Of Tax Cuts and Hurricanes: The Cost of Faux-Conservative Tax Policy
Interesting read on the relationship between spend 'n' cut taxes and preparedness for hurricanes.
Casual observers wouldn’t expect Mike Parker to serve as a de facto spokesman for how the Republicans’ tax-cuts-at-all-cost agenda has weakened America. As a conservative GOP Congressman from Mississippi in the ’90s, Parker was an outspoken advocate for giving tax breaks to the wealthy.He served as one of Newt Gingrich’s lead grassroots advocates for reducing the estate tax—a levy that falls almost exclusively on the wealthiest 1.2 percent of Americans. In his 1999 run as Republican nominee for Mississippi governor, Parker made tax cuts the centerpiece of his campaign. His signature television advertisement featured him shooting pool, saying “When I say I’ll fight to cut your taxes, well friend, that’s something that you can bank on.”
After narrowly losing that race, Parker was rewarded for his Republican service by President Bush, who appointed him to head the Army Corps of Engineers on June 7, 2001. That was the very same day Bush signed his massive $1.3 trillion income tax cut into law—a tax cut that severely depleted the government of revenues it needed to address critical priorities. As Parker soon learned, one of the priorities that would be sacrificed was flood and hurricane protection.
By the beginning of the 2002 congressional session, Parker had enough of sitting in silence while these tax and budget decisions were being made. In a meeting with White House budget director Mitch Daniels, Parker demanded the Bush administration restore the critical money for flood and hurricane protection.
“I took two pieces of steel into Mitch Daniels’ office,” Parker recalled. “They were exactly the same pieces of steel, except one had been under water in a Mississippi lock for 30 years, and the other was new. The first piece was completely corroded and falling apart because of a lack of funding. I said, ‘Mitch, it doesn’t matter if a terrorist blows the lock up or if it falls down because it disintegrates—either way it’s the same effect, and if we let it fall down, we have only ourselves to blame.’ “
But as Parker noted, “It made no impact on [the White House] whatsoever.” In February 2002, the president unveiled his new budget, this one with a $390 million cut to the Army Corps. The cuts came during the same year the richest 5 percent (those who make an average of $300,000 or more) were slated to receive $24 billion in new tax cuts.
The cuts were devastating. The administration provided just $5 million for maintaining and upgrading critical hurricane protection levees in New Orleans—one fifth of what government experts and Republican elected officials in Louisiana told the administration was needed. Likewise, the administration had been informed that SELA needed $80 million to keep its work moving at full speed, but the White House only proposed providing a quarter of that. These cuts came even though the potential cost of not improving infrastructure was known to be astronomical. A widely-circulated 1998 report on Louisiana’s insurance risks said a serious storm could inflict $27 billion worth of damage just to homes and cars—and that didn’t include industrial or commercial property. Local insurance executives estimated in 2002 that the total damage would be closer to $100 billion to $150 billion—estimates that now look frighteningly accurate.
When Parker headed to Capitol Hill for annual budget hearings in February 2002, he couldn’t hide the truth. Under questioning, he admitted that “there will be a negative impact” if the President’s budget cuts were allowed to go forward. The White House fired Parker within a matter of days.
The Army Corps told the levee board that the necessary improvements could cost up to $2 billion—a large figure, indeed. But not compared to the new tax cut package that President Bush unveiled just three months later.
On January 7, 2003, Bush gave a speech in Chicago outlining a $600 billion tax cut proposal. It was a plan that centered around eliminating taxes on stock dividends. “Nearly two-thirds of the tax benefits would flow to the most affluent 5 percent of households,” noted the Christian Science Monitor. “The top 1 percent—with incomes averaging $1 million—would get 42 percent of the tax-free-dividend goodies [while] only 13 percent of this tax cut would go to people with incomes below $50,000.”
For the Gulf Coast in particular, the plan was a disaster. According to the nonpartisan Citizens for Tax Justice, three out of the five states that would receive the least from the new tax cuts were Louisiana, Mississippi and Alabama. Perhaps more importantly, the package would cost cash-strapped states tens of millions of dollars in lost revenues, because many state tax rates were tied to the federal tax code. The Baton Rouge Advocate soon reported that the proposal “could cost the Louisiana state treasury up to $30 million in tax revenues”—money needed to address the state’s infrastructure problems.
Those concerned about Louisiana’s safety may have seen the new tax proposal as a reason for optimism. If the White House believed it could afford hundreds of billions of dollars of new tax cuts for the very wealthy, surely it would not plead poverty when it came to spending a few million to plug infrastructure deficiencies its own experts said were critical.
But four weeks after the dividend tax cut plan came Bush’s new budget, and another half billion proposed cut to the Army Corps of Engineers. That included a proposal to slice about two thirds of SELA’s budget—such a massive cut that it would effectively halt projects that were reinforcing flood control infrastructure.
The Washington Times headline on January 20, 2004, told it all: “Bush Wants Tax Cuts to Stay.” The article reported that even with a war, record budget deficits and dangerously crumbling infrastructure, the president would make a new, $1 trillion tax cut plan the centerpiece of his State of the Union address.
And once again, just days after the speech, the White House on February 2 released a budget with another massive cut to infrastructure and public works projects—this time to the tune of $460 million. As the Denver Post later reported, “the Southeast Louisiana Flood Control project sought $100 million in U.S. aid to strengthen the levees holding back the Mississippi River and Lake Pontchartrain, but the Bush administration offered a paltry $16.5 million.” The Chicago Tribune noted that the Army Corps of Engineers had also requested $27 million to pay for hurricane protection upgrades around Lake Pontchartrain—but the White House pared that back to $3.9 million. Meanwhile, budget cuts forced the corps to delay seven projects that included enlarging critical levees.
These latest cuts came just as the previous ones were starting to wreak havoc. Five days after Bush’s budget was released, the Times-Picayune reported that “the Army Corps of Engineers doesn’t have money to keep its dozen major flood-protection projects going” simultaneously.
By the time Katrina struck on August 29, the disaster was already a fait accompli. Though politicians feigned shock and outrage at the federal government’s hurricane preparations, there was nothing to be surprised about. The disaster was the consequence of years of putting tax cuts above everything else—even above a catastrophe we knew was coming.
Actions have consequences.
Such is the distillation of the conservative's mindset: he has, I want, and you should allow me to take.