Message #2 to the newly formed RDA

The following are some of my thoughts as I consider the impact the RDA can have on the region.

Agreement is not only elusive it is counterproductive to the very nature of our mission. The necessary range of our endeavor can only be achieved through a decentralized network of interests.

Organizing a region is one of the most ambitious human endeavors. Concepts at this scale are at the height of what is to be a Metropolis and why the RDA has formed. Where planning is generally considered a local responsibility municipal fragmentation is inevitable. Ordering the regional system has generally taken one of three approaches; social, environmental, or transportation.

Social plans emanating from a concern for creating a better place to live include Ebenezer Howard's Garden City concept, and today's New Urbanism. They establish three fundamental foci: The Urban Boundary, The Rural Boundary and Transit-Oriented Development. (NWI does not have regional example of this approach, However we do have a few scattered developments ranging from the worker villages of Marktown and Sunnyside to more recent developments such as Coffee Creek)

The environmentally structured plans include Olmsted and Eliot's Boston Regional Plan. These examplify how the juxtaposition of nature to human settlements transcends ideology. Concerns for health, recreation, as well as our watershed, land and forests can overcome socioeconomic divisions. (The Marquette Plan as our first and only regional land use plan is a worthy expression of a Metropolis)

Until recent concerns for the environment, transportation had been the strongest determinant of the regional form, and continuous to be the ruling determinant here in NWI. (Again NWI is looking to transportation)

It is my recommendation, as we build this Metropolis and compete against other regions, that NWI and the RDA along with other regional authorities seed and overlay plans along all three approaches, To be a successful community we must learn to juggle many balls, and not ignore any for the emanance of one. From a land use perspective NWI has suffered from the tyrrany of single - use planning (some may argue the lack of planning). We must now acknowledge that this approach has not done us well. It has not been smart nor sustainable.

Message #1 to the newly formed RDA

Today is an apt time to release some of my thoughts about the forming of the RDA. The following is a message I sent on to Tim Sanders, the NWI representative of the Indiana Economic Development Corp. and one of the organizers of the RDA, on September 6, 2005.

Today's Opinion section of the Times outlined a number of initiatives for the RDA. Although I fully support the economic opportunities these projects represent to the region, I must encourage the RDA to adopt principles of "smart growth" and "sustainable development" to mitigate against any adverse impact. With the ongoing events on the Gulf Coast (due in part to the weakened wetlands system), the mission of the Great Lakes Collaborative in protecting our water supply, and the regional movement to improve the quality of life here in NWI, it is timely that the economic mission of the RDA partner with ecological principles. As we all know our waterways and air are amongst the most polluted in the country. We have the need and the opportunity to reverse the damage. First, in so doing, we have the opportunity to seed an industry of environmental re-mediation, secondly, in so doing, we open the opportunity to feed-up the American economic food chain and attract knowledge based industries and workers to the region. I have an idea, lets get obsessive about cleaning our environment and lets be known throughout the country for this obsession. Chattanooga, Tennessee can serve as a great example, considered America's dirtiest city in the 1980's today it is one of America's greenest.

At present the mission of the RDA is project or action/transportation orientated, as the outline of initiatives show. The RDA, as a natural outgrowth of NIRPC is like NIRPC, and threatens to duplicate NIRPC and past mistakes. With that said NIRPC's historical role has been in transportation, leaving land use to the municipalities, in reality to industry (In the case of East Chicago and Gary City Planning and building standards are no longer existent). At some point, municipal shortfalls will need to be addressed at the regional level, if we are to maximize economic growth opportunities. The regions lack of history in land use planning and lack of balance between land use and transportation has contributed to the regions lack of quality of life. We lack so much. I encourage the members of the RDA to bring greater emphasis to land use planning and establish a committee addressing Brownfield redevelopment. For further discussion on Brownfield Redevelopment and three case studies see below.

Although I am not a Historical Preservationist I must also encourage the RDA to act responsibly when it comes to the few remaining remnants of our regions heritage. In the right hands these resources offer nodes of development from which to cluster new industries in todays knowledge based economy. These historical references can give location a place, and a marker to time. In our zeal to get something done don't forgot the value of what was already here. WE DO NOT LIVE IN AN ENVIRONMENT OF SCARCE OPPORTUNITIES AND WE DON'T HAVE TO BEHAVE AS IF WE DO. We need to behave as we want to be, and we will become that. We just need to prove that we are economically rational, that we understand the value of what we have, and that we treat what we have with value.

Next, I would like to raise a tone of caution when it comes to the planned expansion of Gary/Chicago International Airport, I fear the need to aggressively push expansion through will negatively and severely impact East Chicago's harbor neighborhoods as this does not have to be the case. As presently planned the expansion would negatively impact the only stable middle class neighborhood in the City, a hospital, three elementary schools, and acres of parkland. If I could I would nominate the airport expansion as a candidate for a smart growth initiative, by orienting growth in a much more compatible manner. It appears the planned configuration is a political configuration, and perhaps a product of the petty fiefdoms. The intent seems to be to threaten the desirability of East chicago, and force East Chicago to negotiate from a negative position, to gain back its future economic potential. The only problem is East Chicago leadership does not yet perceive the threat and are not engaging the issue.

Lastly, Lets be vision makers, and lets build upon our identity.

Bruce Bartlett's testimony on the Bush economy

From MaxSpeak, You Listen! Bruce Bartlett, the Conservative Republican and Reagan Tax Guru, testifies before the Senate Policy Committee.

Thank you for the opportunity to testify before you this morning. As you know, I testify as a Republican—I have served in senior political positions in Ronald Reagan’s White House and George H.W. Bush’s Treasury Department, and as executive director of the Joint Economic Committee, a cosponsor of this hearing. However, I do not represent the Republican Party or any organization with which I may be associated. I am here speaking only for myself.

I testify as someone who is very disenchanted with his party’s fiscal policy since 2001. Unlike the other witnesses, I am less concerned about the deficit per se or about the size of the tax cuts enacted over the last five years. Rather, what really bothers me is the increase in spending and expansion of government that my party has been responsible for.

I used to believe that the Republican Party was the party of small government. That’s why I became a Republican. I don’t believe that the federal government has the right to one penny more than absolutely necessary to fulfill its essential functions as spelled out in the Constitution. I think government is over-intrusive and could do what it has to do far more efficiently and at lower cost, which means with lower taxes.

Therefore, it bothers me a great deal when Republicans initiate new entitlement programs, massively expand pork-barrel spending, and show the most callous disregard for fiscal integrity. Not too many years ago, Ronald Reagan vetoed a politically popular highway bill because it contained 157 pork-barrel projects. The latest bill contained at least 5,000. Yet President Bush signed this $295 billion bill into law, despite having promised repeatedly to veto a bill larger than $256 billion.

For the life of me, I cannot understand why President Bush seems so incapable of using his veto pen. His father knew how to veto bills. He vetoed 29 of them in his four years in office. But in his first four-plus years, this President Bush has vetoed nothing. He is the first president since John Quincy Adams to serve a full term without vetoing anything. Curiously, Adams is also the only other son of a former president to become president—and his father, John Adams, didn’t veto anything, either.

When I complain about this to the White House, they tell me that it is very hard to veto bills when your party controls both Congress and the White House. But this explanation is simply implausible. Franklin D. Roosevelt had huge Democratic majorities, yet vetoed a record 372 bills. John F. Kennedy, Lyndon Johnson and Jimmy Carter also had large majorities of Democrats, yet Kennedy vetoed 12 bills during his short presidency, Johnson vetoed 16, and Carter vetoed 13.

I won’t bore this committee with numbers. You know them as well as I do. Suffice it to say that our fiscal situation is dire and growing worse by the day. My principal concern, however, is not with today’s deficits—even if they are swollen by Katrina and Rita-related emergency spending. What worries me is the retirement of the baby boom, the first of which turns 62 in 2008. I’m not saying that we are close to driving off a fiscal cliff, but clearly the implications of this event have not impacted on policymakers in any way whatsoever.

I have struggled with a way to illustrate the consequences of an aging population and its effect on the budget. This is the best I have been able to do. Social Security’s unfunded liability comes to 1.2 percent of GDP in perpetuity (1.4 percent without the trust fund)—about what is raised by the corporate income tax—according to that program’s actuaries. The comparable number for Medicare is 7.1 percent of GDP—about what is raised by the individual income tax. And remember that these figures are for the unfunded portion of these programs, so they are over and above payroll taxes.

The chilling conclusion, therefore, is that virtually 100 percent of all federal taxes, on a present value basis, do nothing but pay for Social Security and Medicare. Unless there are plans to abolish the rest of the federal government, large tax increases are inevitable.

Let me be clear that I am no advocate of higher taxes. I’m the one who drafted the Kemp-Roth bill back in the 1970’s and I have spent most of my career looking for ways to cut tax levels and tax rates. But that was predicated on an assumption those supporting tax cuts also wanted to downsize government. I never saw tax cuts as a substitute for spending cuts, but more as sugar to make the medicine go down. My ultimate goal was to reduce both taxes and spending.

Unfortunately, few in my party seem to share this philosophy any longer. For many, tax cuts have become a substitute for spending cuts. It truly amazes me how often I hear people on my side talk about cutting taxes as if this is the only thing necessary to downsize government. They seem genuinely oblivious to the fact that the burden of government is largely determined by the level of spending, not taxes. Nor do they understand that in the long-run, all spending must be paid for one way or another. Increasing spending today, therefore, absolutely guarantees that taxes will have to be raised in the future.

I am often criticized by friends on my side of the aisle for implicitly endorsing tax increases. I do no such thing. I am simply adding two and two and getting four while my friends seem to think there is some way of only getting three.

They also criticize me for implicitly abandoning the fight to cut spending and downside government. Again, I plead innocent. It is not I who has abandoned the fight, but my party. I don’t need to remind anyone here that the biggest spending increases in recent years passed Congresses with Republican majorities largely without Democratic votes. Nor do I need to remind anyone here that during the Clinton years we not only went from budget deficits to budget surpluses, but did so to a large extent by cutting spending—something my conservative friends seldom acknowledge.

Here’s the basic accounting. Defense spending fell by 1.4 percent of GDP between 1993 and 2000, and domestic discretionary spending fell from 3.8 percent to 3.3 percent. Even spending on entitlements fell for temporary demographic reasons, from 10.2 percent of GDP to 9.8 percent. Finally, interest on the debt fell, largely because of falling interest rates, from three percent of GDP to 2.3 percent. The result was an overall decline in spending of three percent of GDP, from 21.4 percent to 18.4 percent, the lowest level since 1966, before the Great Society geared up.

On the revenue side, individual income taxes rose by 2.5 percent of GDP, mainly as the result of rising incomes that pushed people up into higher tax brackets and higher capital gains taxes from the booming stock market. Corporate income taxes and payroll taxes added another 0.8 percent, for a total revenue increase of 3.3 percent of GDP. Thus lower spending and higher revenues constituted a fiscal turnaround of 6.3 percent of GDP, which explains how a deficit of 3.9 percent of GDP in 1993 became a budget surplus of 2.4 percent by 2000.

I don’t give President Clinton full credit for this performance. I think most of the credit goes to gridlock. Mr. Clinton wouldn’t support the Republican Congress’s spending and it wouldn’t support his. So for a blessed six years, government effectively was on automatic pilot. Sadly, unified government has led to an utter lack of restraint by my party that is simply inexcusable. It is extremely dismaying for me to hear House Majority Leader Tom Delay say that there is no fat in the budget and that Republicans have cut it to the bone. This is, quite frankly, ludicrous. My real fear, however, is that he may actually believe it.

I remain convinced that given the total lack of fiscal responsibility demonstrated by the Republican Party that very large tax increases are inevitable. I believe that the fiscal hole is now so large that it is unrealistic to think that we can just tinker with the tax system, as we did so often in the 1980’s, and raise enough revenue to pay for spending commitments that have been made. And under the circumstances, I have no faith whatsoever that spending will be significantly restrained—at least not by my side. They would first have to admit error and beg for forgiveness from people like me, something I don’t expect to be forthcoming any time soon.

Therefore, like it or not, we must travel the same route taken by the Europeans, who long before us made peace with the welfare state and tried to figure out how to pay for it with the least negative impact on economic growth and incentives. They all imposed a broad-based consumption tax called the value-added tax as an add-on tax to all the others. I think it is only a matter of time before we are forced to do the same thing and the longer we wait the more painful it will be when it is finally done. Unfortunately, we are more than likely going to have to be forced into it by a financial crisis of some sort. It would be better to avoid that cost and deal with our fiscal situation rationally. But I see no leadership on either side that would allow that to happen.

I don’t know when, where or how a financial crisis will develop. I only know that trends that can’t continue don’t. Since it is unlikely that the vast fiscal imbalance will be resolved with a whimper, it becomes a certainty that it will end with a bang. Among the areas ripe for triggering a crisis are a popping of the housing bubble, a crash of the dollar, a mistake by some big hedge fund, excessive tightening by the Fed and others too numerous to mention. It will take extraordinary luck and skill to avoid every boulder in the stream and I have little confidence that this administration has the personnel to even give us a fighting chance. There are too many Michael Browns at senior levels of the government today and too few Bob Rubins or Alan Greenspans.

Contrary to popular belief, I don’t think the American people are a bunch of children who only want hand-outs from the government and will only reward the party that promises them something for nothing. Experience and academic research confirm that they are more likely to support the candidate who treats the public purse with prudence and trust and not as a piggy bank to be routinely broken on a whim. In short, I think there is a political market for the party and the candidate who speaks honestly about the nature of the fiscal crisis that is looming. The payoff may not be immediate and the public trust has to be earned by more than just rhetoric. But if, as I believe, some event will eventually change the political landscape, voters will remember who spoke the truth and who mouthed the platitudes.

It’s dirty work, but someone has to do it. Since my party won’t do it, yours is going to have to. If it’s done right, your party will gain at the expense of mine and you will deserve the benefits and my party will deserve the electorate’s disdain.

Katrina: Halliburton Community Development - Old Classism / Same Mold

Behind the scene efforts at the White House to screw the middle and Lower classes

From the LAT's: "Limiting Government's Role" by Peter G. Gosselin and Ricardo Alonso-Zaldivar

Two days after Hurricane Katrina slammed into the Gulf Coast, the Department of Housing and Urban Development announced plans to issue emergency vouchers aimed at helping poor storm victims find new housing quickly by covering as much as $10,000 of their rent.
But the department suddenly backed away from the idea after White House aides met with senior HUD officials. Although emergency vouchers had been successfully used after the 1994 Northridge earthquake, the administration focused instead on a plan for government-built trailer parks, an approach that even many Republicans say would concentrate poverty in the very fashion the government has long sought to avoid.

A similar struggle has occurred over how to provide healthcare to storm victims. White House officials are quietly working to derail a proposal by leading Republican and Democratic senators to temporarily expand Medicaid. Instead, the administration is pushing a narrower plan that would not commit the government to covering certain groups of evacuees.

Katrina: A View of a Better President

From Duncan Black:

Eschaton: Quote of the Day

"... I went to Florida a few days after President Bush did to observe the damage from Hurricane Andrew. I had dealt with a lot of natural disasters as governor, including floods, droughts, and tornadoes, but I had never seen anything like this. I was surprised to hear complaints from both local officials and residents about how the Federal Emergency Management Agency was handling the aftermath of the hurricane. Traditionally, the job of FEMA director was given to a political supporter of the President who wanted some plum position but who had no experience with emergencies. I made a mental note to avoid that mistake if I won. Voters don't chose a President based on how he'll handle disasters, but if they're faced with one themselves, it quickly becomes the most important issue in their lives."
Bill Clinton, My Life (p. 428).

Katrina: What has it revealed about the Bush Government

Paul Krugman asks "how many FEMA's are there?"

All the President's Friends - New York Times: How many FEMA's are there? Unfortunately, it's easy to find other agencies suffering from some version of the FEMA syndrome.

The first example won't surprise you: the Environmental Protection Agency, which has a key role to play in Hurricane Katrina's aftermath, but which has seen a major exodus of experienced officials over the past few years. In particular, senior officials have left in protest over what they say is the Bush administration's unwillingness to enforce environmental law.

Yesterday The Independent, the British newspaper, published an interview about the environmental aftermath of Katrina with Hugh Kaufman, a senior policy analyst in the agency's Office of Solid Waste and Emergency Response, whom one suspects is planning to join the exodus. "The budget has been cut," he said, "and inept political hacks have been put in key positions."... What about the Food and Drug Administration? Serious questions have been raised about the agency's coziness with drug companies, and the agency's top official in charge of women's health issues resigned over the delay in approving Plan B, the morning-after pill, accusing the agency's head of overruling the professional staff on political grounds. Then there's the Corporation for Public Broadcasting....

You could say that these are all cases in which the Bush administration hasn't worried about degrading the quality of a government agency because it doesn't really believe in the agency's mission. But you can't say that about my other two examples. Even a conservative government needs an effective Treasury Department. Yet Treasury, which had high prestige and morale during the Clinton years, has fallen from grace.

The public symbol of that fall is the fact that John Snow, who was obviously picked for his loyalty rather than his qualifications, is still Treasury secretary. Less obvious to the public is the hollowing out of the department's expertise. Many experienced staff members have left since 2000, and a number of key positions are either empty or filled only on an acting basis. "There is no policy," an economist who was leaving the department after 22 years told The Washington Post, back in 2002. "If there are no pipes, why do you need a plumber?" So the best and brightest have been leaving.

And finally, what about the department of Homeland Security itself? FEMA was neglected, some people say, because it was folded into a large agency that was focused on terrorist threats, not natural disasters. But what, exactly, is the department doing to protect us from terrorists? In 2004 Reuters reported a "steady exodus" of counterterrorism officials, who believed that the war in Iraq had taken precedence over the real terrorist threat. Why, then, should we believe that Homeland Security is being well run?...

The point is that Katrina should serve as a wakeup call, not just about FEMA, but about the executive branch as a whole. Everything I know suggests that it's in a sorry state - that an administration which doesn't treat governing seriously has created two, three, many FEMA's...

This is an era for the history books - A time I never expected to see in my life-time.

Katrina: Timeline

For a good timeline on the events surrounding Hurricane Katrina visit Josh Marshall at Talking Points Memo.

Today's Times Opinion

In today's Times Opinion RDA needs to hit the ground running, East Chicago's Intermodal ambitions are apparently not on the agenda, trumped by that of the Port of Indiana's. It looks like East Chicago's lack of interest in engaging regionalism and regional authorities (NIRPC, the Forum, Quality of Life Council, The Marquette Plan), during the first six months of this administration, may have cost East chicago's "Economic Development Council" the opportunity to do what it has wanted to do - develop a Port or Intermodal facility ASAP. When you consider the timeline for the navigational dredge, the soon to come environmental dredge, and the need to widen and deepen the canal to support such shipping (if Mr. Ruff continues to insist on the present location), build new bridges, do all the feasibility and environmental studies, the lack of developed plans, get the support of the RDA and all other necessary authorities, it was never a quick deal. Now, It looks like Mr. Ruff will have an opportunity to develop an Intermodal Port, only it will be in Portage.


The issue: Regional Development Authority
Our opinion: Now that we have a full slate of board members, they should move quickly, under John Clark's leadership, on the important work they must do. They need to draft a

Harley Snyder and Lou Martinez have been named to the Northwest Indiana Regional Development Authority. The RDA now begins its work Sept. 26.

The RDA's first meeting on that date will be at the Northwestern Indiana Regional Planning Commission building in Portage. The RDA should start with a good briefing from NIRPC and take time to listen to the views of the region.
It must then quickly draft a plan that sets priorities and quickly act on it.

In announcing Snyder's appointment Thursday, Gov. Mitch Daniels said Northwest Indiana has no shortage of plans. What it needs is results.

That's true, but what the region really needs first is a single blueprint for Northwest Indiana that incorporates those many other plans.

Then the RDA can decide in what order to tackle these objectives and start moving on them.

Bus services need to be consolidated and routes thoughtfully crafted. Passenger rail service needs to be extended to Lowell and Valparaiso. An intermodal facility needs to be developed to facilitate intermodal shipping through the port in Portage. Land along the Lake Michigan shoreline needs to be reclaimed for public use, in line with the Marquette Greenway plan. The Gary/Chicago International Airport needs to be improved and additional airlines recruited.

And that's just a sampling of the work the RDA needs to do.

The board members need to hit the ground running. They need to ask NIRPC's expert advice but also others in the region.

And they're asking you, too, to speak out. It's your region, and you should have a voice in how it develops. Offer your advice to the RDA members.

The RDA is Indiana's first truly regional government. Help make it work well.

On the RDA board

* John Clark, RDA chairman and Gov. Mitch Daniels's senior adviser for economic growth

* Harley Snyder, president of HSC Inc./Real Estate Counseling and Investment

* Howard Cohen, chancellor of Purdue University Calumet

* Gus Olympidis, Family Express founder and president

* Ned Ruff, East Chicago city attorney

* Bill Joiner, president of the Gary Economic Development Commission

* Lou Martinez, president of Lake Area United Way

Offer your advice

The RDA is inviting comments and suggestions prior to its first meeting. Send your e-mail to rda@iedc.in.gov

If you go

The Regional Development Authority will meet at 6:30 p.m. Sept. 26 at the Northwestern Indiana Regional Planning Commission building, 6100 Southport Road, Portage.

Your opinion, please

What should be the RDA's first priority?

Katrina: Kevin Drum's perspective

The Washington Monthly: EVACUATING THE POOR.... Why did so many people who lacked the means to evacuate New Orleans get left behind?

Brian Wolshon, an engineering professor at Louisiana State University who served as a consultant on the state's evacuation plan, said little attention was paid to moving out New Orleans's "low-mobility" population -- the elderly, the infirm and the poor without cars or other means of fleeing the city, about 100,000 people. At disaster planning meetings, he said, "the answer was often silence."

It's not that no one had thought of this problem. They just didn't consider it important enough to spend any time on.

Katrina: The Story fills in

"Incompetence" and "Unprepared" are the drum beats of the Bush administration. Bush's claim "that nobody expected the breach of the levees" sounds too familiar to 9-11. In fact, there had been repeated warnings about exactly that risk.

Paul Krugman A Can't-Do Government - New York Times: Before 9/11 the Federal Emergency Management Agency listed the three most likely catastrophic disasters facing America: a terrorist attack on New York, a major earthquake in San Francisco and a hurricane strike on New Orleans.... So why were New Orleans and the nation so unprepared? After 9/11, hard questions were deferred in the name of national unity, then buried under a thick coat of whitewash....

Why have aid and security taken so long to arrive? Katrina hit five days ago - and it was already clear by last Friday that Katrina could do immense damage along the Gulf Coast.... [T]he evidence points, above all, to a stunning lack of both preparation and urgency in the federal government's response. Even military resources in the right place weren't ordered into action. "On Wednesday," said an editorial in The Sun Herald in Biloxi, Miss., "reporters listening to horrific stories of death and survival at the Biloxi Junior High School shelter looked north across Irish Hill Road and saw Air Force personnel playing basketball and performing calisthenics."...

Why wasn't more preventive action taken?... [T]he Army Corps of Engineers... "never tried to hide the fact that the spending pressures of the war in Iraq, as well as homeland security - coming at the same time as federal tax cuts - was the reason for the strain." In 2002 the corps' chief resigned, reportedly under threat of being fired, after he criticized the administration's proposed cuts in the corps' budget, including flood-control spending....

Did the Bush administration destroy FEMA's effectiveness? The administration has, by all accounts, treated the emergency management agency like an unwanted stepchild.... Last year James Lee Witt, who won bipartisan praise for his leadership of the agency during the Clinton years, said at a Congressional hearing: "I am extremely concerned that the ability of our nation to prepare for and respond to disasters has been sharply eroded. I hear from emergency managers, local and state leaders, and first responders nearly every day that the FEMA they knew and worked well with has now disappeared."

I don't think this is a simple tale of incompetence. The reason the military wasn't rushed in to help along the Gulf Coast is, I believe, the same reason nothing was done to stop looting after the fall of Baghdad. Flood control was neglected for the same reason our troops in Iraq didn't get adequate armor.... [O]ur current leaders just aren't serious about... the essential functions of government.... Yesterday Mr. Bush made an utterly fantastic claim: that nobody expected the breach of the levees. In fact, there had been repeated warnings about exactly that risk....

America... has a can't-do government that makes excuses instead of doing its job...

Housing Bubble: Paul Krugman on Alan Greenspan

He writes:

Greenspan and the Bubble - New York Times: Most of what Alan Greenspan said at last week's conference in his honor made very good sense. But his words of wisdom come too late. He's like a man who suggests leaving the barn door ajar, and then - after the horse is gone - delivers a lecture on the importance of keeping your animals properly locked up.

Regular readers know that I have never forgiven the Federal Reserve chairman for his role in creating today's budget deficit. In 2001 Mr. Greenspan, a stern fiscal taskmaster during the Clinton years, gave decisive support to the Bush administration's irresponsible tax cuts, urging Congress to reduce the federal government's revenue so that it wouldn't pay off its debt too quickly. Since then, federal debt has soared. But as far as I can tell, Mr. Greenspan has never admitted that he gave Congress bad advice. He has, however, gone back to lecturing us about the evils of deficits.

Now, it seems, he's playing a similar game with regard to the housing bubble. At the conference, Mr. Greenspan didn't say in plain English that house prices are way out of line. But he never says things in plain English. What he did say, after emphasizing the recent economic importance of rising house prices, was that "this vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent." And he warned that "history has not dealt kindly with the aftermath of protracted periods of low-risk premiums." I believe that translates as "Beware the bursting bubble."...

If Mr. Greenspan had said two years ago what he's saying now, people might have borrowed less and bought more wisely. But he didn't, and now it's too late. There are signs that the housing market either has peaked already or soon will. And it will be up to Mr. Greenspan's successor to manage the bubble's aftermath.

How bad will that aftermath be? The U.S. economy is currently suffering from twin imbalances.... One way or another, the economy will eventually eliminate both imbalances. But if the process doesn't go smoothly - if, in particular, the housing bubble bursts before the trade deficit shrinks - we're going to have an economic slowdown, and possibly a recession...

Katrina: Why FEMA Was Missing in Action

Peter Gosselin and Alan Miller of the LA Times explain what went wrong with FEMA:

Why FEMA Was Missing in Action - Los Angeles Times: By Peter G. Gosselin and Alan C. Miller, Times Staff Writers

WASHINGTON -- While the federal government has spent much of the last quarter-century trimming the safety nets it provides Americans, it has dramatically expanded its promise of protection in one area %u2014 disaster. Since the 1970s, Washington has emerged as the insurer of last resort against floods, fires, earthquakes and -- after 2001 -- terrorist attacks.

But the government's stumbling response to the storm that devastated the nation's Gulf Coast reveals that the federal agency singularly most responsible for making good on Washington's expanded promise has been hobbled by cutbacks and a bureaucratic downgrading. The Federal Emergency Management Agency once speedily delivered food, water, shelter and medical care to disaster areas, and paid to quickly rebuild damaged roads and schools and get businesses and people back on their feet. Like a commercial insurance firm setting safety standards to prevent future problems, it also underwrote efforts to get cities and states to reduce risks ahead of time and plan for what they would do if calamity struck. But in the aftermath of the Sept. 11 attacks, FEMA lost its Cabinet-level status as it was folded into the giant new Department of Homeland Security. And in recent years it has suffered budget cuts, the elimination or reduction of key programs and an exodus of experienced staffers.

The agency's core budget, which includes disaster preparedness and mitigation, has been cut each year since it was absorbed by the Homeland Security Department in 2003. Depending on what the final numbers end up being for next fiscal year, the cuts will have been between about 2% and 18%. The agency's staff has been reduced by 500 positions to 4,735. Among the results, FEMA has had to cut one of its three emergency management teams, which are charged with overseeing relief efforts in a disaster. Where it once had "red," "white" and "blue" teams, it now has only red and white. Three out of every four dollars the agency provides in local preparedness and first-responder grants go to terrorism-related activities, even though a recent Government Accountability Office report quotes local officials as saying what they really need is money to prepare for natural disasters and accidents.

"They've taken emergency management away from the emergency managers," complained Morrie Goodman, who was FEMA's chief spokesman during the Clinton administration. "These operations are being run by people who are amateurs at what they are doing."

Richard W. Krimm, a former senior FEMA official for several administrations, agreed. "It was a terrible mistake to take disaster response and recovery... and disaster preparedness and mitigation, and put them in Homeland Security," he said.

Homeland Security Secretary Michael Chertoff acknowledged in interviews Sunday that Washington was insufficiently prepared for the hurricane that laid waste to New Orleans and surrounding areas. But he defended its performance by arguing that the size of the storm was beyond anything his department could have anticipated and that primary responsibility for handling emergencies rested with state and local, not federal, officials. "Before this happened, I said -- we need to build a preparedness capacity going forward," Chertoff told NBC's "Meet the Press." He added that that was something "we have not yet succeeded in doing." Under the law, Chertoff said, state and local officials must direct initial emergency operations. "The federal government comes in and supports those officials," he said.

Chertoff's remarks, which echoed earlier statements by President Bush, prompted withering rebukes both from former senior FEMA staffers and outside experts. "They can't do that," former agency chief of staff Jane Bullock said of Bush administration efforts to shift responsibility away from Washington. "The moment the president declared a federal disaster, it became a federal responsibility.... The federal government took ownership over the response," she said. Bush declared a disaster in Louisiana and Mississippi when the storm hit a week ago.

"What's awe-inspiring here is how many federal officials didn't issue any orders," said Paul C. Light, an authority on government operations at New York University. Evidence of confusion extended beyond FEMA and the Homeland Security Department on Sunday.

Health and Human Services Secretary Mike Leavitt said that conditions in New Orleans and elsewhere could quickly escalate into a major public health crisis. But asked whether his agency had dispatched teams in advance of the storm and flooding, Leavitt answered, "No." "None of these teams were pre-positioned," he told CNN's "Late Edition." "We're having to organize them... as we go." Such an ad hoc approach might not have surprised Americans until recent decades because the federal government was thought to have few responsibilities for disaster relief, and what duties it did have were mostly delegated to the American Red Cross.

"A century ago, no one would have expected a massive federal response. Most people viewed natural disasters mainly as things to be endured on their own or with the help of their neighbors and communities," said Harvard University economic historian David A. Moss, whose recent book, "When All Else Fails: Government as the Ultimate Risk Manager," traces Washington's expanding duties in protecting Americans from all sorts of risks.

In 1927, President Coolidge described the federal role in aiding victims of a devastating flood of the lower Mississippi River this way: "To direct the sympathy of our people to the sad plight of thousands of their fellow citizens, and to urge that generous contributions be promptly forthcoming." But starting with the New Deal of the 1930s and with increasing vigor in recent decades, Washington sought to prevent disasters, both natural and man-made, and to partially compensate state and local governments, companies and even individuals when calamities did strike. The government reacted to Tropical Storm Agnes in 1972 by providing victims with grants and low-cost loans. It responded to a flood of the upper Mississippi in 1993 by approving $6.3 billion in aid. Comparing the federal government's response in 1927 to its efforts in 1993, Moss concluded that Washington made up less than 4% of the estimated losses in the earlier flood, but more than 50% in the later one.

Within 10 days of the Sept. 11 attacks, Congress and Bush had OKd $40 billion in aid, including $15 billion in grants and loans for the staggering airline industry and $4.3 billion to compensate the families of victims. "The federal government has dramatically increased its role in absorbing disaster losses after the fact," Moss said. "Until recently, many may have assumed we'd made similar strides in disaster prevention." FEMA was created in 1979 in response to criticism about Washington's fragmented reaction to a series of disasters, including Hurricane Camille, which devastated the Mississippi coast 10 years earlier. The agency was rocked by scandal in the 1980s and turned in such a poor performance after Hurricane Andrew struck South Florida in 1992 that President George H.W. Bush is thought to have lost votes as a result. But according to a variety of former officials and outside experts, the agency experienced a renaissance under President Clinton's director, James Lee Witt, speedily responding to the 1993 Mississippi flood, the 1994 Northridge earthquake and other disasters.

Witt's biggest change was to get FEMA to focus on reducing risks ahead of disasters and funding local prevention programs. After the 1993 flood, for instance, Witt's agency bought homes and businesses nearest the water and moved their occupants to safer locations. The result in one Illinois town was that although more than 400 people applied for disaster aid after the flood, only 11 needed to apply two years later when the river again jumped its banks. "He got communities to take practical steps like encouraging homeowners to bolt buildings to foundations in earthquake-prone areas and elevate living space in flood-prone ones," said Howard Kunreuther, co-director of the Wharton Risk Center at the University of Pennsylvania. But with the change of administration in 2001, many of Witt's prevention programs were reduced or cut entirely. After Sept. 11, former FEMA officials and outside authorities said, Washington's attention turned to terrorism to the exclusion of almost anything else.

Times staff writer Judy Pasternak contributed to this report.

Impeach George W. Bush. Impeach him now.