Lots and Lots and Lots of Money
This Sunday while pining for football (American or otherwise), I was watching Meet the Press and was able to catch Russert's great interview with Senate Majority Leader and Terry Schiavo's personal neurologist, Bill Frist. In addition to noticing that Senator Frist prefaces many statements with, "All I can say..." one of the exchanges really got me thinking. When asked about the rapidly increasing federal debt, Frist defended his party's spending by saying, "You just asked why we weren’t doing enough in Katrina. Why we shouldn’t be doing more, and my response is we had to respond with well over $100 billion which is appropriate."
Who can argue with massive government expenditures for hurricane relief? After all, it was a massive natural disaster and I agree with Frist's assertion that $100 billion is appropriate. Our government has a responsibility to help its citizens and taxpayers in the Delta. My argument is not with the amount of money spent, but with how that money will be spent. With a number like 100 billion you should be able to move mountains. You should be able to fulfill Huey Long's vision of, "Every Man a King."
Say what you will about Huey Long, but in reading his speeches I realized that one of his great strengths was in conveying the significance of the large numbers that we hear every day. In the spirit of Huey Long, let me just try to convey the significance of the $100 billion that our government has spent on Katrina. First let's break down $100,000,000,000 into a more palpable number. $1 million is more money than most American families will make in ten years so that's not very palpable. $250,000 is the average price of a single-family home in America. It's still not a very palpable figure because it takes most of us 30 years to pay off a loan of that amount, but for that reason it will do nicely.
If we break $100 billion dollars into increments of $250,000 and put each of those into a briefcase, we will have a stack of 400,000 briefcases. According to numerous sources, there were over 200,000 homes destroyed in Katrina. This news article puts the number at 250,000 destroyed homes. Certainly there were many more with severe damage caused by wind and floodwaters. If we say that a total of 350,000 homes were destroyed or seriously damaged by Hurricane Katrina we could give every one of those families a briefcase with $250,000 to rebuild or relocate and still have 50,000 suitcases (12.5 billion dollars) left over.
Some things to remember about my hypothetical exercise:
1. $250,000 is the average price of a single-family home nationwide. That includes very expensive areas like San Francisco, New York City, and Washington. The average price of a home in Louisiana and Mississippi is undoubtedly lower.
2. The federal government's contribution of $100 billion is not the only stream of monetary aid. State and local governments will also be contributing aid along with numerous international charities and many foreign governments.
3. Many other people were affected by this event. I'm not saying that the only people affected by the disaster were homeowners. Plenty of businesses and many people living in rental properties were also affected by the disaster, but remember we still had 50,000 briefcases left over in addition to the aid sources mentioned above.
4. Some of those affected by Katrina don't need financial aid. Plenty of Katrina's victims had adequate insurance or would only need a fraction of their allotted briefcase money. That would leave money left over for other costs like levee reconstruction.
I'm sure that this is partially an oversimplification of disaster relief. Certainly there are other costs and expenses that I haven't thought of, but this analysis illustrates my central point. The actual assistance that Katrina victims will receive is nowhere near a monetary value of $250,000. The reason the number won't approach $250,000 is because of how the money will be spent. Those billions will find their way into the hands of unscrupulous real estate developers and greedy construction firms before they make it to the common man. The money will be used to treat the industrial and commercial areas long before it makes it to the residential areas and that's not where it is needed most. The corporations of the Gulf Coast will have a windfall (no pun intended) and the lower and middle class residents will just be left with a bunch of windfall (pun intended).
I hate to end this post on a goofy pun, but I'm getting long-winded.
Oh god, I did it again.
This Sunday while pining for football (American or otherwise), I was watching Meet the Press and was able to catch Russert's great interview with Senate Majority Leader and Terry Schiavo's personal neurologist, Bill Frist. In addition to noticing that Senator Frist prefaces many statements with, "All I can say..." one of the exchanges really got me thinking. When asked about the rapidly increasing federal debt, Frist defended his party's spending by saying, "You just asked why we weren’t doing enough in Katrina. Why we shouldn’t be doing more, and my response is we had to respond with well over $100 billion which is appropriate."
Who can argue with massive government expenditures for hurricane relief? After all, it was a massive natural disaster and I agree with Frist's assertion that $100 billion is appropriate. Our government has a responsibility to help its citizens and taxpayers in the Delta. My argument is not with the amount of money spent, but with how that money will be spent. With a number like 100 billion you should be able to move mountains. You should be able to fulfill Huey Long's vision of, "Every Man a King."
Say what you will about Huey Long, but in reading his speeches I realized that one of his great strengths was in conveying the significance of the large numbers that we hear every day. In the spirit of Huey Long, let me just try to convey the significance of the $100 billion that our government has spent on Katrina. First let's break down $100,000,000,000 into a more palpable number. $1 million is more money than most American families will make in ten years so that's not very palpable. $250,000 is the average price of a single-family home in America. It's still not a very palpable figure because it takes most of us 30 years to pay off a loan of that amount, but for that reason it will do nicely.
If we break $100 billion dollars into increments of $250,000 and put each of those into a briefcase, we will have a stack of 400,000 briefcases. According to numerous sources, there were over 200,000 homes destroyed in Katrina. This news article puts the number at 250,000 destroyed homes. Certainly there were many more with severe damage caused by wind and floodwaters. If we say that a total of 350,000 homes were destroyed or seriously damaged by Hurricane Katrina we could give every one of those families a briefcase with $250,000 to rebuild or relocate and still have 50,000 suitcases (12.5 billion dollars) left over.
Some things to remember about my hypothetical exercise:
1. $250,000 is the average price of a single-family home nationwide. That includes very expensive areas like San Francisco, New York City, and Washington. The average price of a home in Louisiana and Mississippi is undoubtedly lower.
2. The federal government's contribution of $100 billion is not the only stream of monetary aid. State and local governments will also be contributing aid along with numerous international charities and many foreign governments.
3. Many other people were affected by this event. I'm not saying that the only people affected by the disaster were homeowners. Plenty of businesses and many people living in rental properties were also affected by the disaster, but remember we still had 50,000 briefcases left over in addition to the aid sources mentioned above.
4. Some of those affected by Katrina don't need financial aid. Plenty of Katrina's victims had adequate insurance or would only need a fraction of their allotted briefcase money. That would leave money left over for other costs like levee reconstruction.
I'm sure that this is partially an oversimplification of disaster relief. Certainly there are other costs and expenses that I haven't thought of, but this analysis illustrates my central point. The actual assistance that Katrina victims will receive is nowhere near a monetary value of $250,000. The reason the number won't approach $250,000 is because of how the money will be spent. Those billions will find their way into the hands of unscrupulous real estate developers and greedy construction firms before they make it to the common man. The money will be used to treat the industrial and commercial areas long before it makes it to the residential areas and that's not where it is needed most. The corporations of the Gulf Coast will have a windfall (no pun intended) and the lower and middle class residents will just be left with a bunch of windfall (pun intended).
I hate to end this post on a goofy pun, but I'm getting long-winded.
Oh god, I did it again.
posted by adelino @ 3:56 PM
2 Comments:
At 10:26 AM,
Anonymous said…
I appreciate your break down (pun intended) of the relief effort. What a helpful visual to put that sum in perspective. 50,000 is a lot of episodes of deal/no deal and I agree with your assessment. I think one huge area of spending you forgot, though, was the immediate relief of food, water, medical and rescue which not only had a high price, but also couldn't be planned systematically enough to be economically efficient, so I'm sure there was a lot of wastage in exchange for quick (arguably) response.
At 10:26 AM,
Anonymous said…
I appreciate your break down (pun intended) of the relief effort. What a helpful visual to put that sum in perspective. 50,000 is a lot of episodes of deal/no deal and I agree with your assessment. I think one huge area of spending you forgot, though, was the immediate relief of food, water, medical and rescue which not only had a high price, but also couldn't be planned systematically enough to be economically efficient, so I'm sure there was a lot of wastage in exchange for quick (arguably) response.
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