Update 819 — Storms of Disinformation:
Speaker Johnson: Assistance “Can Wait”
Millions of Americans affected by Hurricanes Helene and Milton in the last month have had to endure not only personal and financial catastrophe but a flood of disinformation from Republicans about the status and availability of federal disaster assistance. Calls continued this week for Congress to reconvene before the elections conclude to authorize additional assistance.
The calls have fallen on deaf ears, with House Speaker Mike Johnson closing the door to Congress returning early to pass funding to respond to Hurricanes Milton and Helene. Assistance “can wait because remember… Congress appropriated $20 billion additional to FEMA so that they would have the necessary resources to address immediate needs.” Below, we sort out fact from fiction and lay out how and when Congress will act to address the damage wrought by the storms.
Good weekends, all…
Best,
Dana
With 18 days until the elections and over a month to go in the 2024 hurricane season that has already devastated parts of the Southeast and left billions of dollars worth of damages, the question remains: can Congress afford to wait until after the elections to address funding for federal disaster relief programs? What are the prospects for action in the lame-duck session between the elections and adjournment in December?
On September 26, Hurricane Helene, the strongest hurricane ever to strike the eastern panhandle of Florida, left a path of devastation as it moved north through Alabama, Georgia, and South Carolina, eventually blanketing the mountains of North Carolina and Eastern Tennessee with record-breaking floods. Less than two weeks after Hurricane Helene devastated the Southeast, Hurricane Milton made landfall in the Tampa region with record-breaking intensity, again leaving death and devastation in its path.
These storms hit shortly after members of Congress headed back to their home states for a recess ahead of the election. While brief considerations of Congress returning for an emergency session have passed, we can surely expect action after the election. Given that repairs and recovery are expected to cost as much as $55 billion, according to estimates by Moody’s, questions have circulated around the state of federal assistance as federal agencies respond to these disasters and brace for the rest of the hurricane season with their funding body away from the wheel.
Federal Disaster Response
When most people think about the role of the federal government in disaster relief, they think about FEMA and its Disaster Relief Fund. This fund has been the subject of recent debate between Congress and the Biden Administration, with Biden and progressives in Congress pushing for a $10 billion increase for the disaster fund in FY25 even before the most recent disasters struck. The additional money was included in Speaker Johnson’s initial continuing resolution (CR) proposal but was ultimately left out in favor of a cleaner funding stop-gap as Congress stared down a government shutdown.
However, there has been growing concern in recent weeks about the ability of FEMA to continue to respond to disasters following the landfall of Hurricane Helene and Hurricane Milton earlier this month. Though FEMA Administrator Deanne Criswell remains confident the agency will have enough funding to make it to December 20 – when the current CR expires – the Small Business Administration (SBA) ran out of funding for its disaster relief loan program this week. This program operates on a much smaller budget than FEMA but importantly provides access to capital in the short term.
In response to concerns about future FEMA shortfalls and the SBA exhausting its disaster relief funding, President Biden, joined by other Democratic members of Congress, pitched a return from pre-election recess to ensure adequate support for disaster victims. Speaker Johnson has dismissed this idea, and it seems Congress is very unlikely to reconvene before the lame-duck session. This leaves the SBA’s loan program on pause and opens up FEMA to funding uncertainty in the case of additional disasters. Below, we provide an overview of federal disaster relief efforts – along with the current fiscal state of these programs – and discuss legislative action that may lie ahead when Congress returns next month.
FEMA
The Federal Emergency Management Agency (FEMA) is responsible for the most robust parts of our federal response to emergencies, including damage to personal property, public infrastructure, and support to state and local governments. FEMA usually aims to pay 75 percent of disaster costs, leaving the rest to the affected states. This target has strained the agency’s resources in recent years, as its costs have increased dramatically with the rising occurrence of natural disasters caused by climate change. Congress has not responded in turn with significant enough funding through annual appropriations, often opting to address funding shortfalls as they arise. Funding shortfalls have caused FEMA to put spending restrictions into place 10 times since 2023, including just two months ago.
Following an allocation of roughly $20 billion from Congress to address hurricane season included in the CR passed at the end of last month, FEMA utilized about $11.5 billion from its Disaster Relief Fund within a span of just two weeks. Prior to Hurricane Milton’s landfall in Florida last week, the agency had already spent $9 billion. As POLITICO reported last week, a significant portion of the funds disbursed was used to reimburse other states for past disasters, a delayed process that became possible after spending restrictions were lifted on October 1 given new funding provided under the FY25 CR.
If FEMA runs out of disaster relief funding again, spending will be restricted to immediate needs (as it was before October 1), leading the agency to narrow its focus to lifesaving operations. FEMA Administrator Deanne Criswell currently believes they will have funding for disaster assistance through the expiration of the FY25 CR after December 20, though this could change rapidly as hurricane season continues.
Small Business Administration
Looking past FEMA, additional federal disaster relief flows through the SBA in the form of low-interest loans to homeowners, renters, and businesses with property damaged by a disaster:
- Businesses – SBA emergency loans for businesses are capped at $2 million and can be used for physical damages as well as economic losses due to halted business. These loans have rates of as low as 4 percent for for-profit businesses and 3.25 percent for non-profit organizations.
- Homeowners/Renters – On the individual side, homeowners can receive loans of up to $500,000 “to repair or replace disaster-damaged or destroyed real estate” and both renters and homeowners can receive loans of up to $100,000 to “repair or replace disaster-damaged or destroyed personal property.” The rates for homeowners and renters can vary “based on each applicant’s fiscal condition,” but the minimum rate is 2.8 percent.
In all cases mentioned above, interest does not begin to accrue until a year after the loan is issued, which is when payments on the loans also start. Loans are often offered for a 30-year term.
The SBA can typically loan three to four times the amount received for its disaster relief program, which was just under $40 million in the FY25 stop-gap funding bill ($175 million before prorated for length of CR). The SBA originally requested $524 million for FY25 but has since increased that request to $1.6 billion – a similar amount to what was offered by Congress in FY18, another big year for hurricanes.
The SBA officially ran out of money for its disaster program on Tuesday due to the high number of loan applications for the damage caused by Hurricane Helene and Hurricane Milton. The SBA has encouraged those affected by these disasters to continue to apply for loans through its disaster program, but will not be making new loan offers until Congress appropriates more funding. People who are unable to receive SBA loans may instead apply for FEMA emergency aid of up to $45,000, putting further stress on FEMA’s finances. However, the extent to which this will accelerate FEMA’s shortfall projections is currently unclear.
National Flood Insurance Program
The National Flood Insurance Program (NFIP) is America’s primary source of flood insurance coverage, with more than 4.7 million flood insurance policies providing over $1.3 trillion in coverage. It was created by Congress in 1968 to make up for the private insurance market’s lack of coverage for flood damage. The program was intended to provide access to primary flood insurance, allowing the federal government to take on some of the financial risks for residences at risk of flood damage. The problem is that the program was never designed to take on the risks of truly extreme events, and with climate change, such events have become more frequent.
At the beginning of the month, the NFIP was already strained due to covering claims from Hurricane Helene. With Hurricane Milton entering the equation, the NFIP will likely exhaust its $5 billion in funds and need to tap into $9.9 billion in Treasury borrowing authority to continue covering claims for the millions of additional policyholders that were impacted in Florida. Once that is exhausted, NFIP will need Congress to step in to allow the program to continue paying out for claims. The problem is that the NFIP has long been a contentious issue for Congress, and lawmakers cannot agree on how to reform the program to ensure it remains sustainable for the long term. Even simply providing enough money to the NFIP to cover claims in the short term may be difficult, as options include appropriating more money to the program, raising its borrowing authority, or canceling NFIP debt.
Expected Legislative Action
As mentioned above, it now appears certain that Congress will not return to tackle disaster funding before the November elections, and the issue will have to be addressed in the lame-duck session of Congress (the period after new members have been elected but before they are sworn in). Legislation related to funding the SBA’s disaster relief loan program – the most immediate need facing Congress on the disaster front – has been introduced by Representative Jared Moskowitz (D-FL). His bill would provide the SBA with $8 billion in funding specifically for its disaster relief loan program, a much higher amount than the SBA requested following the most recent hurricanes ($1.6 billion). Speaker Johnson has noted bipartisan support for passing a disaster relief package that includes funding for FEMA and the SBA, but Republicans will likely balk at such significant funding for the SBA’s loan program.
Adding uncertainty to the possibility of bipartisan support for disaster relief during the lame-duck is a letter sent by four Republican Senators on the Senate Small Business Committee to SBA Administrator Isabel Guzman on Wednesday. The letter, signed by Ranking Member Joni Ernst (R-IA) and Committee Members Tim Scott (R-SC), Todd Young (R-IN), and James Risch (R-ID), expresses their deep concern “about the SBA’s handling of its disaster loan account and the SBA’s failure to provide its authorizing committees statutorily required information.” The letter could signal pushback from Republicans on refilling the loan program’s coffers, as the GOP has often used mismanagement of funds to justify delaying supplemental funding.
Furthermore, GOP leaders and members have been spreading misinformation about the recent hurricanes and federal disaster relief. This misinformation, condemned by Republicans from the affected states, includes claims from Representative Marjorie Taylor Greene (R-GA) that the hurricanes were manmade and politically motivated. We have also seen false assertions from Trump suggesting that disaster relief funds are being allocated to migrants crossing the border illegally and that FEMA is only providing victims with a total of $750 (which is actually an initial payment before more substantial resources are made available). Not only could this misinformation complicate negotiations for a disaster supplemental in the coming months, it is extremely dangerous as it may lead to a reduction in disaster relief claims or general mistrust in FEMA and its lifesaving assistance efforts.
A disaster relief package may be difficult to get across the finish line even if there is enough bipartisan support. It competes with several other priorities Congress is looking to tackle in the lame-duck session, including an extension for the farm bill, the National Defense Authorization Act (NDAA), and FY25 funding legislation. Members could try to take advantage of a possible legislative vehicle and pair items with a disaster relief bill, complicating the legislation’s path to passage. Even if these items are not packaged together, the crowded agenda, as well as other priorities like confirming justices while the Senate is still controlled by the Democratic party, could cause a time crunch for finalizing FY25 funding bills. It is also important to note that Congress will only have eight days in session between its post-election return and the week-long Thanksgiving recess, meaning it is not far-fetched to assume that disaster-related legislation could be pushed into December.
While these factors could also indicate that a CR for FY25 is more likely than full-year appropriations, the outcome of these fights will be influenced by the election outcome, in which we could see a sweep by either party or a divided government. For the time being, Congress and the Administration will continue to monitor emergency funding needs and work behind the scenes to plan for Congress’ return next month. For those seeking loans to help with recovery from Hurricane Helene and Hurricane Milton, further relief may not come until later in the lame-duck session.