With the $62 billion that’s been approved for Hurricane Katrina relief efforts set to run out in the coming weeks, a competition between the Democrats and Republicans has seemingly begun over which party can be more generous with the peoples’ money. So far, Republican Sen. Judd Gregg is the leader of this spending movement, having “bid” $200 billion last week. The initial outlay of $62 billion already is a record disbursement for a U.S. natural disaster, and arguably has its roots in the unprecedented federal response to the 1927 Mississippi River flood that similarly crippled New Orleans and much of the South.
The 1927 relief effort was unparalleled. According to historian John Barry, who wrote the 1997 book Rising Tide, there was at the time “a fault line in American thought about the role of government and how much responsibility it had for its citizens.” Before 1927, this fault line had not been crossed.
Indeed, in 1887 President Grover Cleveland vetoed a $10,000 appropriation for drought victims in Texas based on his contention that the federal government had no “warrant in the Constitution … to indulge a benevolent and charitable sentiment through the appropriation of public funds.” In 1907 the federal government demanded that banks in New Orleans put up $250,000 before the surgeon general would help fight the yellow fever epidemic there.
Despite the fact that the 1927 flood left 1 percent of the U.S. population homeless, had an estimated death toll in the thousands, and burdened the Red Cross with nearly 700,000 refugees to feed, there was great reluctance on the part of Southern leaders to initiate federal action. When President Calvin Coolidge refused to call Congress into session to respond to the flood, they backed him.
The consensus during that era was that government should do nothing in times of a localized natural crisis. This was in particular true of the federal government. According to Barry, “direct aid had always been considered charity, and charity stigmatized recipients.” When a 1922 flood in Tennessee left 35,000 homeless, Gov. John Parker refused all outside help — even from the Red Cross. In the aftermath of the ‘27 flood, Tennessee Gov. Austin Peay similarly refused aid given his belief that “the people in the local communities should be expected to provide for themselves, rather than depend on outside assistance.”
Commenting on the events of 1927, the Chicago Journal of Commerce stated that if “relief of sufferers were to become a government task, the self-respect of recipients of funds would be decidedly damaged.” A New York Times editorial said it was fortunate “there are still some things that can be done without the wisdom of Congress and the all-fathering Federal Government.”
Still, the federal government did involve itself in the local disaster of ‘27, and Commerce Secretary Herbert Hoover’s unprecedented relief efforts arguably won him the White House the next year. Notably, federal relief was mild by today’s standards, and none of it was direct. Instead, Hoover created government reconstruction corporations that created $13 million in credit for flood victims. At the time the federal government was running a budget surplus of $635 million.
But slopes are slippery, and by 1928 Congress passed a flood-control bill for the Mississippi River that was “the greatest expenditure the government has undertaken except in the World War.” The Mississippi River was now a national problem, and U.S. taxpayers were seemingly for the first time on the hook for expenditures made to fix a problem that was local in nature. Not unlike spending estimates that are made today –though the total cost for the federal flood-control plan was $300 million — the consensus was that it would run to $1 billion. About the bill, Barry noted that it “set a precedent of direct, comprehensive, and vastly expanded federal involvement in local affairs.”
Despite this massive flow of taxpayer funds into the South, its economies did not boom. New Orleans, formerly the richest city in America, actually declined.
Sen. Gregg (among others) should take note. Massive aid has never worked to do more than temporarily patch an injured economy, and it won’t work this time. More important, it has to be asked whether or not today’s federal bidding wars between the political parties are examples of “moral hazard” at its worst.
This is not meant to minimize the truly awful impact of Hurricane Katrina on Louisiana and Mississippi. But if U.S. taxpayers are going to pay each time a natural disaster strikes within our borders, won’t there be less incentive on the part of states, municipalities, and builders to plan and construct cities and housing developments with local hazards in mind? Just as the existence of the IMF makes it possible for private banks to make bad loans, can it be said that the ability of the U.S. government to tax its citizenry makes city and state governments less cautious, and less mindful of the potential for disasters?
Americans have been extraordinarily generous in Katrina’s aftermath, but has their generosity been tempered by the federal response? What about local leadership? Absent the existence of federal outfits such as FEMA and the Department of Defense, does anyone honestly think that the voters of New Orleans and Louisiana would have elected such obvious incompetents as Mayor Nagin and Gov. Blanco?
The latter question is especially important as our leaders in Washington look to the break the bank with relief funds. Not only is it not compassionate to spend other peoples’ money, if the disaster in Louisiana tells us anything, the existence of the “benevolent” federal government means that ineffective local responses to local disasters will arguably increase in frequency.
While it’s certainly not compassionate to say the federal government should finally put its foot down and stay out of local relief efforts, it’s perhaps the right thing to do. It may be the only thing that insures better local response the next time something as awful as Katrina strikes.
–John Tamny is a writer in Washington, D.C. He can be contacted at jtamny@yahoo.com.