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Hurricane spawns flurry of deregulation

The Bush administration and Republicans in Congress, while voting for more than $60 billion in taxpayer money to spend on hurricane recovery —and promising many billions more — have implemented some regulatory waivers and are planning to do even more on the deregulatory front.
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WASHINGTON — As Democrats and Republicans grapple with the political effects of hurricane Katrina, there's unanimity on one thing: spending billions upon billions of taxpayer dollars on the recovery effort.

But both sides also see an opening for pushing its own political agenda.

The Democrats are emphasizing the need for vast amounts of new federal spending and creation of a new federal reconstruction agency — Sen. Edward Kennedy, D-Mass. called for a federal agency for Gulf Coast rebuilding, similar in concept to the Tennessee Valley Authority, one of Franklin Roosevelt's New Deal creations from 1933.

But Republicans are talking about suspending environmental, workplace safety and contracting rules to spur recovery. Undoing decades of federal regulations has long been a primary Republican goal.

The Bush administration and Republicans in Congress, while voting for more than $60 billion in taxpayer money to be spent on hurricane recovery — and promising many billions more — have implemented some regulatory waivers and are planning to do even more deregulation:

  • Starting last Wednesday and until next Wednesday, the federal Department of Transportation has eased rules on how many hours truckers can drive when transporting fuel.
  • The Environmental Protection Agency has suspended until next Thursday certain federal fuel standards in response to possible diesel and gasoline shortages. The suspended rules are designed to combat high ozone and sulfur emissions.
  • Bush has ordered suspension of provisions of the Jones Act, which requires transport of petroleum, gasoline and other petroleum products on U.S.-flagged ships while operating in U.S. coastal waters.
  • Senate Environment and Public Works chairman Sen. James Inhofe, R-Okla., said Congress would need to waive a law that limits federal emergency road building funds to $100 million per state per emergency and that limits full federal funding to 180 days.
  • The House unanimously passed a bill allowing the Department of Education to waive the repayment requirement for low-income college students who received Pell grants. Normally if a college student drops out of school, he must pay back the unused portion of his Pell grant.
  • On Thursday, Bush suspended the Davis-Bacon law on all federally financed construction in areas hit by Hurricane Katrina. That law requires the federal government to pay the “prevailing wage” on construction projects, which is often higher than the local minimum wage. Suspending Davis-Bacon will allow the government to pay lower than prevailing wages, and Bush said, “will result in greater assistance to these devastated communities and will permit the employment of thousands of additional individuals."
  • House Majority Leader Tom DeLay, R-Texas, saw a need for a new energy bill as a result of the hurricane. “When one hurricane, as massive as it was, can knock out about 20 percent of our (oil and natural gas) facilities, it shows how vulnerable we are,” he said.  In order to expand the long-term U.S. oil and gas supply, DeLay wants to open parts of the country that are currently off-limits to oil and gas drilling. Large swaths of the Atlantic and Pacific Coasts are under a federal moratorium on oil and gas exploration until the year 2012.

Of course, not all the proposals were deregulatory in nature: Rep. Harold Ford, D-Tenn., said Congress should increase federal fuel economy standards and force automakers to find ways “to dramatically increase mile per gallon standards” in new cars and trucks.

A short deregulatory pause?
One question raised by all the talk of deregulation is whether the post-Katrina period will be merely a pause to cope with specific hurricane-related problems, or it portends a new era of deregulation?

If Democrats have their way, the pause will be short. “These have to be all temporary in nature,” said Senate Democratic Leader Harry Reid, D-Nev., when asked Thursday about waivers.

But Sen. George Allen, R-Va., suggested that EPA rules mandating specialized gasoline blends which vary by region and by season ought to be radically and permanently simplified.

It would be unusual if the Katrina crisis did lead to long-term deregulation, said Peter van Doren, editor of the journal Regulation at the free-market Cato Institute in Washington. “Politicians of all stripes use disasters to further their agenda,” he said. “The tendency is for things to ratchet up on the regulatory front during a crisis. Crises are useful for people who want more regulation, rather than less.”

Bring back the New Deal? As Republicans were moving ahead with cutting federal regulations, Democrats sought inspiration in the monumental spending programs of past Democratic presidents.

Reid said Thursday, “We believe there should be a Marshall Plan to move in as quickly as possible and start the reconstruction.” The Marshall Plan was the post-World War II effort launched by President Harry Truman and Secretary of State George Marshall in 1947 to rebuild Europe.

Hearkening even further back in history to the days of Roosevelt’s New Deal and its vast expansion of federal power in the 1930s, Sen. Edward Kennedy, D-Mass., called for a New Orleans and Gulf Coast Redevelopment Authority modeled after the Tennessee Valley Authority.

“We should invest at least $150 billion in its actions to work with governors and mayors and citizens and communities to plan, help fund, and coordinate for the reconstruction of that damaged region,” Kennedy said Wednesday.