'Operation offset'

New Orleans | The bill for rebuilding New Orleans will be big, and the default position of Congress is just to add it to the national debt. But some in Congress are looking for another way to cover the cost

Issue: "Rita: Strike 2," Oct. 1, 2005

Americans responded to Hurricane Katrina's devastation by reaching into their pockets and giving to charity. America's government seems to be responding by reaching into the pockets of American children.

At least that's what some conservatives on Capitol Hill were saying last week as they mounted what they are calling "Operation Offset." Their goal is to keep the costs for the enormous post-Katrina recovery effort from simply being added to the national debt. Instead, they are finding places in the federal budget where Congress could cut spending to pay for a bill that has already reached $62 billion and may run as high as $200 billion to $300 billion.

It's an uphill effort, but the practice of offsetting emergency costs with spending cuts is not unprecedented. In 1994, after an earthquake in Los Angeles, President Clinton and a Democratic Congress cut spending to offset recovery costs. The next year, a GOP Congress managed to find spending cuts after the Oklahoma City bombing.

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But that was then. Now, despite a 30 percent increase in federal spending over the last four years, including a 7 percent hike this year, powerful Republicans like House Majority Leader Tom DeLay (R-Texas) say the federal budget is too tight to find any place to cut. "It is right to borrow to pay for it," said Mr. DeLay about the recovery cost.

While President Bush says he is open to the broad idea of budget cuts to pay for Katrina relief, he hasn't taken the lead by mentioning specifics. Aides say the issue has not been a focus of meetings about the recovery plan, and the president's only public absolute is that he won't increase taxes, on the grounds that it would hurt the economy. His commitment to spend, on the other hand, is about as open-ended as possible: "It's going to cost whatever it's going to cost."

In the absence of White House leadership, conservatives in and out of Congress have taken up the mantle of fiscal discipline. Among the proposals they are floating:

  • Cut federal agency spending. Several members of the House reportedly offered an amendment to a relief bill that would have done just that, but it failed to even get a floor vote. Many are still promoting the idea. Sen. Lindsey Graham (R-S.C.) has, for instance, called for an across-the-board cut in nondefense spending to pay for the recovery.
  • Hold off for one year on President Bush's new prescription drug entitlement for seniors. Savings: $40 billion. Rep. Jeff Flake (R-Ariz.) offered up the plan even before Katrina hit, but the idea so far has gone nowhere, with White House spokesmen signaling presidential opposition.
  • Eliminate $25 billion in "earmarks"-appropriations for things like nature trails and bike paths-from the transportation bill signed into law this summer. Start with the "Bridge to Nowhere," the $231 million structure approved by Alaska Rep. Don Young's transportation committee, that would connect Ketchikan, Alaska (pop. 8,000), with an airport that receives seven commercial flights a day.

In a first step, Tracy Velázquez, co-chair of the Montana Democratic Party, called on the Bozeman, Mont., City Commission to give up a $4 million earmark for a parking garage. "I think every city in America should look at what they can postpone or do without for now," she told the Bozeman Daily Chronicle. Few others have followed that example, though, and so far Congress has not slashed any pork.

The lawmakers proposing these cuts could hardly be called tight-fisted. Rep. Mike Pence (R-Ind.), a co-sponsor of Rep. Flake's prescription drug proposal and a leader of "Operation Offset," told WORLD that even the strongest conservatives in the House are willing to spend the money to rebuild New Orleans: "I really don't think the fight right now is over what the policies should be so much as how we'll pay for them."

The president's plan for New Orleans seems to be broadly popular among Republicans in the capital. It is built on the idea that direct federal spending will best help in the area of infrastructure-the rebuilding of things like utilities and schools. For everything else, the government will likely use vouchers, tax incentives, and a new "Urban Homestead Act" (see "Before the next crisis") to encourage individuals and small businesses to do the rebuilding.

"The American people expect us to rebuild the bones," says Rep. Pence, "but the muscle and the tendons and sinews of the private economy is where we have to look to bring back New Orleans."

One question, however, remains unanswered: If they rebuild it, how many will come? A poll of evacuees in Houston, conducted by The Washington Post and the Henry J. Kaiser Family Foundation, found that only 43 percent said they wanted to return to New Orleans. (Forty-four percent said they would resettle elsewhere, and 12 percent said they did not know yet.)


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