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Windfall: How Conservatives, Contractors, and Developers Cashed In on Katrina

The grim pictures from the Superdome had barely faded from your TV screen when the Bush administration and its allies set to work redefining the meaning of the hurricane. A timeline of how disaster became opportunity.

| Thu Aug. 30, 2007 3:00 AM EDT

September 9

  • In a memo to all federal contracting agencies, the Department of Labor suspends affirmative action requirements on all reconstruction contracts.
  • Baton Rouge Republican Congressman Richard Baker is overheard telling a group of lobbyists, "We finally cleaned up public housing in New Orleans. We couldn't do it, but God did."

September 10

  • New Orleans mayor Ray Nagin convenes a meeting of prominent local business leaders—dubbed by some the "forty thieves"—and public officials to plan the city's future. A key figure at the meeting is millionaire Jimmy Reiss, head of the Business Council of New Orleans (which has a history of advocating for luxury development in the city). The Wall Street Journal reports that Reiss—who "helicoptered in an Israeli security company" to guard his house after the storm—says "the new city must be something very different…with better services and fewer poor people. 'Those who want to see this city rebuilt want to see it done in a completely different way: demographically, geographically, and politically.'" Days later, Reiss tells Newsweek that he is thinking about how "to use this catastrophe as a once-in-an-eon opportunity to change the dynamic" of the city.
  • The first of several contracts from FEMA and the Louisiana Department of Health and Hospitals for the recovery of bodies is awarded to Kenyon International, whose parent company, Service Corporation International (SCI), a Bush campaign contributor, has previously been implicated in a high-profile scandal in Texas. The company has also been sued for illegally dumping and desecrating corpses in Florida. Fast Forward: After two months, Kenyon bills the State of Louisiana more than $6 million for collecting 535 bodies. New Orleans' numerous family-owned African American funeral homes, meanwhile, are turned down when they offer to volunteer their services after the disaster, and none receive any subcontracts from Kenyon to bury victims.
  • The Department of Homeland Security refuses to promise that undocumented immigrants will not be arrested if they seek help from relief agencies—a promise the agency did make after the 9/11 attacks. DHS does, however, temporarily suspend sanctions on employers in the region who hire workers without proof of citizenship, a move that paves the way for contractors to obtain cheap, easily exploited migrant labor.

September 11

  • The White House's spin operation seems determined to cast the federal government's role in responding to Katrina as a "backup" for state and local governments. Michael Chertoff, in particular, questions the Department of Homeland Security's authority to take action without a state request, and suggests that a new "model" is needed for dealing with "ultra-catastrophes"—possibly one that puts the Pentagon in charge. But a section of his own agency's 426-page National Response Plan, released with much fanfare in January 2005, clearly gives DHS broad authority to bypass states and localities to mobilize search-and-rescue operations, medical teams, and a host of other emergency essentials.

September 12

  • Alarmed by the plans for billions in relief spending, conservative and libertarian think tanks begin issuing their own plans, in which the disaster becomes a justification for massive (and permanent) cuts to the federal budget—and indeed, the entire federal government. In a detailed plan, the Heritage Foundation proposes a host of longtime conservative goals: sweeping rollbacks of regulations protecting workers and the environment (to hasten the rebuilding process); opening the Arctic Wildlife Refuge to drilling (to compensate for disrupted oil supplies); school-voucher programs (for displaced children); and an immediate suspension of the estate tax (for any millionaires killed by Katrina).
  • After being relieved of responsibility for overseeing on-site relief efforts along the Gulf Coast several days earlier, Michael Brown officially resigns as head of FEMA.

September 14

  • The New York Times reports that Karl Rove has been placed in charge of the federal government's Katrina reconstruction effort, suggesting that it is viewed as a facet of the White House's political damage-control operation.

September 15

  • Bush makes a televised speech on Katrina reconstruction from New Orleans' Jackson Square. It is a high-stakes political moment for the president, and the address is elaborately stage-managed. Camouflage netting masks debris-filled streets and Bush stands alone in front of the city's grand cathedral, bathed in an otherworldly light (from floodlights brought in for the purpose). During the address, Bush echoes ideas—and in some cases language—found in the Heritage Foundation's plan, including various forms of deregulation to expedite the recovery. He proposes a "Gulf Opportunity Zone" (replete with tax breaks that critics warn are an invitation to fraud); private "Worker Recovery Accounts" to help victims find new jobs (based on an earlier program already rejected by Congress); and an "Urban Homesteading Act" to hand out federal land by lottery to low-income families, a plan denounced by congressional Democrats as "a recycling of an idea that made sense in the 19th century," whose "primary effect will be to unload undesirable federal title property and to use Katrina as the excuse." Fast Forward: The Recovery Accounts and the Homesteading Act never materialize—nor do the majority of the promises made in the Jackson Square speech.
  • The House votes to create the so-called House Select Bipartisan Committee to Investigate Preparation for and Response to Hurricane Katrina, which is made up of 11 Republicans; the Democrats again recuse themselves. Fast Forward: The committee hears wide-ranging testimony, and in February 2006 issues a report that is surprisingly sharp in its criticism of the Bush administration. Among other things, it cites a "failure of leadership" and singles out Homeland Security Secretary Michael Chertoff. "A blinding lack of situational awareness and disjointed decision making needlessly compounded and prolonged Katrina's horror," the report's preface states.
  • James Inhofe, chair of the Senate Environment and Public Works Committee, and Louisiana Senator David Vitter introduce the first of several bills that use the Gulf Coast disaster as a reason to suspend or weaken environmental regulations. This bill, S. 1711, aims to allow the Environmental Protection Agency to waive or modify the application of any law under its jurisdiction, if doing so is necessary to respond "to a situation or damage relating to Hurricane Katrina." Federal and state agencies have already issued short-term waivers of laws regulating air and water pollution, fuel standards, asbestos removal, and many other environmental standards.

September 16

  • Despite his reliance on free-market solutions, the sweeping nature of Bush's promises in the Jackson Square speech and their projected price tag stir anxiety among conservatives, some of whom are already alarmed by the administration's Iraq war spending. Conservative publications dub the recovery plan "the GOP's New Deal" and "Bush's disaster socialism." The speech clearly causes concern at the Heritage Foundation, which identifies "potential dangers" in the president's remarks and offers stern reminders of the post-Katrina conservative battle plan for the White House and for Republicans in Congress.
  • The administration's top federal procurement official, David Safavian, who has been responsible for implementing new, streamlined government-contracting policies for Katrina relief and reconstruction, resigns suddenly from the White House Office of Management and Budget.
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