Politics & Policy

Open For Business

We've had a disaster, but now we have an opportunity.

The hurricanes that hit the Gulf region decimated communities, leveled houses, closed businesses, and scattered families across the country. More then 600,000 Louisianans fled their homes after Hurricane Katrina, and as families trickle back into the region, many continue to sift through mildew-stained photographs, soaked furniture and clothing, rotting drywall, and rusted kitchen appliances. They must salvage their hope and deal with the overhanging questions on whether to rebuild, the prospect of future job opportunities in the region, and the level of commitment to build a flood-wall protection system strong enough to withstand future hurricanes.

#ad#Despite these challenges, residents of the hurricane-devastated region have not surrendered and have actively taken steps to rebuild. City lights in the French Quarter are illuminated–even before today’s Mardis Gras celebrations–and restaurants are again shucking oysters and boiling crawfish. Some businesses have even found the footing to expand: One New Orleans law firm is adding two new offices, one north of Lake Pontchartrain and the other in Baton Rouge, as a derivative of the areas’ economic and population growth. Another example involves a film studio’s expanding to Shreveport, La., while keeping its New Orleans facilities intact. This is the beginning to what I hope is a recovery that is strengthens by the return of entrepreneurs whose ingenuity, combined with reduced government bureaucracy and increased economic incentives, can create jobs for returning Louisianans and future generations.

As cranes and plows move into town, however, let’s not be fooled by the residual effects of building roads and clearing away debris. Yes, they do create short-term jobs, but as the great French economist Frederic Bastiat asked in his famous essay about a town’s unexpected broken window, “What would become of the glaziers if no one ever broke any windows?”

As the lesson is told, a shopkeeper’s window is broken by a vandal. A crowd formed to sympathize with the man. After a while, someone in the crowd suggested that the perpetrator was not guilty of vandalism; instead, he was a public benefactor, creating economic benefits for everyone in town. After all, fixing the broken window creates employment for the glazier, who will then buy bread and benefit the baker, who will then buy shoes and benefit the cobbler, and so on. But Bastiat hypothesized that we must search for the unseen effects when discussing repair costs–namely, the loss of investment in other projects when the money is diverted to repair whatever was unexpectedly broken.

In our flooded communities, that loss of investment still needs to be regained. The immediate influx of funding for the recovery of the Louisiana region is important, but we must not let that funding come at the expense of substantive investment in the long-term health of our state, which leads to the creation and expansion of small businesses which produce jobs and strengthen local economies. Many businesses are facing reduced revenue in light of a dramatically reduced customer base; loans are delayed and backlogged in a bureaucratic system. For a Gulf Coast business barely hanging on by a thread, proactive steps for relief needs to be demonstrated at all levels of government as well as through capital markets. The state government must assist in removing bureaucratic hurdles that hinder the movement of capital. Local governments need to ensure that small businesses are aware of available resources and programs. And government at all levels must demonstrate its pledge to continued investment by setting realistic priorities and then achieving them.

At the federal level, efforts are underway to increase the maximum size of small-business disaster loans from $1.5 million per loan to $10 million per loan, permit nonprofit institutions–including faith-based organizations–in the declared disaster area to qualify for economic-injury disaster loans, and provide incentives for business development through targeted tax support. Political will also exists to designate the Hurricane Katrina and Rita declared disaster areas as a HUBZone, which expands contracting abilities for small businesses, and increases disaster-mitigation loans to cover total damages.

These efforts are not a cure-all for small businesses, but they are proactive steps toward stabilizing and growing the region. More needs to be done, but it ultimately takes the power of the private sector, not control of government, to create sustained opportunity.

It is crucial that America realizes that Louisiana is again open for business, and there is nothing that can better fortify this message than the commitment to build a strong flood-protection system that defends our parishes from not only a Category 3 hurricane, but from the strongest Category 5 storms. Building stronger levees and restoring Louisiana’s coast, which acts as a buffer and absorbs incoming tidal surges, are perhaps the most critical project to enable rebirth and resurgence in the region. So many outstanding concerns–from new home construction to consumer and investor confidence–ride on the assurance the flood walls can withstand the worst of nature’s destruction.

For Louisiana to make a comeback, our state–along with Louisiana’s cities and parishes–must help rebuild our own communities and reform our own institutions. But without a substantial flood-protection system, homeowners will not have the confidence to rebuild, and businesses will not justify investment in the region.

I am working with my colleagues in Congress to cement funding to rebuild immediately our levees to a true Category 3 system, even surpassing the structural designs that existed prior to the storm. We need to further make our commitment a reality by designing a higher level of protection, including Category 5-resistant levees and coastal restoration, and implement that plan. I have also led a delegation effort requesting forensic studies on all our levees, to verify that we are taking the appropriate precautions now to mitigate future losses.

As we work to provide protection, we also need to provide relief for the people who lost their homes due to faulty levee designs. Congressional efforts are underway to provide assistance to the thousands of individuals and families who experienced severe flood damage to their homes. For Louisiana this means helping many of the more than 590,000 people who were harmed by these twin storms.

From Disaster, an Opportunity

As we rebuild, it is crucial we commit to improving our education systems and health-care infrastructure. We need to foster community-based schools that connect needed resources to help young people successfully learn, stay in school, and prepare for life, and we need to provide financial and regulatory relief to health-care providers. We also need to ensure that Louisianans have access to personalized health-care services. This should include efforts to make private insurance more affordable. Refundable tax credits, new insurance products–including health-reimbursement arrangements, health savings accounts, state-run purchasing pools, and regulatory relief–must be provided to make it easier for individuals to purchase private coverage.

One of the quickest and most affordable ways of increasing access to high quality affordable care is to provide families with jobs that provide employer-sponsored health-care benefits. To this end, we need to push for more workforce training, aggressive tax relief, including suspension of capital gains and incomes taxes, regulatory relief–all and all, more economic freedom in the Gulf coast to spur investment in the future.

Before Congress wrapped up last year, we passed legislation that created the “Gulf Opportunity Zone,” a set of business tax incentives–such as bonus depreciation for equipment purchases, increased expensing for small businesses, and net-operating-loss carryback for new repairs and investment, which allows companies to “carry back” current losses to earlier, profitable years and obtain tax refunds. These economic incentives will help create the impetus for businesses to stand on solid ground while attracting new investment to the region.

Louisiana is open for business and there is no question we all have a stake in its future. The Mississippi River is the busiest commercial waterway in the world and its operation supports the economies of 26 states. Over a third of the nation’s oil and gas production originates in Louisiana. Louisiana shipyards regularly produce vessels for national defense and Coast Guard operations. The distinctive New Orleans culture and spirit, its architecture, and history make it one of the nation’s most authentic cities.

Moving forward, we must be thinking not only of the immediate health of the region, but of the long-term viability of the economy and citizenry. We will rebuild our levees. We will repair our hospitals and schools. We will bring people back to their homes. This is not a federal effort alone; it requires a long-term commitment and an active role for Louisianans to roll up their sleeves, apply their skills, and rebuild. And it requires that we set priorities so the world can know we have a plan and a passion for the future.

Bobby Jindal is a Republican congressman from Louisiana.

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