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 is 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, drought 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).
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 processors 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.
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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,” Christie said. “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.”
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, Calif. earthquake in 1994 has been credited with spurring economic growth in California, and perhaps beyond.
In “The Economics of Natural Disasters,” a paper 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 wrote.
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.