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Before the storm struck, Bush and the federal government gets blamed for not spending enough money, indeed for suggesting cuts, in requests to improve the levees around the city, perhaps as a consequence to fund the war in Iraq, or by tax cuts. But in fact, not only could any amount of money spent during Bush’s term not have improved the situation, enough money to have significantly strengthened the levees was given to local authorities who then chose to spend it on other priorities.
With advancements in technology, only in the past decade or so has there been a realization that the existing levees would come up short relative to a huge hurricane and that it would take decades to fully complete an adequate levee system – one which in fact, given the vagaries of Mother Nature, might never be good enough. However, horribly, it seems that the money and the time once had been available – except that the governing authorities involved, the Orleans Parish Levee District and the state, diverted the funds to other priorities.
For over a century, the city has been in decline. It incompletely made the transition from a commercial capital in an agricultural-driven economy to the same status in an industrial-driven economy, and would have failed to do so without the oil and shipping industries. But when much of the oil industry fled starting 20 years ago, reducing the need for shipping as a consequence, and the city failed to make the transition into the information-driven economy, the steady ride downwards took on more the characteristics of falling off a cliff.
The main source of this decline came from a creeping political liberalism and populism which, ironically, penetrated the city later than the rest of the state but which today retards it more than anywhere else in the state. The New Orleans Ring political machine resisted the socialism of Gov. Huey Long past any other area of the state because it was the power he supplanted.
It then became exasperated by a series of mayors more interested in wealth redistribution, to both the “disadvantaged” and their own cronies, beginning with probably the worst, Bob Maestri, but fortunately followed by two relative reformists, deLesseps “Chep” Morrison and Vic Schiro. However, starting with Maurice “Moon” Landrieu, whose grandest economic idea was to build a storm shelter for uncivilized behavior, things began sliding backwards progressively with Ernest “Dutch” Morial and his son Marc Morial sandwiching the reign on the benign but un-visionary Sidney Barthelemy. (Many had high hopes for current mayor C. Ray Nagin, but his performance relative to the disaster ought to snuff those out pretty quickly. Also worth noting – all were Democrats and, beginning with Dutch Morial in 1978, all were black)
So, for the better part of 35 years, New Orleans has had political leadership that, if not outright corrupt, has been particularly ill-suited to bring development to New Orleans in the modern economy. This has created a city whose population continues to decline dramatically and which disproportionately leaves poorer and higher proportions of blacks in it.
In one respect, Katrina may cause New Orleans to become akin to Mexico, exporting poor people away from an environment that does not hold out much promise for economic development. Those who got out showed a determination not unlike that of illegal aliens (and, in fact, probably faced more hurdles than the typical border-crosser given our lax efforts to protect our southern border).
But while one might be tempted to regard this as a refreshing thing (getting the disproportionate number of the poor out who heavily use government services as a result of their poverty), in fact it probably acts as a curse. It was the mainly the most infirm, most unskilled, and most criminal element that did not leave, who are the greatest burden on government and taxpayers. Worse, joining the more-motivated poor who now reside in places where they can do better, a number of more productive citizens who stayed because of certain attachments, with those attachments now gone, also will never return.
(As a case in point, a friend of mine with an Ivy League degree and an advanced degree had just moved to the city to work in order that he and his wife be closer to her family. Her family lost most everything. Now, he reports they are unlikely to return and will head back east.)
These factors complicate the affirmative answering of the question whether New Orleans can even come close to its pre-Katrina semi-glory, much less reverse its decline. With now even the tourism prop somewhat knocked out from under it, a population disproportionately depleted of its more-capable citizens, and a city and state whose political leadership has had a hard time of mastering concepts which have led to growth elsewhere, New Orleans may continue not just to export it citizens as if it was Mexico, but soon also to look more than just politically like Mexico than the U.S.
Granted, no level of government has distinguished itself in response to the crisis (in part man-made by state and local government) provoked by Hurricane Katrina, but that’s the nature of government. It’s inefficient, the nonprofit sector does better and, because it is driven by political rather than market forces, it will let you down a lot. But to blame Pres. Bush yet ignore her own actions simply is dishonest.
We know where the real blame is to be laid if you’re going to assign, and primarily it doesn’t rest with the federal government. But if you are going to blame the federal government, it is disingenuous to declare one official as culpable when your own actions leave you open to the same charge.
Yes, the federal government, under both Republican Bush and Democrat Bill Clinton should have made a greater commitment to flood protection because the Democrat state and local governments were abdicating their responsibility. Yes, the federal response could have been quicker, and may well would have been had Gov. Kathleen Blanco and New Orleans Mayor Ray Nagin been more competent and less partisan.
But where was Landrieu in all of this? If both the Clinton and Bush Administrations were assigning upgrading of levees a low priority, why didn’t she raise their consciousnesses, having 9 years in office to do so? If she were a really effective senator for Louisiana, she would have succeeded in this task and in the last week she would have provided leadership to have cajoled the obstinate Blanco into accepting federal assistance earlier.
I’ve criticized some state officials here. It’s not the New Orleans Police (whose leaders failed them and drove some to desperate measures) or any sheriffs, but, Sen. Landrieu, go ahead if you like, punch me. Punch me like you’ve used the state and citizens of Louisiana as a punching bag for the past 9 years as our senator. Just in the past couple of years, you’ve voted to support abortion, to increase government spending, against tax cuts, to use taxpayer dollars to support abortion, to rescind tax cuts, to discontinue welfare reform, and against a qualified black nominee to the federal courts. And what have you done exactly to help this state, besides make partisan attacks to hide the fact you’d rather follow an ideological agenda (and try to make excuses for your brother Lt. Gov. Mitch Landrieu’s tepid response to the crisis and your father Moon Landrieu’s reign as New Orleans mayor which began to city’s slide into ungovernability) than do what’s good for the state?
So, take a swing at me. You can’t hurt me worse than what you’ve already done to this state, and the dishonor you bring it with your outrageous remarks.
The grim fact is the greater New Orleans area has roughly one-third the state’s population and perhaps an even greater share of total state economic activity. This is because the area is home to two high-volume, high-dollar activities disproportionate to the rest of the state, oil and tourism.
There will be some displacement, of course. Some economic activity will flow to other Louisiana cities, Baton Rouge in particular. Higher gas prices will boost severance tax collections a little (even as the reduced volume does the opposite). And with the federal government pledging already $10.5 billion for rebuilding, that (maybe half; we do have to share with Mississippi) is money entering the economy which likely never would have come this way (as are insurance payoff dollars, estimated in the area of $26 billion of which almost 80 percent should come to Louisiana). But the negatives are going to outweigh the positives by far.
We can estimate that 40 percent of sales taxes, severance taxes, alcohol and beer taxes, auto rental taxes, and individual and corporate income get generated through the area. One-third of all of the remaining kinds of taxes and other forms of revenue tied to economic activity we can estimate come from the area as well. And, of course, it generates 100 percent of the land-based casino receipts
Now (and this is being optimistic; for example, do we really think the land-based casino can earn half of what it was projected to?) let’s cut these totals in half for the 2005-06 cycle. Thus, the state may expect only 80 percent of its anticipated revenues in the areas of sales taxes, alcohol and beer taxes, auto rental taxes, and individual and corporate income (let’s move severance taxes to the other category, given higher prices), and only 83 1/3 percent of anticipated revenues from other sources. (A few small revenue sources should not be affected by the disaster, such as interest earnings.)
This leaves the state with a shocking $1.625 billion loss in anticipated revenues for the next year, almost 9 percent of projected revenues for a budget which we hear every year is short on “needs.” Of course, state expenditures will go down because it won’t be making ordinary expenditures particularly around New Orleans and which ones it will be making now will be subsidized by the federal government. Again, though, some of the expenditures (health care, welfare, etc.) will get displaced just as revenues did. And even new ones may get created.
One could argue the state could draw substantial tax revenues from the $25.5 billion or so federal and insurance money coming in. Assuming it all comes in over the next ten months and the state grabs 4 percent of it (sales tax rate on many items; again, this scenario is optimistic), it’s not far fetched to surmise that the fiscal year 2005-06 budget will end up half a billion dollars in the hole.
Your guess is as good as mine where that money will come from, but I can tell you there will be no educator pay raises, no new initiatives, nor even expansions in practically every state program. Indeed, we are likely to see cuts.
So let’s try looking on the bright side. Maybe this looming economic crisis, of a magnitude the state never before has realized, finally will spur long-needed reform efforts. Simple spending priority alterations such as in the way long-term health care is managed (transferring dollars from institutional to community-based care) and elimination of inefficient uses of state monies such as the notorious Urban and Rural (slush) Funds may come about. Hopefully, other efficiencies may be squeezed from a bloated government.
(Keep in mind that this is an optimistic scenario. Not only must reformers grapple with a political culture that thrives on handouts rather than responsibility, but a lot must go right in the rebuilding process. For example, basically there is now no highway approach from the east to New Orleans. Until this is fixed, economic activity will be severely affected.)
Still, these together would probably save only about $125 million a year. Even if in the short run much of the state will see an increase in economic activity, do not be fooled. The huge hole left in Louisiana’s economy will provide plenty of pain for all taxpayers and producers of wealth and, worst of all, a nontrivial portion of this population will choose to do what many other of their brethren have in recent years – leave the state, aggravating matters even more.
In a previous post I mused that New Orleans Mayor Ray Nagin politically may have gotten a break with his city falling into disaster, that he could evoke sympathy. That was before we knew how extensively Nagin had shirked his responsibility to the city and then tried to blame others for it.
Nagin’s failure to competently discharge his duty began long before the Katrina near-miss cracked levees in Orleans Parish. He appeared not to take seriously disaster preparation even though he has been in office over two years. In retrospect, his plan seemed to be this:
1. Tell everybody to evacuate
2. Whoever doesn’t, get city buses to pick them up and take them to shelters, the primary one being the Superdome
3. When it was over, rescue who needs to be rescued using all public safety forces while pleading for help
It was a plan horribly flawed from the start:
For three days, Nagin ran around like a chicken with its head cut off, watching his plan fail, until he decided to move on to his Plan B – blame everybody else, especially Pres. George W. Bush. Which perhaps makes us understand why his policies did so little to have the city prepared for the crisis and to cope with it afterward – as is typical with the liberalism/populism that infuses the political culture of this state, especially in New Orleans, he abdicated responsibility and stuck his hand out waiting for somebody else to take charge and give him something.
The task of rebuilding New Orleans will be long and arduous, and the area and state cannot waste a moment in doing so. It requires wisdom and leadership that Nagin has shown us he does not possess. The grownups from the federal government seem to be in charge of the situation now, so if Nagin could mature for just one moment he can do what he must in order to maximize the city’s chances of recovery – resign as mayor.