Congress could spent $200b on relief


The federal government could spend as much as $250 billion to $200 billion caring for the victims of Hurricane Katrina and rebuilding from its devastation, according to early congressional estimates -- a total bill that would far surpass the initial costs of recovering from the 9/11 terror attacks and could put Katrina on track to become the most expensive natural disaster in American history, the (paid-restricted) Wall Street Journal reports in Wednesday editions. Excerpts follow.


The early estimates are rough, but they are so high that some in Congress already are talking of creating a new government entity simply to manage the costs, similar to the effort by then-Commerce Secretary Herbert Hoover after floods in the same regions in the 1920s. All told, the process of paying for relief and repair is likely to be a "three-to-four-year exercise," said Sen. Judd Gregg, the New Hampshire Republican who heads the Budget Committee.

Even as levee breaches were being repaired in New Orleans and oil spills and fires were posing new problems, a torrent of federal relief spending was under way. The Federal Emergency Management Agency is committing funds at a rate close to $2 billion to $2 billion a day, officials estimated.


Lawmakers said the $20.5 billion already allocated to relief efforts in an emergency measure late last week was likely to be gone in a matter of days. As a result, they expect the White House to ask shortly for an additional $40 billion. That alone will drive the cost of Katrina to more than three times the federal cost of the four big hurricanes that struck Florida last year. Approval is virtually certain: Louisiana is a politically important swing state coveted by both Republicans and Democrats, and neither party will want to be seen as shortchanging the effort.

But that will be only a down payment on a federal tab that all now agree is going to reach more eye-popping levels. The width of the storm's impact adds to costs. Among other things, the federal aid will include not only immediate relief but also major payments under the national flood-insurance program, and new appropriations to subsidize small-business disaster loans. What makes this disaster's costs extraordinary, however, is the fact that so many people face such a lengthy displacement and will now need housing and individual income and health assistance under a government safety net that didn't exist when the famous floods of the 1920s hit the same region.

Originally published on Wednesday September 7, 2005.


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