The Heat Is Online

Climate-driven disasters threatens US budget capacity

Catastrophic storms’ costs put cloud over federal budgets, Dec. 4, 2012

The three states hardest hit by super-storm Sandy in October are requesting $80 billion in emergency funding, raising long-term questions about the federal government’s planning for seemingly ever-more expensive disaster spending.

In his press briefing Tuesday, Senate Majority Leader Harry Reid told reporters, “I met with Gov. (Andrew) Cuomo (of New York) yesterday; I understand Gov. (Chris) Christie (of New Jersey) is coming today or tomorrow.” Reid said he met with a White House aide Tuesday morning on the emergency spending and predicted that Congress would get a formal spending request “in the next 48 hours” from the White House.

On Tuesday Christie requested 100 percent federal reimbursement, instead of the normal 75 percent, for his state’s costs in the aftermath of Sandy. In a letter to Federal Emergency Management Agency (FEMA) Administrator Craig Fugate, Christie said, “The financial burden and economic hardship still confronted by our state and communities threatens the ability to continue debris removal operations at the existing (75 percent) cost-share ratio.”

On Wednesday senators from the three states — New York, New Jersey and Connecticut — will make their case for emergency funds before a Senate Appropriations Committee panel headed by a senator who knows firsthand about the effects of a catastrophic weather event: Louisiana Sen. Mary Landrieu. After Hurricanes Katrina and Rita hit the Gulf Coast in 2005, the federal government eventually spent about $120 billion.

Landrieu said in an interview Tuesday that if Congress does start spending $80 billion every few years on disaster recovery, “it really throws the (spending) averages off and we’re going to have a very serious conversation about how to go forward in the next decade. We’re going to take a good look at that, but right now our job is to get help to the Northeast and that’s what we’re going to do.”

If the United States has entered an era in which mega-storms, perhaps related to climate change, are becoming the “new normal,” it will create new spending pressures at a time when federal revenues every year are falling roughly $1 trillion short of outlays. If you factor in a growing population and development in coastal areas, then storm damage is likely to become even more expensive over time.

Congress and Obama right now are working hard to figure out how to undo the spending cuts that both sides agreed to last year in the Budget Control Act. So adding another $80 billion every few years might not be so strange. It might just be another object lesson in the unpredictability and perhaps the unreality of the federal budget process.

Even with no emergency spending on disaster relief, the Congressional Budget Office forecasts that spending between this year and 2023 will increase by 55 percent. Demographic changes – ever-growing Medicare, Medicaid, and Social Security spending on the aging Baby Boomers  – could be colliding with climate change, leaving a very heavy burden on younger workers.

A senator whose state was hit by the catastrophic Joplin tornado in 2011, Sen. Roy Blunt, R-Mo., said Tuesday, “You can’t plan for every disaster, but you can plan for a reasonable amount of annual disaster spending. And the other thing you can do is more clearly evaluate when something reaches the federal disaster level, when something is too big to be handled by a community and the state that community is in.”

He added, “One of the things we’ve failed to do in recent years is to really carefully evaluate the level of disaster. We haven’t increased the disaster criteria in a couple of decades.”

Blunt said a Government Accountability Office report he requested last year found that the federal government declares a lot more events disasters than it did in past decades “so that by the time you get to a real disaster the money is gone.”

The GAO report said that “The growing number of disaster declarations — a record 98 in fiscal year 2011 compared with 65 in 2004 — has contributed to increased federal disaster costs.” That was in part due to the FEMA standard (a per capita damage indicator) having remained unchanged since 1986, not reflecting the rise in per capita personal income since 1986.

In a House Transportation and Infrastructure Committee hearing Wednesday on how FEMA is responding to Sandy and how it could more effectively react to future catastrophes, committee member Rep. Jerry Nadler, D-N.Y., whose district includes lower Manhattan and parts of Brooklyn that were devastated by Sandy’s storm surge, said that the city and the state of New York “do not have billions of dollars sitting in their coffers in advance to fund repairs, and FEMA reimbursement is slow and cumbersome. In fact, New York still is waiting for payment for Hurricane Irene (from August of 2011). And I’m sure many of my colleagues have had similar experiences in their states.”

Nadler and other congressional Democrats argue that the emergency money for Sandy should be spent without Congress making spending cuts elsewhere to offset the new outlays. Waiting for Congress to come up with offsetting cuts, he said, would simply get in the way of “our most important job — protecting our citizens when calamity strikes.”

The $80 billion should be spent, Nadler said, in a way that protects against future storms “and we have every reason to believe that future storms will threaten us again — and soon.”

At the House hearing, Rep. Donna Edwards, D-Md., was the first committee member to raise the topic of what she called “the elephant in the room: global climate change.”

In an interview outside the hearing, Edwards told, “I do think we have to look seriously at climate change when we think about the way we need to build our infrastructure and to mitigate possible damage from future storms.” She said some protective infrastructure spending today could avert higher post-catastrophe costs in the future.

Edwards did not give a cost estimate for disaster-resistant infrastructure spending. “I don’t think we’ve even begun to explore the kinds of mitigation efforts we need all along our coastline in areas of very dense population where the impact when a disaster happens is tremendous.”