Friday, April 29, 2011

FEMA--An Engine for Economic Development?

A brief history! In the Senate hearings and debates over the formation of FEMA in 1978, Senator William Proxmire foretold a FEMA future as an ATM for the STATES and their local governments. That prediction was followed by the defeat in spring 1993 of the Clinton Administration's economic development and stimulus plan. Instead Clinton was fortunate to have the 12 weeks notice of the late spring 1993 floods in the UPPER Midwest and he used that opportunity for the first time in disaster history to actually meet with the impacted STATES governors and promise them disaster outlays to stimulate not just their economic revival but even expansion. This was done by Director Witt under the direction of the WH political staff. It was successful. Now the same thing looks like it is about to occur under President Obama, and strangely it is NOT the current tornado outbreak but again the prospect of historic levels of mainstem riverine flooding that will provide the opportunity. Whether this foreshadows a FEMA pulled out of DHS in the forthcoming series of federal reorganizations that will end HUD as a Cabinet level department with FHA being merged with FNMA and FHMC is unknown at this point but probable. Now most of the real brain power on disaster housing and long-term recovery is coming from HUD not FEMA.

Interestingly a number of the major powers in the Approps Committee in the HOUSE are from Alabama and Senator Jeff Sessions whom I met in Alabama when US Attorney have enough seniority and status that Alabama will indeed be getting huge outlays of fresh disaster dollars. Also the federal facilities in Alabama including the Marshall Space Flight Center, knocked out from support of the last shuttle mission, will be getting large amounts of money to restore its operations.

Strangely, the Economics Profession has never agreed on whether the disaster outlays revive the devastated communities or not. There are examples both ways. Kobe, Japan for example despite the largest single outlays of disaster relief and recovery funds in world history have created a bright shining new city and port. But oddly its container and shipping traffic still has not reached pre-disaster levels. Suffice it to say the DHS/OIG and GAO have never looked at disasters from the potential economic stimulus point of view but the OBAMABA Administration like the Clinton Administration is about to do so.