DC to NE – Drop Dead!

Bruce Krasting's picture

 

 

If you’ve lived in NY for a long time, it is very hard to forget this now famous, headline. I think the Daily News will be able to reuse this title page again sometime over the next month or two. NY and NJ have stuck out their hands, and requested a very lumpy $80B from Washington to cover the cost of the clean up from Sandy.

 

 

Man is this bad timing. If granted, the cost to the Feds would be reflected in the 2013 budget. Good-bye to any hope of improvement in the overall deficit picture if this nut has to be paid. The $80b that has been requested is more than the revenue from a reversal of the +$250k Bush tax cut. It comes to $530 for every worker in America.

 

The 2011 Budget Control Act limits annual payments of disaster relief to $11B. So the $80B is going to require a special spending bill. That’s not going to be easy to achieve in Washington with all the Cliff/money issues that are now on the table.

 

NY’s big Democratic Senator, Chuck Schumer is very much in the middle of this. He knows he has problems with this request. From The Hill (Link).

 

“There is no doubt this is going to be a hard fight. It comes in the middle of strenuous negotiations around the fiscal cliff.”

 

Schumer is a weasel; he also had this to say about the process of getting the necessary legislation passed:

 

I am working to keep the quest for Sandy aid separate from the talks and to preserve a tradition of not offsetting disaster relief.

 

Separate? How can you keep $80B separate? The issue of not offsetting the cost of a disaster by reducing other spending is not going to come easy. Some Republicans are going to insist that there be cuts in the budget to offset a big portion of the Sandy clean up. An aide for Eric Cantor chimed in with this:

 

Cantor has made clear that needs beyond the $11 billion allotted by the Budget Control Act will be properly considered.

 

Properly considered? That is Washington speak for, “No way in Hell”.

 

There is an element of this that is going to prove difficult for the NE legislators. Why are the costs of Sandy so high? Answer:

 

Schumer wants to do away with limits such as a $31,000-per-home cap on repairs because of high home prices and expenses in the New York area.

 

Ah! That explains it. The numbers are big because of expensive beachfront homes. This is not going to sell very well, nor should it.

 

I’m looking for a big fight over this money, and I think it has to be part of the Fiscal Cliff discussions. It is too big a number to sweep under the carpet. There is the broader issue of what really should be the role of the Federal Government when weather turns bad. It’s way past time for a discussion of the costs of cleaning up properties that are in storms way. The folks who don’t live on ocean water, are subsidizing everyone who does.

 

 

 

If you live on the West Coast the weather report this morning is terrible. Another “Pineapple Express” is headed to land. The expectations are for winds north of 80mph and rainfall of as much as 12 inches. If that is what happens, expect to see pictures of houses being washed down the streets of Bel Air. A storm like this could easily cost $10B.