The Floodgates Have Opened

Hurricane Katrina and the death of New Orleans have changed everything, exposing the rot in government and the failures of the free-market worldview that has dominated our politics and economic policy for more than 30 years. Once again, the country must take stock of a terrible failure; once again we must change direction.

It is becoming clear that the human and economic damage from Katrina will far exceed that from September 11. Katrina has killed many thousands and displaced more than a million people. Immediately they need shelter, food, clothing, medical care, and places in school; these are being provided. But very quickly they will also need housing, jobs, and health insurance. Later on they will need help to get back home, if they choose to return, as many will, when New Orleans and the Gulf Coast are rebuilt.

The affected families should be given housing vouchers and placement assistance; cities like Houston, which is inundated with evacuees, should get immediate impact aid to provide housing units, classrooms, and, if required, jobs. All Gulf Coast evacuees should get immediate health coverage under Medicare. And let's help the evacuees form a national union, to communicate with one another, to represent their interests, and to keep alive the spirit of New Orleans and the Gulf Coast. In our democracy, the voices of the displaced must be heard.

To rebuild New Orleans and the Gulf Coast will require a vast and coordinated effort. Before the storm, scientists and planners called for $14 billion to rehabilitate the barrier islands and wetlands and to re-engineer the levees. Rebuilding the city itself will cost tens of billions more. And it should be done fairly soon in the interest of those just displaced. The new New Orleans should be a beacon of mixed neighborhoods, affordable housing, and decent transit for the poor and middle class. It should be free of slumlords and protected from excessive gentrification. Because the risks will not go away, the country needs a new disaster-management paradigm. This must include transparent plans, properly resourced, with provision for all Americans living in areas of risk.

The Federal Emergency Management Agency, or FEMA -- which was functional under Bill Clinton and corrupted under George W. Bush -- must be taken out of the Department of Homeland Security and given back over to competent leadership. But that should be only the beginning; it is very clear we are totally unprepared to cope with calamity on the scale just seen. For the Gulf Coast we may need a new authority altogether -- a Gulf Coast Authority, modeled on the Tennessee Valley Authority (TVA) and based in the region -- to manage the ecological risks and coordinate disaster planning.

Katrina's damage extends nationwide. Oil production, refining, and trade routes are disrupted; prices are soaring; confidence is damaged. The Port of New Orleans cannot be dispensed with, and so long as it is disrupted the national economy is in peril. The best support will come not from quick fixes but from immediate steps that meet long-term needs, strengthening our infrastructure in many parts of the country after decades of neglect and decay.

But some quick fixes are needed. On the physical side, opening and staffing the port will have to be done quickly at any cost. On the human side, the new bankruptcy bill should be suspended at once, before it takes effect on October 17. Gulf Coast evacuees who have lost everything should get immediate relief from their existing debts.

So then, where must the resources come from? It's obvious that immediate relief, long-term investment needs, and a slowing economy will all add to deficits and debt. So be it: meeting needs must take precedence over all other objectives right now. But even so, resources can be found to cover part of the cost.

First, the National Guard must come home from Iraq, and our adventure there phased out as soon as it safely can be. Congress should also kill the Missile Defense program, bunker-busting nuclear weapons, proposed permanent bases in Iraq, Afghanistan, and Central Asia, and other military systems that add nothing to our security. Bridges to nowhere in Alaska and other civilian pork should be cut immediately. Steel and concrete are needed, now, for more important things.

Next, Congress must declare a moratorium on all tax cuts. The estate tax should be restored at a fair level, not repealed, as the Senate leadership continues to propose, at a cost of $1.5 billion a week. The IRS and financial regulators should shut down offshore tax havens and bring those who had abused them to justice. New taxes as necessary should fall on those who can afford to pay: on capital gains, dividends, and those with high incomes. It was poor and middle-class citizens who, above all, suffered catastrophe last week. Prosperous Americans must now share the burden of helping them out.

Finally -- as if the above were not enough -- we will need to focus on getting rid of corruption in this country at every level: state, local, and federal. Looting is indeed intolerable. But it's very clear that the worst looting we've seen has been the wholesale destruction of the capacity -- and indeed the will -- of the government to serve the people. The shocking misconduct of FEMA during the disaster, when timely and determined action could have saved many lives, needs a full and completely independent investigation. One vignette, disclosed by Senator Mary Landrieu on September 3, tells much: that in the midst of the disaster, Bush's minions faked the repair of the 17th Street canal levee in New Orleans for a presidential photo opportunity. The changes we need now go to the heart of this mentality. That will require not only the defeat of the present administration, but a fundamental break with complacency, cynicism, and indifference in both parties.

James K. Galbraith and Michael Intriligator are chairman and vice chairman, respectively, of the New York-based Economists for Peace and Security.

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