FEMA Forced to Restrict Disaster Spending

FEMA Forced to Restrict Disaster Spending

Firefighters attempt to put out a house fire in the aftermath of Hurricane Idalia.
By Yuval Rosenberg and Michael Rainey
Wednesday, August 30, 2023

Happy Wednesday! A super rare super blue moon (or a blue supermoon) will rise tonight — it’s the second full moon of the calendar month (hence “blue”) occurring when the moon's orbit is closest to Earth (“supermoon”) making our lunar neighbor appear larger and brighter than usual. It’s the last super blue moon until 2037. Here’s how to see it.

Low on Funds, FEMA Forced to Restrict Spending

As Florida deals with the damage from Hurricane Idalia and Hawaii looks to recover from the devastating wildfires in Maui, the Federal Emergency Management Agency reportedly says its main disaster fund is “approaching exhaustion,” forcing it to restrict spending on recovery efforts from past events.

“The restriction, known as ‘immediate needs funding,’ limits FEMA to spending disaster funds on life-saving measures such as clearing debris from roads, maintaining services such as health care and water, and providing emergency housing for displaced individuals,” Politico’s Thomas Frank reports.

Frank adds that the agency’s move will add pressure on Congress to approve the Biden administration’s request for $12 billion in additional disaster relief money, part of a $40 billion emergency funding request that also includes $24 billion for Ukraine. Some Republicans oppose providing additional money for Ukraine and House conservatives have said they would oppose a stopgap spending bill, which could include emergency funding, unless their demands for spending cuts and policy concessions are met.

Money for Maui: President Joe Biden on Wednesday afternoon said he spoke with the governors of states likely to be affected by Idalia and assured them that he was ready to mobilize any federal support they would need.

Biden also said he remains “laser focused on recovery and rebuilding efforts in Maui” after the wildfires that killed at least 115 people and left much of the island in ashes, though he added that the effort is “going to be frustrating as the devil for people.”

Biden has come under intense criticism from Republicans for the administration’s response to the wildfires and for appearing to have offered a “no comment” in response to a question about the death toll of the wildfires. The White House said Biden never heard the question. On Wednesday, it said that more than 1,000 federal personnel are in Maui assisting residents and that the administration has approved more than $16 million in assistance to 4,200 households there.

The president on Wednesday also announced $95 million in funding via the $1.2 trillion Bipartisan Infrastructure Law to strengthen Hawaii’s power grid and help the state better withstand future storms. The White House said the money will help strengthen transmission lines, harden poles supporting critical facilities and replace wooden poles with fire-resistant material, and relocate the Maui control center to a more secure location, among other things. “It means investments to make sure electricity can continue to reach homes, hospitals, water stations even during intense storms and extreme weather,” Biden said.

A fight over funding? When asked by a reporter whether he can assure Americans that the federal government will have the emergency funds needed to get through the hurricane season, Biden stopped short of doing so — and tried to ramp up pressure on lawmakers who might object to an emergency funding package.

“The answer is, If I can’t do that I’m going to point out why,” the president said. “How can we not respond? My god. How can we not respond to these needs. And so I’m confident even though there’s a lot of talk from some of our friends up on [Capitol] Hill about the costs. We’ve got to do it. This is the United States of America.”

For now, though, the newly imposed restriction on FEMA’s disaster fund “could temporarily halt thousands of projects by states to rebuild facilities and infrastructure that were damaged by disasters in the past decade or longer ago,” Politico’s Frank writes. “FEMA pays a large share of those projects’ costs — usually 75 percent. Without federal funds, states will have to delay projects or spend their own money and await reimbursement.”

The Senate is scheduled to return to the Capitol after Labor Day, and the House will come back a week later.

Quote of the Day

“It’s a pretty big mess.”

Senate Minority Leader Mitch McConnell, discussing efforts to avoid a government shutdown and the spending fight expected when lawmakers return from their August recess. “The Speaker and the president reached an agreement which I supported in connection with raising the debt ceiling to set spending levels for next year,” McConnell said. “The House then turned around and passed spending levels that were below that level. Without stating an opinion about that, that’s not going to be replicated in the Senate.”

McConnell predicted that lawmakers would end up with a stopgap measure that funds the government into December “as we struggle to figure out exactly what the government’s spending levels are going to be next year.”

In answering reporters’ questions, McConnell later froze for the second time in recent weeks, again raising questions about his health.

GDP Growth Revised Lower for Q2: Is the Economy Just Returning to Normal?

The economy was not quite as strong in the second quarter as originally estimated, the Department of Commerce announced Wednesday. The government revised its GDP growth estimate for the April-to-June period to 2.1% on an annualized basis, down from 2.4% as reported initially. The downward revision was unexpected.

A separate, newly announced measure of income growth was also something of a disappointment, with real gross domestic income, known as real GDI, growing by a modest 0.5% during the second quarter.

Economist David Doyle of Macquarie Group told Yahoo Finance that the modest revision and the income data indicate that “growth was a fair bit weaker, and that sort of continues a trend and divergence that's occurred over the last four quarters ... it suggests to us that potentially the economy isn't as strong as the headline real GDP numbers are suggesting.”

In another sign that the economy may be a bit weaker than some analysts have assumed, payroll processor ADP reported that private employers added just 177,000 jobs in August according to its data, with the results coming in below expectations of 195,000. The firm also revised its July results downward to 312,000.

An economy in decline – or a return to normal? Analysts at PNC Economics said in a note that the latest data point toward “an economy that is expanding at close to its long-run potential rate.” That represents a decline from the exceptional conditions created by the end of the pandemic, which appear to be coming to an end, aided by the Fed’s effort to fight inflation. “This may indicate that tighter monetary policy from the Federal Reserve has been more effective in slowing growth than the real GDP numbers taken alone might show.”

Nela Richardson, chief economist at ADP, said the economy is returning to something like normal conditions. “This month's numbers are consistent with the pace of job creation before the pandemic," she said in a statement. “After two years of exceptional gains tied to the recovery, we're moving toward more sustainable growth in pay and employment as the economic effects of the pandemic recede.”

A programming note: We're off the rest of this week and will be back in your inbox after Labor Day. Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to sign up here for their own copy of this newsletter.

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