Looting Homeland Security

Natural disasters have a way of exposing the cracks in the foundation of our civilization -- the scary things that we all suspect to be just under the surface, but that, in ordinary times, we would prefer not to think about. The sudden visibility of poverty in New Orleans after Hurricane Katrina laid waste to the city is the most vivid example of this effect. So, too, is the fact -- now plain for all to see -- that the Department of Homeland Security, the arm of the federal government responsible for ensuring our safety in times of national emergency, has become little more than an arm of big business, a radical experiment in President Bush's brand of market-based government.

The most glaring example of the for-profit marketization of DHS came on September 26th, barely a month after Katrina devastated the Gulf Coast, when some 300 corporate lobbyists and lawyers assembled for the Katrina Reconstruction Summit to learn how they could cash in on the federal effort to rebuild New Orleans. Such how-to sessions are nothing new in Washington, of course, and private firms certainly have a major role to play in relocating the 1.5 million people uprooted by the worst natural disaster in American history. What was extraordinary about this particular summit, however, was that it was held not in some conference room at a Beltway hotel, but in an office building of the U.S. Senate. It was a seminar on profiteering, held on the grounds of the very institution to be plundered.

Bill Hoagland, a senior aide to Senate Majority Leader Bill Frist, was on hand to address the corporate consultants in the Hart Office Building that morning. Katrina spending, he told the assembled group, was likely to total no more than $100 billion. But spirits were running high, and the contractors had bigger dreams. Two hundred billion was more like it, said a representative of a D.C. law firm that specializes in federal contracting. Two hundred fifty billion, said another man from the same firm -- and "we all recognize that that might be a low estimate." But hell, why put a number on it? "Trust me," declared Edward Badolato, executive vice president of the Shaw Group, one of the nation's largest engineering firms, "there's going to be plenty for everybody down there."

Badolato was in a position to know. As former deputy assistant energy secretary under Ronald Reagan and George H.W. Bush, he helped Shaw bag one of the first four contracts that the Federal Emergency Management Agency awarded for housing and engineering projects. Even sweeter, the $100 million deal was a no-bid contract -- meaning that Shaw was awarded taxpayer money without having to compete with other companies to see who could do the job fastest and cheapest. Thanks to the firm's political connections, Badolato boasted, Shaw's lobbyists "really delivered the bacon to us."

Even staunch conservatives were disgusted by the summit. "We were not happy with the result," said a spokeswoman for Sen. Mel Martinez, a Florida Republican who secured the room for the meeting. "It was a total corporate event."

The boundaries between business and government had been effectively erased in 2002, when Bush created the Department of Homeland Security. Although the administration initially opposed the idea of an umbrella agency to oversee domestic security after 9/11, it wound up staging a political coup by approving DHS on the condition that it be conducted as a massive merger-and-acquisition deal. In what amounted to a hostile takeover, the self-proclaimed "MBA president" stuffed twenty-two federal agencies and more than 183,000 government employees into a single, gigantic department committed to shifting as much work as possible from the public to the private sector.

Bush appointed inexperienced friends to top posts, outsourced essential government services to the party's corporate backers and gave anti-terrorism programs priority over everything else, including disaster preparedness. Homeland Security became the only federal agency ever designed to hollow out government and enrich an administration's corporate cronies. "It was a brilliant tactic," says Don Kettl, a professor of political science at the University of Pennsylvania. "The Bush administration used DHS to seize power."

According to the Homeland Security Research Corporation, a private firm that monitors the "market" in federal contracts, government outsourcing on homeland security has soared by $130 billion since Bush took office. And that's just a fraction of the windfall expected in the next five years. By 2010, the firm predicts, "the tragic events that resulted from Hurricane Katrina" -- combined with the administration's "much greater reliance on the private sector" -- will boost the global market in homeland security by another $400 billion.

But what is good for the private sector has proved disastrous for the public. Indeed, what has happened to FEMA and Homeland Security is part of the broader Republican strategy to shred the federal safety net, enabling the administration to claim each case of the system's breakdown as a vindication of its fondest faith, a credo so blunt that it can be expressed in two words: Government sucks.

***

Downgrading FEMA

To be honest, FEMA was a mess from the very beginning. Jimmy Carter created the agency in 1979 to coordinate the nation's disaster planning, promoting an "all hazards" approach that would direct the federal response to "the full range of emergencies." During the Reagan years, however, the agency jettisoned its focus on natural disasters in favor of nuclear-war survival schemes and plans for declaring martial law. It was stuff right out of The X-Files -- in fact, the militarized FEMA of the Eighties served as an inspiration for the show. The FEMA director responsible for these flights of militaristic fantasy, former National Guard Gen. Louis Giuffrida, resigned in 1985 after he was caught hiring cronies, doling out no-bid contracts to friends and using agency funds for a flashy apartment in Maryland. But in his short, strange tenure, the first glimmer of the GOP's broader priorities began to emerge: a militarized agency that would give sinecures to loyalists and steer lush profits to the well-connected.

The one thing FEMA couldn't get right, it seemed, was natural disasters. In the late 1980s, the agency responded feebly to a series of hurricanes in the Southeast, and its inept handling of the Loma Prieta earthquake in 1989 inspired Norman Mineta, then a California congressman, to quip that FEMA "could screw up a two-car parade." That same year, FEMA botched the response to Hurricane Hugo so badly that Sen. Ernest Hollings called the agency's leaders "the sorriest bunch of bureaucratic jackasses I've ever known," and members of Congress proposed folding the agency into the Department of Defense.

Then Bill Clinton came into office with a novel idea: make FEMA work the way it's supposed to. Clinton appointed James Lee Witt, who had earned praise for his work heading the Office of Emergency Services in Arkansas, as head of FEMA and elevated the agency to Cabinet-level status. Witt reorganized the office from top to bottom, producing immediate results. In a 1998 story criticizing the Clinton administration for insufficiently reforming federal agencies, The Washington Monthly made an exception for Witt and his team of emergency managers. "FEMA's former critics hail it as a first-rate agency," the magazine gushed. "In sixteen recent surveys of disaster victims, more than eighty percent of respondents approved of the way the agency was doing its job." Bush himself praised the agency in his first debate with Al Gore in 2000.

But the next year, when Bush took office, he set out to replace FEMA's experienced staff with political cronies. His choice for director was his campaign manager, Joseph Allbaugh, who had no experience in emergency management. Veteran staffers were demoralized. "There are plenty of Republican emergency managers, fire chiefs or police chiefs around," says Leo Bosner, an emergency-management specialist who has worked at FEMA since its beginning in 1979 and now heads the agency's union. "And they pull this guy who's a campaign manager?"

Allbaugh, in turn, hired his college pal Michael Brown as FEMA's general counsel and then promoted him to deputy director. Brown was looking for work after being forced to resign from the International Arabian Horse Association, where he served as chief rules enforcer. Seeking to win Senate approval, he claimed that he had worked for three years as "Assistant City Manager, Police, Fire and Emergency Response" in Edmond, Oklahoma. According to Edmond records, however, Brown was actually assistant to the city manager, a position that entailed few leadership responsibilities beyond answering the phone and scheduling appearances.

But the real damage began when Bush folded FEMA into the sprawling new Department of Homeland Security. "DHS was created for political, not administrative, reasons," says Kettl, the University of Pennsylvania professor. "How to make the new department work was largely an afterthought." With the department's focus almost exclusively on terrorism, disaster experts and emergency managers found themselves excluded from planning sessions. Military and law-enforcement personnel dominated DHS, imposing a top-down structure built on secrecy and skepticism, which clashed with FEMA's primary function of collaborating with regional agencies in an environment of shared information and mutual trust. Worse, Bush stripped FEMA of its Cabinet rank, cutting off easy access to the Oval Office. As a result, says Wallace Stickney, who directed FEMA under Bush Sr., the agency is now "sitting as the third layer down" in DHS -- leaving it "half-a-dozen staff offices away from the director." The agency that had earned bipartisan praise under Clinton suddenly found itself lumped together with the Animal and Plant Health Inspection Service and the Environmental Measurements Laboratory at the bottom of a department in which law-and-order projects had clear priority.

"The moment FEMA went into DHS, it was a death knell," says Jane Bullock, who served as chief of staff for emergency management from 1995 to 2001. "When FEMA was independent, Witt could pick up the phone and call up the Secretary of Defense for assistance. He'd respond immediately, because he had seen Witt in Cabinet meetings. No one can tell me that if Mike Brown picked up the phone and called Don Rumsfeld, that Rumsfeld would even have known who Brown was."

***

The Looting Begins

In downgrading FEMA, Bush placed so much faith in military planning and market logic that he disregarded warnings that organizational confusion at DHS might undermine existing disaster-response programs. In 2002, Witt wrote that "the administration's proposal to place all of FEMA into the new Department of Homeland Security will . . . dismantle what only recently has become a successful and vital agency." Rep. David Obey, a Democrat from Wisconsin, also cautioned against the move. "While FEMA is an agency that most people do not think about most of the time," he reminded his colleagues, "it can be the most important agency in the federal government at particular points in time."

Tom Ridge, the first secretary of Homeland Security, packed the department's advisory council with corporate CEOs, many from industries positioned to profit from homeland-security projects. Joseph Grano Jr., the chief executive of UBS Paine Webber, chaired the council, and its members included top officials from Dow Chemical, Eli Lilly, Conoco Phillips and Lockheed Martin. With the help of such high-level business partners, the department modeled its managerial and purchasing practices on the Pentagon, which has long used taxpayer money to buy $400 hammers and $2,000 toilet seats from favored contractors.

"DHS is emulating the worst contracting patterns developed at the Department of Defense," says Danielle Brian, executive director of the Project on Government Oversight, an independent group that monitors federal contracts. "They use the same politically connected contractors, even if they have a record of misconduct on government jobs without performing the work they're getting paid to do."

By law, federal contracts are supposed to be awarded to the company that can do the best job at the best price. But much of the outsourcing in DHS has been delivered in the form of no-bid contracts, which are awarded without subjecting the grantee to the nuisance of competition. Thanks to the transformation of government into a money sluice for private industry, no-bid deals have become the primary vehicle for corruption in recent years, a device for funneling taxpayer dollars into the pockets of the companies with the best lobbying departments. In 2003, FEMA was given the key task of upgrading the critical National Response Plan, expanding it to address a wider range of emergencies and improving coordination with state and local officials. But the Bush administration outsourced the job to the RAND Corp. in a no-bid contract. The private firm spent eight months putting together a plan -- which, in the end, proved to be unusable. Thanks to the substandard work, the entire process had to be restarted, wasting taxpayer dollars and delaying vital preparations against terrorism.

Most of the money spent by Homeland Security was frittered away on projects that did nothing to make America safer. Instead of directing resources based on the actual threat of terrorism or natural disaster, the Bush administration used homeland-security funds to reward predominantly Republican states with a low risk of terrorism. "Congress turned the new department into a giant pork barrel," says Kettl.

Even Bush's closest allies called the system foolish and corrupt. "Instead of applying specific risks and allocating funds to address them, the system that we presently use sometimes does nearly the opposite," said Christopher Cox, the former Republican congressman who now chairs the Securities and Exchange Commission. Money was allocated to states and cities, Cox added, "without the prerequisite analysis of risk. These authorities, then, occasionally find themselves looking for ways to spend the money."

The bizarre episodes of bad planning and wasteful spending might be funny, if they didn't involve squandering taxpayer dollars intended for securing the nation. Awash in homeland-security funds, small counties in Iowa splurged on traffic cones and wall clocks with built-in hidden cameras. Columbus, Ohio, bought bulletproof vests for dogs in the city's fire department. The District of Columbia paid kids in a summer jobs program to come up with a rap song about emergency preparedness. "Nationally, we just kind of threw money against the wall," said Tim Daniel, former director of homeland security for Missouri, which received $7.2 million to buy 13,000 hazmat suits -- one for every law-enforcement officer in the state. New York and New Jersey, which handle twelve percent of the nation's cargo, received barely one percent of federal funds intended to protect vulnerable ports, while Sunoco and other oil companies were awarded government money to beef up security at their for-profit facilities. At one port, a federal audit found, DHS spent $130,000 for a closed-circuit television system that its own staff deemed "redundant to what the port authority has in place."

As the Bush administration squandered security funds and outsourced projects to private contractors, experienced veterans within the department were all but ignored. "This administration really distrusts government workers," says Bosner, the FEMA union president. "They don't especially like us. They think, 'We can trust the private sector, and they'll do it right.'"

In June 2004, the union wrote Congress to warn that "jobs are increasingly being filled by hiring inexperienced and unqualified persons," while private-sector contractors were bungling important security projects. Earlier that year in a survey of agency workers, eighty percent said that FEMA was worse off since it was folded into Homeland Security; fewer than two percent said it had improved. Sixty percent said they would leave FEMA for another job if they had an offer, and seventy-four percent said they would retire immediately once eligible. "Once the highest-ranked government office for worker satisfaction," The Wall Street Journal reported last year, "FEMA is now dead last."

Many of the agency's most experienced professionals did not wait around for conditions to deteriorate any further. "Little by little, the top career people began to leave," says Bosner, who emphasizes that he does not speak for the agency. "They saw that the top jobs were going to twenty-five- or thirty-year-olds who worked for the Bush campaign." High turnover has been a problem throughout DHS. "It's a big revolving door right now," says one congressional staffer. "You need to depend on leadership being there, but they come for a few years and race off to the private sector."

The Transportation Security Administration -- the arm of DHS responsible for airport security -- offers a particularly alarming case study. This year alone, deputy administrator Carol DiBattiste took an executive position at ChoicePoint, a provider of background checks and "credential verification" services, for a minimum base salary of $500,000, plus a minimum performance bonus of $350,000 and a year-end bonus of $100,000. Tom Blank, the acting deputy administrator, left to join the lobbying firm of Wexler & Walker, and Chad Wolf, his assistant policy administrator, followed him. Sametta Klinetob, who served as director of cargo, transportation and trade security, signed on as director of governmental affairs at Delta Airlines.

Given the high-ranking departures, it is hardly surprising that TSA has failed to complete urgent security plans for trains, buses and cruise ships, and has neglected to update technology needed to improve airport screening. "The GAO, the inspector general and the 9/11 Commission all say we need new technology in these airports," says Rep. Peter DeFazio, an Oregon Democrat. "But the money is being diverted to who knows what else."

The race to the private sector has left DHS unable to do its job. In 2004, before DiBattiste cashed out, the nonpartisan Century Foundation issued its first report card on the department, giving DHS a C+ overall. The department fared even worse in the National Security Report Card issued this month by the September 11th Commission. The bipartisan panel awarded DHS five Fs, twelve Ds and two "incompletes," blasting the Bush administration for failing to implement reforms that could prevent another terrorist attack. According to an employee survey, morale at DHS ranks lower than in all but one other federal agency.

The public had little way of knowing about the trouble inside DHS. Yet with no terrorist attacks or natural disasters to undercut his image, Bush was able to make homeland security the centerpiece of his re-election strategy, warning that his effete Democratic opponents were incapable of safeguarding the nation.

But that was before Katrina.

***

The First Test

Compared to other possible catastrophes -- a dirty bomb in a big city, avian flu, a bioterrorist attack -- planning for hurricanes is relatively straightforward. Storms, after all, come with plenty of advance warning. In August 2001, FEMA listed the three catastrophes that most threatened America: a terrorist attack in New York, an earthquake in San Francisco and a hurricane in New Orleans. In May 2004, the agency even hired a consulting firm, Innovative Emergency Management, to simulate a catastrophic hurricane hitting New Orleans and develop preparedness plans in workshops with government officials. "We got a little under $1 million for the four workshops," recalls Madhu Beriwal, president of IEM. The planning workshops began that July -- but there was only one problem. "The funding for FEMA people who had to come wasn't available," says Beriwal. "The first workshop had about 300 people, there were 100 in the next two, and 80 people in the fourth. But FEMA was one of the smallest groups there."

For years, FEMA officials held regular conference calls with every state in hurricane areas to make sure that local authorities were prepared. But the agency began to neglect those lines of communication when Bush appointed Michael Brown and other cronies without emergency-management experience to run FEMA. As Katrina approached the Gulf Coast, the White House did issue a federal-disaster declaration on Saturday, August 27th, thereby giving federal agencies the power to support local governments with any available resources. But FEMA did little to advise local leaders on how to prepare for the emergency, and New Orleans Mayor Ray Nagin did not issue a mandatory evacuation order until the next day, August 28th.

"Everybody knew that if there was a Category 5 hurricane potentially hitting New Orleans, the state and local governments would be overwhelmed," says Jane Bullock, the former FEMA chief of staff. "It would have been useful to have FEMA there, counseling less-experienced officials on how to respond."

Instead, FEMA sent only one staff member to New Orleans before the storm -- Marty Bahamonde, a regional director from the Boston office whose previous responsibilities were in public affairs. The agency also failed to deliver the vital resources it had routinely supplied in the past: power generators, potable water and ice, emergency-communications systems, medical teams to support local hospitals, search-and-rescue teams to locate and assist survivors. The result was catastrophic: thousands of people stranded without water and food; thousands more huddling for days in the dim, stinking Superdome; hospital patients baking to death; nursing-home residents abandoned and drowned.

"Just look at the generators," says Bullock. "We've all read horror stories about people dying in hospitals because their fuel for generators ran out. But it's easy to bring in generators with military helicopters if the roads are blocked. It's astounding to me that this didn't happen. Or the Convention Center -- the government could have flown in water and food immediately. Those people didn't have to be stuck like that. There was no one on the ground with experience in disasters. I don't think Brown knew what to do."

As the disaster unfolded, Bahamonde frantically tried to impress the seriousness of the situation on Brown. "Sir," he e-mailed his boss on August 31st, "I know that you know the situation is past critical. Here are some things you might not know. Hotels are kicking people out, thousands gathering in the streets with no food or water. Hundreds still being rescued from homes . . . Estimates are many will die within hours . . . We are out of food and running water at the dome . . ."

Brown's reply: "Thanks for update. Anything specific I need to do or tweak?"

A little later, Brown's press secretary, Sharon Worthy, sent another e-mail to DHS staffers that made clear just how in charge the director was: "It is very important that time is allowed for Mr. Brown to eat dinner. Given that Baton Rouge is back to normal, restaurants are getting busy. He needs much more than twenty or thirty minutes. We now have traffic to encounter to get to and from a location of his choice, followed by wait service from the restaurant staff, eating, etc."

Bahamonde's response: "Oh my God!!! No, won't go any further, too easy of a target. Just tell her that I just ate an MRE and crapped in the hallway of the Superdome along with 30,000 other close friends, so I understand her concern about busy restaurants . . ."

Brown's boss seemed to be even less engaged. On the weekend that the monster storm was roaring in, Michael Chertoff, who replaced Ridge as head of DHS, stayed home and let his subordinates handle the crisis. After the worst had happened, he failed to implement the National Response Plan's Catastrophe Incident Annex, which allows the federal government to take command when local agencies are overwhelmed. His explanation to Congress: "I'm not a hurricane expert."

***

The Sweetheart Deals

Those who believe that Homeland Security could not have responded more quickly to the disaster in New Orleans need only look at the department's rapid response to the host of private contractors eager to convert the catastrophe into opportunity. When it comes to helping its friends, the Bush administration knows how to get things done -- and fast.

One of the first people to rush to Louisiana after the hurricane was none other than Joseph Allbaugh, Bush's former campaign manager and first FEMA director. Allbaugh, known as "The Enforcer," is hard to miss. He's a hulking figure, six feet four, with a flat-top, a bulging forehead and the build of a defensive lineman. Since leaving FEMA, Allbaugh has opened three consulting firms that help private companies snag government contracts. As he swept through hurricane-devastated areas, however, Allbaugh insisted that he wasn't there as a paid consultant. "I was just trying to lend my shoulder to the wheel," he says, "trying to coordinate some private-sector support."

But in the weeks after Katrina hit, Allbaugh's clients displayed extraordinary success in landing big-ticket deals. One -- the Shaw Group -- not only won its prized $100 million no-bid contract to provide housing, it also secured another $100 million deal for pumping water out of the flooded city. By mid-October, another Allbaugh client, Halliburton subsidiary KBR, had corralled $88 million in contracts.

"This is huge money, and it's getting huger all the time," says Stickney, the FEMA director under Bush Sr. "As someone who has been in government for forty years, it makes me uncomfortable. But it's everywhere, and it is part of the culture."

In the past, FEMA made a point of hiring local businesses for disaster recovery -- that way, the money spent not only helped to rebuild communities, it also pumped federal money into devastated areas. Not this time. "Less than two percent of the contracts for Mississippi have gone to Mississippi businesses," says Rep. Bennie Thompson, pointing to the "sweetheart deals" that Allbaugh and others have won for their clients. "Is it just a coincidence that the last FEMA director consults with companies that are getting the best contracts? At this point, because of cronyism, we are less safe."

Although Democrats also engage in cronyism, the real money has been funneled through consultants with direct ties to the Republican Party. Mike Parker, a former GOP congressman from Mississippi who directed the Army Corps of Engineers until 2002, agreed to consult for the AshBritt company just days before it won $550 million in contracts for FEMA missions for debris removal from -- that's right -- the Army Corps of Engineers. Mark Holman, a former adviser to Tom Ridge and a Bush "Pioneer" who raised more than $100,000 for the president's 2004 campaign, is now a senior partner at Blank Rome Government Relations, which represents Carnival Cruise Lines, the company that won a staggering $236 million contract to provide the government with three luxury liners for six months. Blank Rome also represents CH2M Hill, an engineering firm that bagged a $100 million no-bid contract.

The other no-bid contracts for Katrina went to Bechtel and Fluor, leading defense contractors famous for their high-level connections in Washington. Bechtel was long headed by George Shultz, who served as secretary of state under Reagan and was a highly influential figure in the making of the current Bush presidency. Fluor, the oil-and-gas engineering outfit, retains on its board Suzanne Woolsey, wife of former CIA director James Woolsey.

By October, the four no-bid contracts had come under so much attack from members of both parties that DHS was forced to reopen the deals and allow other firms to compete for the business. But Homeland Security -- modeling the reconstruction on time-tested practices at the Pentagon -- continues to outsource the rebuilding effort. "Look at Titan, one of the companies contracted to do interrogations at Abu Ghraib," says Danielle Brian, the government oversight director. "It was charged with hiring and supervising an employee who tortured prisoners, and with overcharging the government more than $200 million for the work. Now Titan has a DHS contract to do cleanup for Katrina. It's amazing. Not only have we failed to learn from our mistakes at the Pentagon, we're amplifying them."

Indeed, the president has turned the entire reconstruction project over to an old business pal. To oversee the massive effort, Bush brought in Donald Powell -- a former Texas banker whose primary qualification appears to be his generous support for the president. In 2000, Powell too was a Bush Pioneer, bringing in at least $100,000 in contributions. "He has no disaster-recovery experience," says Sen. Edward Kennedy. "I find this terribly troubling -- especially given the tragic missteps of Michael Brown. It's just business as usual for this administration."

***

The Coming Disaster

Such shameless cronyism underscores not just the inadequacy of Bush's disaster preparedness but the hollowness of his entire philosophy of government. Katrina revealed the underlying reality of the GOP agenda: that the federal government, after decades of reinventing and outsourcing and marketizing, is structured primarily to serve the needs of big business.

But before the waters had even subsided in New Orleans, Republicans and their corporate allies were busy spinning their botched response to Katrina as a clarion call for more of the same. The way they tell it, the disaster is simply a validation of their anti-government, pro-business ideology, a testament to the failures of the federal system and the wonders of the private sector. The Wall Street Journal, naturally, took the lead. "Big public bureaucracies are going to get us killed," wrote columnist Daniel Henninger, as the country watched New Orleans drown and FEMA fiddle. "We should consider outsourcing some of these functions, for profit, to the private sector." Henninger even recommended Bechtel by name.

Consider the case of Wal-Mart, one of the heroes to emerge from Katrina's wreckage. After the hurricane hit, that company got conservative blogs to spread the word about its gallant efforts: how it prepared for the oncoming disaster, sent in truckloads of bottled water once the worst had happened and made sure that precious items like generators remained available at its stores (at their usual, pre-hurricane prices). If the government "had responded like Wal-Mart has responded," one New Orleans area official declared, "we wouldn't be in this crisis."

The company's concerted PR effort paid off. As Business Week Online reported, the resulting buzz "fit nicely into the story line that was taking shape: Government doesn't work, Wal-Mart does."

That is a precise and revealing summary of how the Bush administration is dealing with the aftermath of Katrina. What will fix the mess in New Orleans, according to the White House and its allies, is less government and more business. In the days after the hurricane, Bush called on Congress to create a "Gulf Opportunity Zone" -- a sort of free-market fantasy state that would enact much of the conservative dream agenda of the last few decades in the form of disaster-relief measures. There would be tax breaks for businesses, an across-the-board suspension of environmental regulations, perks for the oil industry, subsidies to churches, even vouchers for private schools.

The Heritage Foundation was particularly eager to use the disaster to implement a wide range of ambitious regulatory rollbacks. In two position papers issued just days after the flood waters subsided, the conservative think tank called on the White House to repeal the Clean Air Act, rewrite "restrictive" sections of the Clean Water Act "that have contributed to Katrina's damage," permanently eliminate capital-gains taxes on all investments made within the Gulf Opportunity Zone and suspend all zoning regulations. The foundation applauded the president for cutting the wages that private contractors are required to pay workers on federal reconstruction projects -- a decree so outrageous that Bush was later forced to rescind it -- and even proposed capping state Medicare spending for Katrina victims.

And that is only the beginning. Perhaps, according to some conservatives, Katrina offers an even bigger opportunity to roll back the welfare state. Perhaps, they suggest, government has no business trying to help the victims of natural disasters -- at all. That was the none-too-subtle message of a Senate subcommittee hearing on disaster funding that took place one wet, chilly afternoon in October. Sitting beneath the Roman light fixtures and classical Greek ceiling in the Dirksen Senate Office Building, Sen. Tom Coburn, an archconservative from Oklahoma, waved in the air a thin, seventy-three-year-old book titled Congress as Santa Claus, declaring that "the problems we face today are the same problems described in 1932."

It was an odd text for a U.S. senator to be praising in the wake of a historic disaster. The book dates to the early years of the Great Depression, when the conservative Hoover administration was vetoing relief measures for the unemployed. In response, the liberal Sen. Robert La Follette Jr. drew up a list of dozens of instances in which the government had furnished relief to victims of natural disasters. Arguing that the nationwide economic collapse was, for moral purposes, the same as a hurricane or earthquake or drought, La Follette demanded that the government intervene. Taking office in 1933, Franklin Roosevelt adopted La Follette's line of thinking, initiated massive unemployment programs and ultimately presented La Follette's list of disaster-relief precedents to the Supreme Court in defense of the New Deal. Disaster relief thus helped provide the legal foundation for the modern welfare state, for everything from Social Security to agricultural price supports. Its very existence legitimates all the rest.

Congress as Santa Claus was the conservative response to La Follette. Its argument, simply, is that the Constitution forbids the federal government from handing out public money for disaster relief and thus, by extension, for any other charitable endeavor. For government to tax one group of citizens and hand over the proceeds to some other group of citizens, whether they were afflicted by flood, fire, hurricane or business downturn, is a fatal perversion of democratic government.

After Coburn finished hailing the book in the Senate, he turned to Roger Pilon, a constitutional scholar from the libertarian Cato Institute, who saluted Congress as Santa Claus as a "wonderful account" of "our long slow slide from liberty and limited government to the welfare state." As Pilon told the story, America remained largely virtuous and true to its rightful Constitution through the nineteenth century. But with the New Deal, the Supreme Court "unleashed the modern redistributive and regulatory state," giving us what Pilon called a "modern Leviathan," a tyrannical monster-state for which there is no legal justification. "Search the Constitution as you will," he admonished, "you will find no authority for Congress to appropriate and spend federal funds on education, agriculture, disaster relief, retirement programs, housing, health care, day care, the arts, public broadcasting -- the list is endless."

No authority for disaster relief. That is a level of free-market supremacy that even George W. Bush has never dared to dream of. The president, for his part, has been content simply to gut FEMA, rendering the agency incapable of fulfilling its mandate. Indeed, rather than restoring the disaster-relief programs he eviscerated, Bush has continued to appoint his cronies to top jobs in Homeland Security. While New Orleans was still underwater, the president nominated Julie Myers, the thirty-six-year-old niece of Air Force Gen. Richard Myers, to head Immigration and Customs Enforcement -- with its 20,000 employees and $4 billion budget -- even though she has no expertise in the field.

In the wake of Katrina, members of both parties have called for an independent commission to investigative the federal response and provide a bipartisan account of what went wrong, and how we can do it better next time around. But such an inquiry would almost certainly conclude that under the administration's militarized, market-based model for homeland security, Americans have become more vulnerable to the hazards we are likeliest to face, not less.

Today we are entering what disaster experts are calling a "post-Katrina, pre-pandemic" period. Health officials warn that a lethal flu virus, avian or other, could kill millions. "Once the international spread begins," reports the World Health Organization, "pandemics are considered unstoppable." Thanks to modern levels of travel and trade, an outbreak could strike more than a third of the entire U.S. population. "Global, national and regional economies will come to an abrupt halt," warns infectious-disease expert Michael Osterholm. The pandemic, he adds, "will change the world overnight."

Who will protect us when a pandemic inevitably strikes? Who is in charge of planning the response? The Department of Homeland Security -- the same crony-riddled administration that failed so miserably in New Orleans.

Eager to change the topic after Katrina, Bush suddenly announced that he wants to spend $7.1 billion to prepare for a flu pandemic. His plan, predictably, dumps much of the costs and responsibility on state and local governments -- while providing $6 billion to giant pharmaceutical corporations developing anti-viral drugs and vaccines.

Such vaccines will be of little use, however, if they are administered by a department that has proved itself unable and unwilling to take even the most basic and obvious steps in the wake of a disaster. Yet when Newt Gingrich, a respected leader of the administration's party, suggests reforms in preparation for the coming epidemic, what does he recommend? That the government adopt "entrepreneurial management practices," modeling itself after "America's best-run corporations."

Even after Katrina, it would seem, we cannot shake the free-market mind-set. But after the coming pandemic has run its deadly course, we may find that entrusting our safety to the market comes at a very steep price indeed.

Note: This story has been updated to correct an error in the original, published version. It is the global, not federal, market for homeland security that is expected to increase by $400 billion by 2010. Rolling Stone regrets the error.