Revised September 19, 2005

By Jim Horney, Robert Greenstein, and Richard Kogan

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Budget Priorities After Hurricane Katrina

Federal Budget Policy

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Some conservative lawmakers and pundits are arguing that while the funding for relief and recovery efforts from the hurricane may be money that the nation has to spend, the costs will swell federal spending to dangerous and unprecedented levels.  This claim is being used both to advance calls for sharp cuts in other domestic programs — in order to offset the costs of relief and recovery efforts — and to reject any suggestion that the tax cuts of recent years be revisited to even a modest degree.

The rhetoric about an explosion in federal spending is not supported by the facts.

End Notes:

[1] All projections cited here start with the baseline in the Congressional Budget Office’s August 2005 report, The Budget and Economic Outlook: An Update.  That baseline is then adjusted to include the effects of the following policies, as shown in Table 1-6 of CBO’s report:  (1) extending the expiring tax cuts (except for the provision dealing with repatriation of profits held abroad by American corporations); (2) continuation of relief from the Alternative Minimum Tax; (3)and a phase-down of activities in Iraq and Afghanistan.  The projections of the cost of Katrina relief reflect CBPP’s estimate of outlays from appropriations of $150 billion or $200 billion for Katrina relief, based on CBO’s estimate of outlays from the $62 billion in Katrina relief that has already been appropriated.

[2] Steve Bowman, “Iraq: U.S. Military Operations,” Congressional Research Service, updated July 5, 2005.