NCPA - National Center for Policy Analysis


August 24, 2006

The fiscal impact of Hurricane Katrina, the most costly natural disaster in U.S. history, shows no sign of ending, say observers.

According to the latest figures:

  • Congress has already approved $122 billion in total spending; $87 billion in cash, nearly $20 billion in flood-insurance payouts and billions in tax breaks for victims, and is now paving the way for Gulf Coast states to get billions more.
  • Some $1.4 billion was misspent because the Federal Emergency Management Agency lacked safeguards, according to the Government Accountability Office.
  • The Bush administration may need $2 billion more for public projects such as roads, schools and utilities.
  • Most of the federal money so far has gone to compensate victims, clear debris, house evacuees and make repairs to New Orleans' levees.

Coastal restoration efforts could receive as much as $20 billion from offshore drilling royalties in the next few decades, helping somewhat to ease the burden.  Louisiana has been seeking $14 billion for that purpose.

That appetite for federal funds could clash with lawmakers' wallets, say observers.

"Not another dime should go," says Colorado Rep. Tom Tancredo, one of 11 Republicans who opposed the largest spending bill last year.  Others want offsets in the budget.  Still others are worried about the precedents set.  Sen. Judd Gregg (R-N.H.), Budget Committee chairman, says when floods struck his state in May, "people were wondering why they didn't get the same amount as Katrina" victims did.

Source: Richard Wolf, "Katrina Cost Continues to Swell," USA Today, August 22, 2006


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