Hip Hop Caucus

Policy Reports

Humanity on the Line: Hip Hop Caucus report on 3rd Year Anniversary of Hurricane Katrina

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Executive Summary

Hurricane Katrina was a domestic natural disaster of unprecedented magnitude. Areas of Gulf Coast states – Louisiana, Mississippi and Alabama – were ravaged by a combination of flooding and winds of 145 miles per hour on August 29, 2005 (Elliot and Pais, 2006). The scope of the disaster was prodigious as more than one million people were displaced from their residence (Kromm and Sturgis, 2008). Over 1800 people are thought to have died as a result of Katrina (Shaw et al., 2008). The total area of damage – approaching the size of Great Britain – is approximately 90,000 square miles. Monetary damages due to the storm total nearly $81 billion (Shaw et al., 2008).

Three years have passed since that tragic day in August altered the lives not only of Gulf Coast inhabitants, but also of the nation. While it has become customary for the national media to annually venerate those affected by Katrina, its domestic prominence has been lessened by a crisis in health care; global warming; an energy crisis; wars in Iraq and Afghanistan; a national housing crisis; anemic economic growth; increasing food prices; widespread malfeasance in the Department of Justice; an exponentially ascending national debt which has been adjusted to fourteen digits and domestic warrant-less wiretapping among other problems.

Some of the aforementioned issues have been allocated ample resources. The monthly operating expense for running the war in Iraq is approximately $12.5 billion; the war in Afghanistan requires $16 billion monthly (Stiglitz and Bilmes, 2008). Federal money to rebuild areas affected by the storm in the form of Community Development Block Grants (CDBG), however, totals approximately $16 billion. More so, the rebuilding funds are allocated through supplemental war spending requests. Thus, rebuilding the Gulf Coast has been inextricably linked to war spending for the past three years (Crowley, 2006).

Another example of a national issue receiving adequate resources and prompt action concerns the national housing crisis. President George Bush recently signed into law a bill that would allow the Treasury Department to rescue Fannie Mae and Freddie Mac – two Government Sponsored Enterprises that either own or guarantee half of the nations $12 billion in mortgages – by potentially injecting billions of taxpayer money into the companies. One of the salient accomplishments of this legislation is the establishment of an affordable housing trust fund. The nonpartisan Congressional Budget Office (CBO) estimates that rescue package will cost taxpayers $25 billion over the next two years. Additionally, the bill allows the Federal Housing Administration (FHA) to insure up to $300 billion in troubled mortgages. The legislation should prevent 400,000 homeowners from experiencing foreclosure. The CBO estimates that only $68 billion should be utilized though (Herszenhorn, 2008). While this legislation could alleviate the Gulf Coast affordable housing crisis, no funds will be allocated to the Housing Trust Fund until FY 2010. Thus, while this legislation is integral to the functioning of the economy, it represents nearly $100 billion of taxpayer money which could have been utilized to expedite recovery of affordable housing in the Gulf Coast.

Hurricane Katrina did not discern based on income – affluent and poor alike lost their homes and in many instances places of employment. The storm, however, created additional problems for low-income people who are less likely to own a home; hold insurance or possess significant assets which could assuage the financial burden of recovery. Overall, approximately 302,405 housing units were either seriously damaged or destroyed by Katrina. Census data exhibits that 412,844 housing units comprised the jurisdictions of Louisiana, Mississippi and Alabama that were affected by the hurricane (Crowley, 2006). Therefore, nearly 3 of 4 housing units in the affected areas were damaged or destroyed.

A tragedy within the disaster concerns housing for low-income cohorts. Much of the housing that was compromised or lost was affordable to low-income people; of the 700,000 people that lost their homes due to Katrina, approximately 300,000 are classified as low-income by federal poverty standards. Approximately seventy percent of the 300,000 housing units damaged or destroyed were affordable to families of low income (Crowley, 2006).

The devastation wrought by Katrina begins to reflect a Matryoshka doll when one considers the racial dimension. Data from the 2000 census exhibits that approximately half of the population that lived in acutely impacted neighborhoods- characterized by significant structural problems or flooding – were black (Crowley, 2006). Nearly three of four acutely impacted people in New Orleans were black. Despite loss being experienced throughout the income distribution, the class and racial dimensions of Katrina are conspicuous.

The recovery and reconstruction efforts throughout the damaged areas have largely marginalized the needs of low-income people. State action plans for recovery are more focused on homeowners and restoring infrastructure. Restoring rental units has been a lower priority; almost one of two housing units damaged or destroyed by Katrina were rental units (Crowley, 2006). Importantly, one of the prominent conduits through which low-income housing could be restored – CDBG appropriations – has been modified to increase its scope of utilization. Prior to Katrina, seventy percent of CDBG monies were to be utilized for projects involving moderate to low-income people. The Department of Housing and Urban Development (HUD), which oversees CDBG funds, modified that amount to at least fifty percent. The former Secretary of HUD, Alphonso Jackson, endowed states with the ability to waive the fifty percent requirement if they could demonstrate a need (Crowley, 2006).

The housing plight of low-income people in Katrina affected areas will be the focus of this paper. Allowing people for three years to languish in formaldehyde-tainted FEMA trailers, in homes with makeshift roofs of blue tarp, doubling or tripling up with other families, residing in shelters, living in tents and inhabiting areas under overpasses is unacceptable given the copious financial and intellectual resources of this country.

Initially, this paper will discuss the plight of Internally Displaced People (IDP). The second section will cover which federal legislation has been passed by the 109th and 110th sessions of Congress. More so, this section will serve to highlight the many bills that could alleviate the crisis, yet either expired in the 109th Congress or are still languishing in committees awaiting mark up in the 110th Congress. It is likely that many of the bills currently in committee will expire in this session. Thus, many exemplary bills that would confer right-of-return status as well as one-to-one replacement of damaged or destroyed units will need to be reintroduced in the next session of Congress. The third section will cover opportunity costs – or trade-offs – of war spending on Iraq and Afghanistan. A dollar spent on operations in the aforementioned countries is a dollar not allocated to housing for low-income people in the Gulf Coast. This section is not designed to denigrate the public servants that were deceived by the Bush Administration and a Congress that admittedly did not fully read or comprehend legislation pertaining to the war. The people that comprise our armed forces should be commended for bravely serving our country. Rather, prudent policy analysis considers costs and benefits of public expenditure. One could consider the recent housing legislation. While there are obvious financial costs, the monetary benefits of allowing people to stay in their home are obvious. Five years after the commencement of operations in Iraq and Afghanistan, monetized benefits to the public of invading sovereign countries are not palpable. Lastly, this paper offers a policy solution that corrects the market failure of inadequate private production of affordable housing in Katrina-affected areas.