Fix the Debt or Save the Coasts?

One of the casualties of Hurricane Sandy is the premise that America’s biggest economic problem is deficit reduction. That’s because the United States just became a much larger version of the Netherlands.

Once we get through the election, official Washington may be willing to talk about this. President Obama’s leadership in helping flooded communities cope with the damage nicely positions him to lead an effort to prevent future super-storm damage.

As events like Sandy become more common, and the ocean levels rise even in the absence of hurricanes, the communities of the Eastern and Gulf seaboard will increasingly be at risk of regularly being underwater—unless we build a massive system of seawalls, dikes, levees, storm-surge barriers, and pumping facilities, as the Dutch have done for centuries.

The immediate damage from Sandy will cost upwards of $50 billion. But looking forward, America’s seaboard cities will need to spend serious money not just on seawalls, but on public improvements to prevent flooding of subways and electric power stations and the swamping of water and sewer systems. Low-lying communities will need to be elevated, and some will simply need to be rebuilt on higher ground.

It happens that Norfolk, one of the U.S. Navy’s premier bases, is among the most vulnerable of all East Coast cities, and the Navy is far ahead of other government agencies in its planning for the reality of rising seas and storm surges.

The new normal is here, the legacy of our denial of the reality of climate change. The federal government needs to do a comprehensive assessment of the public investment necessary to protect our coasts, which will run into the trillions of dollars.

One consequences of that reality is that it blows away past assumptions about deficit reduction. The government needs to begin a multi-year public investment program. 

With interest rates at historic lows, the government could issue a special series of flood-prevention bonds. 

The scenes of devastation that we’ve seen in recent days are like what happens to cities in wartime. If there were a war, government would have no hesitation about borrowing as much money as is necessary to prevail. 

The damage of 9/11 was small compared to the damage of Sandy—and 9/11 prompted increases in military spending north of two trillion dollars. The cynical corporate CEOs who are spending tens of millions to demand that we “fix the debt” should get serious and back a campaign to Fix the Coasts. Several of these Wall Street moguls can’t even use their Lower Manhattan offices this week because of the lingering storm damage.

And of course, that would only address defense against the consequences of climate change.  We also need to remedy the causes. We should be investing comparable sums in conversion to carbon-free energy to head off even worse climate change. Not to mention the modernizing and greening of the rest of our infrastructure.

All of this public outlay will have the handy side effect of stimulating a real economic recover, instead of the half-recovery that will limp along for years absent drastic policy changes.

Whether we seize this moment depends on whether the public demands it, and whether a re-elected Barack Obama has the courage to lead it. But if he was the wit to appreciate the new normal, President Obama should grasp that the metaphor of a fiscal cliff has just been overtaken by the reality of a physical flood, with more to come.

It’s an ill wind that blows no good, as the old proverb has it. If Hurricane Sandy blows away the propaganda of financier Pete Peterson and the rest of the deficit hysteria posse, that will be a major public benefit.

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