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CBO Releases Sandy Damage Estimate: At $60.4 Billion, It Would Send US Over The Debt Ceiling

Tyler Durden's picture




 

At the end of October, as the Tristate Area was being flooded by Hurricane Sandy, one after another Wall Street firm tried to position Sandy virtually as a non-event, with total damage "forecasts" by such "reputable" firms as Goldman Sachs and Bank of America forecasting a total bill between $10 and $20 billion (as anything above that and the Q3 damage to GDP would be far more substantial than their recently bullish forecasts had accounted for, and would also imply a substantial spillover effect into Q1 2013), the same as various insurance companies who had other far more obvious reasons to undershoot on the total damages. We said the opposite, and based on historic damage forecasts, predicted the damage would likely be between $50 and $100 billion. Once again the sellside consensus was wrong and a fringe blog was accurate, as the CBO has just released the Obama administration's full aid request. Bottom line: $60.4 billion, or roughly what one year of what the ultimate tax hike compromise will bring into the government's treasury. Furthermore, if fully funded by debt today, this amount would send the US (which has a $57 billion debt buffer as of this moment) over the debt ceiling immediately.

Expect this number to rise even more before all is said and done.

Sure enough, expect lots of political bickering before this amount, or any part of it, is approved. From Reuters:

Senate Democrats are moving quickly to push through the Obama administration's full request for $60.4 billion in emergency aid for Superstorm Sandy, but a growing number of Republicans are arguing for a smaller initial amount.

 

The Senate Appropriations Committee released the text of its bill on Wednesday, which seeks to aid East Coast states hit hard when Sandy came ashore on Oct 29. Democratic aides said they are working towards final passage of the measure by early next week.

 

The quick turnaround effort appeared aimed at gaining the initiative over Republicans who want a slower, more cautious approach, passing appropriations only as the money is needed.

 

The Congressional Budget Office, in a new report on Obama's $60.4 billion request, estimated that only about $8.97 billion of the total would be spent in 2013, with another $12.66 billion spent in 2014 and $11.59 billion spent in 2015.

 

"That means there's very little reason to pass the whole thing now - especially since there hasn't been a single hearing on this request," a senior Republican aide said.

 

The $60.4 billion request is "more money than the annual budgets for the departments of Interior, Labor, Treasury and Transportation combined," the aide added, noting those budgets are subject to multiple hearings.

 

Republican Senator Jon Kyl of Arizona said on Tuesday that Obama's Sandy request was simply "too much."

 

"At $60 billion? In this time when we're trying to solve the deficit problem?" he told reporters.

The bottom line, however, is that the creme of the Wall Street crop was once again off by a factor of 300% in a space as short as 1 month: the same people who apparently can "predict" not only US GDP in the 2013-2016 period with decimal comma precision, but the 2022 Greek debt/GDP.

 

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Wed, 12/12/2012 - 23:39 | 3058324 Dr. Gonzo
Dr. Gonzo's picture

Good thing it doesn't have to be paid in silver because that's about 35X the value of all the registered silver on the COMEX. We'd have to borrow the entire U.S. mine supply for the next 20 years or so. Better to print. 

Wed, 12/12/2012 - 23:48 | 3058341 kaiserhoff
kaiserhoff's picture

Now there's a young man who can do his ciphering.  I was thinking along the same lines.

Riddle me this:

If we put all of Joisy for sale on e-bay, would the top bid be over or under 60 billion?

Thu, 12/13/2012 - 00:12 | 3058357 TruthInSunshine
TruthInSunshine's picture

And that's today's if-only-it-were-a-bad-comedy-rap.

If anyone thinks that the U.S. (or many, large EU Member States including half-in-half-out-Britain, Japan, Canada -- maybe China, gasp!) can truly pay down their official, let alone real, debt...

...well, good luck on that thought experiment, and just a reminder; basic arithmetic isn't that hard.

This is what happens when you run DECADES of massive annual deficits, accumulating epic, de facto unpayable real aggregate debt, with such inefficient, wasteful spending that it boggles the rational mind:  At some point, which many large, developed nations have now clearly passed a long time ago, any attempt to pay off that real debt via taxation or increasing revenues via imposition of other fees on the population not only kills the economy with finality, but even if you double taxes and other "revenues extraction," you won't even dent the debt.

The Ponzi is revealed in more crystal clear detail for what it really is with each passing day now.

Thu, 12/13/2012 - 00:19 | 3058397 goldfish1
goldfish1's picture

The  W H O  fukking rocks, bitchez.

Thu, 12/13/2012 - 03:00 | 3058577 BraveSirRobin
BraveSirRobin's picture

Remeber, it's only money folks.

Thu, 12/13/2012 - 09:17 | 3058824 trav777
trav777's picture

60B???  It's Obama trying to pay off his blue-state cronies.

Maybe they can cough up a small fraction of that to replace the gd'd Portal Bridge.

Thu, 12/13/2012 - 09:44 | 3058896 goldfish1
goldfish1's picture

I take it from the downrate that you didn't see the benefit concert 121212 for NY NJ Hurricane Sandy damages.

Thu, 12/13/2012 - 00:38 | 3058427 cxl9
cxl9's picture

If we put all of Joisy for sale on e-bay, would the top bid be over or under 60 billion?

With or without Newark?

Thu, 12/13/2012 - 00:56 | 3058455 JLee2027
JLee2027's picture

If we put all of Joisy for sale on e-bay, would the top bid be over or under 60 billion?

Does this include the Governor's personal donut supply? If so, I'll take the over.

Thu, 12/13/2012 - 09:00 | 3058786 CPL
CPL's picture

I barely even noted Christie before the mess, but if you draw comparisons between Bloomberg and Him during and currently.

 

Christie is out there throwing the hammer and getting shit done.  He is doing a great job of sideways deals to get his state back up and running.  For three weeks you could catch a picture every day of him at dawn somewhere in state.  Then at dusk somewhere in state and wrap it up with a tv interview at 11.

Versus Bloomberg...he took the subway.  Gosh...what a champion of the people.  Occasionally a lunch date photo engagement.  

Between the irascible and hard working Christie and the lazy sack of shit Bloomberg, I can tell you who is getting reelected and who is trusted now to act on behalf of their electorate.

 

I don't give away compliments too often to politico's, but I was impressed.  Christie is a tank AND he's still working on this shit.  Bloomberg, I think he's at home polishing his silver spoon collection from mummy and daddy wondering what all the little people are doing.

Wed, 12/12/2012 - 23:53 | 3058345 AlaricBalth
AlaricBalth's picture

So the damage from Hurricane Sandy is equal to the entire nominal GDP of the country of Syria. Interesting...
http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/index.aspx

Wed, 12/12/2012 - 23:44 | 3058332 Flakmeister
Flakmeister's picture

Pretty expensive for a nothinburger storm... at least that was what I was told it would be by the "experts" here....

Wed, 12/12/2012 - 23:58 | 3058358 NidStyles
NidStyles's picture

Insurance costs are not equal to real market value. Even you should be able to figure that one out.

Thu, 12/13/2012 - 00:39 | 3058432 Flakmeister
Flakmeister's picture

Um... are you quibbling about a few billion dollars? 

And since we are now pretty much a 3rd world country we should expect ~100 deaths from "nothingburger" storms, just like in Haiti... Is that what you are implying?

Thu, 12/13/2012 - 05:02 | 3058642 NidStyles
NidStyles's picture

Strawman. You likely got junked because someone else has actually read the definition.

Thu, 12/13/2012 - 09:19 | 3058827 trav777
trav777's picture

It was a nothingburger storm.

Haiti has a lot more deaths than 100.

the damage was to idiots who live in flood zones along with a poorly-defended set of urban areas that are relatively flood-prone in the first place.

Thu, 12/13/2012 - 09:29 | 3058858 CPL
CPL's picture

I've never understood the wisdom of building on a flood plain.  Only motivation is stupid greed instead of smart greed.

 

And Haiti, what a mess.  They shouldn't have sent a nickle.  

Instead what should have been sent.  30 Hercules planes loaded with rebar, concrete and builders/makers should have been flown in.  Followed by frieghters full of lumber, rented equipment and more concrete and bodies to train on the ground. 10 billion later and Port au Prince is still a rubble quarry.  

Could have rebuilt the entire island for three decades at the cost of it all.

Thu, 12/13/2012 - 10:13 | 3058997 Flakmeister
Flakmeister's picture

Haiti might very well be the human version of the St. Matthew Island Reindeer study....

A text book case for overshoot and why collectively we ain't much smarter than yeast....

Thu, 12/13/2012 - 10:08 | 3058974 Flakmeister
Flakmeister's picture

Sorry Trav, more deaths in the US than in Haiti for Sandy...Like you called it, we are going 3rd world...

And people will build where there is no living memory of getting flooded out... Hell, they'll build if they like the view, flooding be damned...

Wed, 12/12/2012 - 23:45 | 3058333 buzzsaw99
buzzsaw99's picture

Give them sixty trillion. what difference does it make?

Wed, 12/12/2012 - 23:50 | 3058346 kaiserhoff
kaiserhoff's picture

Googleplex of dollars?  Ben will get there soon.

Wed, 12/12/2012 - 23:52 | 3058347 Caviar Emptor
Caviar Emptor's picture

They love to show off how fast they can print. 

Thu, 12/13/2012 - 08:45 | 3058767 Antifaschistische
Antifaschistische's picture

It matters, because they have the 60 T, and the rest of the country doesn't.   Counterfeiting is profitable to the initial spenders...and the rest get screwed.

I'm tired of the rest of the country bailing out people who voluntarily chose to live within 1000 feet of the coast.  (along with all the other bailouts I'm tired of)

Give them a FEMA trailer, and be done with it.

Wed, 12/12/2012 - 23:46 | 3058335 IridiumRebel
IridiumRebel's picture

That concert should buy us another day.

Wed, 12/12/2012 - 23:47 | 3058337 A Lunatic
A Lunatic's picture

12-21-12 just can't get here fast enough.............

Wed, 12/12/2012 - 23:54 | 3058349 FreeMktFisherMN
FreeMktFisherMN's picture

Just another day, actually, unless the Lord returns on that day. It will be something to see, though, the hysteria. The average Joe has at least heard of the 'Mayans' and quite a few will probably fall for the sorcery and  get caught up in it. 

Thu, 12/13/2012 - 00:26 | 3058407 goldfish1
goldfish1's picture

Do you have a fukking clue what you are babbling about?

Thu, 12/13/2012 - 00:32 | 3058411 knukles
knukles's picture

When NASA cautions about the end of the world being naught except  scaring the kids, I know my tax money is well spent.
All we need now is a Federal Funded Zombie related campaign for law enforcement...

What?
You're kidding me, right?

No shit.....

 

BTW, Nazi Pelousy accused the GOP of not caring about Kwanza.
Would that be the same as the Democrats not enshrining Halloween and April Fools as National Holidays?
What the fuck is going on?

This is madness.........

Thu, 12/13/2012 - 00:52 | 3058451 AlaricBalth
AlaricBalth's picture

Kwanzaa is an ideological celebration with seven core principles (Nguzo Saba): Unity, self-determination, collective work and responsibility, cooperative economics, purpose, creativity, and faith.

I believe that Pelosi favors the principle of cooperative economics most of all due to its socialistic aspects.
http://en.m.wikipedia.org/wiki/Cooperative_economics#section_3

Thu, 12/13/2012 - 03:35 | 3058592 Manic by Proxy
Manic by Proxy's picture

Pelosi favors the "draped over the sofa back, grabbing the coffee table with both hands and screaming your name" principle

Thu, 12/13/2012 - 09:21 | 3058837 trav777
trav777's picture

it's a fabricated holiday that has nothing whatsoever to do with anything and has never been adhered to by the people who supposedly it sources from...unless 40 shootings a weekend in Chicago is part of that "collective work"

Thu, 12/13/2012 - 09:24 | 3058850 knukles
knukles's picture

Uh huh.
Sadly but truly....

Wed, 12/12/2012 - 23:47 | 3058339 Cognitive Dissonance
Cognitive Dissonance's picture

Bottom line: $60.4 billion

A billion here, a billion there, before you know it you're talking real (fiat) money.

Thu, 12/13/2012 - 00:38 | 3058429 AlaricBalth
AlaricBalth's picture

Hi CD! What are you doing up so late? I thought bedtime in rural America was soon after sundown. :-) Mrs Cog toss you out of the room?

Thu, 12/13/2012 - 01:05 | 3058473 Harbanger
Harbanger's picture

It's no so big when you consider the $45 billion per month we're getting.  I wonder if it will have and incremental affect on commodities.

Wed, 12/12/2012 - 23:49 | 3058342 DavosSherman
DavosSherman's picture

How much do you wanna bet that the FuckedEMA trailers weren't mobilized to support the hotel and restuarant sector?

Wed, 12/12/2012 - 23:52 | 3058348 FreeMktFisherMN
FreeMktFisherMN's picture

It still is astonishing how they find ways to paper over these things and then they're swept under the rug/forgotten. I know 60 billion these days isn't even big compared to the quadrillions in derivatives and whatnot, but how can this be covered up without even a ripple? These states are broke. There are no 'funds' allocated for this kind of thing (nor should there be, as we need to get individual responsibility and real risk assessments--e.g., living near the ocean is a risk and that has to be accounted for--back). 

 

At some point, and I think soon, it wlil become known to everybody that the Fed can print dollars, but it can't print purchasing power/supply. 

It is just incredible how these things maybe get discussed for a little bit in terms of challenging the notion that the taxpayer ought to be on the hook for this, but then it goes away segued by bread and circuses, and then at the end of the day 'magically' the reconstruction funds manifest themselves and it might as well have been absorbed as though nothing happened, a la, if a tree falls in middle of forest, does ...?

Thu, 12/13/2012 - 00:00 | 3058361 kaiserhoff
kaiserhoff's picture

I feel your pain.  The Fed can't print real jobs or intelligent use of capital.  There are many other failures of Soviet Central Planning, but those wounds would suffice. 

The good news is, those most dependent on government shall be well and truly fucked.

Thu, 12/13/2012 - 00:31 | 3058414 FreeMktFisherMN
FreeMktFisherMN's picture

I'm not 'feeling pain.' I just look to hedge accordingly. Along the way, though, 'milestones' like this still don't always fail to amaze me. 

I'm just glad that where I'm at as a junior in my 'studies,' I'm done with econ classes for the 'major', and can just take generals and in the mean time follow the markets/ZH more closely and know what really is going on so I can be prepared. 

Thu, 12/13/2012 - 09:00 | 3058787 dark pools of soros
dark pools of soros's picture

If u are pouring money into some Econ tuition, you really haven't been reading ZH

Wed, 12/12/2012 - 23:55 | 3058352 A Lunatic
A Lunatic's picture

So nobody was insured....................?

Thu, 12/13/2012 - 00:02 | 3058364 scatterbrains
scatterbrains's picture

maybe they tallied $30 bil in actual damage so $60 bil should cover paying off Uncle Warren and the other insurers.. but to home owners trying to prove storm damage... well good luck  lol

Thu, 12/13/2012 - 00:28 | 3058410 goldfish1
goldfish1's picture

Way more than $60B

Thu, 12/13/2012 - 01:11 | 3058484 Harbanger
Harbanger's picture

It would be nice to know the number of claims and divide it into the 60 billion.  I bet everyone got like 10 million dollars :)

Thu, 12/13/2012 - 01:46 | 3058514 MsCreant
MsCreant's picture

Wall Street is insured alright...

Helicopters are standing by.

The Printers are fired up.

The Zombies all await their "centrally planned rescue."

Thu, 12/13/2012 - 03:05 | 3058579 ghostfaceinvestah
ghostfaceinvestah's picture

It's pure bullshit.  Do you really think they are still going to be repairing storm damage in 2015?  This is just a way for the broke States to get Uncle Sam to foot the bill for their infrastructure projects.

It's like totalling your old, beaten up 2003 Toyota, and getting the insurance company to buy you a new 2013 Fe

Thu, 12/13/2012 - 09:23 | 3058847 trav777
trav777's picture

yes and they will be stupid as fuck infrastructure projects like more free shit for air and road travel.  Meanwhile they will bleat how rail needs to be "private sector," while Amtrak is actually turning a profit on NE corridor on 100 year old infrastructure, 80 year old wiring, and 40 year old rolling stock, because they have to own and maintain their own infrastructure.  While the gov picks up the tab for every airport and road in sight.

Wed, 12/12/2012 - 23:57 | 3058354 Creepy Lurker
Creepy Lurker's picture

Come on, yous guys are all missing the point. Think of all the broken windows! Just think of it! Me, I'm getting ready for the economic boom that's going to result from all this!

Thu, 12/13/2012 - 00:04 | 3058369 NidStyles
NidStyles's picture

Just don't bring out the good scotch and silverware. You can bring out the good cheese though.

Thu, 12/13/2012 - 00:03 | 3058367 NidStyles
NidStyles's picture

I bet 50% of that is inflated market prices due to subsidy. Another further 20% due to Insurance scams.

Thu, 12/13/2012 - 00:06 | 3058373 tip e. canoe
tip e. canoe's picture

wonder how much of that will funnelled to (a) the FIRE boyz or (b) the union boyz?

mob rules.

Thu, 12/13/2012 - 00:24 | 3058404 NidStyles
NidStyles's picture

Like I said, subsidy.

Thu, 12/13/2012 - 00:26 | 3058402 dolph9
dolph9's picture

The great effect of Sandy is not precisely measurable, and that's a loss of confidence.   Especially to the residents of NYC and the surrounding area.  Because if it happens once, it can happen again, right?  And they've been pummeled by strange weather in recent years and Sandy is yet another example.

And I say...what comes around goes around.  Because these people of NYC lived high on the hog and skimmed off the top of American productivity.  And they thought they were "Masters of the Universe" and they held sway over an Empire that stood at the end of history, and would dominate every little thing on this planet.

Well guess what?  You people shit like the rest of us, and you aren't special.  And nature doesn't give a damn, nature will strike you with 1000 times the force as a few airplanes piloted by Mossad controlled operatives on 9/11.

So get used to it, NYC.  More is on the way.  And, when the final collapse of the currency comes, all I can say is, good luck, because you'll be left with an overbuilt sewer not fit for human life.  And good luck escaping to the countryside, you might find the people less hospitable in a collapse scenario than you imagined.

Thu, 12/13/2012 - 09:13 | 3058813 dark pools of soros
dark pools of soros's picture

The chosen lizard people shrugged...

Thu, 12/13/2012 - 09:28 | 3058855 trav777
trav777's picture

well, gee, NYC may actually have to put some of their vig to work on flood control measures for the subway...like this is the first time it's ever happened, right?  Same with these road tunnels..jfc.

But of course you're right...EVERY currency collapse has led to fleeing the cities.  I mean, Buenos Aires doesn't even exist at this point, Rio, Sao Paulo, Belgrade...they're all gone. Wiped away by currency collapse.  Same thing with Bogota, Medellin, Cartagena, Bucaramanga, Salvador, BH, Curitiba...

Thu, 12/13/2012 - 00:26 | 3058408 knukles
knukles's picture

Listen.
The bankers were bailed out.
This shit'll cause insurance companies to need to be bailed out.
So fuck the little guy.
Don't help him at all since he's the one gets fucked in the end anyhow.
That way less money spent, no pressure on the debt ceiling and the little guy eats shit

American Nirvana.

Thu, 12/13/2012 - 09:29 | 3058857 trav777
trav777's picture

these companies employ little people

the automakers got bailed out too

Thu, 12/13/2012 - 00:37 | 3058413 Bicycle Repairman
Bicycle Repairman's picture

$60B is a politically convenient, understated number.  The final number will be $100B.

This isn't New Orleans.  This is NYC.  The peeps will get paid.

Thu, 12/13/2012 - 00:44 | 3058441 Seasmoke
Seasmoke's picture

60 Billion my ass !!! Since anyone who has a 2nd home at the shore is fucked by every bloated level of government and is not getting one penny of help.

Thu, 12/13/2012 - 00:52 | 3058448 Flakmeister
Flakmeister's picture

This is as good as place as any...

Observation of a Red Shift 11.9 galaxy aka the oldest galaxy ever observed.

http://phys.org/news/2012-12-oldest-galaxy-universe-older.html

Thu, 12/13/2012 - 01:51 | 3058520 MsCreant
MsCreant's picture

They must be printing galaxies, thus diluting the value of existing galaxies. Matter is neither created nor destroyed so it has to be true.

Thu, 12/13/2012 - 09:54 | 3058523 Flakmeister
Flakmeister's picture

It has something to do with Inflation.....

Edit: Yep, junked by either Creationists or Boetians....

Thu, 12/13/2012 - 05:03 | 3058643 NidStyles
NidStyles's picture

Ahh, you're one of those guys. That makes sense now.

Thu, 12/13/2012 - 10:15 | 3058960 Flakmeister
Flakmeister's picture

What? Someone with an appreciation and grasp of Natural Philosophy? Given your background it is no fucking wonder you have ideological issues with science, or ever worse, completely fail to get it...

Thu, 12/13/2012 - 09:31 | 3058865 trav777
trav777's picture

NASA should be closed down.

i watched that Curiosity landing mission and I didn't see diversity.  Obviously, NASA is in a crisis and must be reformed or shuttered.

There are people starving and we are wasting money on telescopes.  We should be giving money to the poor because they will spend it, thus helping the economy.

Thu, 12/13/2012 - 00:54 | 3058452 flyonmywall
flyonmywall's picture

It's another backdoor bailout of their bankster friends? Who else can actually afford beach property in NY ? Duh!

If they didn't bail them out, that would be a loss of ...*gasp*...principal somewhere...we can't have that now, can we?

 

Thu, 12/13/2012 - 01:28 | 3058459 JLee2027
JLee2027's picture

So nothing can be paid out until the Fiscal Cliff is resolved?

Thu, 12/13/2012 - 01:06 | 3058475 q99x2
q99x2's picture

There is no ceiling high enough for Bernanke. I don't know what that man expects. They certainly aren't going to let him into heaven. He sure does like to print that one. He'll find a way to get it out to them.

Thu, 12/13/2012 - 01:56 | 3058529 lolmao500
lolmao500's picture

They got insurance... so they are stealing money from taxpayers in asking for money.

Thu, 12/13/2012 - 02:13 | 3058543 azusgm
azusgm's picture

Flood insurance is the National Flood Insurance Program. It is under FEMA which is under Homeland Security. It is a federal government program and is pretty much broke.

As far a $60b goes, apparently the projected cost is significantly less (around $34b?), but NY, CT, and NJ are asking for more so that they can do infrastructure upgrades on the federal dime.

Thu, 12/13/2012 - 03:07 | 3058581 ghostfaceinvestah
ghostfaceinvestah's picture

Bingo!  The States are flat broke, so they can't repair any of their roads, bridges, schools, etc.  So they are getting Uncle Sam to pay.

Thu, 12/13/2012 - 08:47 | 3058770 Bicycle Repairman
Bicycle Repairman's picture

Don't let a crisis go to waste.

Thu, 12/13/2012 - 10:52 | 3059165 azusgm
azusgm's picture

Whoa. Pardon me. I am (gasp, horror) in error. The damage estimate the government is willing to accept is pegged at around $60b. The states have asked for $82b. And yes, some of the excess funds requested are for infrastructure upgrades, not damage repairs.

Thu, 12/13/2012 - 03:41 | 3058594 Manic by Proxy
Manic by Proxy's picture

Warren Buffett and Bill Gates can just pony up the $60 billion themselves. Warren really owes it to us. Consider it "paying their fair share".

Thu, 12/13/2012 - 06:28 | 3058684 negative rates
negative rates's picture

Tyler, you don't really believe the gvt #'s, do you? You, like the congress, will go insane trying to juggle and balance them. Let them fly over your head like a sea gull searching for sea food at the sea shore.

Thu, 12/13/2012 - 07:04 | 3058699 rodocostarica
rodocostarica's picture

So does this mean the old saying "Saving for a rainy day" is now out the window?

Thu, 12/13/2012 - 08:31 | 3058745 youngman
youngman's picture

60.4 billion is the union price....the 10- 20 billion is the non-union price......you don´t think there is a little fluff in this number....these governors see this as a free money rebuild my state thingy....everyone gets a brand new whatever...its amazing that you build on a beach....and you demand someone else rebuild it...but that is our country today

Thu, 12/13/2012 - 09:00 | 3058785 max2205
max2205's picture

Shummer gets the NE. A cadellac recovery and LA got a bunch of boxes to exist in. Fucking carpetbaggers

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