Federal Funding for Disasters – the Case for a Disaster Superfund

In an article titled The Dance for Disaster Dough, the author makes an interesting case for creating a Disaster Superfund. The author, Steven Cohen, is Executive Dir. of the Earth Institute at Columbia University.

See readers’ comments below.

4 thoughts on “Federal Funding for Disasters – the Case for a Disaster Superfund

  1. Just what we need – another federal program. No! Since 2005, our national debt service (the amount we pay as the interest on our national debt each year) has increased by two Sandy’s. Adding a new bureaucracy (AND its learning curve) just makes the current system even more bureaucratic and less efficient.

    A more valuable approach would be to force the politicians to include funding for disasters in the federal budget. This would provide incentives for programs aimed at reducing the costs of disaster and force the body politic to make hard choices. The arguments that have finally been started about funding recovery are healthy because they remind all of us that there ain’t no free lunch.

    We are currently funding recovery via IOUs made on our children’s bank accounts. Is that even moral? How does Prof Cohen’s idea solve this problem?

  2. We already have a vehicle for providing disaster relief funding – the Stafford Act. I agree with Mr. Cohen’s appraisal that the current process is rife with bureaucracy and delays, but that’s where politics get you. If we were to create a ‘superfund’, the management and allocation of funds under this program would become a bureaucracy of its own; and what then of the Stafford Act and its provisions for public and individual assistance? Would these be moved over to the superfund program? At a glance – sure, why not? But if you look into the details of the provisions of the Stafford Act, we see ongoing programmatic requirements in disaster recovery and mitigation – things that belong within FEMA. I have to say that I completely disagree with the creation of a new system (something we often times see in government – if we perceive it as broken, instead of fixing it we just write more bills, pass more laws, and create new bureaucracies). Instead, let’s look at streamlining the processes in the current program.

  3. This is simplistic in many ways. First, we already have a such a fund, the disaster relief fund, created by Congress many years ago to address just the problem Cohen identifies. The fund covers the public costs of response and recovery. Last year it ran out of money, and it too became a political football. So, the first lesson is that there is no way to take the politics out of this. But, second, what it does not cover are the private costs of disasters or all the costs of building back better (it does cover some of the latter costs, via 15% for mitigation grants). This is presumably what Cohen’s superfund would add. But does Cohen want us to pay for all of these things without limits, in order to take the politics out of it? Should we throw out the NFIP–indeed all private insurers as well–and just have the federal government fix everyone harmed by all natural disasters, big and small? It seems to me that readily compensating private parties would create a severe moral hazard problem. Regarding building back better, everyone agrees that this is the responsible, rational thing to do. But it costs a lot of money. How much better should we rebuild New York and New Jersey? And then why not do the same everywhere else? The point is this: simply creating a “superfund” won’t take the politics out of it, nor will there ever be enough money to meet all the needs. A more responsible plea would be for a significant increase in mitigation funding over current levels, both for post-disaster and pre-disaster situations.

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