Mary Landrieu: It's Never Enough

Sen. Mary Landrieu (D—La.) was unhappy last Friday night. After sparring with Senate Republicans, including her counterpart from Louisiana, Sen. David Vitter (R—La.), she didn't get what she wanted — $15 billion in hurricane—related loans to her state without any strings attached. No matter how much she gets for her state, it's never enough.

Now, don't get me wrong, she did get some money —— $750 million to be exact. But the recipients are going to have to pay it back, and that's not what Landrieu wanted. She felt that given everything Louisianans have gone through, these loans should have been totally forgivable, meaning that if the recipients didn't want to reimburse America's taxpayers, they didn't have to.

Doesn't that make it a grant and not a loan, or am I parsing words? 

Regardless, it's not like there hasn't been a significant amount of money already approved by Congress and the President to go to this region's recovery efforts, unless you don't consider $62 billion (that's billion with a 'b') significant. And, given that this represents more than three times the amount of federal income taxes collected from Louisiana residents and businesses in 2004, this is certainly not chump change.

But, that's not enough for Landrieu and others in her delegation.  For instance, according to the Los Angeles Times,  across the hall in the House, Rep. Charlie Melancon (D—La.) said of this decision:

''I will go back home, look my local leaders in the eyes and tell them to take the money and run. Spend it, and don't pay it back!'"

That's the spirit, Charlie. And what was Landrieu's opinion? Well, in the press release posted at her website, Landrieu made some pretty hypocritical statements:

''We now have a third—rate FEMA operating, a second class levee system, and now to pour salt on the wound, a tightfisted lending policy applied only to us.''

Yet, her press release goes on to say,

'The Government Accountability Office (GAO) reports that between 1974 and 1995, 20 of 52 community disaster loans given had been partially or completely forgiven, with only 13 loans having been fully repaid.'

As such, not only isn't this 'a policy applied only to [Louisianans],' but by Landrieu's own admission, 62 percent of the community disaster loans given between 1974 and 1995 were not automatically forgiven.
 
Of course, the existence of fuzzy math shouldn't surprise anyone familiar with Louisiana politics, especially since Landrieu was elected. In fact, since she became senator in 1997, Louisiana has significantly trailed the rest of the nation in its growth of federal income taxes paid, while leading most states in the growth of federal funds received.

As illustrated by the nonpartisan Tax Foundation, federal income taxes collected from residents and businesses in Louisiana have only increased by 11 percent in the period from 1997 through 2003. Yet, at the same time, federal receipts for the entire nation grew by 23 percent, meaning that Louisiana's contribution to the federal government since Landrieu was elected is growing at a 52 percent slower rate than the rest of the country.

Unfortunately, what Landrieu's state takes from federal coffers has by no means experienced such a slow rate of growth. On the contrary, during this same period, Louisiana's take of federal funds has increased by 44 percent, or an astounding four times the rate of growth in its federal income taxes collected.  At the same time, federal spending for the entire country only increased by 38 percent. 

Taking this further, before Landrieu was elected, the average person in Louisiana received $992 more in funds and/or services from the federal government than was paid in federal income taxes by the state per capita. That number exploded to $2,691 in 2003 — an outlandish 171 percent increase. As a result, Louisianans have gone from receiving $1.28 per capita in federal funds for every dollar of federal income taxes they paid before Landrieu was elected to a 2003 level of $1.47 — a 15 percent increase.

This should have made every American shudder when a tearful Mary Landrieu on This Week a month ago — touring the wreckage of New Orleans on board a helicopter with ABC's George Stephanopoulos — said about her city's levees:

'The president could have funded it. He cut it out of the budget. Is that the most pitiful sight that you have ever seen in your life? Look at that. It's so sad, George.'

Forgive me, but what's really pitiful is that since Landrieu became senator, her state's share of federal spending has increased at a faster rate than the rest of the nation's. Maybe most important, in the first three years under President Bush, her state's take increased by $5.6 billion, or 22 percent, while its contributions to the nation's tax base actually declined by $2 billion.

Given this, the problem isn't how much funds Louisiana has gotten from the federal government since Bush was elected. Instead, it's how poorly Landrieu and the rest of Louisiana's elected officials have allocated such funds.
                                
I guess this explains why she doesn't want anyone to have to pay back these loans that Congress just voted to give her state. Now that's sad.

Noel Sheppard is an economist, business owner, and contributing writer to the Free Market Project and contributing editor for the Media Research Center's NewsBusters.org.  Noel welcomes feedback at slep@danvillebc.com.