Irene costs restart Washington budget battle

WASHINGTON Tue Aug 30, 2011 3:54am IST

U.S. House Majority Leader Eric Cantor (R-VA) (C) talks to reporters as he walks from the House chamber after voting on debt ceiling legislation at the U.S. Capitol in Washington, August 1, 2011. REUTERS/Jonathan Ernst

U.S. House Majority Leader Eric Cantor (R-VA) (C) talks to reporters as he walks from the House chamber after voting on debt ceiling legislation at the U.S. Capitol in Washington, August 1, 2011.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - Washington's never-ending budget battle threatened to snarl the recovery from Hurricane Irene as a top Republican said on Monday that any federal aid will have to be offset by spending cuts elsewhere.

"Yes there's a federal role, yes we're going to find the money. We're just going to make sure that there are savings elsewhere," Representative Eric Cantor, the No. 2 Republican in the House of Representatives, told Fox News.

Democrats who oversee disaster funding in the Senate said they won't cut other programs to boost emergency aid.

"It makes no sense to cut programs that help respond to future disasters in order to pay for emergencies that have already occurred," Democratic Senator Mary Landrieu said in a prepared statement.

Irene killed at least 21 people and caused substantial property damage from North Carolina to Vermont over the weekend. Cantor's Virginia district was among the areas hit by the storm, and was the epicentre of an earthquake last week.

Obama administration officials said they had no estimate of the storm's cost and were still assessing the damage, but other elected officials and companies have indicated it will likely amount to billions of dollars.

The administration will likely have to ask Congress for additional funding at a time when lawmakers are debating further budget cuts.

The Federal Emergency Management Agency has suspended funding for some rebuilding programs from earlier disasters to ensure that its disaster-relief fund will not run out of money, according to agency administrator Craig Fugate.

FEMA currently has $972 million in the fund, according to congressional Republicans.

President Barack Obama has signed declarations committing the federal government to helping states from North Carolina to New Hampshire cover disaster-response costs.

Obama also approved federal funding for individuals in Puerto Rico who were affected by the storm. People in other storm-ravaged areas could become eligible for federal money once damage assessments are completed, Fugate said.

FUND RUNNING LOW

"Once we know how much impact Irene will have we'll have a better sense of what assistance we may need," Fugate said on a conference call.

This year has been one of the most extreme for weather in U.S. history, with $35 billion in losses so far from floods, tornadoes and heat waves.

FEMA has struggled to fund these recovery efforts, warning lawmakers that its disaster-relief fund is running low.

The Republican-controlled House passed a bill in June that would give FEMA an additional $1 billion in disaster-relief funds for the current fiscal year, which ends Sept. 30, as well as $2.65 billion for the coming fiscal year.

But that bill would require the White House to cut other government programs if it needed more money for disaster relief -- a provision the administration has said it would ignore.

Landrieu said her Senate Homeland Security appropriations subcommittee will hold a vote on its own funding bill on Sept. 6, the day Congress returns from its August recess. That bill will differ substantially from the House-passed version, her staff indicated.

Cantor and other Republicans have made spending cuts a top priority since taking control of the House in November 2010 in a bid to bring trillion-dollar budget deficits under control. Budget battles pushed the government to the brink of a shutdown in April and to the edge of a first-ever default in August.

Republicans have not in the past been reluctant to approve disaster-relief money free from normal budget constraints.

After Hurricane Katrina devastated New Orleans and much of the surrounding region in 2005, the Republican-controlled Congress approved $81.6 billion as "emergency spending" outside of the normal budget process.

(Editing by Xavier Briand and Todd Eastham)

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