Shouldering the Burden: Federal Assumption of Disaster Costs

INTRODUCTION

Depression and war spawned a much larger, more paternalistic federal government. By the late 1940s, the American people had become accustomed to Social Security, federal housing programs, veterans benefits, farm subsidies, public higher education, federal aid to highways, and other federally supported social programs. The Federal Housing Administration (FHA) and the Veterans Administration (VA) offered subsidized mortgage insurance and low-interest loans to help veterans and their young families buy new homes, thus stimulating the spread of tract subdivisions onto rural land (later termed "urban sprawl"). In 1949, Congress launched the federal urban renewal program to acquire, clear, and redevelop "blighted" neighborhoods in cities. In 1956, Congress authorized construction of the 42,500-mile Interstate Highway System with 90 percent federal funding, which further encouraged growth on the fringes of older cities. The Federal Tax Code offered further incentives to home ownership and land development. Laissez-faire was in tatters, but government was intervening in the private economy primarily to promote, not hinder, new investment and urbanization.

In the absence of restraint, some of this new development impinged on stream valleys, unstable hillsides, accessible forestlands, and coastal shorelines, not to mention prime farmland and critical natural habitat. Inevitably, a by-product of this process was the exposure of rising numbers of homes, workplaces, and lives to the risk of natural hazards. As losses mounted, or at least occurred at the doorsteps of the politically influential, Congress began, hesitantly at first, to devise a new set of programs and policies that collectively would transfer much of the financial costs of disasters from individuals and communities to the nation as a whole (in other words, to the federal taxpayer). In the process, an implicit new social compact was gradually forged between government and citizenry in which the former assumed a large share of disaster losses arising from the bad luck or bad judgment of the latter.

FEDERAL DISASTER ASSISTANCE

The nation's first general disaster assistance law—the Disaster Relief Act of 1950 (PL 81–875)—was a mere pinprick in relation to this backdrop of federal activism and grandiose construction programs. Three months after the outbreak of the Korean War and with the foul winds of McCarthyism beginning to waft through the nation's capital, it was adopted quietly with little study or debate. Its initial authorization was $5 million, paltry even then. But despite the conservative climate of the moment, it harked back to New Deal social legislation as a logical extension of social security, housing, education, VA medical care, and other social benefit programs. Initially, its benefits were limited to local public costs; later this would be expanded to include private enterprise and individuals as well. The 1950 law marked a threshold in national policy concerning disasters, from an era of disinterest to one of limited federal involvement (Table 1-1). It was the modest forerunner of a long series of acts that would cumulatively commit the United States to providing tens of billions of dollars in assistance to individuals and communities stricken by natural and other disasters.

This obscure law was introduced by Rep. Harold Hagen of Minnesota, whose immediate concern was to relieve the financial burdens of repairing the farm-to-market roads and bridges in recently flooded areas along the Red River in Minnesota and North Dakota (the same region where prolonged floods would attract national attention and $2 billion in federal assistance in 1997). Its sponsor presented a long list of past special acts of Congress, along with other examples of federal response to disasters through the Army Corps of Engineers, the Farm Credit Administration, and the Bureau of Public Roads. But unlike those ad hoc measures, the new legislation would prove to be the first permanent and general disaster law passed by Congress, and its concepts would become the model of all succeeding federal disaster laws, albeit vastly expanded in scope and cost. Its sketchy legislative history states that the law: "will cover disaster occurring anywhere in the entire country instead of a particular state or locality. [It will] provide for an orderly and continuing method of rendering assistance to the states and local governments in alleviating suffering and damage resulting from a major peacetime disaster...." The means provided to accomplish that mission were, however, parsimonious as compared with the disaster cornucopia of the 1990s. The several hurricanes that struck the East Coast during the mid-1950s introduced the public to the new concept of federal disaster assistance, albeit in limited form (Figure 1-1).

The peacetime mission of the fledgling program was to be overshadowed for decades by the Cold War. It was initially assigned to the Housing and Home Finance Agency, which administered the federal urban renewal program. But from 1953 until 1974, the program was housed within a series of civil defense agencies where it languished in relative obscurity in the midst of preparations for nuclear war (Table 1-2). In 1974, it returned to the arena of community planning under the newly created Federal Disaster Assistance Administration of the U.S. Department of Housing and Urban Development. From there, in 1979, it was transferred to the new Federal Emergency Management Agency, an amalgam of civilian and military preparedness programs established by President Jimmy Carter. In the 1980s, under the Reagan Administration, FEMA pursued a chimera called "integrated emergency management" that was intended to protect the American people from anything between a local flood and all-out nuclear war. Since 1993, under the Clinton Administration, FEMA has finally shed its Cold War baggage and has evolved into a genuinely domestic program with a strong emphasis on natural hazard mitigation. (See Chapter 3.)

After 1950, and more emphatically after the Federal Disaster Relief Act of 1970, the federal government assumed a permanent role as the primary...