WASHINGTON — Bush on Wednesday asked Congress to provide an additional $51.8 billion in relief and recovery aid to the hurricane-ravaged Gulf Coast, and congressional leaders vowed to approve the request before the week is out.
The new emergency spending package comes on top of the $10.5 billion Congress authorized last week — and the bailout is far from over. Joshua Bolten, director of the Office of Management and Budget, said he expected the administration to ask Congress for more money in a “few weeks” when the current round of financing runs dry.
“My expectation is we will need to have substantially more,” Bolten said. “This at least puts everyone on very solid footing.”
Most of the money will go to the Federal Emergency Management Agency, which is in charge of the relief and recovery operation, and about half will be spent on direct payment to victims, temporary housing, unemployment insurance and damage assessments of homes flooded out by the storm. Last week FEMA was spending about $500 million per day, a figure that shot up to $2 billion daily over the weekend as the agency signed contracts for work and ramped up its efforts.
In the latest aid package, the Department of Defense will receive $1.5 billion and the Army Corps of Engineers, which is responsible for the levees surrounding New Orleans, will get $400 million.
Lawmakers threw out a variety of figures for the total cost of the relief and recovery operation, none more than educated guesses since the flood waters have yet to be cleared out of New Orleans. Senate Budget Chairman Judd Gregg, R-N.H., said $200 billion was not unrealistic. Senate Minority Leader Harry Reid, D-N.V., said the total cost could end up being $150 billion.
Rep. William Jefferson, D-New Orleans, urged Congress Wednesday to spend $100 billion just on New Orleans and another $125 billion on other areas in Louisiana, Mississippi and Alabama damaged in the storm.
“We cannot ask for piecemeal requests,” he said in a statement. “We must move swiftly to restore the economy of the region and to improve the existence of hundreds of thousands of Americans whose lives have been over-turned in the past ten days.”
A critical question for the three states hardest hit by the storm — Louisiana, Mississippi and Alabama — is how long the federal government will continue to pick up the tab. At the request of governor from the three states, President Bush waived federal rules that require state and local governments to pick up 25 percent of post-disaster costs. The U.S. Treasury will foot the relief and recovery bill for 60 days after the storm hit the Gulf Coast. Asked whether that deadline will be extended, a Bush administration official said it is too early to say.
For the time being, Washington seems only too happy to underwrite the effort. With the devastation from Katrina still fresh, Congress and the Bush administration appear unconcerned about the mounting federal budget deficit as they pursue a carte blanche approach to repairing the hurricane damage.
Bolten said that the fiscal 2006 budget deficit will be greater than the $333 billion expected shortfall in the current fiscal year. But Bolten said he is “confident” that Bush’s promise to slice the deficit to $260 billion by 2009 is still realistic.
Already, however, Katrina spending is leaving some legislative casualties in its wake. A Republican-backed plan to scrap the estate tax has been put on hold indefinitely. Hopes to extend tax cuts made in 2003 are fading. Lawmakers said that they are now looking at tax cuts aimed specifically helping hurricane victims.
A bipartisan group of senators also urged congressional leaders to scrap plans to cut entitlement programs, including Medicaid, food stamps, housing and education.
“At a time when millions are displaced and seeking federal and state assistance, we believe it is inappropriate to move forward,” the senators wrote to Senate Finance Committee Chairman Charles Grassley, R-Iowa.
Paying for disaster relief has been Congress’ most tangible response to Katrina since the hurricane hit Aug. 29, but it is not the only one. Since Congress returned to session this week, dozens of bills have been offered to speed the recovery and cut through bureaucratic red tape that has slowed rescues and emergency relief.
House Republican leaders Wednesday said they would push legislation to help people get Social Security checks and other forms of public assistance if they have been displaced. The House wants to free students from loan repayment obligations if they were forced to withdraw from college because of the hurricane and increase the amount available for flood insurance claims. FEMA is able to borrow $1.5 billion for the program, a figure expected to be dwarfed by the tens of thousands of claims alone from metropolitan New Orleans.