Money, Money, Everywhere

The president arrived in darkness, in the dead silence of what looked to be--and in many ways was--an abandoned city under military occupation. Riding through town in an SUV, escorted only by two police cars with their sirens off, George W. Bush made his way through deserted streets, past the oddly intimate detritus of disaster--a random single sneaker, an empty baby stroller, a stack of looted mattresses. On the corners of the French Quarter, pairs of soldiers materialized in the headlights: members of the 82nd Airborne, wearing red berets and hefting assault rifles, snapping salutes to a commander in chief they could not see. Bourbon Street--once neon-bright, tumultuous--now stood empty in the pitch dark, covered with thick dust like a Western ghost town, the utter quiet broken only by chirping locusts and the creak of unlatched shutters in the night.

But one place was illuminated--blindingly so: Jackson Square, the heart of a city that, in turn, is the heart of a Gulf Coast region devastated by the most powerful hurricane ever to hit the United States. White House advance men, who brought their own generators as backups, lit the square with hundreds of rock-concert high-voltage lamps. They draped camouflage nets from the trees to shield the scene--the Cathedral of St. Louis and an equestrian statue of Andrew Jackson--from surrounding streets. They barred the press and public; among the few allowed inside the gates were chief of staff Andy Card, Louisiana Gov. Kathleen Blanco and New Orleans Mayor Ray Nagin. When he got the cue last Thursday night, Bush strode across the empty lawns to give one of the most important speeches of his presidency, committing himself, and the nation, to two daunting, expensive and complex missions: not only to resurrecting the city of New Orleans and the region but to uplifting them, making them "even better and stronger than before the storm." Not a New Jerusalem, perhaps, but a Better Easy.

It won't be easy. Bright lights can be symbols of life and renewal, and so the gulf region--and the president--has to believe. The man depicted in the statue, after all, became a hero by winning a stunning victory in the Battle of New Orleans in 1815. But Bush's own Battle of New Orleans has barely begun. By late last week there were signs of renewal in the city and the sounds of hammers and saws all along the coast. But Bush's new commitments, as broad and sweeping as the Mississippi River itself, could divide his own party, blast gaping holes in the federal budget and create management tasks that swamp his second-term agenda--including the creation of a benign Iraq.

The administration now must renew its financial case for the Iraq war against the backdrop of the desperate needs of the Other Gulf, Secretary of State Condoleezza Rice conceded in an interview with NEWSWEEK. In the fall, when Congress considers military spending--and perhaps a new special appropriation to fund the war--the pressure will grow. "I don't doubt that we'll have to make the argument in budget time..." Rice said. "But I have every confidence that it's an argument that Americans will understand, resonate with."

Even before Hurricane Katrina, the president's standing had been eroded by doubts about the war, by painfully high gasoline prices and by a sense that the benefits of the rather smoothly cruising economy were not reaching average voters. Then came the storm, and the flood, and his own late-arriving focus on the crisis. The result: the lowest job-approval ratings of his presidency. In Jackson Square, Bush again took responsibility for the federal government's failures in emergency relief. But he and his aides were eager to try to put that lost cause behind them and seize control of the narrative of rebirth.

The result was an audacious, sketchy--and, to some, dangerously expensive--gumbo of government ideas: Lyndon Johnson's Great Society, Ronald Reagan's tax cutting and the pork-barrel populism of Louisiana's own Huey Long. Having extracted $62 billion in emergency relief from the Republican-controlled Congress, Bush now pledged to seek whatever it takes to: rebuild the infrastructure of the gulf region hundreds of highways, bridges, police and fire stations and other public buildings; deploy tax cuts, tax breaks and cash grants to spur business investment; give stipends and vouchers to as many as 1 million victims of the disaster, helping them remake their lives, educate their kids and find jobs anywhere in the country; fortify New Orleans against Katrina-level hurricanes and floods, and lift up blacks whose poverty, he said, "has roots in a history of racial discrimination." Administration officials said that the three specific proposals Bush mentioned in his speech--a Gulf Opportunity Zone, a lottery for abandoned federal land and job-training grants--would cost less than $5 billion. But the bottom line for every idea mentioned and commitment made: unknown. "We will do what it takes," Bush said.

What it now will take, according to some estimates, is at least $200 billion, and the bayous were bipartisan in their enthusiasm for Bush's kitchen-sink approach. "I think it's the best speech he has ever given," declared Michael Olivier, the state Economic Development secretary. John Maginnis, a plugged-in Louisiana pundit, had an explanation for the official good cheer. "Everyone wants all of the money," he said. For their part, White House officials insisted that the overall federal budget can withstand Katrina. In a $13 trillion economy, they said, the hurricane isn't a disaster. The day after his speech, the president ruled out increasing taxes, saying costs could be handled by cutting unspecified "unnecessary spending." He even renewed his pledge to seek new tax cuts in the name of stimulating the economy. His advisers did the follow-up. "We're fortunate that the economy is very, very strong right now; it will continue to be strong," said Al Hubbard, director of Bush's National Economic Council.

But not every Republican was so sanguine, and the first sign of an internecine war on the budget emerged at a recent gathering of the House Republican Conference. Rep. Mike Pence, the House's leading deficit hawk, challenged Joshua Bolten, a former Goldman Sachs banker who runs the Office of Management and Budget. There to seek a tranche of $50 billion in relief money, Bolten brushed aside the congressman's insistent fiscal questions. Pence suggested a yearlong delay in launching the Medicare drug benefit; several allies floated the idea of a 10 percent, across-the-board cut in every category of spending. No dice. Bolten agreed that spending "offsets" were a "worthy topic," but stayed mum. It was "not the time to have this debate," he told the assembled Republicans, saying the cash was needed immediately to save lives in the region.

Even as Bush spoke in New Orleans, questions were multiplying--about who would pay for the costs of recovery, and the implications of those costs for the rest of the Bush agenda; about what the federal government could do to ensure that the flood of cash would be well and wisely spent; about the geographical, cultural and even racial politics of what it would be spent on. New Orleans and the Gulf Coast weren't built to be the ground upon which we argue, once again, some of the basic issues of American life. But that discussion has already begun.

With no control of the White House or Congress, Beltway Democrats came up with a long list of short-term proposals, but no sweeping Marshall Plan of their own. And they continued to dwell on the need for an independent, 9/11-style commission to investigate the original disaster response. Only such a body can prevent a GOP "whitewash," said Harry Reid, the Senate's Democratic leader. "We can't know how to go forward," he said, "unless we know what went wrong."

Beyond the illuminated confines of Jackson Square, there were those who thought Bush was lurching forward, like a free-spending conventioneer maxing out his credit card as he roamed the Quarter. "He got clobbered on the disaster relief, and now he is overcompensating by promising the moon," said Chris Edwards, director of tax policy at the Cato Institute in Washington. "We are going to make New Orleans 'better'? To say that is imprudent and crazy." The president's upbeat view of the budget drew jeers from some quarters beyond the French. In New York, centrist Democrats on Wall Street were dubious, citing America's growing reputation for a lack of fiscal discipline. Years of profligate spending and tax cutting have made it unnecessarily risky to accomplish the rebuilding of the Gulf Coast, said Citigroup's Robert Rubin, the former Clinton Treasury secretary who left behind a towering budget surplus. "It's a job we have to do, but we're operating out of a deep fiscal hole," he said.

Rubin has some allies in the GOP--and one of the risks for Bush is that Rubin will soon have many more. For now, most of the party in Congress remains loyal to the modern GOP orthodoxy, which is to cut taxes like a Republican while spending money like a Democrat. Bush has never vetoed a spending bill sent to him by his Republican allies--or any bill, for that matter. The prescription-drug plan they passed is now estimated to cost $700 billion over 10 years; their highway bill, at $286 billion, was the biggest ever--and $36 billion larger than the largest Bush had said he would accept.

Numbers such as these are causing a revolt among a small but growing number of Republicans. In the Senate, they are led by John McCain, who sees deficits as a sign of larger, systemic problems; in the House, the renascent "green eyeshade" faction is run by Pence, an influential conservative who is often an irritant to the rest of the leadership. "We have to make sure that a catastrophe of nature does not become a catastrophe of debt for our children and grandchildren," he said.

Some GOP strategists worry that the costs of Katrina--on top of everything else--will generate pressure, at the grass roots, to cut back support for the war in Iraq. "I'm worried about the moment when a mayor in Louisiana is told that he's not going to get his bridge or his firehouse built for two years," said a top GOP staffer in the House, declining to be named because he deals with the White House daily. "And we're going to tell him to get in line, that the money isn't there right now, and he is going to say, 'How come we can afford to keep rebuilding the same damned bridge in Baghdad every day and y'all can't afford to build mine?'" Rep. Gene Taylor, a conservative Democrat from Mississippi, said he didn't envision that happening in his Gulf Coast district. "Then again, I've got one of the most pro-military districts in the country." The Mississippi National Guard is heavily deployed in Iraq, and Taylor says his constituents are proud that it is. The administration insists that there are more than enough members of the guard stateside to handle all Katrina-related duties. Taylor doesn't disagree, but adds that "you can always use more help."

However much money is spent, who is going to spend it--and monitor whether it is spent legally, let alone properly? And who's in charge? "I don't really know, and the fact that I don't know concerns me," said John Kennedy, the Louisiana state treasurer. It's hardly reassuring that the two agencies funneling money into Louisiana are the most heavily criticized government entities on the face of the planet: FEMA and the state's Office of Homeland Security and Emergency Preparedness. Local officials send their requests to the OHSEP, which forwards them to FEMA, which signs off on them and sends them back down the chain. "It looks like, right now, FEMA is playing the primary role," said Pres Kabacoff, a local developer. "But we're still trying to figure out who is FEMA, who is in charge." Local rivalries confuse things further: New Orleans officials, for example, would prefer to deal directly with the Feds, and to bypass Baton Rouge.

The ground-level confusion is fueling a debate within the White House about naming a "czar" to oversee the entire Gulf Coast effort--arguably the biggest reconstruction project since, well, Reconstruction. As the leading Republican in an otherwise mostly Democratic state, Sen. David Vitter of Louisiana wants a czar, and has been lobbying Bush directly for the appointment of one. Alabama Sen. Jeff Sessions introduced a bill calling for establishment of a post-Katrina "manager"; Sen. Judd Gregg of New Hampshire, chairman of the Budget Committee, wants a White House office to perform the same function. But in Mississippi, they don't want a czar because they figure they already have one: Gov. Haley Barbour. A former chairman of the Republican National Committee and a close personal friend of the president's, Barbour has deep ties in Washington and to his state's GOP senators. He and the Mississippi delegation want him to run the show--a message Barbour personally "relayed" to the president, according to Barbour's press secretary. Still, the administration hasn't entirely ruled out the czar idea, and the names of potential candidates continue to swirl through the capital, from Colin Powell to Rudy Giuliani to Jack Welch.

The president is dispatching "inspectors general" to audit the books, but they had better be a cross between George Patton and Eliot Ness if they are going to master the folkways of Louisiana. Concerns have already been raised about the cronies who surround Governor Blanco. Jim Bernhard, a major financial supporter, last week quit the chairmanship of the state Democratic Party so he could devote himself full time to his company, the Shaw Group, which had just won a $100 million contract from the Feds for reconstruction work. The word around Baton Rouge: friends of state officials are likely to be first in line for subcontracts. The entire spectacle brings gales of bitter laughter from the denizens of the state capital. An alderman once famously said, "Chicago ain't ready for reform." It's not clear whether Baton Rouge is ready, either.

Whoever leads the reconstruction effort--and, in the end, that's George W. Bush--will have to confront deep matters of philosophy, place and race. Everyone agrees that the levees and canals in New Orleans need to be upgraded, and the basic infrastructure restored throughout an area the size of Britain. But beyond that, no one really agrees on means and methods. Democrats see the aftermath of the disaster as a reason not only to cancel Bush's tax cuts but to expand funding of government-based health care, education and training programs. And Democrats in New Orleans want to see neighborhoods rebuilt--even if not especially the poorest of the poor--in the place where they existed before the flood.

The Bush White House has a different vision, one that traces its roots to the Reagan days and those of Bush One, and to the thinking of Jack Kemp. The administration wants to deploy his pet idea--an enterprise zone--throughout the Gulf Coast region, and to use FEMA housing grants, of up to $26,000, to allow New Orleanians, now scattered around the country, to live anywhere they want in whatever kind of housing they can buy or rent.

Administration officials say they want to prevent the creation of what some call "FEMA ghettos"--trailer parks that turn into semipermanent, isolated federal projects. "You give people the options and ability to vote with their feet," said a senior administration official, who declined to be named because of the political sensitivity of the issue. But Democrats see a more cynical purpose: to disperse some of the most heavily concentrated--and reliably Democratic--neighborhoods in the country. It's only one of the many incendiary issues with which Bush must now deal. But if he wants a statue in Jackson Square--or just a successful second term--he has no choice but to try.