Rainy day fund running dry

MYRNA BROWN, HOST: Coming up next on The World and Everything in It: Paying the bill for disaster recovery.

CBS NEWS: Tonight the death toll in Maui continues to rise. The wildfire is now becoming the deadliest in modern U.S. history…

FOX: Hurricane Hilary has prompted historic weather alerts in California as millions across the…

NBC NEWS: This is the power of Hurricane Idalia and we’re right in the thick of it. The winds here have really picked up.

PAUL BUTLER, HOST: The month of August started with fires in Maui and ended with Hurricane Idalia in Florida. In between, the Biden administration warned that FEMA, the Federal Emergency Management Agency was running low on disaster relief funds, adding additional stress to communities trying to recover from loss. What do these new challenges mean for clean up after natural disasters?

BROWN: Joining us now is Richard Stern, the head of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation.

Richard, welcome.

RICHARD STERN: Thank you for having me on.

BROWN: Can you start us off with some explanation: What is the FEMA disaster relief fund, and how does it work?

STERN: You'd imagine we know that there's a lot of natural disasters that happen and we have an entire fund that is dedicated to being able to give money out to families that are affected that are injured in a disaster relief area. So we have something called the Stafford Act that governs all of the provisions about how the federal government deals with disasters declares disasters. And what kind of sharing agreements there are how much of the money states have to put in how, much the federal government has to put in. Now, the Disaster Relief Fund gets a regular appropriation from Congress, that money sits there, and then is doled out through the automatic mechanisms of the Stafford Act. This is designed so that when there's a disaster going on, you don't have a secondary disaster, which is dealing with Congress trying to get its act together in the middle of the crisis. But that being said, half the money that was in the Fund for this year got spent by the Biden administration on quote, "COVID spending," despite the fact that COVID is no longer an emergency. And so when they say the fund is underwater, that the fund is going to be bankrupt. And it's actually gonna be eight and a half billion dollars underwater by the end of the fiscal year, they don't really mean that the Disaster Relief Fund is going to be, they really mean that having stolen half the money out of the fund for non-emergencies. It's gonna be underwater.

BROWN: You know, Richard, I grew up on the Gulf Coast of Alabama, and lived through a hurricane or two. And so I got to experience FEMA, the disaster relief at work, so it is critical. Talk a little bit more about what happens, you know, what this means, the relief fund is running low, is this a first?

STERN: Well, I should say as well, I'm from Florida, so I hear you on the kind of ever present danger of the Gulf Coast. Right,

BROWN: Right, yeah.

STERN: So it's not common. I know what's happened before part of this, again, is because presidents have raided the Disaster Relief Fund in a lot of other funds at different points in time. But this is not good, let me put it that way. And it's rare to have this kind of situation. And I think, you know, the other part of this, of course, is that Biden is asking for money for the disaster relief fund to backfill what his administration took out of there, but wants to tie it to more Ukraine funding. And so we now have this hostile situation, where Biden is saying, Yeah, I'm willing to backfill the money that I took out of there for non-emergency reasons, but only if you guys give me another $20 billion for my war in Ukraine that I have no end to no strategy on and no transparency the American public about why we're there, how long are there, what the commitment is or even what that money is going to be used for?

BROWN: How will the funding shortfall affect victims of the fires in Maui and Hurricane Idalia in the southeastern U.S. and for that matter, disasters yet to come?

STERN: Yeah, so it means that that money doesn't get out the door. Alright, it means that people don't get the money that they're relying on. But it means not even just that, but things run by the state governments and local governments that are designed to deal with disasters, they don't get the money they're expecting either. And, you know, I should point out this is money that we all pay in through taxes. And part of that is that this money is sent to the federal government in trust, that it will be held for something that is actually useful to the American public, and not just squandered somewhere else. So yeah, it delays the money out the door, it adds uncertainty at a moment when certainty is key, it adds uncertainty to the mix. And of course, by tying it to Ukraine funding, it brings this whole other dimension into the politics of it. And it's just playing politics at a moment when people want certainty.

BROWN: You mentioned earlier that President Biden has asked Congress for funds to backfill the Disaster Relief Fund…about $16 billion in total. I’m just wondering, is a quick infusion of funding the wisest course of action in the long term?

STERN: So I think the way that we look at this right is we would like reform, frankly, of the Disaster Relief Fund. We'd like to make it so the money is there for the purposes was to be for that's actually tied to the Stafford Act. You know, I think my concern, you know, that and my team as well is the Biden administration lifted $20 billion out of there for non-disaster related stuff. There's no reason why they couldn't do that again with that money, to be perfectly honest with you. You know, if let's say that we broke up the political Cabal, and we did a cash infusion of the Disaster Relief Fund with no Ukraine funding, there's nothing to stop his administration from taking some of that money and saying, Hey, Ukraine is a disaster in the United States, we're going to just send the money abroad. And it sounds ludicrous in some ways, but that's actually how a lot of the federal budget works. The President has what are called reprogramming authorities over an enormous amount of that money, and can just pick it up and slosh it around. And really, a lot of times, we have no caps, no limits, not having to let Congress know, not having to talk to them at all. So, you know, that's part of why we're always hesitant to just take more money from hardworking Americans, and just throw it in as a quick infusion to different programs.

BROWN: Alright. Well, Richard Stern, thank you so much for joining us.

STERN: Thank you for having me on again.

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