Katrina Recovery: Who Will Pay?

President Bush, right, and Russian President Vladimir Putin, left, hold a joint press availability, Friday, Sept. 15, 2005, after their meeting in the Oval Office at the White House. AP

President Bush on Friday ruled out raising taxes to pay the massive costs of Gulf Coast reconstruction, saying other government spending must be cut to pay for a recovery effort expected to swell the national debt by $200 billion or more.

Hours earlier, Bush vowed to help rebuild the region with an eye toward wiping out the persistent poverty and racial injustice that exist there.

"As we clear away the debris of a hurricane, let us also clear away the legacy of inequality," he said at a prayer service at Washington National Cathedral in memory of Hurricane Katrina's victims. Polls suggest a majority of Americans believe the president should have responded quicker to Katrina, and high percentages of blacks tell pollsters they believe race played a role in the slow response by all levels of government.

Race may be playing a role in who is getting rebuilding work as well, reports CBS News Correspondent Sharyl Attkisson.

Although FEMA has handed out $9 billion, many local businesses in New Orleans, including black morticians, say they didn't get body recovery work. When they complained, FEMA asked for a list of minority businesses. The NAACP's local President provided one but says he hasn't heard back, Attkisson reports.

"The majority of people who perished were African American," said Danatus King, New Orleans NAACP president. "Now it would just seem right that minority businesses would be involved in the process."

Back at the White House, the chairman of Bush's National Economic Council, Al Hubbard, made clear that Hurricane Katrina recovery costs are "coming from the American taxpayer." Another top aide, domestic policy adviser Claude Allen, said the administration had not identified any budget cuts to offset the disaster expense, and Bush did not name any either.

Congress already has approved $62 billion for the disaster, but that is expected to run out next month and require another budget-busting installment. The federal deficit was projected at $333 billion for the current year before the storm slammed into the Gulf Coast more than two weeks ago.

CBS News Correspondent John Roberts reports that the rebuilding efforts could add $200 billion to the deficit – a figure Republican budget hawks complain is out of control.

"It is inexcusable for the White House and Congress to not even make the effort to find at least some offsets to this new spending," said Sen. Tom Coburn, R-Okla.

Bush, who declined to try to put a price tag on the costs, expressed no worry.

"You bet it's going to cost money. But I'm confident we can handle it and I'm confident we can handle our other priorities," he said during a news conference with Russian President Vladimir Putin. "It's going to cost whatever it costs."

Bush said it's important that government quickly restore the region to give people hope, and repeated his statement from Thursday night's speech from the heart of the New Orleans' French Quarter that the federal government would cover most of the cost of rebuilding schools, bridges and other infrastructure. Asked who would pay for the work and how it would impact the nation's rising debt, Bush said "the key question is to make sure that the costs are wisely spent."
  • Scott Benjamin

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