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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tip e. canoe's picture

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

mob rules.

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.

dark pools of soros's picture

The chosen lizard people shrugged...

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...

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.

trav777's picture

these companies employ little people

the automakers got bailed out too

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.

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.

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

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.

Flakmeister's picture

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

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

NidStyles's picture

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

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...

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.

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?

 

JLee2027's picture

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

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.

lolmao500's picture

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

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.

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.

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.

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".

rodocostarica's picture

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

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

max2205's picture

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