Fox's Wallace claimed that no one would argue that Bush's Gulf reconstruction proposals "aren't good ideas"; news reports disagree


On Fox News Sunday, host Chris Wallace falsely clamed that nobody "would argue" that the three chief Bush administration proposals to rebuild the Gulf Coast after Hurricane Katrina "aren't good ones." But contrary to Wallace's suggestion, offered during an interview with Sen. Lindsey O. Graham (R-SC), several economic and housing experts, as well as politicians, have voiced concerns about Bush's ideas for rebuilding the Gulf region.

Bush, in his September 15 televised address, outlined several proposals for aiding those affected by Hurricane Katrina, including the proposals mentioned by Wallace. Bush proposed a "Gulf Opportunity Zone," where "businesses would get substantial tax breaks to invest in equipment and build structures. Small businesses would be able to deduct from their taxes the cost of investments up to $200,000" [The Washington Post, 9/16/05]. He also proposed what he called "worker recovery accounts," which would provide up to $5,000 a person for "education, job training and child care" [Los Angeles Times, 9/16/05]. Those who find a job within 13 weeks would get to keep the remaining amount in their account. And third on Wallace's list, Bush called for an "urban homestead act" that would "giv[e] federally owned property to aspiring homeowners through a lottery" [Los Angeles Times, 9/16/05].

The September 16 Los Angeles Times noted that Bush's "ideas are, in effect, disaster-relief versions of proposals Bush made during his first term and in his 2004 re-election campaign -- proposals for urban enterprise zones, home-ownership subsidies for low-income families and job-training accounts." An article in the September 17 edition of The Washington Post reported that "many liberals worried that the accounts would eventually replace unemployment insurance and other long-standing parts of the social safety net. And many conservatives didn't care for the idea of creating a large new government program."

The September 16 Post also cited numerous examples to support its reporting that Bush's "proposals were met with some skepticism -- and some hostility -- from economists and housing experts who listened to the speech."

The "urban homestead act" proposal faced questions about its effectiveness, according to the September 16 Post.

  • Brookings Institution metropolitan policy director and former Department of Housing and Urban Development chief of staff Bruce Katz criticized the homesteading plan. The Post wrote of Katz's concerns: "Even if impoverished evacuees can secure the financial assistance to build on donated land, how will they maintain the properties? ... '[W]hen it comes to housing, the support [in the Bush plan] is almost nonexistent,' Katz said. 'He's just handing out land.' "
  • The Post reported conservative University of Virginia economist Edgar Olsen's concern "that a lottery for the homesteads would effectively concentrate assistance among a random few who will have the least means to improve the property."

Bush's "Gulf Opportunity Zone" also drew questions. Bush's proposal is similar to the Opportunity Zones he touted during the 2004 campaign. Variations on the zones have been promoted by previous Republican and Democratic administrations. But, as the Associated Press reported on September 16, "private economists said the history of empowerment zones shows they have failed to generate a significant rebound in depressed urban areas. They said that gains for the special tax zones often meant lost investment in other parts of the country." Several experts agreed with that assessment in the September 16 Washington Post article:

  • Urban Institute senior fellow Leonard E. Burman said that "[t]here is some evidence [empowerment zones] work," but that "other examinations suggest entrepreneurs would have invested in designated regions anyway and have gamed the system to take advantage of the tax breaks."
  • Olsen, the Virginia economist, asked, "Why is it better to have more activity here and less activity elsewhere? ... You'd almost have to have your license taken away as an economist if you didn't believe that's what's going on with these [empowerment zones]."
  • Brookings Institution economic studies director Isabel V. Sawhill said that "[e]mpowerment zone incentives also tend to shuffle economic activity from one area to another, creating winners and losers but no net economic gain." The AP also cited Sawhill regarding empowerment zones: "The bottom line is that they have not been very effective. They didn't stimulate a great urban renewal."

News reports also cited criticism of Bush's "worker recovery accounts":

  • Brookings Institution visiting fellow Margy Waller, who "studies employment," criticized the proposed "recovery accounts" as "unproven" and "a bad idea in emergency situations." "There is certainly value in people having choice, and that's what the accounts would provide," Waller said. "But choice works best when you have information about what training is available and where to get child care. With a new program like this, we have no infrastructure to provide that information." [The Washington Post, 9/17/05]
  • The Associated Press reported on September 16 that "[C]ritics say the accounts provide a perverse incentive by encouraging workers to accept inferior or temporary jobs so they can collect their bonus, rather than undergo the kind of job training that would eventually lead to a better job." The article cited National Employment Law Project policy analyst Andrew Stettner, who said, "What people need right now is time and cash to find a job, and improving the current unemployment benefit system is the way to do that."

In addition, Senate Minority Leader Harry Reid (D-NV) and House Minority Leader Nancy Pelosi (D-CA) criticized Bush's reconstruction proposals as making "the disaster zone 'a laboratory for ... ideological experimentation.'" [Los Angeles Times, 9/16/05]

From the September 18 broadcast of Fox Broadcasting Co.'s Fox News Sunday:

WALLACE: Here are the specific measures that Mr. Bush proposed: a Gulf Opportunity Zone giving tax breaks to businesses that invest there, individual recovery accounts, up to $5,000, for job training and education, and an urban homesteading act giving poor people federal land to build homes.

Senator, I don't think anybody would argue that those ideas aren't good ones, but are they the bold action that's needed to confront persistent poverty?

GRAHAM: They're part of the bold action. We need sort of a Marshall Plan to deal with this problem. I'm a son of the South, Chris. I was in the sixth grade before I ever attended school with an African-American student. The president's right. I've lived this.

Posted In
Economy, Housing
Hurricane Katrina, Natural Disasters
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