Subsidizing poverty


Louisiana can't pay the bills. Now what?
Now this one bears watching.

Flood-ravaged Louisiana can't pay the $3.7 billion that the U.S. government says is its share of hurricane relief, a spokeswoman for Gov. Kathleen Blanco said Thursday.

"You can't squeeze $3.7 billion out of this state to pay this bill. Period. That would be difficult for us on a good day," the spokeswoman, Denise Bottcher, told USA TODAY.

Staffers for the governor "about fell over" Wednesday night when they received the Federal Emergency Management Agency's estimate of the state's costs for hurricanes Katrina and Rita, said Mark Merritt, a consultant working for Blanco.

FEMA projects that it will spend a total of $41.4 billion in Louisiana, about $9,000 per resident. Federal law requires state and local governments to pay a portion of disaster relief costs. That share can be as much as 25%. The $3.7 billion estimate is roughly 9% of FEMA's projected costs in Louisiana.

The $3.7 billion represents just under half of the $8 billion the state spends per year and comes as the extensive flooding around New Orleans has severely undercut tax revenue. The state is in the midst of heavy cost-cutting to whittle down a projected $1 billion shortfall.

Granted, there is no way this bill can be paid and still have Louisiana stay an independent state. By my rough and admittedly inaccurate but conservative estimate, something on the order of 7 billion Federal dollars went to Louisiana since about 1960. Louisiana received 1.9 billion in Army Corps of Engineers funding alone during the first five years of the Bush Administration.

Do you know how much interest 7 billion dollars over 40 years can generate? Even if it is not all deposited at once? Whole financial empires have risen since that time and at considerably less cost. The current bill BEFORE new investment is 14.5 billion. You can count on pork being added to any debt relief or additional funding bill that goes before Congress.

Let me make this clear. Federal spending caused most of the poverty in New Orleans.

People respond to incentives.

If people have to choose between not eating and leaving to look for work, most of them will leave.

If people believe that they are entitled to just enough to keep them from starving and they get just that, they will stay. They will resent the money, they will complain, but they will stay.

By trying to make things easier for people who live on the knife edge between poverty and death, we encouraged more people to stay in poverty.

People respond to incentives.

And everything the Federal government is doing now will make things worse in New Orleans.

— NeoWayland

Posted: Sat - December 3, 2005 at 05:22 AM  Tag


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