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

$1,017

 

 

 

Economic Research Service

$80

 

 

 

Farm Service Agency

$1,046

 

 

 

Rural Business Cooperative Service

$153

 

 

 

Rural Housing Service

$267

 

 

 

Foreign Agricultural Service

$1,200

 

 

Department of Commerce

 

 

 

 

Economic Development Administration

$390

 

 

Department of Education

 

 

 

 

Vocational and Adult Education

$1,928

 

 

Department of Energy

 

 

 

 

Energy Supply

$981

 

 

 

Applied Research for Fossil Fuel and Renewable Sources

$269

 

 

 

Energy Conservation

$243

 

 

Department of Health and Human Services

 

 

 

 

Administration on Aging

$1,379

 

 

 

State grants for child support enforcement

$4,270

 

 

 

family planning

$286

 

 

 

Promoting safe and stable families

$522

 

 

 

Abstinence Education

$138

 

 

 

Child Care Entitlement to States

$2,718

 

 

Department of Housing and Urban Development

 

 

 

 

Community Development Block Grants

$6,129

 

 

Department of Labor

 

 

 

 

Training Employment and Services

$5,352

 

 

Department of State

 

 

 

 

Andean Counterdrug Initiative

$734

 

 

Department of Transportation

 

 

 

 

Grants-in-Aid for Airports

$3,001

 

 

 

Air Traffic Organization

$6,647

 

 

 

Grant to the National Railroad Passenger Corporation

$1,200

 

 

Other Agencies and Activities

 

 

 

 

Agency for International Development

$5,200

 

 

 

Corporation for Public Broadcasting

$390

 

 

 

NASA

$9,600

 

 

 

National Endowment for the Arts

$124

 

 

 

National Endowment for the Humanities

$142

 

 

 

Small Business Administration

$592

 

 

Total Proposed Spending Cuts

$55,998

 

 

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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