- Mark Makela/Reuters
That effort will require action by the federal government and Congress. And it comes as Congress is facing down a series of fiscal deadlines that must be addressed by the end of September.
Before the end of next month, Congress must pass a bill to fund the government, increase the debt ceiling to avoid a financial catastrophe, and reauthorize both the federal government’s flood-insurance program and the Children’s Health Insurance Program.
Morgan Stanley’s US economics team said on Tuesday that the demands of the storm could move up the deadline to raise the debt ceiling, as the Federal Emergency Management Agency will most likely need an immediate influx of funding to handle the disaster.
There is only $3.3 billion in FEMA’s Disaster Relief Fund, and while the agency could pull from other sources of funding, any additional large-scale funding would need to be appropriated by Congress.
President Donald Trump told reporters Monday that the government would do whatever was needed to help fund the Harvey response, most likely meaning an appropriation from Congress will be necessary.
Increased outlays, however, would draw on the Treasury Department’s already low reserve of cash on hand.
“If additional funds are appropriated without raising the debt ceiling first, this risks bringing forward the timing of the debt ceiling deadline, but it is more likely that these issues would be dealt with together,” the Morgan Stanley team said.
Moving up that timeline may result in a solution to the debt ceiling earlier than anticipated.
Any additional disaster relief could be attached to a debt-ceiling increase, making the combined package nearly impossible to vote against, Greg Valliere, the chief strategist at Horizon Investments, wrote in a note to clients about Harvey’s effect on the so-called budget brawl.
“Sources of Capitol Hill report that a massive hurricane relief bill may be attached to the debt ceiling increase, which would make its passage certain – and relatively quick, by Washington standards,” Valliere said. “Or it may be attached to an overall budget package, avoiding a shutdown threat. We’d guess the former scenario is most likely; a shutdown threat can be deferred until December, when the budget will be resolved, as usual.”
Such a package could also win over more conservative members of the Republican Party who are likely to vote against increasing the debt ceiling.
According to Politico, adding the relief package to either the debt-ceiling legislation or a continuing resolution is on the table.
However, attaching it to a six-month continuing resolution to keep the government open would introduce another degree of uncertainty about its passage, as Trump has threatened to veto any such legislation that doesn’t include funding for a wall along the US-Mexico border.
If Trump were to drop that request, it would most likely have broad support, though the details of the package could be a snag.
A final option could be to roll the entirety of the issues together, something a handful of GOP members have been advocating.