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Bush makes new tax vow

President rules out any increase to fund Katrina relief, but talk of budget cuts to help evokes skepticism

BY CRAIG GORDON | WASHINGTON BUREAU

September 17, 2005

WASHINGTON - Faced with restive conservatives calling Katrina relief a $200-billion budget-buster, President George W. Bush on Friday ruled out raising taxes and pledged budget cuts to cover some of the tab.

But top White House advisers said Friday that they had yet to identify a single program cut that would offset Hurricane Katrina expenses, and Bush didn't cite any either.

Bush stood by Thursday night's pledge of a massive, open-ended federal Gulf Coast commitment, saying, "You bet it's going to cost money, but I'm confident we can handle it."

At the same time Bush was fending off fiscal critics, he also used a Katrina prayer service at Washington National Cathedral to confront accusations by some in the minority community that race played a role in the slow government response to blacks in New Orleans.

"This poverty has roots in generations of segregation and discrimination that closed many doors of opportunity," Bush said in an address steeped in religious tones. "As we clear away the debris of a hurricane, let us also clear away the legacy of inequality."

But while Bush's plans for rebuilding the Gulf Coast include a variety of specific programs and spending ideas, his vision for how to repair this racial breach has lacked specifics. Bush aides said plans for $5,000 job-training vouchers and a federal property giveaway for prospective low-income homeowners would help address those needs.

Several of Bush's new programs came straight out of his "opportunity society" campaign themes, but it also became clear Friday that some of the physical rebuilding of the Gulf region will come down to massive infusions of federal cash. Those are the kind of big-government programs conservatives often rail against because they swell the federal deficit, already at the third-highest level ever, $331 billion.

Bush's chief economic adviser Al Hubbard was blunt in acknowledging Friday, "Well, there's no question that this recovery will be paid for by the federal taxpayer, and it will add to the deficit."

Two of the main programs Bush outlined Thursday - an enterprise zone to provide tax incentives for rebuilding, and education grants and vouchers to help displaced students - proved to be something of a drop in the bucket in the expected overall effort, totaling about $2 billion each. Congress already has approved $62 billion for Katrina costs.

But until Bush's comment Friday, the White House and Republicans in Congress had refused to discuss possible spending cuts to pay for Katrina. House Majority Leader Tom DeLay (R-Texas) even suggested that Republicans would have trouble finding any cuts at all because they had trimmed all the federal-budget fat.

Some political analysts said Bush appeared to be calculating that he needed to, in effect, spend his way out of his current political troubles - including an all-time-low approval rating - by adopting a spare-no-expense approach to Katrina to make up for his government's early sluggish response.

"The president had some damage control to do" Thursday night, said Stu Rothenberg, an independent political analyst. So "the president is showing the love, and the way he's showing the love is by writing a big check."

But budget analyst Brian Riedl of the conservative Heritage Foundation predicted that Katrina spending and other programs could push the federal deficit past $500 billion in 2008 and argued that Bush needs to plug that hole with spending cuts. "The president laid out a very ambitious agenda. I wish he had told us where the money was going to come from to pay for it all," he said.