The High Price of Emergency Spending: Our Response to Disasters and the Costly, Wasteful Outcomes
When Congress comes back to town after Election Day, one of the top things on the to-do list is likely to be a package of new disaster relief spending in response to damage Hurricane Ian inflicted on parts of Florida and the Carolinas. One current request pegs this additional spending at $33 billion. Aid to fellow countrymen and women in their hour of need is arguably a justifiable expense, but the manner in which emergency response is funded at the federal level is both fiscally perilous and often ineffective. The true cost of emergency spending can be much higher than it appears on the sticker.
The catalog of disaster spending pitfalls is lengthy. Overlaying the entire issue is the misleading notion that disaster spending is unpredictable and there’s no way to respond apart from urgent cash injections outside the typical budget and appropriations process. In fact, hurricanes, wildfires, flooding and tornadoes have their own seasons, and as climate change worsens, scientists warn that these and other natural disasters will intensify. Though the Federal Emergency Management Agency, the National Forest Service, and other responsive agencies and programs receive annual appropriations, when disaster strikes there is inevitably a cry for new funds.
If those needs are meritorious, it is far better that the funds be allocated through the appropriations process rather than designated emergency spending and rushed across the floor. Regardless of temporary budget caps, agreements made earlier in the fiscal year, or any number of other rules in place to tame Washington’s spending, emergency spending is typically exempt from these tempering restrictions. Emergency spending is also not added to the annual tab to be offset with other reductions or revenues, or counted against discretionary limits. Instead, it is deficit spending funded by borrowing against future taxpayers. With interest rates on the rise, that borrowing is increasingly costly.
As emergency spending speeds across the Hill, it tends to pick up other priorities and spending measures too. Congressional gridlock keeps frustrated legislators and their pet projects on the sideline until a “must pass” bill comes along and they can hitch a ride. For example, the June 2019 emergency supplemental passed in the wake of Hurricanes Maria, Michael and Florence also included a provision adding hemp to the crops covered by federal crop insurance. A 2017 disaster supplemental included continuing appropriations, a suspension of the debt limit and the Reinforcing Education Accountability in Development (READ) Act, which directed the State Department to work with other countries and organizations to promote learning and literacy. The $50.6 billion package in response to Hurricane Sandy was famously packed with spending for wholly unrelated projects. Watchdog organization Taxpayers for Common Sense identified $118 million for AMTRAK upgrades unrelated to Sandy damage; $10 million for Federal Bureau of Investigation salaries and expenses; and billions more in funding to the Federal Highway Administration, Community Development Funds and the Army Corps of Engineers—all for use in states unaffected by the storm. Like a snowball gathering ice, sticks and leaves as it careens down the hill, the final product is often a big, expensive mess.
Hastily enacted supplementals outside the typical budget process of requests, hearings and other committee work can create significant challenges for effective oversight and accountability. Who is responsible for overseeing what is not always clear. When entities receive a flood of new funds, it’s not always easy to absorb and put that money to use quickly and efficiently. It can be difficult to vet awardees and to establish just what can and should be done in response to the catastrophe at hand. For instance, after a severe hurricane, decisions like whether to allow families to rebuild and in what manner need deliberation, not politically charged handouts that could lead to more dangerous situations in the future.
Thoughtful evaluation of the long-term risks and implications needs to happen outside the fog and sorrow of immediate losses. The giant spending packages Congress passed in response to the COVID-19 pandemic were rife with these issues. The Pentagon misused funds for projects unrelated to the virus response. Funds intended for desperately needed personal protection equipment went toward shipbuilding, drones and aircraft parts. The Project on Government Oversight also found that more than $389 billion went to federal contractors with a history of misconduct. Likewise, the hastily enacted Paycheck Protection Program loans have proven to be rife with fraud. The 2021 American Rescue plan designated $122 billion for public schools, but only 15 percent has been spent, according to the Washington Post. Leftover funds from earlier rescue packages, slow bureaucracy and lack of staffing were all cited as to why the funds couldn’t be quickly deployed to help avoid the current educational crisis. Overlapping, hastily arranged and—at times—understaffed oversight bodies make it difficult to establish clear lines of responsibility.
Many of these problems can be avoided. Better planning with more realistic expectations of disaster costs can help ensure necessary resources are already in place, and avoid wasteful spending due to political wrangling. When additional funds are called for, that spending should be offset by commensurate spending reductions or revenue increases, not just added to our debt so that taxpayers could end up paying for that borrowing several times over in the form of interest and slowed economic growth. Likewise, spending should be targeted to immediate needs, not loaded down with unrelated projects and bills.
Lawmakers and leaders at all levels of government should avoid making hasty decisions and statements about the future that can lead to misplaced hopes and more losses in the future. When those choices are made and there is a federal role to play, that spending can then be part of the regular appropriations process, which is currently the best place to establish our spending priorities collectively in context with our other needs and long-term fiscal health.Also, see our explainer: The High Price of Emergency Spending: What’s the true cost of ad hoc disaster aid? Image credit: 22091967