Democrats Must Choose

09/04/2005 11:44 pm ET | Updated May 25, 2011

When Sherman marched through Georgia he discovered the Confederacy was hollow: nothing stood in his way. And so it was with Katrina at New Orleans. There was no plan for plugging leaks in the levees, no plan to evacuate the poor from the city before the storm hit, no mobilization to rescue them once the city flooded. In this stew of neglect, George Bush is deeply complicit, but the roots are longer and sadly bipartisan; they reflect in part the collapse of the New Deal tradition in the Democratic Party. They reflect, also, the baleful influence of economists, who for thirty years--precisely since the New York City fiscal crisis of 1975--have placed cutting deficits and managing debts above meeting public needs and improving the quality and security of life. Katrina showed the deadly
consequences of this line of thought.

In a recent paper published by the Levy Institute (and written up this week in the Economist), I argue against the economics and politics of the deficit hawks, and in favor of placing national priorities first and financial questions in second place. Priorities do matter: one cannot have unlimited tax cuts, unending wars, and the massive investments our country requires. But one also cannot place home investments below deficit reduction, and hope ever to recover the capacity we must have to deal with the cataclysm we now face on the Gulf Coast.

The task of reconstruction will be huge. Given the complexity of the ecology and the power of nature, there is a good case for investing it in a new federal authority -- say a Gulf Coast Authority, modeled on the TVA. Good economics teaches that such an authority should be bond-financed, since it will create capital assets whose value should last for centuries, if the job is correctly done. That means increasing budget deficits in the years to come.

So Democrats must choose. They can continue to shelter behind fiscal slogans – in which case, they have little standing to criticize Bush for the fiasco that is New Orleans. Or they can begin now to articulate a policy of national rebuilding – not only on the Gulf Coast, but across this neglected and run-down country, where challenges and hazards face us at every turn.

If they choose rightly, the politics of the whole country might be