Bush requests $51.8 billion more in relief

Lawmakers estimate federal spending tab could run as high as $200 billion

Katrina's Wake

September 08, 2005|By Gwyneth K. Shaw and Julie Hirschfeld Davis | Gwyneth K. Shaw and Julie Hirschfeld Davis,SUN NATIONAL STAFF

WASHINGTON - With total federal spending for Hurricane Katrina expected to climb as high as $200 billion, President Bush asked Congress yesterday for an additional $51.8 billion in relief assistance for the storm-battered Gulf Coast states.

Officially, there were no firm estimates, as top officials said that the demands for funding were still being examined.

"The answer is, I do not know, but we know it's going to be larger than anything like this we've done before," said House Appropriations Committee Chairman Jerry Lewis, a California Republican. "We've never experienced anything like this."

Senate Budget Committee Chairman Judd Gregg said, "The cost is going to be very, very significant."

"We're just beginning the process - we've got to rebuild people's homes, we've got to rebuild people's businesses, we've got to rebuild the infrastructure," said Gregg, a New Hampshire Republican.

Gregg and other lawmakers spoke of a total tab in the range of $150 billion to $200 billion, an amount that would make Katrina the most expensive U.S. disaster ever.

Last year, after four hurricanes struck Florida and other parts of the Southeast, the federal government spent $13.6 billion on storm relief.

A Democratic Senate aide said the allotment for the Federal Emergency Management Agency could exceed $100 billion.

About half of the FEMA allotment in the latest request would fund direct assistance to storm victims, including temporary housing and $2,000 debit cards that could go to as many as 1 million families, the White House said. The rest would pay for logistical costs and initial infrastructure repairs, as well as the efforts of other agencies participating in the recovery efforts.

Bush's $51.8 billion request comes on top of $10.5 billion that Congress approved last week. White House aides described it as another stopgap measure, designed to meet immediate recovery needs for the next several weeks.

"This will not be the last request," said Joshua B. Bolten, Bush's budget director.

Bolten declined to speculate about how much taxpayer money would ultimately be needed to fund the recovery and a longer-term rebuilding effort, saying it would be "several weeks before we come back with a more detailed proposal."

The latest request includes $50 billion for FEMA, whose spending rate shot up to $2 billion a day over last weekend; $1.4 billion for the Pentagon's recovery efforts; and $400 million for the Army Corps of Engineers to fund its effort to drain New Orleans.

In coming months, as the scope of rebuilding shattered communities and housing displaced people comes into sharper focus, lawmakers said they anticipate additional requests.

Some, including Gregg, want to see the money separated out and managed by a new, independent agency, to ensure that it is carefully spent.

"We're going to have to, I believe, create some sort of a recovery-rehabilitation entity," he said, "someplace where you have an on-the-ground, substantive center of operations ... with adequate auditing capability."

Other officials say the Department of Homeland Security - which oversees FEMA - should remain in charge, if only to get money to those who need it as quickly as possible.

"I'm inclined to think that the department can handle the administration of these funds, and that we would lose time and focus by setting up a brand new office," said Sen. Susan M. Collins, who heads the Senate's homeland security committee. Collins, a Maine Republican, will co-chair a new House-Senate committee, announced yesterday, to investigate the government's handling of the storm and its aftermath.

The magnitude of the devastation wrought by Katrina - and the federal effort needed to restore some kind of normal life for the storm's victims - is likely to test both the federal budget and the nation's economy.

The nonpartisan Congressional Budget Office released a preliminary analysis predicting that the economy would slow markedly and that employment numbers for September could be down 150,000 to a half-million jobs. Insured losses from the storm could top $30 billion, the CBO reported, and flood insurance claims are also likely to be substantial.

The impact on the budget deficit - already estimated to be more than $300 billion for the fiscal year that ends Sept. 30 - is unclear, according to the CBO report, though the new federal spending prompted by Katrina is almost certain to throw the budget further out of balance, at least in the short term.

Bolten said he didn't expect the recovery and rebuilding effort to do long-term damage. The deficit will grow in the next couple of years, especially next year, but Bolten said he was "confident" that Bush was still on track to fulfill his deficit-cutting goals.

The White House budget director hinted that the drain on the budget in the aftermath of Katrina would be a compelling new argument for the president in his efforts to get Congress to rein in spending in future years.

Spending discipline "does become increasingly important when we have emergencies like this that come up, that simply require [us] to dig into the federal treasury for emergency spending," Bolten said.

Still, GOP budget hawks have long been frustrated by what they regard as Bush's free-spending ways and have been unhappy that his presidency has been marked by creation of costly new government programs, such as a prescription drug benefit under Medicare.

Other Republicans said yesterday that the additional spending was further reason to press ahead with plans to make $35 billion in spending cuts, as well as an additional $70 billion in tax cuts. Roughly $10 billion in projected savings are from proposed cuts to the Medicaid program - which might be forced to increase spending to aid storm victims.

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