from Follow the Money

Is John Snow going to be among Katrina’s (political) casualties?

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Budget, Debt, and Deficits

Mike Allen of Time (formerly Mike Allen of the Washington Post) seems to think so.  Or at least he is starting hear whispers.

It seems that the White House's post-Katrina political strategy consists of:

a) Spending a lot of money on the Gulf Coast and in New Orleans to show the Administration cares. 

The first [part of the Administration's comeback plan]: Spend freely, and worry about the tab and the consequences later. "Nothing can salve the wounds like money," said an official who helped develop the strategy.

There are real needs out there that should be addressed.  But rebuilding also offers plenty of opportunity for patronage. 

b) Using the debate on tax reform to mobilize the conservative base.  And John Snow is not considered (by some) to be the right person to mobilize the base, or to serve as the Administration's spokesperson for tax reform. 

The money quote from Time:

Advisers are proceeding with plans to gin up base-conservative voters for next year's congressional midterm elections with a platform that probably will be focused around tax reform. Because Bush will need a dynamic salesman to make sure that initiative goes better than his Social Security proposal, advisers tell TIME there is once again talk of replacing Treasury Secretary John Snow.

Of course, a tax reform that mobilizes the "base" also probably cuts into the Federal government's revenue base.   That, combined with salving (political) wounds with money is  hardly the best recipe for fiscal balance.

David Broder notes:

In the wake of Hurricane Katrina, credible private experts are forecasting a federal budget deficit of $500 billion for this year, a sharp reminder of the government's fiscal folly.

Some post-Katrina expenses will be one-offs, but a broad upgrade in disaster preparedness likely implies higher ongoing federal spending as well, and thus a larger long-run gap between spending and revenues.    Look at the projections that Kash posted at the Angry Bear.

And try to imagine what the deficit would look like if the US housing bubble (OK, depending on your point of view, either a global housing bubble that the US has joined in, or a series of regional housing bubbles, since housing prices are not up equally in all parts of the States; see Kash and the Economist) burst, slowing economy, reducing revenues and increasing demands on federal spending.

More on:

Budget, Debt, and Deficits