The epic Senate battle over relief funding for Sandy

December 26, 2012

New Jersey Governor Chris Christie recently berated Congress for its lack of progress on funding recovery monies for Hurricane Sandy. He made the argument that New Jersey and New York are net contributors to the federal treasury and they therefore deserve the funds that they requested. Yet, it is members of Christie’s own party who are slow-walking the legislation that would authorize spending. Republicans have raised some concerns – among them the amount of the original request and the need to budget for it.

The Republicans are right. More study should be performed into how states and communities are reimbursed for hurricane damage. Senator Charles Schumer of New York and others who are pushing for the funding cite the speed and largess of the federal government toward the affected Gulf region after Hurricane Katrina. But a study conducted by the Federal Reserve Bank of New York determined that the economic costs of Katrina were over-compensated to a level of 125%:

In hurricanes prior to Katrina, the [federal government reimbursement] rate was generally between 75 and 90 percent. However, beginning with Katrina, state and local governments often received 100 percent reimbursement. With this expansion of federal disaster assistance, payments from private insurance companies and the federal government exceeded the total economic cost of events since Katrina by about 25 percent.

On December 7, President Obama sent a Sandy funding request for $60 billion to Congress, which was a substantial reduction from the initial $80 billion request made by Governor Christie and New York Governor Andrew Cuomo. Senate Majority leader Harry Reid introduced legislation that mirrored the president’s request. Senate Republicans countered with a $23 billion offer.

I have argued for Congress to more thoroughly vet the appropriation given the federal government’s lack of funds. There is no doubt that the tri-state area needs relief, but the process and rationale for the funds should be much more substantive and transparent. The numbers often seem inflated. For example Louisiana Senator Mary Landrieu, whose own state suffered horribly in Hurricane Katrina, was admonishing the Small Business Administration to amp up its efforts for small firms affected by Sandy (emphasis mine):

Sen. Mary Landrieu, D-La., said Sandy’s impact on business dwarfed that of Hurricane Katrina. Katrina in 2005 destroyed 18,700 businesses, she said, while Sandy destroyed 189,000 in New Jersey and 265,000 in New York.

Were that many small businesses really “destroyed”? Only a tiny fraction (about half of one percent) of the supposedly affected businesses had applied for SBA support:

She said that to date, 1,498 New Jersey businesses had applied for SBA help, 68 applications were approved and nine loans have been disbursed.

November job losses in New Jersey were modest and certainly contradict the idea that 189,000 small businesses were destroyed. The Record reports:

New Jersey lost 8,100 jobs […] The biggest job losses were in leisure and hospitality, with 6,900 jobs lost and Atlantic City casinos bearing the brunt of the storm, according to the monthly employment report issued Thursday by the Department of Labor and Workforce Development. In all, 3,700 private-sector jobs and 4,400 government posts were lost.

Majority Leader Reid managed to push the bill through the Senate, but it is laden with 20 amendments. The Record reports:

A $60.4 billion spending bill for superstorm Sandy relief survived a crucial vote in the Senate on Friday, but faces another 20 amendment votes next week, including one that would cut the cost down to less than $24 billion.

Supporters, including senators from New Jersey and New York, were not able to get the bill approved before Christmas as they hoped. But the bill also could have been scuttled without some complicated maneuvers, and there were some smiles on the Senate floor.

Sen. Pat Toomey, R-Pa., succeeded in requiring that $3.4 billion of the funding to be offset by cuts elsewhere in the budget later this year, a move Democrats said was a dangerous precedent for a disaster bill.

Toomey said many of the projects covered by his amendment won’t be built for years, and while they may be worthy, they were not emergencies and would normally have had to compete with other projects through the normal budget process.

The Senate is rushing this money. As more data emerges, it will likely be apparent that Sandy relief was laden with unsubstantiated spending and pork. Pay up taxpayers!

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