Gulf rebuilding plans: mix and match

The Gulf Coast has become a giant petri dish - for post-Katrina creeping mold, and also for Democrats and Republicans who view it as a vast policy lab to test their ideas about community rebuilding. Many, but not all of these ideas, should be attempted.

Predictably, some Republicans put government emphasis on the private sector. President Bush proposes a "Gulf Opportunity Zone" of mostly business tax breaks. The Heritage Foundation, a conservative think tank, wants to eliminate capital gains taxes for investors in the area, and is pushing school vouchers and health-care tax credits to meet the temporary needs of a dispersed population.

Equally predictable, key Democrats are pushing an expanded role for government. Sen. Edward Kennedy (D) of Massachusetts touts a temporary Gulf Coast redevelopment authority, reminiscent of the Tennessee Valley Authority, created to revive that area during the Depression. The new authority would bring local, regional, and federal leaders together to plan rebuilding and set priorities. Interestingly, he found a friend in GOP New Hampshire Sen. Judd Gregg. This week, they proposed a bill establishing a new agency that would oversee billions of rebuilding dollars.

Given the enormity of the job to be done, the Gulf area is big enough and the needs great enough to accommodate both Republican and Democratic approaches - with limits.

A new agency, as well as a retro New Deal jobs program proposed by 2004 Democratic vice presidential candidate John Edwards, give Washington the task of managing rebuilding. But the nation has just seen the pitfalls of that approach. Not only has it taken years to organize the new Department of Homeland Security, it fell down on the job with hurricane Katrina.

Yet a key sentiment behind these proposals - putting locals to work on well-paying federal recovery projects - is sound. As President Bush said, federal funds will have to cover the majority of costs to repair public infrastructure. The way to rebuild the Gulf coast - and its decimated tax base - is to make sure locals have first dibs on these jobs, and that they receive the region's prevailing wages. But that's a matter of regulation and oversight by existing agencies and Congress.

As for giving tax breaks to businesses and individuals in the region, not all proposals make sense. New Orleans Mayor Ray Nagin proposed one dubious idea: giving a 50 percent federal income tax credit to employees who live and work in the city and who make under $50,000. That's too generous for those not greatly affected by the hurricane. A more tailored approach is needed, such as federal vouchers for evacuees to find housing and schooling.

The proposal for healthcare tax credits could be insignificant if they're not generous enough. And let's skip tax relief for casinos: Gambling can perpetuate poverty, worsen crime, and is morally bankrupt.

While they dream of rebuilding plans, policymakers should consider how they might discourage building in vulnerable coastal areas. One place to look: the federal flood insurance program. About a quarter of the program's losses come from properties damaged multiple times. The program needs new rules to reduce the financial incentive for unwise building in flood-prone areas.

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