higher level instead of it receiving a 50 percent cut. Despite support for full funding from 58 Senators on a letter Harkin circulated, only 46 voted for the amendment today.

1. Two-Face Talk about "Up or Down Votes": The GOP mantra when radical conservative judges were renominated to the appeals courts -- nominees so radical that they threaten the very ability of the federal government to protect the public -- was that parliamentary maneuvers such as holds and filibusters should not prevent the nominees from going to the floor and getting an up-or-down vote (in other words, being allowed to simply be elevated to lifetime judgeships without any real fight). Much of this talk died down when a centrist coalition agreed to tie the hands of Democratic Senators and "save" the filibuster by making it irrelevant. Apparently, though, hashing things out in the open only matters when it comes to lifetime appointments to the federal bench, not when it comes to $60 billion tax cuts for the wealthy.

2. Unfunded Mandates -- Now They Care about Them, Now They Don't: We have been monitoring developments that threaten to expand the Unfunded Mandates Reform Act. A recent change to an UMRA parliamentary procedure was invoked to kill a proposal to raise the minimum wage. So "unfunded mandates" -- in the GOP parlance, it means opposing protections of the public on the grounds that federal policy decisions result in costs to state and local governments -- matter when it comes to killing the minimum wage, but not when it comes to kicking abused and neglected children out of federally-funded foster care. By restricting eligibility for the Title IV-E entitlement, the House bill shifts the cost for the now ineligible abused and neglected children entirely to the states. (By the way, those kids aren't getting any less abused or neglected.) Get more details on the cut programs here.) Just goes to show that the phrase "unfunded mandates" does not signify a problem that demands solutions; instead, it is a political weapon, deployed to freeze new public protections and then conveniently holstered when it would otherwise threaten an anti-government agenda.

According to the latest report from the Bureau of Labor Statistics (BLS), the nation added a minute 56,000 new jobs in October, a large reduction compared to previous month's growth. Unlike the September report, BLS concluded that the weak job growth was "not attributable to the areas directly affected by Katrina" because job growth was down in all areas of the country.

The most disturbing aspect of the report was a preliminary estimate of the employment status of victims of Hurricane Katrina. Shortly after the hurricane struck, BLS - along with analysts at the U.S. Census created a short series of questions designed to identify and solicit information from survey respondents who had evacuated from their homes. Based on these questions, BLS estimated nearly a quarter (24.7 percent) of the Americans impacted by the hurricanes were currently unemployed. What's worse is this survey was not able to reach those still living in temporary facilities, shelters, or hotels, the vast majority of whom are most likely struggling to find steady employment. The 24.7 percent unemployment figure, therefore, is most likely too low.

Economic Policy Institute Senior Economist Jared Bernstein believes these new data call for congressional action:

These findings strongly suggest a necessary policy intervention that would significantly boost the job prospects of those evacuees who want to return home. Given that many of those who left the affected areas have low incomes and little savings, they need to get back to work as soon as possible. Congress therefore should quickly craft and implement policies to help these displaced persons find transportation, housing, and work.

BLS plans to continue to use these special Katrina-related questions through January 2006 to track trends in the employment status of Katrina vicitms.

The Bush administration is putting the finishing touches on another Katrina spending relief bill tonight and it is expected on Capitol Hill tomorrow. Early reports indicate the bill will propose to use up to $17 billion in already appropriated funds to begin reconstruction of federal facilities damanged by the hurricanes.

Although there is still a substantial amount of the previously appropriated $62 billion in relief funds left to be spent, federal rules prohibit that money from being spent on other projects, such as repairs of military bases, highways, and other federal infrastructure. The Associated Press reports the shift in funds would most likely be used for "repairs to Interstate 10 in Mississippi and Louisiana and Keesler Air Force Base in Mississippi."

AP: White House Readies New Hurricane Request

Spending in the wake of Hurricane Katrina has elicited a lot of yelling and screaming from all sides, with worries ranging from how much we are spending, to how we will offset that spending, to whether or not tax and budget cuts are necessary or wise in the wake of the disaster. A new round of legitimate worries has gained more momentum recently, specifically over which giant corporations are getting government contracts, why they are getting those contracts, what their ultimate development goals are, and whether or not they are receiving too much money for the services they are providing (and thus wasting taxpayer dollars).

Halliburton has been the focus of much of this attention for receiving tens of millions of dollars from the Republican administration to work on rebuilding the Gulf Coast. Now, many are questioning the deal struck between the government and Carnival Cruise Lines, which is housing displaced hurricane victims on three of their cruise ships. The company is receiving $236 million for this six-month contract, to cover the costs of using the ships, and also to compensate for lost revenue Carnival would have received if the ships were stocked with paying vacationers.

The disconnect here, however, is that Carnival Cruise Lines is possibly making significantly more money than they should be, and thus wasting disaster-relief funds which are badly needed in many areas. The cruise line earned $150 million in revenue over a 6 month period (the data came from 2002), which is significantly lower than the $236 million being allocated to the company. (A spokeswoman for Carnival noted that revenue was down because it was the year following the September 11 attacks, but did not provide data to back up this statement). On top of this, many of the cruise line's entertainment services and staff -- a big chunk of their expenditures, no doubt -- will not be needed or used by the company over the next six months, thus arguably bringing costs even lower than $150 million.

Rep. Henry Waxman (D-CA) is a key lawmaker investigating this issue, and he sent a letter to Dept. of Homeland Security Secretary Chertoff yesterday demanding more accountability and transparency in federal contracting. The letter asks DHS to provide the following information:

In a time when lawmakers are calling for harsh budget cuts to offset the costs of Katrina-related spending, it is imperative that funds are not wasted through excessive government handouts to these major corporations. Lawmakers, who are responsible for these contracts, should know what the cost estimates for certain contracts should be and not be duped into paying more than what is necessary.

Katrina Exposes Some, But Not All, Unmet Security and Safety Needs

Republicans Use Katrina To Push For More Drastic Cuts

Congress Mistakenly Focusing On Katrina Spending As Top Fiscal Danger

Post-Katrina Affordable Housing Bill to Include Nonprofit Gag Provision

After Hurricane Katrina, President Bush waived wage protections established under the Davis-Bacon Act that require federal contractors to pay area prevailing wages. While some have speculated on the legality of this decision, it has flat out angered a substantial number of House members from the President's own party, who sent a letter to him in late September expressing their outrage.

This week, Rep. LaTourette (R-OH) - the member who spearheaded the effort to rally 36 other Republicans against the waiver - announced on the House floor he would be seeking legislative action to reinstate Davis-Bacon requirements. "I don't know exactly what we have in mind yet, but I think the week of the 17th [of October] there may be some activity," LaTourette said.

Democrats in the House have already taking action to attempt to reverse Bush's decision. Rep. George Miller (D-CA) has introduced a bill, H.R. 3763, that will require the re-application of Davis-Bacon wage requirements to the areas affect by Hurricane Katrina. It is widely agreed the bill would pass it voted upon, but the House GOP leadership has continued to block any such vote.

Make Your Voice Heard
The Campaign for America's Future has launched a letter writing campaign to raise support for reinstating Davis-Bacon requirements.

CongressDaily, a publication of the National Journal, reported this morning that 65 House members sent a letter to President Bush urging him to exclude gambling interests in tax cuts designed to spur reconstruction and renewal on the Gulf Coast.

Lead by Rep. Frank Wolf (R-VA), the letter was signed by both Republicans and 14 Democrats and was sent in response to press reports that the administration was considering allowing casinos to qualify for tax breaks in the wake of Hurricane Katrina. The letter concluded, "We trust you will do the right thing and make sure federal resources go to the poor, the needy and the vulnerable and not the gambling interests who already have insurance to cover catastrophic events like hurricanes."

It's nice to see rational and moderate Republicans (and Democrats) speaking out for the right priorities in the wake of Katrina. Now if only they would apply this philosophy across the board and oppose the extension of more tax cuts for the superwealthy paid for by budget cuts to programs for low-income Americans.

Read the letter send to President Bush.

It appears the House Budget Committee has moved the deadline for budget reconciliation back yet again. After initially postponing the deadline post-Katrina, the committees were slated to get their spending proposals to the Budget Committee the week of Oct. 17, but Chairman Jim Nussle (R-IA) was able to push back the deadline to Oct. 28. The hope for Nussle is that this pushback will give committees an extra week to submit proposals for cutting mandatory spending to the budget panel. The Senate, apparently, will not join the House in this spending bill delay.

Nussle has proposed amending the FY 2006 budget resolution to call for across-the-board cuts in discretionary spending. His proposal notably calls for cuts in both defense and homeland security spending, as well as increased cuts in mandatory programs such as Medicare.

The calls for increased cuts have been increasing along with Republican restlessness over how to save money to pay for the costs of Katrina recovery. Groups such as the Committee for a Responsible Federal Budget have lauded Nussle and others for their attempts to bring down the deficit by increasing budget cuts, yet are ignoring the fact that these same lawmakers support passing $70 billion worth of deficit-financed tax cuts in reconciliation. The Democratic Senate leadership has taken steps to urge Congressional GOPs that it is more important to deal with immediate needs of hurricane victims and rising energy prices, as opposed to passing another round of tax breaks through reconciliation. Minority leader Reid (D-NV) and a number of other Democratic Senators sent a letter to Majority leader Frist (R-TN) on Friday, outlining those points.

In a boost to Budget Chairman Jim Nussle's plans to enact substantial budget cuts to offset the cost for recovery from Hurricane Katrina, House Speaker Hastert announced yesterday the approval of a package of cuts modeled after Nussle's plan. "In order to maintain our commitment to deficit reduction, we are proposing to move a mid-session Budget Amendment for the first time in almost 30 years (1977)," Hastert said in a written release. The release also detailed the following proposals for offsetting Katrina costs:

• An "additional across the board cut of '06 discretionary spending." Permanently eliminate and "deauthorize" programs that House appropriators have zeroed out.
  
• Increase total minimum reconciled mandatory savings from $34.7 billion to $50 billion. "In addition to the $50 billion, we will offset dollar-for-dollar the new mandatory spending included in reconciliation/entitlement reform that is required to address the disasters."
  
• "We will bring forward packages of additional rescissions to further help offset reconstruction costs. Congress must develop, with the President, a budget for reconstruction and a plan to pay for it."

What is truly befuddling about this statement is Haster's claim of a committment to deficit reduction. It has been under his leadership that the Congress has enacted reckless and short sighted tax and budget policies that have driven the federal government back iinto the red in the first place. And Hastert does not have a committment to deficit reduction - he has a committment to cutting programs and services and reducing the size of government. If the Speaker was serious about deficit reduction, he would be talking about either tax rollbacks or increases in addition to budget cuts.

A week after a hearing of the Senate Finance committee cast doubt on the usefulness of tax cuts in relief efforts to help individuals and businesses on the Gulf Coast, additional economists and expert analysts have supported that position. The New York Times reported this morning that economists from the very conservative Heritage Foundation to the more centrist Tax Policy Center have confirmed that President Bush's tax incentive proposal will do less for individuals who live in the affected areas and more for rich investors and businesses from other parts of the country. The Times article quoted William Beach, chief economist at the Heritage Foundation as saying, "People in the area obviously won't have tax liabilities for some time. What we're talking about is getting very wealthy people from around the United States to invest in New Orleans."

In addition to growing concensus among private economists that tax cuts are not the best option for relief and reconstruction efforts in the Gulf Coast, the highly respected Congressional Research Service released a report last week that found little evidence of the positive impact of tax incentives such as the "opportunity zones" proposed by President Bush in growth and employment in those areas. Nonetheless, Congress continues to explore writing yet another tax cut bill under the guise of "Katrina relief." Treasury Secretary John Snow was the lead witness today at another Senate Finance Committee hearing to promote the president's tax proposals for reconstruction of the Gulf Coast and spent most of his time defending the proposals against attacks from skeptical Senators.

During a Senate Finance Committee hearing this afternoon at which Secretary of the Treasury John Snow was testifying on the president's tax incentive proposals for rebuilding the Gulf Coast, Chairman Charles Grassley (R-IA) vocalized his anger at the White House for what he perceives to be a covert effort to derail legislation to temporarily extend Medicaid to hurricane victims. “Unfortunately, the White House is working against me behind the scenes, and I resent that considering how much I’ve delivered for the White House” in recent years, Grassley said.

Sens. Grassley and Max Baucus (D-MT), the ranking member on the Finance Committee, have been trying to win approval from a number of conservative Senators for legislation that would extend Medicaid coverage to all low-income victims of Hurricane Katrina and guarantee that the federal government would pay for 100 percent of the costs. The legislation is supported by the National Governors Association, Majority Leader Biill Frist (R-TN) and Minority Leader Harry Reid (D-NV), the American Medical Association, and dozens of other groups.

The White House has proposed instead to grant a waiver to individual states who are currently providing health care coverage for victims. This proposal has been heavily criticized, particularly by the Center on Budget and Policy Priorities for excluding many low-income vicitims from receiving benefits and for not assuring states that 100 percent of the cost would be covered by the federal government.

Grassley has previously threatened to withhold support or delay the tax reconciliation bill his committee must write this fall if Senators do not support his Medicaid bill. Unfortunately, it seems these threats have had little impact.

As House Budget Chairman Jim Nussle (R-IA) continues to push for an amendment to the budget resolution passed in April to institute an across the board cut to discretionary spending by 2 percent, many Republican members of the Senate have expressed reservations or outright disdain for such a plan, threatening its survival.

While not ruling out any avenue for finding budget cuts to offset the cost of Hurricane Katrina relief and reconstruction spending, a number of key Senate Republicans criticized Nussle's proposal. Senate Budget Committee Chairman Judd Gregg's (R-NH) preference is to use the reconcilation process already in place to look for larger cuts to entitlement programs. Senate Majority Leader Bill Frist (R-TN) called Nussle's proposal a "nonstarter," ruling out re-opening the budget resolution. And Defense Appropriations Subcommittee Chairman Ted Stevens (R-AK) stated he opposes the proposal and believes a substantial majority of the Senate would also oppose it. Discretionary spending makes up only 26 percent of the total federal budget and Stevens believes it should not have to shoulder a disproportionate share of the cuts.

Unfortunately, Congress has yet to realize the damage done by cutting investments in America to pay for Katrina costs will not only make communities and families around the country less secure, it will actually do very little to offset the cost of Katrina. It's time Congress realizes it needs to revisit the massive tax cuts for the wealthy if it wants to truly keep Katrina spending deficit neutral.