Did Big Government Return with Katrina?

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"The cash needed to support the armies of compassion is great," President Bush told the American people in a televised speech on September 15, and government agencies have been taking full advantage of our compassion for the victims of Hurricane Katrina to start spending it. Cato Institute scholars are now asking why the federal government should be spending that cash, where it will come from, and how to ensure that it is spent wisely.

Cato Institute scholars have appeared on radio and television and in print media to discuss the government's role in disaster relief and how tragedies like this may be avoided in the future. After Wall Street Journal columnist David Wessel announced that Katrina had killed small government, Cato chairman William Niskanen demonstrated that disaster relief was simply the latest in a long line of big government programs advanced by the Bush administration. In a September 20 article for the American Spectator, Niskanen detailed how other Bush administration priorities—such as military spending, expansion of entitlements, and federal oversight of education—have caused the federal budget to balloon in size. If we hope to curb wasteful spending, he argued, we must tackle the country's long-term financial concerns instead of using a natural disaster as a convenient explanation for the problem.

What is worrisome, however, is increasing federal control over infrastructure projects, such as the New Orleans levees, that could be better managed by state, local, and private interests. In the Washington Times, Chris Edwards, Cato's director of tax policy studies, called for the federal government to return such projects to those who understand the unique needs of local communities. In the Chicago Sun-Times and several international newspapers, Cato executive vice president David Boaz compared President Bush to Franklin Delano Roosevelt, a president who believed that all problems could be solved with more federal spending. Boaz suggested that massive federal spending would be less necessary if years of dependence on government programs had not "so destroyed wealth and self-reliance in the people of New Orleans that they were unable to fend for themselves in a crisis."

Director of budget studies Stephen Slivinski pointed out on CNBC and MSNBC and in the Washington Times that members of Congress can use infrastructure and relief bills to hide pork projects for their own districts, just as they did in the post-9/11 relief projects. He wondered how much of the hundreds of billions of dollars President Bush has promised to hurricane victims will actually reach them and how much will end up benefiting the constituents of powerful members of Congress.

Many Americans also believe that the federal government should have mobilized National Guard and other military forces to maintain order in the wake of Katrina. But as Cato senior editor Gene Healy explained on ABC's World News Tonight and PBS's NewsHour with Jim Lehrer, the military may not be used to maintain order or perform police functions except in very limited circumstances. Senior fellow Patrick Basham, appearing on National Public Radio, predicted significant political fallout at all levels of government from questionable decisions made as Katrina progressed.

How did Katrina wreak such destruction so quickly? Patrick Michaels, senior fellow in environmental studies, was featured on Fox News and CNN to discuss hurricanes and global warming, disputing the notion that stronger environmental laws would prevent natural disasters. In response to claims that Katrina doesn't justify rapidly rising oil prices, Cato's director of natural resource studies Jerry Taylor defended so-called price gouging in the National Review and on CNBC and Fox News's O'Reilly Factor. Prices will rise in times of crisis, he wrote, and those higher prices are a sign that the market is working well. "Allocating resources to those who value them most is one very important reason why our economy outperforms economies where resources are allocated by political action."

President Bush has applauded the American people for their compassion, generosity, and strength of spirit in the wake of this year's devastating hurricane season. However, the government seems unwilling to trust that Americans will take care of one another in the absence of massive and inefficient government assistance. As Cato director of health and welfare studies Michael Tanner wrote in the Christian Science Monitor, we must decide "what should be the role of government and what should be the responsibility of the incredibly generous American people."

This article originally appeared in the November/ December 2005 edition of Cato Policy Report