Saturday, December 18, 2010

Selling the Drama

Y'all remember how, after a disaster, there's always complaints about some unscrupulous relief agency or another using sympathy for the disaster to collect donations for other projects? Doesn't it piss you off?

Y'all also remember how, after the flood in New Orleans, a lot of complaints nationwide were made about New Orleanians wasting all the Billions they'd got for disaster relief? Didn't that piss you off too? (For different reasons, as Americans wondered why it cost so many Billions, and New Orleanians wondered "what Fing Billions are y'all talkin' about?")

Well, put those two rememberances together when you think about how a whole lot of relief tax credits marketed (or stigmatized) as "New Orleans' recovery" ended up going elsewhere. Only 3% of the $7.8 Billion in Louisiana GO Zone tax credits ended up in New Orleans.

Now, I ain't got a problem with the rest of Louisiana taking advantage of tax credits and subsidies for some capital improvements. This state suffers while other states and the Federal government make money off her resources. A lot of other places got hit by the direct or secondary impact of Hurricanes Katrina, Rita and Wilma, and a lot of places had to deal with the fallout of the flood in New Orleans.

But 3%? Seriously? I guess that answers the reactionary and infuriating question "why should we spend our tax dollars rebuilding a city below sea level?" with the true answer "you ain't, really."

And I guess this is one of the answers to Dante's questions in an earlier comment thread. The proof that the 'richer you are, the more proportionately you benefit from the system' is in the puddin':

The GO Zone bond program’s limited success in New Orleans is largely a function of market forces, state officials from outside of the city say. Before the national economy tanked and the credit market dried up, banks could make a healthy return on the tax-free bonds. Even then, however, the businesses that qualified for the bonds must meet the bank’s investment standards, something tough for companies attempting a project in high-risk New Orleans.

“If you didn’t have the money you couldn’t qualify to get the money,” State Bond Commission Director Whitman J. Kling said in an interview Wednesday.

Yeah, I added that emphasis. Expect to see that quote a few more times on this website, as one of my main theories on life is that our system is specifically set up to benefit and subsidize the well-off at proportionately greater levels than your average middle class worker. But I digress...

Coupled with the Stafford Act, where local entities - some which were facing more than total losses - had to match certain financial benchmarks to qualify for disaster aid funds, the recovery of New Orleans is still going on in fits and spurts, 5 years after the storm. If you have to have money to qualify for recovery money, that's a tricky system.

At the same time, the multi-billion dollar price tag is being politically marketed as a government waste-of-tax-dollars boondoggle, as "$7.9 Billion was spent on a city-below-sea-level, and look at the fat nothing they've done with that opportunity."

And don't act like that ain't the narrative, we've been hearing it since before Katrina's outflow bands had completely cleared the Florida coast.



Dante said...

At least you're thinking about it now instead of just accepting the status quo because it's the status quo. If something is so obvious then it should be easy to prove.

I spy with my little eye about half of this money going towards government-owned entities, which doesn't take away from your point but is interesting. I also fully agree that this program only works if you already have money but that's not income, it's wealth. Your income could be $0 last year yet have more than enough wealth accumulated to get one of these bonds. Or are they tax credits? I'm confused on that point. I'm also interested to see the impact of these bonds on the income of the companies that received them. And note that I'm not saying you're wrong. I'm just excited that you're finally digging up evidence for a political belief you find so fundamental.

Thinking back to Katrina benefits, my favorite one was the Katrina benefit play Susan Sarandon and Tim Robbins put on. What majestic relief agency did they give their money to? The AFLCIO.

Cousin Pat from Georgia said...

No, I'm still just making it up as I go along.

A lot of the bonds did go to government entities, but only two of those were listed for New Orleans (S&WB for badly needed infrastructure, and Port of New Orleans). Both of those public projects are directly related to supporting private market infrastructure (as further evidence of my macro point).

They're bonds - tax free loans. Sorry for the confusion.

Again, the article mentions why "needing money to get the money" was difficult for entities in New Orleans:

Even then, however, the businesses that qualified for the bonds must meet the bank’s investment standards, something tough for companies attempting a project in high-risk New Orleans.

If the intention of the program is to invest in an area hit by disaster, why place even more obstacles on companies who attempt to invest in a disaster area? Not that I'm against being careful, and ensuring a positive return on investment, but if you're intentions don't line up so well with your policies, the money might be better spent on other policies.