Dangerous times for our wallets

Mary Katharine Ham

9/9/2005 12:00:00 AM - Mary Katharine Ham

These are dangerous times. These are the times, immediately following a national emergency, when the federal government feels it must do something. They’re not sure what exactly, but they know they must do something so that everyone knows how much they care.

     All taxpaying citizens should live in fear of these times, when politicians cannot be satisfied with their own contributions to Hurricane Katrina relief and start healing with our money. But understanding that such is the nature of politicians, I’ve come up with a few things they can do that do more to show just how much they care than throwing $50 billion in tax money in the general direction of the American South without a plan for using it.

     Purge the pork. The New York Times will probably be horrified to learn that it is in agreement with myself and The Heritage Foundation on this point. When Congress passed and President Bush signed the $286.5 billion transportation bill in early August, they all knew it contained a lot of nonsense—$24 billion to pay for more than 6,000 pet projects, to be exact. If Congress wants to do something, it should give up the projects. The regular citizens of their states are giving up much to help the victims, and I doubt the folks in Wilmington, Del. would miss a $6.5 million train station restoration.

     Perhaps Don Young, architect of the $223 million bridge to nowhere in Alaska, could be convinced to give up his project to pay for a bridge over the Bay of St. Louis in Mississippi. I’m glad to see folks on both ends of the political spectrum picking up on this idea, because our friends in Congress sometimes require a larger dose of shame than the average American to get in line. A tongue-lashing from both sides of the aisle could do the trick.

     Cut the Bacon. Davis-Bacon, that is. The Davis-Bacon Act is a Depression Era federal regulation that requires the government to pay the “prevailing wage” in federal construction projects. The “prevailing wage” is, of course, a product of a ridiculous bureaucratic formula figured with the help of lobbying unions. The formula effectively excludes anyone but union builders and sets the “prevailing wage” high enough to inflate federal construction costs by as much as 15 percent, according to the U.S. Chamber of Commerce.

     Luckily, President Bush has the power to waive Davis-Bacon in a time of national emergency, as he did yesterday. Now, Washington can show how much it cares by providing 15 percent more infrastructure for the same price. Waiving Davis-Bacon has the added benefit of allowing contractors to employ more out-of-work Gulf Coast residents.

     Under Davis-Bacon’s high wage requirements, contractors are more likely to hire seasoned union members, many from other parts of the country. But without Davis-Bacon, builders can afford to take a chance on out-of-work locals who may not have as much experience in construction, but are eager and able to help with reconstruction at a lower cost.

     The elder President Bush waived Davis-Bacon after Hurricane Andrew, and Franklin Roosevelt and Richard Nixon did it before him.

     Read the supplemental. One of the more appalling facts about Washington, D.C. is that Congress can get together, spend a couple of billion dollars and have little idea what it is spending that money on.    

     Congress is going to spend all of September on Katrina and the confirmation hearings for John Roberts. But surely someone can find the time to read the Katrina relief bills, right? Well, not so fast. As of now, folks on the Hill are open about the fact that few will read the Katrina relief legislation before it passes.

     My co-worker Tim Chapman, who has his ear to the Hill, predicts that the government will end up spending $100 billion in response to Katrina. That’s the equivalent of 5 percent of the annual federal budget. If you sent 5 percent of your annual budget to a charity for Katrina relief, would you do it without checking up on the charity and finding out exactly how they would spend the money? Of course not, but Congress doesn’t have many of the sensible habits of most Americans.

     Now would be a good time to develop some fiscal responsibility. Policing the supplemental would assure that fewer folks try to sneak in yet more pork projects that drain resources from Louisiana road-building. Citizens Against Government Waste has already challenged Congress to avoid pet projects, and President Bush is said to be pushing for line-item veto power over the bill. 

     Stop channeling Jimmy Carter. Politicians need to let go of the delusion that they are capable of setting prices for gas in a free market.

     Sen. Carl Levin (D-Mich.) has already asked President Bush to impose an emergency cap on gas prices until prices return to pre-Katrina levels. The California attorney general plans to prosecute price-gougers. Sen. Dianne Feinstein (D-Cal.) asked oil companies to voluntarily slash prices. Is it not remarkable that folks can get this far in government without understanding the first thing about the free-market system that drives our country?

     Rising prices signal increased demand (or diminishing supply, as was the case of Katrina). They force Americans to make cost-benefit decisions about just how much they really need to drive. For instance, if the rising cost of a trip to the beach begins to outweigh the benefits of sunbathing, one would stay home, leaving gas for those truly in need. In addition, rising prices—and yes, rising profits—are an incentive for the gas distribution chain to work harder to keep gas flowing, even when the circumstances are not ideal. Without this incentive, gas would cease to flow. That would make $3.50-a-gallon gas look pretty good.

     Gas is allocated to the appropriate areas and remains flowing for everyone in America without your help, Congress. Please don’t mess it up.

     All of the families displaced by Hurricane Katrina this week will need to slash their new shoes and pedicure budgets to take care of the more important expenses brought on by Katrina, like housing and food. They will need to make sure they get the best deals possible on the reconstruction of their homes, and read the fine print on every deal they make. It is not too much to ask Congress to do the same.

Mary Katharine Ham is Senior Writer & Associate Editor at Townhall.com.