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Disasters increase strain on federal resources

By Brian E. Muhammad -Staff Writer- | Last updated: Dec 6, 2017 - 2:27:42 PM

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Firefi ghters battle wildfi res in California, Oct 10. Photo: MGN Online

From coast to coast over several decades, big weather events have pummeled the United States devastating both its infrastructure and economy. Record floods, deadly hurricanes, destructive tornadoes, drought, wild fires and earthquakes have inflicted havoc and more is expected to come. With disasters coming more powerful and frequently, there is grave concern about the financial toll on the federal government. 

“That’s going to be a challenge,” said Dr. Bernard Weinstein, an economist with Southern Methodist University in Dallas. “FEMA, the federal agency that has been involved in the relief efforts has really been strained with all these disasters occurring at the same time.”

The U.S. national debt is steadily rising above its current $20.4 trillion. Coupled with a financially neglected infrastructure, mitigating disasters adds stress to an already strained situation. Dr. Weinstein told The Final Call disasters will burden the federal budget and require additional appropriations to help hard hit areas rebuild.

In the aftermath of California wild fires in recent months and the September hurricanes, Irma, Maria and Harvey, U.S. lawmakers passed a $36.5 billion disaster relief package toward addressing mounting costs of rebuilding territories and lives effected by the disasters. The highly politicized debate on aid resulted in an 82-17 vote with more funds forthcoming in coming months, said lawmakers.

The financial assessments of damages tell the story. The website for the National Oceanic and Atmospheric Administration pointed out: Since 1980, the U.S. has sustained more than 200 weather and climate disasters where the overall damage costs reached or exceeded $1 billion (including adjustments based on the Consumer Price Index, as of January 2017). The cumulative costs for these years exceeds $1.1 trillion, NOAA reported.

The September 2017 onslaught of Hurricanes Irma and Maria on the Caribbean that includes the U.S. Virgin Islands and Puerto Rico, left a hefty price tag between $100 billion to $300 billion. Irma flatlined Puerto Rico placing it in the center of a political storm between local officials and the federal government over resource costs and allocations.

In early November—more than 50 days after—Puerto Rican Gov. Ricardo Rosselló made a $94.3 billion disaster relief request to Congress.

The largest portion, $31 billion, is for housing assistance, then $17.7 billion to rebuild the island’s power grid and $14.9 billion for health care, according to a Miami Herald article.

With disasters, most of the money for rebuilding is going to come from private sources like flood and business interruption insurance, not necessarily just the federal government, explained Dr. Weinstein. “That’s helpful, no question about it,” he added.

“But there’s no free lunch, so when it comes to federal aid, we taxpayers are going to pay for it—one way or the other,” said Dr. Weinstein. 

Furthermore, disasters cost the insurance industry billions in payouts, particularly in areas where floods and fires raged. Other economic costs are incurred by disruptions to businesses which cause increased unemployment rates for weeks, and possibly months in some places, said Dr. Joel N. Myers, founder of AccuWeather, in a September statement.

There is damage to homes, cars, furniture, antiques, jewelry and loss of other valuables like papers and cherished belongings. “Some of the losses will be covered by insurance, some will not,” said Dr. Myers.

The Zurich Switzerland-based insurance giant Swiss Re estimates its preliminary combined losses from hurricanes Harvey, Irma and Maria and the earthquakes in Mexico to be approximately $3.6 billion.

Then there is crop loss and the impact on agriculture which influences prices of consumables for all Americans. A Bloomberg report said Irma threatened $1.2 billion in Florida’s produce crops. The state is America’s second largest grower of vegetables like tomatoes, green beans and cucumbers.

“The natural disasters are going to drain monies that could be used for other things like agriculture,” said Dr. Ridgley Mu’min Muhammad, economist and national student minister of agriculture for the Nation of Islam.

“They can reduce the military, which they ain’t going to do or they can cut the subsidies to agriculture—which is the type of thing they would do,” Dr. Muhammad said.

However, if they cut money from agriculture, big business farmers will stop farming because they can’t make money, Dr. Muhammad explained. The only reason large scale farmers farm is to get federal subsidies, he argued.

Worldwide, mainly in Asia and Africa, disasters have had a major impact on agriculture sectors, particularly in developing countries, according to a report by the United Nations Food and Agriculture Organization. On average, agriculture absorbed 22 percent of the total economic impact caused by natural hazards, said the report. 

The latest numbers provided in the 2015 report looked at the decade of disasters from 2003-2013. In 67 developing countries that were affected by at least one medium to larger-scale disaster in that decade, there was a combined loss of $70 billion with crops most affected, followed by livestock and fisheries.

Dr. Muhammad pointed out that the larger problem is not the big weather events, but the man-made problem of climate change causing crops not to germinate in due season. The implication is the potential for famine and further loss, he said.

“What scares me is not the large scale quick disasters … but the long-term effect of the change in climate that can really destroy civilizations,” Dr. Muhammad said. This is “why we must get control of the planet again,” he added.

Farmers are negatively affected by climate change, which the government has not prioritized, Dr. Muhammad said. With the weather patterns off their normal course for crops, it’s bad economically for farmers and the country. The bottom line for the federal government is a price will be paid for disasters. There’s only two ways to pay, either through taxation or borrowing.

“It’s going to cost taxpayers either in terms of higher tax payments or less spending on other programs or borrowing and paying the interest … and that also comes out of tax payer dollars,” said Dr. Weinstein.