Monday, September 05, 2005

We all live in an economic New Orleans

By Steve Kurdziel

Steve Kurdziel of Shaker Heights, Ohio, is our guest columnist as we continue to explore the moral and economic consequences of Hurricane Katrina. This column is a renewal after more than 30 years of our relationship as reporter and editor when we were undergrads at Georgetown University. He's a gifted writer and an occasional (and highly-praised) columnist for the Cleveland Plain Dealer. Feel free to engage Steve in conversation by posting a comment below. I've also posted as a comment (below) his second article on President Bush's failure to use his legal authority to intervene at an early stage of the hurricane crisis.

There is no doubt that the disaster on the Gulf Coast was a major failure of government. As David Brooks says in his New York Times column, this massive and very public debacle has joined in the public mind with the Enron scandal, the intelligence screw-up on weapons of mass destruction and the shame of Abu Ghraib in a broad indictment of the sheer incompetence and moral failure of our political leaders and institutions. The result, Brooks thinks, could be a tectonic shift in our politics similar to the one that brought Ronald Reagan to power in 1980.

But perhaps we need more than a shift in the political landscape. My fear is that the crisis unleashed by Hurricane Katrina could obscure a greater danger: the coming economic disaster that Katrina has brought even closer.

The counter on the front page of this blog spits out the dizzying, relentless cost of our intervention in Iraq. That's important. But to be honest about what we're facing economically, we need simultaneous counters reeling off:
  • our dependence on consumer debt to keep our economy afloat (doubling from $5 trillion in 1998 to $10 trillion in 2004, with 80 percent of that based on a home loan);
  • the increasing share of our gross domestic product based on consumer sales, growing from just under 50 percent in 2000 to nearly 90 percent in 2004;
  • the unfunded responsibilities for pensions and health care that will be needed as baby boomers retire.
Oh, and we should have a counter that's stuck on zero to show how much America is saving now that we've become addicted to the idea that we don't need savings when we have an ATM machine in our house.

Are we are living in an economic New Orleans?

Katrina is going to cost at least $100 billion. Iraq and the other costs of maintaining Pax Americana are a financial open sore that will continue to bleed for years. The Social Security and Medicare bills will be in the trillions. And we don't know how much the next terrorist attack or the next California earthquake will cost, although both disasters are probable (as FEMA warned in 2001), if not inevitable.

In fact, we are all living in an economic New Orleans, well below the sea level of an economy where expenses, present and future, are balanced by income and savings. Our temporary protection has been a system of easy, cheap credit and the illusions of wealth that (we have been repeatedly warned) will not stand up forever if they are strained.

Make no mistake, we are here because this administration gambled that it could keep everyone buying things with plenty of inexpensive credit while they created a new economy of new jobs through tax cuts and free trade. That plan depended upon those new jobs showing up and the credit slowly being dried up.

Now, because of Katrina, the overheated credit machine will have to keep running. The great illusion of increasing wealth will mask the mounting public and private debt that must someday be repaid.

The administration's plan: the rich can ride out the storm

If you think it's outrageous that the administration has been so obtuse, so ill-prepared and so wrong about Iraq and Katrina, consider that its policies are now dependent on an economic base of stagnating incomes, non-existent savings and massive bills coming due for what we already know and for what we know is coming.

What is their plan?

Part of it seems to be a version of the evacuation plan for New Orleans—those who can should drive out of town, and those that can't will have to drown. David Brooks called the abandonment of the poor in New Orleans the moral equivalent of leaving the wounded on the battlefield. Does that image also apply when only a tiny segment of America has the means to ride out the coming economic collapse while the middle class is trapped in houses on which they owe more than they are worth and a bankrupt government lacks resources to help the poor?

We can't turn back the clock to prevent last week's catastrophe. But there may still be time to fix our economy—although, as was the case with the storm levees, the job and the costs will be massive and it is very tempting not to act. The price of failure in this case, however, will not be limited to one region nor confined to the destructive force of a single hurricane.

More links on this subject

A tale of two families: one poor, one middle class
Times Picayune to Bush: "bald-faced lies"
Tikkun: America, welcome to the global era
Maureen Dowd: United States of Shame
Paul Krugman: a can't-do government


At 10:37 AM, Anonymous Steve Kurdziel said...

By Steve Kurdziel

Why didn't President Bush send federal troops into New Orleans as soon as it was clear that basic security had broken down?

The President's defenders have widely raised the argument that a President has no authority to intervene in local law enforcement unless formally asked by the governor.

But what if that's not true? And what if there is a precedent to prove it?

I'm an Eisenhower Republican and have had a serious, scholarly interest for over 30 years in the history of Eisenhower as general and president. In 1957, Eisenhower did send federal troops into Little Rock, Ark., to integrate Central High School when a mob, defying a federal court order, surrounded the school to keep black students out.

And he didn’t wait for the governor to call.

Arkansas Gov. Orval Faubus was a segregationist. He had no intention of using either state police or the National Guard to protect the students. He certainly was not going to invite the President to intervene, Eisenhower was helpless ... or so Faubus assumed.

But the President, the brilliant organizer of D-Day, knew how to get a job done. As he recounts in his memoirs, at the first sign of trouble he asked the U.S. Attorney General for a legal opinion: did he have the power to deploy federal troops without a formal request from the state government?

The answer was that "the President can suppress any ... domestic violence ... which so hinders the execution of the laws that people are deprived of their lawful rights and state authorities are unable, fail, or refuse to protect those rights...."

Eisenhower knew that when a mob of more than a thousand was keeping eight young black students from lawfully attending school, failure to act would invite anarchy. As Eisenhower biographer Stephen Ambrose put it, "he could not have done otherwise and still been President."

In typical Eisenhower fashion, once he made his decision he saw no point in further delay. On Day Two of the crisis in Little Rock, he ordered the 101st Airborne Division to restore order. The first detachment surrounded the high school within hours. Mob resistance to integration collapsed the next day.

President Bush had the legal authority to order rapid deployment units into New Orleans on Monday ... with or without the formality of a request from state authorities. Today the President vowed to "lead" his own investigation into the failures of communication between the state and federal governments in the early days of the crisis. Some may ask why he didn’t exercise leadership—as President Eisenhower surely would have done—when it counted.

At 10:44 AM, Anonymous REILLY said...

This isn't so much as a comment on this particular post, but more so on the entire blog. i skimmed around it a bit and found I couldn't agree more with many of your statements. Keep 'em comming! As i too, am blue in Cleveland, Ohio! Also, you may enjoy the music video at the end of my comment.

"The government is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs." - Hunter S. Thompson


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