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

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In those first emotional days after Katrina laid waste to the Gulf Coast, widespread predictions of a political sea change arrived from liberal and even some conservative commentators. “Americans are ready to fix their restless gaze on enduring problems of poverty, race, and class that have escaped their attention,” Newsweek‘s Jonathan Alter wrote in a September 2005 cover story. Some went so far as to forecast the dawn of a new America, one stunned out of both complacency and conservatism by the images of suffering on the Gulf Coast. Katrina, one commentator suggested, would permanently “redefine the political landscape.”

But within just a few weeks of the hurricane, something had changed in the press coverage and the public response: As the floodwaters receded, so, too, did the powerful images—the portraits of racially segregated suffering, of death by poverty. America’s—even liberal America’s—focus appeared to be moving away from the experiences of Katrina victims and the deep, systemic problems they revealed. In the end, the leap from pathos to policy was never made. Instead, a narrower lens was focused on the foibles of the Bush administration—for instance, its hiring of a political crony, Michael Brown, to head FEMA (and, later, Brown’s infamous emails about wardrobe choices and dinner plans as New Orleans residents were literally drowning in their homes). Democrats were quick to attack President Bush, but when it came to advancing meaningful policy changes, they came up short on momentum.

It quickly became clear that the public “meaning” of Katrina, which had initially seemed so obvious to so many, was actually up for grabs—and so, too, was its impact on U.S. politics.

In the coming weeks and months, conservatives hit their stride. The Bush administration, with the help of its friends in the Washington establishment and elsewhere, turned the disaster in New Orleans from a crisis into an opportunity—a chance to extend, rather than repeal, the conservative revolution that had begun 25 years earlier. The campaign to accomplish this apparent political paradox would operate on many levels and with astonishing success. While the country was absorbed by watching the president try to stuff an uncooperative political rabbit back into his hat, the real tricks were taking place offstage.

The PR campaign. This began with a carefully constructed plan—engineered, to no one’s surprise, by Karl Rove—to shift blame away from the White House, accompanied by promises of “investigations,” and followed by a highly stage-managed expression of conservative compassion by Bush.
The advancement of conservative social policies, including an overhaul of the federal budget. Despite some haggling among conservatives, Bush’s pledge to help the victims from Katrina would be used to justify a series of cuts that had always been favored by the right—robbing the poor to give (for a little while) to the poor.
The remaking of New Orleans. A variety of carefully planned “rebuilding” strategies, along with a selective apportionment of resources, would effectively clear out many of the city’s poor African Americans to make way for a richer, whiter simulacrum of the Big Easy.
A free-for-all for corporate contractors. There were billions of dollars to be made on the reconstruction of New Orleans and the rest of the Gulf Coast, a good share of it awarded to companies with political connections, and a fair portion of that lost to greed, waste, incompetence, and fraud.

The following timeline tracks developments in these four areas, focusing on the disaster that followed the disaster, when the tragedy and travesty of what happened on the Gulf Coast was turned into an opportunity to advance political and policy goals and increase private profits. In most cases, the groundwork for this was laid within the first hundred days.

September 2

President Bush makes his first post-Katrina trip to New Orleans. The visit includes staged photo ops that may have actually impeded aid efforts.

September 4

The New York Times reports on a White House plan—hatched days earlier while the hurricane’s victims were still stranded and dying—to “contain the political damage” from the Bush administration’s failure to respond promptly and decisively to Hurricane Katrina. Managed by Karl Rove and White House counselor Dan Bartlett, the strategies for this PR campaign include dodging questions, obfuscating facts, and redirecting blame to state and local authorities.

September 5

Facing falling poll numbers after ignoring or downplaying the magnitude of the Gulf Coast crisis for a week after the storm, the president makes a second trip to Louisiana. On this visit, unlike the first, there are no jokes about his drinking days in the Big Easy, although he still follows a carefully planned itinerary that circumvents the worst-hit areas and puts him in contact with only “friendly audiences.” Meanwhile, after touring the Houston Astrodome, where many Katrina evacuees have taken refuge, Barbara Bush suggests that the accommodations are “working very well for them” since “so many of the people in the arena here…were “underprivileged anyway.”

September 6

At a press conference, surrounded by cabinet members, the president is asked whether he intends to fire any of the members of his administration responsible for the botched rescue effort. Bush replies that he intends “to lead an investigation to find out what went right and what went wrong.” He decries “the blame game,” but makes veiled references to problems with “the state government and the local government”—per the administration’s previously outlined damage-control strategy. Fast Forward: Prepared by White House Homeland Security Advisor (and controversial political climber) Frances Fragos Townsend and released in February 2006, the report is a study in the selective use of facts. At one point, for example, Townsend quotes an assessment that “the President…took extraordinary steps prior to landfall.” A look at the footnotes to the report shows the source of the quote to be a speech made by none other than Townsend herself.
The Katrina disaster becomes an enormous boon to contractors with friends in high places. One of the first to swing into action is Halliburton subsidiary Kellogg, Brown & Root, which begins work repairing Gulf Coast Naval and Marine facilities under a pre-existing arrangement with the Department of Defense. Fast Forward: By the end of the year, KBR has secured contracts worth nearly $170 million. It can’t have hurt that KBR had retained the services of former FEMA director (and Bush crony) Joseph Allbaugh, who had registered as a lobbyist for the company six months prior to Katrina. Allbaugh also lobbied on behalf of the Shaw Group, which is owned by the chair of the Louisiana Democratic Party. Shaw received two $100 million no-bid contracts shortly after Katrina.
As the White House PR campaign gathers momentum, conservatives launch their own campaign to control the ideological and policy implications of Katrina. Figures like Rush Limbaugh and Bill O’Reilly rush to blame the disaster on the welfare state. In the right-wing weekly Human Events, Jack Kemp describes the disaster not as a tragedy exacerbated by government failures, but rather as “a golden opportunity” to implement “government policies that facilitate and empower the private sector and private citizens.” A week later he warns, “We shouldn’t be bamboozled by the left’s exploiting of Katrina to lobby for bigger, more centralized government.”

September 7

Senate Majority Leader Bill Frist and House Speaker Dennis Hastert (who’d recently remarked of New Orleans that “a lot of that place could be bulldozed“) announce the formation of a House-Senate “Hurricane Katrina Joint Review Committee.” The announcement comes at a gathering attended only by Republicans, after a Republican planning session. Democrats boycott the committee, since Republicans would outnumber them in accordance with their ratios in Congress. They call instead for a 9/11 Commission-style independent investigation.

September 8

Congress approves a second White House request for Katrina relief spending, bringing the total to $62.3 billion. Members of Congress and watchdog groups immediately raise questions about the procurement process for Katrina-related contracts, including insufficient oversight and lack of competitive bidding.
By executive order, the president suspends the Davis-Bacon Act, which requires federal contractors to pay the regional prevailing wage, in areas hit by Katrina. The move is attacked by organized labor and praised by anti-government conservatives.

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.

September 18

In an interview on Fox News, Senator Lindsey Graham, the South Carolina Republican, says, “You know, there’s so much opportunity here to go back into the budget and extract some savings to help pay for this hurricane relief that I look at it as an opportunity for the Congress to get back to its roots of being fiscally sound and conservative. Maybe something good can come from this hurricane.” While Katrina recovery costs are immediate and temporary, the cuts that Graham refers to are meant to be permanent, yielding an overall gain for conservative budget and policy goals.

September 19

David Safavian is arrested in connection with the Jack Abramoff scandal on charges of obstructing a criminal investigation.

September 21

The Republican Study Committee, a group that includes Congress’ most conservative members, issues its own plan for paying for Katrina recovery, which it calls “Operation Offset.”
The plan aims to reduce the federal budget by nearly $100 billion in 2006 alone and nearly $950 billion over 10 years—nearly five times the projected cost of hurricane reconstruction. OMB Watch, the government watchdog group, later describes the proposal as “a historical laundry list of nearly every budget cut Republicans have proposed, imagined or yearned for over the years.” These include cuts to most entitlement programs that serve the poor, as well as an array of the right’s favorite targets—from foreign aid and family planning for teens to the National Endowment for the Arts and Corporation for Public Broadcasting.

September 21

In response to “Operation Offset,” the Center on Budget and Policy Priorities points out that nearly 40 percent of the cuts are in assistance to the nation’s lowest-income residents, which would disproportionately affect African Americans, women, children, the elderly, the sick, and the disabled—in other words, the same vulnerable groups that had suffered most from Hurricane Katrina.
In one of the first comprehensive reports on the environmental impact of the storm, the U.S. Public Interest Research Group offers a grim assessment. The affected areas are a center of the oil, gas, and chemical industries and “home to 31 hazardous waste sites and 466 industrial facilities that handle large quantities of hazardous substances.” Numerous oil spills and the widespread release of toxic chemicals add to the existing public health crisis. Contributing to the disaster is a history of weak environmental regulation in the region.

September 23

The Los Angeles Times reports
that after meeting with White House aides, Department of Housing and Urban Development (HUD) officials nixed plans to issue housing vouchers to help the estimated 650,000 people displaced by Katrina. Vouchers enjoy considerable bipartisan support, but the Bush administration decides to limit the use of vouchers and instead give some families a one-time payment for housing, and warehouse others in trailer parks.

September 24

The suffering of Gulf Coast residents is compounded by the arrival of another major hurricane, Rita, on the Texas-Louisiana border. A handful of people are killed by the hurricane itself, but dozens more die in the largest two-day evacuation in history, which leaves people trapped in gridlock for hours or even days, some without enough water, food, or gasoline.

September 26

While the Republicans are beating back anti-pork elements within their own party, some 300 corporate representatives and lobbyists gather at the trough for the Katrina Reconstruction Summit in the Hart Senate Office Building. Eric Klinenberg and Thomas Frank describe it as “a seminar on profiteering, held on the grounds of the very institution to be plundered.”

September 28

Republican Senator Charles Grassley, chair of the Senate Finance Committee,
complains that the White House is behind efforts to block a bill he coauthored that seeks to extend Medicaid coverage to more Katrina and Rita victims and help affected states with Medicaid costs. The program, modeled on one implemented for victims of 9/11, has the support of both the Democratic and Republican Senate leadership, state governors, the American Medical Association, the Red Cross, and more than 100 other nonprofit organizations. Instead, the administration continues to support its program of state Medicaid Wavers, despite reports that many storm survivors are being denied Medicaid and are living without basic health care or medications.

September 29

During a visit to Houston, HUD Secretary Alphonso Jackson declares, “Whether we like it or not, New Orleans is not going to be 500,000 people for a long time. New Orleans is not going to be as black as it was for a long time, if ever again.” Jackson predicts that the African American population of the city will drop from 67 percent to 35 to 40 percent simply because black neighborhoods have been the worst hit. “I’m telling you, as HUD secretary and having been a developer and a planner, that’s how it’s going to be.” Jackson also expresses doubts about whether the Ninth Ward should be rebuilt at all, and tells the Houston Chronicle’s editorial board, “I wish that the so-called black leadership would stop running around this country, like Jesse and the rest of them, making this a racial issue.” But it will grow increasingly clear that the disaster is being used to advance what some have already begun to call an “ethnic cleansing” of New Orleans.

September 30

New Orleans Mayor Ray Nagin announces the formation of the Bring Back New Orleans Commission, which is made up largely of local businessmen. Joseph Canizaro, one of the city’s biggest developers and a member of the commission, echoes comments by HUD Secretary Jackson when he says, “As a practical matter, these poor folks don’t have the resources to go back to our city, just like they didn’t have the resources to get out of our city. So we won’t get all those folks back. That’s just a fact. It’s not what I want; it’s just a fact.”

October 6

After criticism from both parties during congressional hearings, FEMA’s new acting director, R. David Paulison, announces that four $100 million no-bid contracts awarded for Katrina relief (including one granted to the Shaw Group) will be reopened for competitive bidding, with an eye toward hiring more small businesses and minority-owned firms. Fast Forward: A month later, the Department of Homeland Security postpones the rebidding process until February 2006. In the end, only a fraction of the work is reopened for bidding.
Evacuees begin moving into makeshift trailer parks despite numerous warnings that they are unsafe, overpriced, and likely to create “ghettos of despair” that will further impede any transition back to normal life. The soon-to-be-infamous “FEMA trailers” are in high demand among desperate evacuees, most of whom must wade through paperwork and wait for months to move in—while elsewhere, thousands of trailers sit empty. Fast Forward: True to predictions, the trailer parks are grim places, with
high rates of crime, depression, and suicide, where residents feel they have been placed “in storage.”
For a week, FEMA actually blocks social services, community activities, and even religious gatherings because the sites are supposed to be “temporary,” and at one point prevents journalists from interviewing residents.

October 15

FEMA manages to almost meet its self-imposed deadline to clear Katrina evacuees from often-nightmarish temporary shelters—from a peak of 270,000, only about 15,000 remain. This is accomplished, however, largely by moving them to hotel rooms, where about 600,000 evacuees now live, at a cost of $11 million a day.

October 17

Governor Kathleen Blanco creates the Louisiana Recovery Authority to “coordinate the continuing rebuilding effort.” The group’s membership, The Nation points out, is “dominated by representatives of big business, has only one trade unionist and not a single grassroots black representative.” The LRA will control the allocation of federal recovery funds, a large share of which is slated for the state’s primary housing initiative, the “Road Home” program. Fast Forward: As of May 2007, the program has provided rebuilding funds to just 16,000 of the 130,000 homeowners who requested Road Home assistance. At this point, ICF Consulting, the firm that received a contract to administer the claims, announces that the program is facing a $3 billion shortfall and unable to pay those who’ve been promised assistance.

November 1

Governor Blanco announces plans to conduct a series of meetings on budget cuts. On the first day (November 6), she announces
$500 million in cuts from the Louisiana state budget, with health care and higher education taking the biggest hits. Blanco and her supporters say the cuts reflect the expected precipitous drop in tax revenues—but critics point to the large tax breaks being offered to business and industry in the name of encouraging reconstruction.

November 2

In Senate hearings, a group of civil engineers and scientists release the preliminary findings in their investigation into the causes of the New Orleans levee failures. They conclude that the breaches primarily responsible for flooding the city were caused by flaws in the design and construction of the levees by the Army Corps of Engineers. Fast Forward: These findings are confirmed by other independent investigations, as well as by the Corps’ own report. Some former Corps officials blame Bush-era funding cuts. Other critics argue that congressional earmarks misdirected Corps funding toward pork-barrel projects, rather than toward the most pressing needs.

November 29

FEMA attempts to evict the approximately 150,000 evacuees who still remain in hotels. Fast Forward: FEMA eventually issues two month-long extensions—the first after evacuee protests and bad press, the second after a court order. Most of the evacuees are finally forced out in February and March of 2006.

December 1

For the first time since Katrina struck, residents of the Lower Ninth Ward are permitted to visit their homes after being given shots and masks and passing through National Guard troops that have been blocking access to certain neighborhoods.
Meanwhile, residents have been locked out of public housing projects.
Many dangers to health and safety are real, but policies—and plans for the city’s reconstruction—seem designed to discourage the return of African Americans and especially low-income residents,
wiping certain neighborhoods off the map while enriching developers and corporate contractors.

December 2

Governor Blanco postpones the New Orleans mayoral election, which is slated to be held in February. Fast Forward: The election is held in April after a federal judge refuses to grant a second postponement, despite evidence that a disproportionate number of African Americans displaced by the disaster will find it difficult or impossible to participate.

December 11

A New York Times editorial titled “Death of an American City” states bluntly that “we are about to lose New Orleans,” while other media outlets note that the president has not visited the disaster zone for two months and has mentioned the Gulf Coast in speeches “four times in November and twice so far this month, and then only fleetingly.” A White House adviser tells a reporter that Katrina has “fallen so far off” the president’s “radar screen, you can’t find it.”

Additional links to comprehensive reports, document collections, and other web resources that provide up-to-date facts and assessments on Katrina and its aftermath can be found at the following sites: