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Washington Examiner

 

When Disaster Aid Becomes a Bailout

September 19, 2013

By Nicole Gelinas

Colorado’s flash floods - which have killed at least eight people this week - are a tragedy. The New Jersey boardwalk fire that destroyed small businesses recovering from Superstorm Sandy was a calamity.

But which of these events is a federal disaster requiring taxpayer assistance – and what kind of national assistance is warranted?

Part of this question is easy. The feds should step in to help an overwhelmed state, as well as that state’s local governments when stepping in can mean the difference between life and death.

That’s why nobody complains that the federal government sent five urban search and rescue teams over the weekend to Colorado, and why similar federal support after Sandy hit the northeast last October was not only acceptable but critical.

By contrast, the feds correctly didn’t send a brigade to the Jersey Shore last week to put out the boardwalk fire.

Small-government conservatives should realize that national help during or after a big disaster can keep government costs down. A town that knows that the feds will help it to marshal ambulances from towns in a neighboring state should an emergency arise doesn’t have to buy so many ambulances itself.

And people shouldn’t worry too much that federal help in a disaster will discourage local governments from investing in their own capabilities. A town or city that can’t provide public services to its citizens in a crisis probably can’t do the same on a good day, either.

Look at New Orleans after Hurricane Katrina. New Orleans performed poorly not because it expected federal assistance, but because it’s government had long been incompetent.

The problem is what comes after the emergency. After Sandy, New Jersey got $30 billion in federal funding. Most of it was not for emergency response, but for rebuilding after the emergency. About $5 billion went just to shore up the federal program that insures homeowners against flood losses.

Now, New Jersey is using Sandy aid money to clean up after the fire – and may ask federal administrators for help rebuilding the boardwalk and its businesses.

Colorado will also get disaster aid. President Obama has signed an order paving the way for “grants for home repairs and replacement of essential household items not covered by insurance.”

It may seem cruel to question whether a person should get help rebuilding a home or a business after a flood or fire, so few people have asked such questions. From 2004 through 2011, an eight-year period, the Government Accountability Office has found that Washington made 26 percent more disaster declarations compared to the previous eight years.

The problem is that these federal bailouts encourage risky future behavior. A person who can rebuild in a flood zone often does so.

Fairness questions abound, too. Why should a person who has chosen to live inland in a small home pay to help a person who lives near the water in a large home? Why should a person whose Detroit business is ravaged by a burglar not get the same help as a restaurant owner on the Jersey shore?

Moreover, federal aid can distort local markets. Contractors charge more to rebuild, knowing that customers have the cash.

Federal aid distorts local and state decision-making, as well. In New York and New Jersey after Sandy, state politicians concentrated more on securing federal aid than on what they would do with this money.

But New York gets only 79 cents back from every dollar it sends to Washington and New Jersey only 61 cents, according to the Tax Foundation. (Colorado gets about 81 cents back for every dollar it sends to Washington.)

The states, then, are indirectly spending their own taxpayers’ money. Often, they don’t do so very wisely, as the federal money seems “free” and often must be spent quickly or lost.

After a disaster - especially one that has cost life - nobody wants to question Americans’ generosity. But absent a disaster, no one pays attention.

Original Source: http://washingtonexaminer.com/article/2536109

 

 
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