Ian Gile removes flood debris and ruined belongings from the family house next to the Dog River in West Berlin, VT. Photo by John Lazenby.
Editor’s note: John Lazenby contributed photos for this story. http://www.lazenbyphoto.com/blog/
Where’s the money?
At least 31 bridges damaged or destroyed. “Miles and miles and miles” of highway in rubble, in the words of Robert Stirewalt, a public information officer for the Vermont Division of Emergency Management. The State Office Complex in Waterbury a wreck. Not to mention all the homes and businesses knocked down or swept away.
How many? The state isn’t even trying to count them all yet.
“We’re not doing an inventory now,” Stirewalt said. “We’re just now moving from response to recovery.”
The Transportation Department was doing some counting. By Thursday, it announced seven of the bridges were back in use and 69 of 145 damaged state roads were passable. But progress was slower on the 163 town roads that had been damaged, and late Thursday afternoon, the U.S. Forest Service announced that the Green Mountain National Forest would be closed until further notice.
This is going to take a while.
Whatever the final count, Vermont faces a multi-million-dollar repair job. Just how many millions is impossible to say, said Susan Allen, Gov. Peter Shumlin’s special assistant. The $100 million figure has been bandied about, but Allen said it’s too soon to be precise.
Not that it matters. However much it is, Vermont doesn’t have nearly enough. No state would, at least not without an economically (and politically) disastrous tax increase or an equally devastating reduction in state services.
So the money has to come from somewhere else, from the federal government, specifically from the Federal Emergency Management Agency.
Which is almost out of money. Thanks to budget cuts and a slew of earlier disasters – earthquakes in Missouri, draught in the Southwest, floods along the Mississippi River and right in Vermont – FEMA is down to about $800 million.
That sounds like a lot of money. But the cost of rebuilding the damage wrought by Hurricane/Tropical Storm Irene from the Carolinas to the Canadian border has been estimated at between $7 billion and $10 billion. And the fiscal year is not over. FEMA needs more money.
President Obama quickly approved Shumlin’s request to declare the state a major disaster area Thursday. That allows FEMA to spend money in Vermont, as long as FEMA has money to spend. But when that $800 million runs out, Vermont will still need millions more, which it won’t be able to get unless Congress increases FEMA’s budget.
Something Congress can easily do, if only politics does not get in the way.
Politics has gotten in the way.
To complicate matters further, the cost of rebuilding is not the only problem facing Vermont (or North Carolina, New Jersey, New York, and elsewhere).
Route 107 below Tozier's Restaurant in Bethel. Photo by John Lazenby.
There is also the impact on the state’s economy. Scores of businesses are, for now, out of business. That means they are earning no money and their employees are not getting paid. That, in turn, means they are paying no income taxes and buying less from the businesses that remain intact. The longer that lasts, the poorer the state gets.
Especially hurt, according to Commerce and Community Development Secretary Lawrence Miller, is agriculture. “A bunch of corn has been knocked down,” Miller said, and some “hay crops could be unusable because microtoxins (from the floodwaters) could make it unfeedable.”
And it isn’t just the dairy farmers, Miller said.
“We’ve got all these cheese processers that rely on a high flow of high-quality milk. Right now, not all fluid milk can get from the farms to the co-ops.”
In the long run, the economic problems may not be unsolvable, either, unless, of course, politics gets in the way.
The immediate political problem comes from House Majority Leader Eric Cantor, the Virginia Republican who insists that any additional spending for disaster relief be “offset” by cuts in other domestic programs.
Such offsets are not entirely unprecedented. Earlier this year, Republicans in the House cut programs to free up money for disaster funds for Midwestern floods and earthquakes without increasing the deficit.
But they are unusual. Since 1989, Congress has appropriated disaster relief 33 times without insisting on saving the money from elsewhere in the budget. (That’s from Democratic Party research, but the Republicans have not challenged it, and no doubt they would have, were it challengeable).
There’s a reason that Congress habitually appropriates disaster funds without saving the money from somewhere else, and it isn’t just that people need help right away. It’s also that bridges, roads and buildings are not just conveniences. They are capital assets, another way of saying they are wealth.
When Congress appropriates money without saving it elsewhere or raising taxes, it is ordering the Treasury to borrow more. Borrowing, even at today’s low interest rates, has its downside; eventually, the debt has to be repaid. But borrowing to create wealth is commonly accepted financial policy. It’s what households do when they get a mortgage (as opposed to what they do when they use their credit card for a fancy vacation, though some of them do that, too).
Cantor has partially retreated. On Wednesday he said: ”There are no strings attached. We found the money,” specifically mentioning $1.5 billion from the Energy Department. But $1.5 billion is not nearly enough to clean up and repair after Irene.
Cantor is a moderate compared to Texas U.S. Rep. (and Republican presidential contender) Ron Paul, who would do away with FEMA altogether. His position inspired Shumlin to say (on National Public Radio) that Paul should “look in the eyes of Vermonters who’ve lost their homes, who’ve lost their businesses, who’ve seen their husbands and children killed by the storm and see the kind of response that FEMA is giving us.”
But Paul is on the political fringe, and his view is not likely to prevail. What does concern some officials is that the House will insist on negotiating offsetting cuts before approving the disaster funds. That could lead to weeks of acrimonious debate like the recent squabbling over the debt ceiling. Meanwhile, FEMA’s funds may all get used up.
One reason Cantor may be retreating is that some Republicans have assailed his proposal as fiercely as Democrats. Republican Gov. Chris Christie of New Jersey, whose state was also hit hard by Irene, worried that a protracted debate over “offsets” could become “ a fiasco like that debt-limit thing where you’re fighting with each other for eight or nine weeks, and you expect the citizens of my state to wait? They’re not gonna wait, and I’m going to fight to make sure that they don’t. I don’t want to hear about the fact that offsetting budget cuts have to come first before New Jersey citizens are taken care of.”
Route 100 near Pittsfield. Photo courtesy of CVPS
As the week neared its end, some Washington observers were speculating that Congress would first vote to give FEMA the money, and perhaps then debate possible offset savings.
But unlike a Congressional appropriation, Washington speculation is not money in the bank.
As to Vermont’s economy, Secretary Miller said not all signs were bleak. The storm did not knock the leaves off the trees, he said, and the state will be ready when the leaf-peepers arrive.
“Our message right now is, please keep your plans to come to Vermont,” he said. “Our businesses need you more than ever.”
While some resorts and hotels would not be able to re-open in time, Miller said rooms would be available, and his agency is preparing to help tourists find them.
Another plus, he said, is that the rebuilding itself would stimulate the state’s economy.
“Using an economist’s language in the face of human suffering is difficult,” he said, “but economists say the recovery phase (after a disaster) can be an excellent stimulus.”
In some cases, economists say, a disaster can end up doing more economic good than harm. The $16 billion the federal government spent in the aftermath of the Northridge (California) earthquake in 1994 has been credited with spurring economic growth in California, and perhaps beyond.
In a paper called “The Economics of Natural Disasters, ” written for the Federal Reserve Bank of St. Louis later that year, economist Kevin L. Kliesen wrote that “rebuilding activity usually generates both increased sales tax receipts and additional employment. Thus, one ironic feature of a disaster is that it spurs the pace of economic activity in the affected region… as the economy’s destroyed physical assets are replaced with assets that incorporate more advanced technology.”
Kliesen was not predicting that the net economic impact of a disaster was always – or even usually – positive. But the rebuilding, if it takes place quickly and efficiently, can be helpful.
So far, both Vermont and federal officials seem to be doing all they can to get the rebuilding done as quickly as possible. Whether they succeed could depend on how much the politics gets in the way.
Permalink |
You state that you are concerned that congress will want to figure out where the money is coming from because they allocate the funds to vermont. Like this is an unreasonable thing to do. The government is broke, the american people are struggling, hitting them with increase taxes, only place for the money to come from, is not something to take lightly. Government fought for weeks leading to the debt ceiling increase, and I would find it hard to believe they would blindly pass a FEMA budget increase. Honestly FEMA doesn’t have a great track record, look up all the wasted fuding it spent in New Orleans. I am with Ron Paul on this one. Budget cuts have to come from somewhere, yet every other politican is too scared to name names.
Permalink |
Thanks to a lot of time and effort put in by the Clinton administration FEMA was on a very good track until “W” Bush decided an Arabian horse judging organization’s lawyer would make a fine head of the agency. Of course when one sets out to destroy an organization (such as the US government) that one is entrusted with, then that organization (such as the US government) will fall apart.
It’s like these Obama/Democratic/Bush/Republican tax breaks for the rich and lovely that got passed on the way out of the previous congress – starve the government of enough funds, and then one can claim (paraphrasing) “we’re going broke”.
Permalink |
Is there no military budget contingency plan for National Guard? I do not understand the budgetary process very well but it seems to me that we have military trucks, loaders, bridges, etc that are useful in a time of need. Does our military sit there dumbfounded and continue their line of destruction why we need a line of construction. Is the military’s only goal to kill? Billions for bombs, $0 for national disasters? Who is running this crazy system? We can mobilize the troops in minutes to kill but can’t move a muscle to help with cleanup. States rights? United States? Help me here, I’m confused.
Permalink |
Politics aside, the recently issued Bentek I and Bentek II studies of the Colorado and Texas grids based on measured power plant operating data of fuel consumption and CO2 emissions, proved that wind energy on the grid needs to be 1) balanced with energy from other plants, preferably quick-ramping CCGTs and OCGTs, to ensure grid stability and 2) that this balancing produces MORE CO2/kWh and uses MORE fuel/kWh with wind energy than without!
Soon there will be a study, prepared by a group of Dutch, Canadian, English and US engineers, based on published 1/4-hour data of the Irish electric grid, EIRGRID, that proves 20% wind energy on the grid reduces CO2/kWh by 4%, 28% reduces it by 1%, 34% reduces it by 6%, and 30% reduces it by 3%, not anywhere near to what is claimed by wind aficionados.
The enormous capital cost of the wind turbines, PLUS the capital cost of the new balancing plants required at higher wind energy penetration, PLUS the capital cost of grid modifications with new HVDC lines on 80 to 135 foot-tall steel structures is far greater than the capital cost of base-loaded, 60% efficient CCGTs that would produce the same quantity of energy, use only a few percent more fuel/kWh and would emit only a few percent more CO2/kWh than the wind+balancing plant alternative, but at a much reduced capital cost, AND at a much lower cost/kWh, AND at almost no visual impact.
The above begs the question: If wind energy reduces CO2 by so very little/kWh, AND requires so much capital to implement, AND produces energy at such a high cost/kWh, AND has such huge adverse impacts on quality of life (noise and infrasound, visuals, social unrest, psychological), property values and the environment, why are we, as a nation, doing this to ourselves? Has an irrational renewables hubris clouded the minds of policy makers? Where is Galileo to speak truth to power when we need him?
http://theenergycollective.com/willem-post/57905/wind-power-and-co2-emissions
http://theenergycollective.com/willem-post/59747/ge-flexefficiency-50-ccgt-facilities-and-wind-turbine-facilities
http://theenergycollective.com/willem-post/61309/lowell-mountain-wind-turbine-facility-vermont
http://theenergycollective.com/willem-post/61774/wind-energy-expensive
Permalink |
Speculation that “politics” may get in the way of rebuilding after Irene is a valid issue, but politics is not unique to this or other disasters. As Deborah Pickman Clifford and Nicholas Clifford wrote of one politician in their book “The Troubled Roar of the Waters: Vermont in Flood and Recovery, 1927-1931,”:
“‘The Government is not an insurer of its citizens against the hazards of the elements…’ and while Washington should provide relief when states and municipalities were overburdened, ‘this, however, does not mean restoration.’”
Question: Who said it and when?
Answer: Vermont-born U.S. President Calvin Coolidge in his State of the Union in December 1927, a little more than a month after the Vermont flood of 1927.
As the Cliffords pointed out in their exceptional book, a few years later, the nation embarked on a series of programs — state and federal — that would provide not just “emergency relief, but of longer term reconstruction and restoration as well.”
So, if politics is threatening to erode the strength of these programs in 2011, politics also affected the creation of similar efforts in 1927. As the French say, “plus ça change, plus c’est la même chose” or “the more things change, the more they stay the same.”
(For those who would like to purchase a copy of the Cliffords’ book, which contains important reflections on today’s Vermont as well, you can do so at the Vermont Historical Society’s online store. Support the VHS, not Amazon!)
Permalink |
Thanks Bruce. I plan to buy a copy from VHS. I found a portion of the book on Google Books. http://books.google.com/books?id=66quV-lupsgC&pg=PP4&lpg=PP4&dq=the+troubled+roar+of+the+waters&source=bl&ots=N6aMM8lQ6K&sig=v-GZkTw8z0Mmt35lVUuTQkaLWmM&hl=en&ei=y5ViTvX1HsPZgAetncmoCg&sa=X&oi=book_result&ct=result&resnum=9&ved=0CE0Q6AEwCA#v=onepage&q&f=true.
I was reading it last night and learned that Vermont experienced serious flooding in 1770, 1830 and 1869, too. At that rate, it appears we were overdue, and we are not looking at 100 year floods, but 30 – 60 year floods. (Climate change aside).
Just enough of the book is available on-line to see that the same areas that were affected by TS Irene were also damaged in 1927, except that in 1927 more areas, like Montpelier, also got hit. Other differences: The 1927 flood occurred in early November, there was no early warning, and the flood waters rose at night.
Permalink |
It’s going to cost several billion dollars in federal money to help states rebuild after this hurricane. We should reduce our foreign aid to other countries by the amount necessary to cover losses from hurricane Irene. We give away billions to other nations, why not spend it here during a crises?
Permalink |
No need to derail this, we have to do some real changes that will give the American PEOPLE some of their money back. Calvin Coolidge aside, we should be able to find someone who can bring some sense to this system we have allowed to flourish. Reallocation of expenditures has to be allowed if we are to show the world we are world leaders. This will require a complete overhaul of the way budgets are allocated but I am sure there are some reasonable well-educated people who can figure this out.
Permalink |
Mr. Margolis’ observations about Washington are all to the point, but he does not address the potential political obstacles to recovery right here in Vermont. It is clear that Governor Shumlin is hoping that the federal government pays for most of the damage, but even he had to admit on the radio today that there is a 25% match that has to be provided by the state and towns for twon road and infrastructure repairs.
Moreover, it is hardly likely that FEMA is going to restore all the damaged state facilites, pay for moving the emergency control center, replace all the furniture and computers, etc.
That money will have to come out of the state budget.
Does the Governor still think that Vermont does not need more revenue? He has carefully avoided this question. Does the Governor still think that taxing wealthy people at a fairer rate will make them flee the state? He has spent the last several days talking about how special Vermonters are (and we are); not exactly the kind of people who would jump ship to save a little on taxes.
If the Governor still believes these things, will the Democratic leadership in the state legislature still take the position that they will not challenge the Governor on money and budget issues?
Not to pre-judge, but inquiring minds want to know.
Permalink |
(Note: this comment comes from one who has advocated for more taxes and using funds from those ‘rainy day’ reserves.)
Perhaps this shows the wisdom in not having already raised taxes and/or used funds from those ‘rainy day’ reserves?
Permalink |
Michael Bayer said, “Does the Governor still think that taxing wealthy people at a fairer rate will make them flee the state?”
I’d like to know the answer to that, too, since there was recently a well-publicized study that completely debunked this widely accepted idea.
But really, slightly upping the taxes on upper income-earners in VT wouldn’t make much of a dent in cost of repairing the Irene damage.
Permalink |
Good point Jane
However, assume we borrow $100 million at 4% and pay it back in quarterly payments over 15 years. Each payment would be about $1.8 million. Raising taxes on the wealthy would easily cover this amount.
It would represent an effective tax increase of less than 5% for those earning more than $200,000.