As the tax/debt/deficit talks proceed in Washington, the Republicans supposedly are trying to put some limits on the explosion of Federal spending. Can they trim, nip or tuck a little bit of the entitlement gusher? Even as their attention is focused on entitlements, ten other things are taking off like a rocket, from food stamps, to Social Security disability, to student loans, and so forth. Let's look at just one "little" item on the current Federal list: spending for disaster relief from Hurricane Sandy. Last week President Obama put out a number of $60.4 billion as what he wants the current Congress to appropriate right now as Sandy relief before going home for the year.
The lead story in the New York section of Saturday's Wall Street Journal was "Return Favor, Donors Tell Republicans," a report on how major Republican donors from New York are currently engaged in lobbying the Republican members of Congress to get behind President Obama's $60.4 billion Sandy relief request. It seems that certain wealthy New Yorkers who contributed to the campaigns of Republican congressmen around the country are trying to use the clout from their donations to ensure passage of the relief package. For example, here is Ken Langone (of Home Depot fame): "There's a time for all of us to pull together, and there's a time for all my colleagues in business to pick up the phone, and call all of those people up and say, 'OK, now you can do something for us.'"
I know I am a contrarian, but if the Congress can't resist this one, we might as well just throw in the towel. Even if you believe that the Federal government should act as the infinite insurer of everything, and should draw on the infinite credit card to pay every dollar of every demonstrable loss from every hurricane or other natural disaster, there is still the issue that this $60 billion number is wildly, wildly inflated and is really just a thinly-disguised bailout of the budgets of three of the most fiscally irresponsible states, New York, New Jersey and Connecticut.
How do I know that the $60 billion is wildly inflated? Because I've been paying attention.Here's a story I previously linked from Crain's New York Business of November 26 describing how New York's Governor Andrew Cuomo put together his $40 billion demand for Federal funds. A few tidbits: "Mr. Cuomo is seeking 100% reimbursement from Washington for the recovery, citing the precedent of Hurricane Katrina and other disasters." And what items are included? How about: "$5.7 billion in lost gross product in the city, most of it among the city's small businesses." How about $4.9 billion "to cover storm victims who lack insurance." (Aren't those two duplicative?) And here is my favorite: "[A]n additional $9 billion for what Mr. Cuomo described as 'mitigation [and] prevention."
In other words, give us an extra $9 billion for things that we can't even tell you what they are now and have no idea of how much they will ultimately cost and whether they will do any good.
Let's take a little closer look at another one of the items in the New York request, $4.7 billion for the MTA to get the subways and other trains up and running after the storm. As I previously wrote here, this number is a very large multiple of anything remotely reasonable for repair of these facilities. Included is $600 million for "repair" of the station at South Ferry that was just built new and opened in 2009 at a cost of $530 million. It is absolutely not possible that even a full year repair project on this station could cost more than the four-plus year construction project to build it from scratch just a few years ago, including digging the gigantic hole. Besides which the $530 million for just one station was wildly inflated to begin with. Milan, Italy is currently building a 3.5 mile underground subway line with seven stations for $700 million. Here is an article comparing New York's transit construction costs to those of other international cities -- we are a large multiple in every case. I can understand that we might be 20% higher, or even 50% higher, but how could it be that our costs are more than 10 times as high? To run up $600 million to repair this station over a year, you'd have to pay 2000 people $300,000 each. There are nothing like 2000 people working on this. Can't anyone recognize that this is a ridiculous sham? They're going to spend maybe $100 million to repair this station -- even that far more than necessary -- and the rest of the money will disappear into a black hole. The same comments go for the rest of the MTA's $4.7 billion. It is preposterous. Almost all of the system is already back up and running. They would have had to have more than a hundred thousand people working on the repair to run up that much cost that fast. The real number is less than a tenth of that.
Finally, a comment on New Jersey. As I wrote here, Governor Christie initially came up with a wildly inflated figure of $29.4 billion, and then immediately got "out bid" by Cuomo's ridiculous $40 billion. But in particular Christie, a man not otherwise known for lack of chutzpah, hadn't thought to toss in an extra stack of billions for future "mitigation." On seeing Cuomo's $40 billion, including $9 billion of this imaginary "mitigation," Christie promptly upped his demand by $7.4 billion. I like the .4 at the end -- it gives an air of precision, as if it was not a totally made-up number. He should have made it $7.413 billion.
To just appropriate the $60.4 billion without seeing and scrutinizing the actual costs is the worst possible thing that Congress can do. There is no possibility that legitimate Hurricane Sandy costs are remotely in that range. And if we're just giving out handouts to anyone and everyone, then inevitably everything will get rebuilt bigger and better on the barrier islands ready to get hit by the next storm.
This infinite credit card stuff is a really dangerous game. Republicans, show what you are made of!