Government & Constitution

Imagining the Unimaginable

Mississippi Gov. Haley Barbour called the damage wrought by Hurricane Katrina “unimaginable.” We no longer have to imagine the death and destruction; We are seeing the unimaginable become tragic reality 24/7 on our TV screens. The challenge now facing Congress and Gulf-State legislatures is to imagine the unimaginable future — while doing everything possible to assist people recover from the current emergency — to prepare for future emergencies, reform and restructure government, which clearly failed catastrophically at all levels during the last week, and incentivize and empower private ownership and private enterprise.

The huge calamity of Katrina and the need to rebuild the Gulf Coast provides Congress and state legislatures with the opportunity to implement big ideas that could begin to transform America in the first decade of the 21st century. We have a golden opportunity to “green line” the Delta and Gulf Coast with government policies that facilitate and empower the private sector and private citizens.

Out of the tragedies of the U.S. Civil War and World War II, Presidents Lincoln and Roosevelt imagined an unimaginable future. They created transformative programs that helped define the American dream of ownership and economic empowerment. Lincoln’s Homesteading Act empowered people with title to 160 acres of land, free, and Roosevelt’s Federal Housing Authority and GI Bill of Rights offered ways for capital-less people to own a house and to receive higher education.

As we think about the government’s role in assisting people get back on their feet after Katrina, we should be thinking about how to expand private property rights, business ownership and create rational incentives to build a new Gulf Coast and Delta Region unencumbered by bureaucratic rules and strictures. We have an enormous opportunity to replace outmoded government programs and bureaucracies with public-private partnerships and new private institutions that are built upon the foundation of individual ownership, private property rights, personal responsibility and social justice that an ownership society brings.

There are a few simple things Congress could do immediately to facilitate the rebuilding effort in the private sector. For example, the entire storm region could be turned into an enterprise zone, suspending burdensome federal regulations, such as the Davis-Bacon Act and the Jones Act. Also, onerous regulations imposed by the Federal Trade Commission, the Federal Communication Commission and the Environmental Protection Agency could be suspended.

Certain taxes, such as gasoline taxes, telephone taxes and others could be suspended for the duration of the emergency. Individuals living in the storm-affected region and companies doing business there could be relieved of the outrageously complex and economically destructive federal tax code. For example, the individual income tax and the death tax could be suspended for people living in the storm region. Rules relating to retirement accounts could be relaxed to give people access to capital.

Small businesses could be relieved of payroll taxes, and companies in the region subject to the corporate income tax could be relieved of the most economically damaging features of the current corporate tax code. They could, for example be allowed to write off all investment spending (e.g. spending on plant, equipment, structures, machinery and technology) immediately rather than having to depreciate it over a period of years. In fact, now would be an ideal time to allow companies to choose to be taxed under a simplified reformed system of taxation, the blueprints of which are well developed and could be enacted into law in short time. To further increase access to capital, the capital gains tax could be eliminated.

Displaced individuals could be given education vouchers they could use to enroll their children in schools anywhere in the country. Similarly, vouchers might be used to transform low-income and public housing to give people property rights and pride of ownership in their dwellings. Housing vouchers, for example, could be used not only for homeowners whose houses were destroyed but also for renters and Section 8 housing residents to make a down payment on a house anywhere in the country. And beyond the present emergency, I am working with Urban League President Marc H. Morial, former mayor of New Orleans, to extend and expand such an emergency innovation into a 21st century homesteading act.

Permitting processes could be streamlined and expedited to allow private investors to purchase rights of ways and other property to rebuild infrastructure, including not only roads and bridges but also sewage treatment plants and other utilities, which could be privately owned and operated on a fee/toll basis. The Federal government could pay to rebuild the levies under the condition that they were rebuilt by private contractors and with the understanding that the federal government no longer would provide federal flood insurance for any newly constructed structures, requiring all new building to be economically rational and privately insurable.

It’s easy to write down a wish list of things we should do but it’s not a frivolous exercise. It is imagining the unimaginable. In the wake of this national catastrophic, we all should be imagining the unimaginable and recalling when during another time of uncertainty and apprehension, Robert Kennedy paraphrased George Bernard Shaw: “There are those that look at things the way they are, and ask why? I dream of things that never were, and ask why not?”

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