President Bush said Friday that rebuilding the Gulf Coast would “cost whatever it costs,” that he would not raise taxes to pay for the recovery and that at least some of the expense would have to be offset by cuts in other programs.
His call for sacrifices in the federal budget came a day after he addressed the nation in prime time from an outdoor lectern in New Orleans, where he promised to rebuild New Orleans and the surrounding Gulf Coast region damaged by Hurricane Katrina.
Bush used a national day of remembrance for the storm victims Friday to expand on the themes of racial injustice that he touched upon the night before, telling a packed service at the National Cathedral that “as we clear away the debris of a hurricane, let us also clear away the legacy of inequality.”
Taken together with his speech Thursday night in Jackson Square, Bush’s comments were part of an effort to shift the focus to promises of rebuilding and recovery and away from criticism that the White House had been callous in its slowness to help the storm victims, many of whom were black.
The White House on Friday also offered a few more details about the president’s proposals to provide incentives for rebuilding and to assist displaced residents with homesteading land and money for job retraining. The Gulf Opportunity Zone he outlined Thursday would offer special tax breaks to businesses and would cost about $2 billion; school vouchers, worth up to about $7,000 for displaced students, could be used for private as well as public schools. Administration officials also are considering a suspension of the steep import tariffs now imposed on cement from Mexico, lumber from Canada and numerous forms of steel.
Again on Friday, Bush put no price tag on the rebuilding, although others have said the federal government would quickly run through the $62.3 billion in relief aid already approved by Congress and could wind up spending as much as $200 billion.
At a news conference in the East Room with Russian President Vladimir Putin, Bush offered no suggestions about what kind of cuts might be made or whether he would revisit the $24billion in pet projects for members of Congress that were in the $286.4 billion transportation bill he recently signed into law.
But he explicitly ruled out tax increases to pay for the reconstruction and relief costs. He has continued to press for a permanent extension of his tax cuts, which would cost $1.4 trillion over 10 years.
Bush defended the additional tax breaks he is recommending for businesses in the gulf region, saying they would not be expensive.
“Look, there’s not going to be any revenues coming out of that area for a while anyway, so we might as well give them good tax relief in order to get jobs there and investment there,” he said.
The escalating bills for the damage wreaked by Katrina have begun worrying representatives in Congress, with a growing number of Republicans distancing themselves from what they viewed as unchecked spending by the White House. Congress was poised to make $35 billion in spending cuts over the next five years, including in the Medicaid program that provides health care for the poor.
Budget analysts on Capitol Hill already were bracing for rising deficits as a result of financial burdens ranging from operations in Iraq to the Medicare prescription drug benefit program. On Friday, congressional deficit hawks said they were pleased at the president’s new stance on trying to compensate fiscally for the burgeoning cost of the storm recovery, though they would have preferred he had included a call for cuts in his New Orleans speech.
“I think there are plenty of places to go to work, starting with congressional earmarks,” said Sen. John McCain (R-Ariz.), referring to pet projects lawmakers place in such bills as the transportation measure, which included a now-infamous $250 million bridge in Alaska to a small island that has 50 residents.
Rep. Mike Pence (R-Ind.) said the Republican Study Committee, a group of House conservatives, planned next week to unveil a series of potential cuts as part of its Operation Offset, an effort to identify savings.
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Brian Riedl, a longtime budget analyst at the Heritage Foundation, a conservative research group, said Bush needed to lead the efforts for budget cuts.
“Thus far, President Bush has not vetoed a single bill and has allowed Congress to spend too much money,” Riedl said.
Riedl published a new budget forecast that anticipates soaring deficits as a result of Katrina, the conflict in Iraq and huge costs for the Medicare prescription drug program. All in all, he said, the budget deficit is likely to hit $520 billion in 2008, up from about $400 billion this year.
Democrats were quick to criticize the president’s renewed fight to extend his tax cuts, the consideration of which Congress has postponed for at least the next months. Rep. John Spratt of South Carolina, the ranking Democrat on the House Budget Committee, pointed out the long-term effects of those extensions.
“The president should acknowledge the consequences of what he’s talking about,” Spratt said, adding that the combined cost of Bush’s tax proposals, including a possible repeal of the alternative minimum tax, could hit $2 trillion over 10 years.
“This will clearly preclude cutting the deficit in half over the next five years,” he said.