who’s going to help?

disaster relief in the era of huge bucks

The devastation in greater Los Angeles over just the past several hours is nothing short of remarkable—and heartbreaking. One of my son’s long-ago elementary school mates evacuated yesterday with the briefest of warnings. I last heard news about five and a half hours ago so more fires may be underway.

In an era of already dramatically decreasing availability for private home insurance, I can only imagine the impact on California’s insurance market will make coverage truly nearly impossible to find. Please don’t misunderstand: I fully appreciate that insurance availability, not to mention price for a policy, is an intricate and evolving calculation shifting regularly over the past several years. The 2025 fires are far from some brand new phenomenon: I recall merciless burning in the hills around Oakland perhaps twenty-five years ago. But insurance is for precisely this: unexpected catastrophes.

The private sector, of course, is self-regulating in that private insurers could never incentivize anyone to provide them capital if risk were not part of the equation. Risk values rely on complex math assessments focused at a minimum on increasing probability of fire (substitute hurricane if you’re looking at the same turmoil in Florida, for example) versus the sky-rocketing costs to rebuild a home, much less a community. And my description is so superficial regardiung the different forces insurers consider. Hence, when it’s all said and done, as climate change makes catastrophic damage ever more possible—if not probable, insurers are saying sayonara.

Paging the relevant (often federal) government agencies with relief packages—STAT. Therein lies an additional challenge in an era of escalating risk that people lose everything from one of these not infrequent events. The 2005 damage to New Orleans following Hurricane Katrina was shocking whether one considered the physical aspect of reconstructing a safer environment or merely the dollar figure involved. According to a 2020 Government Accountability Office report, the four most expensive hurricanes in our history topped well into the multiple trillions of dollars. Based on what we are hearing about uncontained wildfires in a period that isn’t even the traditional fire season, The Wall Street Journal projects economic losses from this fire tragedy at $50 billion, currently with $20 billion reconstruction costs as of now (three days into the disaster). Perhaps I am naive but the final result strikes me as substantially higher additional costs as what is the point of rebuilding a community—and the shocking pictures of utter destruction over just the past two days has indeed benefited entire communities now in ashes—if one replicates the circumstances that allowed block after block to burn down? It strikes me as rather daft but I truly want to hear your thoughts. I anticipate local officials, if not feds, will have a say in this reconstruction issue.

Yet all of this is happening as calls grow, particularly within the Republican Party, to scale back government spending because we are now treading into ever more dangerous levels of federal debt. I know many economists disagree this is really a problem but a federal debt in excess of $36 trillion is a rather daunting concern to me. In case you’re wondering, that number has actually declined slightly during the Biden administration following the all time high gross debt number in 2019 of 124.73%, at 110.39% is anything but an “attaboy” for any administration of late. The amount represents what we owe as public debt (incurred debt already, not projected additional spending in the future) is more than the aggregate U.S. gross domestic product for any single year. Those are huge numbers, no matter your politics, your partisan preferences, or your country unless you’re a scofflaw like Latin American countries in the 1980s which didn’t repay debt nor get much further lending when needing additional finance to operate. But, I digress relative to the challenge of rebuilding following disasters.

I am anticipating the outcry we likely will hear when complete projections of reconstruction become available. Private insurers most certainly will withdraw from California even further but even if the state has de facto the fifth largest economy in the world (the Libertarian CATO Institute disputes a ranking this high but doesn’t dispute the enormity of this single entity’s economic output), the state coffers cannot pay for this with raising some of the highest taxes in the country to astronomical rates. I offer the state neither as a partisan condemnation nor a free pass; it’s reality much as the repaying schemes for ever more frequent and violent storms come ashore across the Florida peninsula.

The federal government will become by default the source of last resort out of profound necessity. Again, this is not merely a “left coast” problem but one additionally in more conservative Texas and Florida among other places.

Yet the reconstruction financing is bound to raise questions in an era of a conservative government avowedly determined to scale back government’s role in people’s lives.

So how will that work? During Hurricane Sandy in November 2012, Texas Senator Ted Cruz and others voted against hurricane relief to New Jersey and New York cities literally underwater from the freakish storms (for the record, I suspect not every Democrat wants to vote for aid in disasters, either, so this is not meant as a Republican versus Democratic issue but Democrats appear more comfortable in providing relief). I suppose those who voted against the aid packages figured it wasn’t going to their constituents; unfortunately, I guarantee subsequent years required aid to those senators’ states where these individuals had not problem noisily demanding presidents of both parties help as soon as possible. How will that go this time as the complete Republican control over the levers of power include many more skeptics about more spending? Senator Cruz found out with Hurricane Harvey that votes are demonstrable choices, often leading to charges of hypocrisy, when disaster relief comes into play.

Should the government stop creating a “moral hazard” by offering aid to places? Are we wrong for the government to become the last resort because the private sector refuses the risk? Perhaps but what is government’s role, as stated in the Preamble to the Constitution, except to protect and defend our citizens while providing for the general Welfare. How much more general is welfare than helping citizens in dire need? Surely because charitable contributions are voluntary we don’t rely on not-for-profits to provide the safety net, do we? A safety net is just that: to address critical needs in extenuating circumstances.

Do we as citizens expect “America First” to apply as taking care of our own rather than worrying about our interests overseas, whether China, Israel, Ukraine, or a natural disaster comparable to the 2011 Fukushima tsunami/nuclear meltdown in one of our closest allies? Where do we as a society want that line? I certainly don’t know but expect it a relevant public policy discussion.

Have we reached a point where governments, on the basis on the need to provide relief for people who build homes and communities in ever so vulnerable climate-affected regions—should prohibit citizens from locating to these areas? I fully understand how draconian that would be but so are the costs of these ever more frequent tragedies.

We are Amur’cans, AS LBJ seemed to pronounce us, demanding our individual “rights” either to do anything or live wherever we want yet are we reaching a point where public policy spending will drive us to reconsider that stance? How about stopping people from locating in the southwest where water is scarce? Hurricane-prone regions? Drought areas of the northern plains? The list goes on yet it’s a serious question.

If we move towards not providing disaster relief from the federal system, why do we subsidize farmers for their crops? The obvious answer to that is food is a national security priority yet the crop subsidies are a guarantee regardless of conditions (unless I misunderstand, which is possible). Is that appropriate if we were to scale back or terminate disaster relief? I don’t know but suspect the contradiction might arise.

No one wants to pay higher taxes, though that is probably the only way to genuinely attack the debt. As a result, other policy trade offs with their attendant consequences are going to arise. But $50 billion would be the cost of three aircraft carriers and associated air wings, based on the cost of the USS Gerald Ford at $13.3 billion for the carrier alone.

None of this is to say any of these are not important trade offs but disaster relief is an immediate need, not something one kicks down the line as one does fixing Social Security or addressing infrastructure. People are literally trying to figure where to escape the flames with nothing but the clothes on their backs in many cases. Los Angeles, like the Florida or Texas coastal towns, don’t have housing for free, much less the other amenities or the long-term rebuilding of their lives.

People continue evacuating in the Los Angeles area and red flag warnings still apply for much of the densely occupied areas southward ot the U.S.-Mexico border. Things may well get much worse before they improve but the reconstruction of this tragedy will have to occur.

I raise these questions because they show the consequences of our actions and non-actions, our trade offs, and our emerging lives under climate change. Even if one assumes climate change is not the culprit but instead that too many folks inhabit a region with too little water, what serious alternative is there other than reconstruction? Are the lives of those living in the LA basin judged on a different basis than anywhere else in this country as we prioritize our choices. I am genuinely curious how it appears to you.

Actions, some natural while others human in character, create consequences. Resolutions, however, are largely of our making. On the other hand, we uniquely as Americans look for solutions.

I welcome any rebuttals, queries, or thoughts on this or any other topic. This is far from my specialty but it is so immediate so often these days that I can’t imagine our political transition will let this pass without some debate.

Thank you for your time today or any other day. I welcome readers daily or occasionally. I especially thank the subscribers who commit to the newsletter. You can subscribe for less than a dollar weekly for an annual subscription or on a shorter basis, if you prefer. But I welcome you.

We don’t have the horrors of sooty skies in Annapolis but we most definitely have temperatures in the 20s. The darker portions in the middle of the Creek are water areas pushed forward by the strong winds.

Be well and be safe, wherever you are. FIN

Dartunorro Clark, “Ted Cruz Says He ‘Enthusiastically’ backed Sandy Storm Aid. But He Voted ’No’“, NBC.org, 28 August 2017, retrieved at https://www.nbcnews.com/politics/congress/ted-cruz-says-he-enthusiastically-backed-sandy-storm-aid-he-n796926

Jean Eaglesham, “Lost Angeles Fire Damage Likely to Be Costliest Blaze in U.S. History”, WallStreetJournal, 9 January 2025.

Marc Joffe, “No, California is Not the World’s Fourth Largest Economy”, CATOInstitute.org, 5 April 2023, retrieved at https://www.cato.org/commentary/no-california-not-worlds-fourth-largest-economy

Ashleigh Romero, “The Astonishing Price Tag of the Gerald R. Ford Aircraft Carrier Revealed”, Shunauto.com, 10 March 2024, retrieved at https://shunauto.com/article/how-much-does-the-gerald-r-ford-aircraft-carrier-cost

“U.S. Debt to GDP Ratio, 1989-2025”, Macrotrends.net, retrieved 9 January 2025 at https://www.macrotrends.net/global-metrics/countries/USA/united-states/debt-to-gdp-ratio

“U.S. Debt Clock: Real Time”, U.S.DebtClock.org, retrieved 9 January 2025 at https://www.usdebtclock.org/