keraneuology's Journal: Just throwing out an idea about the Katrina bailout

CBS News reported this morning that the current estimates to recover are at $200,000,000,000 and rising. The first few billion will be covered by insurance companies, the rest by private loans and government grants.

In the past week the US Government has authorized $62,000,000,000 in relief efforts. All of the sources I checked placed the population of New Orleans at around 500,000.

The cheapest solution _by far_ would be to take that $62,000,000,000 and divide it up among the 500,000 residents of New Orleans. Every man, woman and child could be given a trust fund seeded with almost $125,000. Allowing them to withdraw $2,000/month would give them an acceptable standard of living (certainly one better than many of them had in New Orleans) almost anywhere in the country for five years (assuming no interest) - ample time to get them back on their feet: most people don't start out into the world with even a sliver of this kind of head start. And many of those people were minors who wouldn't need to touch the money for years to come. The vast majority would certainly be set for life and a few hundred thousand would be forever removed from the welfare rolls.

And this $62,000,000,000 doesn't include any of the millions/billions of private donations.

Then just abandon the land as far as the government is concerned. Invest no more public funds into the area. If people/companies think they can make it work let them invest private dollars to rebuild the area at their own dime with their own incentives to make the area safe.

This would be a much more efficient way of showing compassion for the displaced, prevents the taxpayers from being ripped off by contractors who will absolutely and unquestionably overcharge the government for rebuilding efforts, cuts the welfare rolls, puts most of the money in the hands of those who need it right here, right now, instead of paying for administrators and bueaurocrats for years of explaining why they don't have enough money to provide aid...

Best of all, it leaves the decision of rebuilding New Orleans up to the free market: if the city has value then it will attract growth and repair by those who can pay for said growth and repair. And if the city is rebuilt by people who put their -own- money into the system then again (and this is the most important part) they will have the incentive to protect their investment without looking to a dispassionate government that would rather build freeways in the middle of nowhere to name after themselves than prevent a city from being wiped off the map.

And the taxpayers aren't burdened with almost a quarter of a trillion dollars that will never be paid off.

Interesting...

[Quantum Jim]

Nice idea. A few questions: 1. Is it taxable? 2. How do you prevent fraud? Of course the government would never do it because then nobody gets to have power to decide what goes on. Never underestimate the bored administrator!

Also I thing some people (the usuals) will complain that the rich don't deserve it. Because being rich means you obviously got there unfairly, of course. So they shouldn't get any breaks (not that I'm rich - in fact I'm a poor college student).

Re:Interesting...

[keraneuology]

1. Is it taxable: Just to make things simple, let's say no. I've never been a big fan of taxing government grants.

2. How do you prevent fraud: there is always fraud. Always will be. You do the best you can.

Also I thing some people (the usuals) will complain that the rich don't deserve it: this program would exclude them from receiving any other grants, payments, public loans or subsidies. Some people will find their insurance payments more lucrative; some will have the funds and the desire to rebuild.