TCS Daily

Hurricane Relief Spending: How Will We Pay For it?

By Veronique de Rugy - September 12, 2005 12:00 AM

President Bush just signed a bill authorizing an additional $51.8 billion to be spent in hurricane relief. This raises Katrina's cost to federal taxpayers to $62.3 billion so far. "The responsibility of caring for hundreds of thousands of citizens who no longer have homes is going to place many demands on our nation," President Bush said before he signed the spending legislation. Already private citizens have rushed to make personal sacrifices to come to the aid of the victims of the hurricane. Now, members of Congress must make a sacrifice of their own and cut low-priority spending and wasteful programs to offset our nation's new financial burden.

White House Budget Director Joshua B. Bolten already announced, "This will not be the last request." Senate Minority leader Harry Reid (D-NV) estimated that the recovery from Hurricane Katrina would eventually cost $150 billion. But a spokeswoman for Senate Budget Chairman Judd Gregg (R-NH) said Wednesday that costs could reach the $200 billion range. No matter what the final number is, the mounting cost of the hurricane and its aftermath comes at a time when the federal budget deficit, even though in retreat, is still very large and the cost of the war in Iraq is steadily increasing.  

It goes without saying that the federal government should help pay for the recovery of Louisiana and Mississippi. But if the President and Congress are going to create billions in new spending, they risk imposing excessive costs on the American economy. To minimize the relief effort's effect on the deficit, the federal recovery effort should be matched by reductions in other domestic spending.   Today, the President should request that the $62 billion in hurricane aid be offset with equivalent spending cuts. Here are some suggestions: He should ask Republicans and Democrats to shift to hurricane relief efforts the $24 billion in pork projects they recently secured for their districts in the highway bill and the additional billions of pork in last year's Omnibus bill. For instance, Rep. Don Young (R-AK) could give up his $230 million "Bridge to Nowhere," while Ted Stevens (R-AK) could turn in the $1.4 million he secured to upgrade the Ted Stevens Airport in Alaska -- along with the other $700 million Alaska is scheduled to receive. House Ways and Means Committee Chairman Bill Thomas (R-CA) could give up the $330 million he secured for a Centennial Corridor loop in his home district of Bakersfield.   

Congress could also shift to hurricane relief the $1.8 million going to the Woman's World Cup Tournament or the $6 million going to the Police Athletic League. Then President Bush should ask Congress to eliminate the hundred items he proposed to terminate in his FY 2006 budget, which would free up $8.6 billion for the hurricane recovery. 







Proposed Spending Cuts to Offset Bush Hurricane Relief Request



(Figures are FY2006 outlays in $millions)



Department and Program

 Cost Savings



U.S. Department of Agriculture





Agriculture Research Service





Economic Research Service





Farm Service Agency





Rural Business Cooperative Service





Rural Housing Service





Foreign Agricultural Service




Department of Commerce





Economic Development Administration




Department of Education





Vocational and Adult Education




Department of Energy





Energy Supply





Applied Research for Fossil Fuel and Renewable Sources





Energy Conservation




Department of Health and Human Services





Administration on Aging





State grants for child support enforcement





family planning





Promoting safe and stable families





Abstinence Education





Child Care Entitlement to States




Department of Housing and Urban Development





Community Development Block Grants




Department of Labor





Training Employment and Services




Department of State





Andean Counterdrug Initiative




Department of Transportation





Grants-in-Aid for Airports





Air Traffic Organization





Grant to the National Railroad Passenger Corporation




Other Agencies and Activities





Agency for International Development





Corporation for Public Broadcasting










National Endowment for the Arts





National Endowment for the Humanities





Small Business Administration




Total Proposed Spending Cuts




Source: de Rugy's calculation from the Budget of the U.S. Government, FY2006.




Table 1 proposes a series of cuts that would save another $56 billion. Can we really justify billions going to Vocational and Adult Education when so many adults and children just lost everything they owned? The work of many government employees, among them NASA workers and air traffic controllers, can be privatized, along with federal assets such as land, mineral stockpiles, and buildings. The National Endowments for the Humanities and for the Arts should be terminated. The federal government should also sell its woefully inefficient business operations, including the Postal Service, Amtrak, and electric utilities.

Cutting billions of dollars earmarked for USAID programs, such as the malaria initiatives, would also be a step in the right direction. These programs have proven to be beneficial mainly to the bureaucrats who run them. The bottom line is: there are plenty of sources of money that can be shifted to the hurricane relief effort and thus spare taxpayers from the burden of new spending.

Like millions of Americans who have made personal sacrifices to help the survivors of Katrina's devastations, the President and Congress should make a sacrifice of their own. They must cut low priority spending and wasteful programs to offset the new hurricane relief spending increase. Failing to do so would impose excessive costs on the American economy. Being compassionate should not prevent lawmakers from being responsible leaders.

Veronique de Rugy is a research scholar at the American Enterprise Institute.

To see more of the extensive coverage of Hurricane Katrina from TCS, click here.


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