Monday, September 26, 2005

Did I Say $200 Billion? I meant less. A lot less.

(Reuters) - U.S. government spending to repair Hurricane Katrina damage may turn out to be just half of early estimates, or about $100 billion, the Senate Majority Leader's chief budget aide said on Monday.

Bill Hoagland, who works for Tennessee Republican Sen. BillFrist (news, bio, voting record), also said congressional leaders would shortly ask lawmakers to find additional spending cuts to help pay for hurricane disaster aid, but added: "It's going to be tough."

At a conference on Katrina reconstruction, Hoagland said an estimate frequently cited on Capitol Hill that federal recovery costs would hit $200 billion "has no basis in analysis."

He warned that Congress, which in six days this month approved $62.3 billion in emergency aid to Gulf Coast states, should be more careful before rushing through another disaster assistance package that the White House is expected to request in October.

"The number could at the end of the day be closer to $100 billion as opposed to $200 billion," Hoagland told the conference organized by Equity International, a business development firm, and held in a Senate office building.

The rate of government spending so far was slower than anticipated, Hoagland said. So far, just $16 billion of the emergency government aid actually had been allocated, he said.

"The rate of expenditure today is not what was reported early on -- $2 billion a day -- but something like $700 million a day. So I'm not sure how fast this will go, but it does suggest that there are some restrictions on the way the money is flowing out to those who are in need," he said.

Hoagland said estimates for what would probably be the biggest chunk of federal spending -- repairs to public infrastructure -- were not in yet, partly because some areas hit by Hurricane Katrina in late August had been hit again during the weekend by Hurricane Rita.

Congressional leaders would step up efforts to find ways to pay for hurricane aid, he said. Before Hurricane Katrina, congressional leaders were hoping to make $35 billion in spending cuts over five years."

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