CATO on Katrina

KATRINA’S REVENGE
President Uses Tragedy to Punish Adversaries

Undaunted by the public’s outrage at his mishandling of the Katrina crisis, the President is taking advantage of the national tragedy to settle a few political scores. Using emergency powers the President is effecting though executive fiat what he could not accomplish legislatively. The Administration’s primary targets include working class Americans and the environment.

WORKING PEOPLE

The Administration moved slower than cold molasses to help the true victims of the storm. However, it acted with lightening speed to suspend federal laws that will benefit some of its largest financial supporters.

Large contractors and developers gave more than $20 million to the Bush-Cheney 2004 campaign. These same interests worked hard to include the elimination of the Davis-Bacon labor law in the 1996 and 2000 Republican Party platforms.

All of their hard work was rewarded on September 7th. President Bush signed an executive order suspending the Davis-Bacon law in Louisiana, Mississippi, Alabama and parts of Florida. Florida? Yes, Florida.

Background
While the bodies of New Orleans were still piling up commercial contractors and developers swung into action on Capitol Hill. Florida’s own Congressman, Tom Feeny, no stranger to developers’ money, helped lead the charge. He and 34 other Republicans demanded the repeal of the Davis-Bacon labor law only days after the hurricane cut the heart out of the Gulf Coast area.

Contractors and developers can usually subvert federal labor laws, such as unemployment insurance, worker compensation and the minimum wage, by hiring illegal immigrants. However, when developers’ projects are financed with federal tax dollars the Davis-Bacon Act normally applies. This means minimal oversight from the federal government. This limited oversight makes contracts nervous since many choose to flout labor laws as a matter of course.

The Davis-Bacon Act requires that contractors pay the prevailing local wage on projects financed with federal tax dollars. Contractors, find it highly offensive that they not only have to pay the minimum wage, but actually have to pay the prevailing wage. This can be more than the $5.15 an hour minimum wage.

On the losing side, organized labor made only $8 million in contributions during the 2004 election cycle. Of that, only 13% went to Republicans.


THE ENVIRONMENT

The Administration acted swiftly to suspend federal clean air standards. Originally, the EPA only suspended air quality standards in the four states directly affected by the hurricane. However, under increasing pressure from the oil industry the EPA administrator suspended the standards nationwide. This action gives the green light to oil and gas companies looking to burn dirtier and less stable fuels nationwide.

U.S. House Speaker Dennis Hastert wants to exploit the crisis to provide yet more tax breaks and regulatory roll backs for the oil and gas industry. Oil companies have decided not to build new refineries in the U.S. in the last 30 years. Oil producers often complain that environmental standards make it too difficult.

This ignores the fact that greater refining capacity creates higher supplies of oil, which decreases the industry’s pricing power, and reduces profits. Even the Wall Street Journal recently reported that energy companies are reluctant to build new refineries because they are poor investments.

In addition, environmentalists and tourism advocates have been fighting to keep ecologically sensitive areas free of oil and gas drilling. Even the recently passed Energy Policy Act of 2005, which lavished more than $10 billion in tax breaks for the oil and gas industry, deferred action on this issue. It did not include oil industry wishes to drill in the Alaskan Artic National Wildlife Refuge or expand drilling along the Atlantic, Pacific and Gulf Coasts.

In the wake of Katrina., the Wall Street Journal reports Congressional leaders will take another stab at the issue. According to the Journal Congressional leaders are, “looking to expand drilling,” in these areas.

While the oil and gas industry gave more than $20 million to President Bush in 2004, environmental advocates gave only $2 million, less than $250,000 of which went to President Bush.

SUMMARY

In these actions the Administration’s political shop has still managed to send an unmistakable message to its adversaries. “We only look dead.”