Bush: Katrina won't spur tax hikes

Tax hikes won't be an option to offset rebuilding funds for the Gulf Coast, President Bush said in a speech Friday.

Bush said some of the money for the monumental effort - estimated to cost $200 billion - would have to be found in cuts to other programs, though he did not offer specifics.

The post-Katrina rebuilding comes at a time when the budget deficit already is increasing.

The shortfall is expected to exceed $500 billion by 2008 and climb to $873 billion by 2015, said Brian Riedl, a federal budget analyst at the Heritage Foundation, a conservative think tank focusing on policy research and analysis.

"Katrina costs are occurring alongside runaway spending and rapidly escalating entitlement costs," Riedl said.

Some experts said Bush likely will look to trim discretionary spending.

"I think in general they'll look for crevices in the budget, and crevices are in the eye of the beholder," said George Rabinowitz, professor of political science at UNC.

"They've already cut substantially from programs that aid to poor people, and I don't think that there is that much room in those programs."

But Riedl said some projects are plainly wasteful, and cutting in those areas wouldn't be detrimental.

"Anytime a lawmaker adds money for a specific project, that's pork," Riedl said.

If Congress eliminated all superfluous projects and delayed the newly established Medicare prescription drug entitlement for four years, Riedl said that would offset the money needed to restore the Gulf.

Experts said defense spending likely would not be cut, and others said Bush should steer clear of cutting from health and education programs.

Michael Donihue, professor of economics at Colby College, said taxpayers ultimately would bear the cost - if not now, then somewhere down the road. "Future generations have to pay it back in the form of higher taxes," he said.

Asking citizens to shoulder the financial burden of a domestic crisis might be politically acceptable, he said. "People would even be willing to pay higher taxes for it."

Some said costs for the reconstruction would be borrowed, both from other countries' governments and individuals.

"Politically speaking, it is easier to borrow the money than to ask Americans to make a sacrifice," said Lawrence Haas, director of public affairs at Manning Selvage & Lee, a global public relations firm.

But no matter where the money comes from, there still is the risk of misspending funds set aside for the Gulf region, Riedl said.

"Congress is notoriously inefficient with tax dollars," he said.

"And I'm concerned that a lot of the Katrina money will be wasted as well."

 

Contact the State & National Editor at stntdesk@unc.edu.