We've heard for days now about the provision of cash-loaded debit cards for evacuees at the
Houston Astrodome:
"Dispossessed families of Hurricane Katrina will receive debit cards good for $2,000 to spend on clothing and other immediate needs, the Bush administration announced Wednesday..."
And while FEMA has decided to "not expand a trial program to distribute debit cards worth $2,000 to victims of Hurricane Katrina for immediate living expenses," the program will eat up a significant portion of the recently approved congressional funds, as seen in this article titled Confusion on Debit Card Aid in the New York Times.
The official story states that:
"...about half of the newly requested money would take the form of direct aid to individuals, and the administration said that included an estimated 320,000 of the $2,000 debit cards per household at a cost of $640 million."
The plan relies on individuals making individual purchases for the provision of basic supplies. Although Administration officials have couched the solution in typical small government, power to the free market terms:
"Michael Brown, the director of the Federal Emergency Management Agency, said those eligible for the unprecedented debit cards would be permitted to use the money "for emergency supplies they need" such as clothing. "The concept is to get them some cash on hand which allows them, empowers them to make their own decisions about what do they need to have to repair their own lives," he said."
Note that:
1) the use of such cards is "unprecedented"
2) Recipients are expected to use the money "for emergency supplies they need" such as clothing.
3) "Cash....empowers them to make their own decisions about what do they need to have to repair their own lives."
While disaster relief often includes federal assistance in the form of loans, aid and funds, it usually occurs further down the line once people have housing and basic needs met. But Brown specifically references such basic items as clothing.
This directly contradicts the strategy and advice of relief agencies when they ask for cash or check donations and not supplies. The Red Cross and other charities can buy in bulk to stretch dollars further and are able to negotiate on purchases and utilize donations. FEMA is literally encouraging people to go out and buy food, clothes, fuel, transportation, even housing on their own with no economy of scale.
Can you imagine the government purchasing power of $640 million? Even taking that kind of money to Costco would vastly increase the amount of supplies and assistance that could be provided. Instead, hundreds of thousands of evacuees will be separately purchasing basic essentials at Walmart without the benefits of bulk purchasing and organization the government is supposed to provide. It's certainly consistent with the Republican response thus far; Why provide leadership when you can let the people lead themselves?
The government routinely flexes its purchasing power to buy goods very cheaply, whether for government programs such as funded school lunch programs, or the military which provides service members substantially reduced prices on food, clothing and housewares. And yet with Katrina, Bush continues to insist that ideology trump common sense. Push responsibility to the state and local government! Government is not the solution, empowered consumers can help themselves! Let them go shopping!
This strategy allows Bush to expend a minimum of effort with the limited government involvement he favors when it comes to the social safety net. Instead, it allows for a relatively large amount of money to flow into the economy in a manner more akin to regular consumer purchasing (i.e. purchases of items not on sale, not in bulk, and at the highest cost the consumer). It would produce a result similar to what one might see with an increase in consumer confidence and spending that Bush's anemic job growth has been struggling to produce.
And which businesses are the most likely recipients of this influx? Predictably retailers such as Wal-Mart which sell clothing, food, back to school supplies, flashlights, bedding, household items; you know the basic necessities. Cheap goods, for the most part; but for the individual purchaser.
Wal-Mart recently cited high gas prices for their failure to meet analyst expectations in the third quarter.
As USA Today reports,
"For the third quarter, Wal-Mart said it expects profit of 55 cents to 59 cents a share, compared with Wall Street's expectations of 61 cents. Wal-Mart, considered a barometer of consumer sentiment because it draws more than 100 million U.S. customers each week, said it remained upbeat on the U.S. economy, but oil prices that topped $67 a barrel this month were a big concern."
USA Today August 18th
This could be an indication of retail sales in the months to come. Several excellent Kos diarists have already discussed the potential impacts on the economy stemming from disruptions to the shipping and oil industries of New Orleans. Even for retailers whose imports don't come directly through New Orleans, rerouting will tighten demand on remaining ports. And the gas prices will affect everyone. I spoke with a spokesperson from the AAA of Southern California who cautioned that consumers have not yet seen the rising price of fuel reflected in the price of goods due to competitive pricing within the trucking industry. With the oil impacts many are predicting for the next 6 months, they won't be able to hold off on raising costs, which could finally result in subsequent price increases for goods.
The potential influx of $640 million won't solve these larger problems but I'm sure it could give business a small boost. Especially where this trial program is taking place--Texas. Which is going through it's own political turmoil in the form of grand jury indictments and a tightening noose around Delay's neck.
I'm glad that aid has been provided to these families and for many the money will help them rejoin extended family and friends who can offer them a place to stay. But I worry this does more for retailers than for the evacuees, and I worry about the notion that they and their $2,000 are on their own. If they can't get back on their feet, will the Bush administration abandon these people, claiming they have already "helped them to help themselves?" As we have seen in today's America, that is often not enough. A relief effort that pushes cash at poor families at such an early stage in the game will provide only temporary relief, not the organized assistance necessary to ensure they don't sink deeper into poverty.
Welcome to the Ownership Society, where every man stands alone; in the face of poverty, in the face of disaster.
[Cross-posted at The Res Publica Project]
