Worries Mount as Aid Flows With Few Controls

Congress is finding it much easier to spend tens of billions of dollars to aid the hurricane-stricken Gulf Coast than to agree on how to keep that money from going to waste.

The House and Senate easily passed tax packages Thursday that would provide $5 billion to $8 billion in tax breaks for Hurricane Katrina’s victims -- legislation that President Bush is expected to sign early next week.

The measures include tax relief for people who house hurricane victims and employers who hire them, and would allow victims to withdraw funds from retirement savings accounts without penalty.

The tax breaks would be in addition to $62.5 billion in emergency assistance already approved by Congress.

But with the White House expected to submit another multibillion-dollar aid request before the end of the month, concern is mounting among lawmakers that money is flowing into the region with too little thought about how best to spend it and too few controls over how it is spent.

Some Republican senators have appealed to Bush to appoint a high-profile person to take charge of the rebuilding effort. Others have urged creation of a federal commission or agency that would direct spending, or naming of a special inspector general to review whatever is spent.

Sen. Jeff Sessions (R-Ala.) has introduced legislation with Sen. Pete V. Domenici (R-N.M.) that would create a “Katrina czar” who would report directly to the president.

A spokesman for Sessions said the senator, who served as a U.S. attorney in Mobile for 15 years, speaks from experience.

“He’s prosecuted post-hurricane abuse and fraud,” Mike Brumas said. “He knows what happens after a hurricane, and here is an instance where $200 billion may be appropriated to help out Louisiana, Mississippi and, to a much lesser extent, Alabama.”

Sen. Larry E. Craig (R-Idaho), who serves on the powerful Appropriations Committee, suggested that local officials might use federal money for inappropriate purposes.

“There is a certain artistry in the state of Louisiana of sharing money between politicians” whenever federal funds are available, Craig said. When Louisianians say they want “local control” of the reconstruction effort, he added, “it means they want their hands on the money.”

Craig also said Louisiana’s elected officials “have effectively demonstrated their lack of capability for dealing with” the reconstruction by the way they initially responded to the disaster.

Few lawmakers are as publicly outspoken as Craig in their criticism. But the chorus of voices from both political parties demanding strict controls on how money is spent has not escaped the notice of the Louisiana congressional delegation.

The reconstruction effort “must be rooted in principles of accountability,” Sen. Mary L. Landrieu (D-La.) said at a news conference Thursday.

But at the same time, she said, “Louisiana will be rebuilt by Louisianians. New Orleans will be rebuilt by New Orleanians.”

Reconstruction decisions, Landrieu added, should be made “on the banks on the Mississippi River, not on the banks of the Potomac.”

Landrieu and the rest of the delegation unveiled a sweeping list of pricey projects that they say their state needs in order to begin economic, social and environmental recovery.

In addition to rebuilding all that was lost in Katrina’s floodwaters, the plan includes initiatives to increase homeownership among Louisiana’s poor and to increase the state’s stock of affordable housing. It also offers an array of incentives aimed at luring back displaced residents and businesses.

Although the group did not put a price tag on the effort, the list included such big-ticket items as $50 billion in Community Development Block Grants for Louisiana communities hit hard by the hurricane, $20 billion to repair and bolster the levees that failed in New Orleans, and $14 billion to restore wetlands along the Louisiana coast.

In an interview, Landrieu said, “We do not need Washington to control all the money.” The Republicans who control Congress and the White House “have always been about local control, flexibility and block grants, so why would this be any different?” she added.

But many lawmakers said the sheer scope and cost of the Gulf Coast rebuilding made it fundamentally different from previous federal efforts.

Sen. Judd Gregg (R-N.H.), chairman of the Budget Committee, has proposed creating an office within the White House that would maintain an on-site presence in the Gulf Coast for several years to oversee the effort. Gregg said he saw no fundamental conflict between those calling for tight federal control over reconstruction and those advocating local control.

“Clearly, when the federal government is putting in hundreds of billions of dollars in aid, it must have a strong say in how it is spent,” he said. “But there must also be a lot of direction from the states.”

One powerful opponent to a reconstruction czar is Sen. Thad Cochran (R-Miss.), chairman of the Senate Appropriations Committee. Jenny Manley, Cochran’s spokeswoman, said the senator supports a strong inspector general to monitor spending, “but he has said he doesn’t see a need for a czar.” Cochran, she said, is sensitive to the desire of state and local authorities to retain as much control as possible over how the money is spent.

In other hurricane-related action Thursday, the House approved a resolution establishing a committee to examine the federal, state and local response to the hurricane.

Senate Majority Leader Bill Frist (R-Tenn.) indicated that he would bring a similar resolution to the Senate floor next week, despite Democrats’ refusal to participate in what congressional Republican leaders have said would be a bipartisan House-Senate investigation.

Democrats continue to press for formation of an independent commission, modeled on the one that investigated the Sept. 11 terrorist attacks, to examine the government’s response to the hurricane.