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Sandy recovery claims mount. How much will a divided Congress pay? (+video)

Congress may be wrangling over the 'fiscal cliff,' but budget experts are confident that both parties will agree to provide billions in Sandy recovery aid sought by Northeastern governors.

By Ron SchererStaff writer / November 28, 2012

A home lies in ruins because of Superstorm Sandy's storm surge in the New Dorp neighborhood of Staten Island, on November 26, 2012 in New York, New York. Many homes in the area were completely destroyed, others can be fixed. So many were left homeless after the storm that housing has become a big problem for states in the hurricane's path.

Melanie Stetson Freeman/The Christian Science Monitor

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New York

The US may be perched on the edge of the “fiscal cliff,” with Republicans demanding spending cuts and Democrats clamoring for tax hikes to reduce the budget deficit.

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But, one thing both parties are likely to agree on: spending billions and billions of dollars to help New Jersey, New York, Connecticut, and other states recover from superstorm Sandy.

Within the last two days, the governors of New York and New Jersey have released estimates that they will need a combined $79 billion ($42 billion for New York and $37 billion for New Jersey) to pay for repairs, restoration, and mitigation against future storms. Connecticut expects to send its request in shortly.

On Wednesday, New York Mayor Michael Bloomberg flew to Washington for meetings just about every thirty minutes with congressional leaders. On Monday, he said the city would like an additional $9.8 billion for storm damage on top of $5.4 billion that they have already submitted to FEMA.

He probably could have saved the airfare because budget experts think Congress is likely to open up the checkbook for this disaster.

“They will pretty much get what they ask for,” says Stan Collender, a budget authority and a partner at Qorvis Communications in Washington.

“Historically, Congress has been quite generous when there are disasters,” says Pete Davis of Davis Capital Investment Ideas in Washington, which advises Wall Street clients. “It won’t be in the lame duck session, it will be next year.”

The money will likely come in the form of an emergency supplemental spending bill that will go through Congress once it resolves its current differences over spending and taxes. “If it weren’t for the fiscal cliff this would get done really quickly,” says Mr. Davis.

But, won’t spending another $80 billion to $100 billion throw those calculations out of line?

“It will expand the deficit,” agrees Mr. Collender. But, that is not likely to matter, he and others say.

“Traditionally, supplemental spending bills are not paid for,” explains Davis. For example, the US wars in Afghanistan and Iraq have been funded by supplemental spending bills.

One of the reasons Congress is so generous is that every senator and representative is keenly aware that a disaster can take place in their district at any time. In the West, wildfires can destroy communities. In the Midwest a drought can hurt farmers. Along the Gulf Coast, there could be another big oil spill.


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