Friday, November 2, 2012

The double-edged storm:
Sandy, crisis, opportunity and the national economy

THE VISUAL images of Staten Island, New Jersey and Manhattan in the wake of Hurricane Sandy convey a horror of an almost Biblical scale: vast scenes of suffering, trees uprooted, cars upended; homes and neighborhoods thrown into helter-skelter chaos by the deadly confluence of three weather systems; municipalities, lives and futures laid waste by an unprecedented display of nature’s fury.

Even as the toll in lives mounts — at this writing, some 102 people have been killed as a result of the storm, a number that’s likely to climb further — the tragedy has been seen as a local or regional phenomenon. But the impact of the storm can be expected to have a ripple effect throughout the nation, affecting the upper-case national Economy — the one the 2012 presidential election is supposed to hinge on. And just as reliably, Sandy’s blowing through the waning days of a presidential campaign that’s already one for the record books.

Mitt Romney, the Republican nominee, has been on the outside of this crisis looking in. With no capacity to act on behalf of the citizens he presumes to lead, he’s been flummoxed for the right campaign message in the wake of something no one on Team Romney planned for. Advantage to President Obama? Maybe. Maybe not.

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In the short term the president has won high marks for cultivating a relationship with New Jersey’s combative Republican governor, Chris Christie, who, despite past savaging of the president as a leader, has lately discovered just how good a leader this president can be.

Their BFF status is showing, for now anyway, just what’s possible, and doing it in a sadly astonishing way. The Obama-Christie odd couple has been widely regarded as a watershed moment in American politics: political figures truly crossing the aisle and working together on behalf of their citizens.

As the wider national scope of Sandy’s impact comes known, and on the heels of Friday’s generally upbeat jobs report, President Obama is poised to be both the beneficiary of the storm in a political sense, and its victim in a macro-economic sense.

Experts are gauging the storm’s financial impact on the region. “November is going to take a haircut obviously, because we're going to lose really the first fiscal week of the retail calendar for a large portion of the country,” said Paul Walsh, vice president of weather analytics for the Weather Channel, on CNBC on Oct. 29.

“About 25 percent of the population will be impacted by the storm because of what's happening now. The next two days we'll lose traffic, and we'll also likely lose power for the balance of the week, so that will have a negative impact on retail,” he said.

Walsh mentioned a research note from an analyst for Citigroup, estimating that shopping could be down by 40 percent for the week in affected areas, and that November same-store sales could be down by between 2 and 3 percent.

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SUCH A downbeat assessment couldn’t come at a worst time of the year: just before the holiday season, where retailers count on a significant percentage of their yearly business. The holiday season accounted for almost 20 percent of total retail sales last year, according to the National Retail Foundation.

And more than 19,000 airline flights were cancelled as a result of Sandy, and major carriers like American, Delta, JetBlue and US Airways will be scrambling to make up for lost time, and lost earnings.

New York City Comptroller John Liu told Reuters that, all told, Sandy costs the city up to $200 million a day in permanently lost economic activity.

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The president has taken a smart course of action: thinking nationally while acting locally, with pledges to fast-track relief assistance, and place high-priority on requests from Jersey officials. The sometimes moving optics of the refreshingly cordial relationship between Obama and Gov. Christie have been powerfully symbolic, showing how relations between Democrats and Republicans can be anodyne instead of antagonistic. Their performance has yielded dividends for the president; the latest Washington Post-ABC News tracking poll found that 78 percent of likely voters approved of Obama’s reaction to the Sandy crisis.

For whatever undecided voters still remain, as well as those subject to persuasion by Team Romney, a lot’s riding on what happens next in disaster relief. FEMA, the federal agency in charge of emergency management and coordination with the states, is much improved since the disaster of Hurricane Katrina and the drowning of New Orleans.

Obama’s demand early this week that there be “no red tape” in the agency’s addressing the needs of those affected by Superstorm Sandy suggests that, in the short term at least, money is no object in the pursuit of getting New York and New Jersey back on their feet.

Realizing the national implications for the disaster on the eastern seaboard, the nation’s most densely populous region, the president’s clearly prepared to take the long view — and with good reason. New York City generates more than $2 billion in revenue every day; Liu told Reuters. Every dollar spent in a New Jersey restaurant generates another $1.06 in sales for the Garden State’s economy. Economic returns like that make reviving both states a justifiable top priority.

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BUT THE president’s whatever-it-takes approach to Sandy recovery will almost certainly run up against the partisan parsimony of the Republican-led House, which may not resist the politically motivated temptation to gin up cynical quid pro quos for disaster relief.

That’s not just a hypothetical. The Huffington Post reported Thursday that, speaking about the Sandy disaster relief effort at a Tuesday debate in Mason City, Iowa, Republican congressman Steve King said, “I want to get them the resources that are necessary to lift them out of this water and this sand and the ashes and the death that’s over there in the east coast and especially the northeast … But they need to come with a plan on how to spend it.

“That’s why I said ‘no’ on that second round of appropriations for Katrina,” Rep. King said, referencing his 2005 vote against a bill allocating almost $52 billion for Hurricane Katrina relief and future Gulf disaster preparation. “… [N]ot one big shot to just open up the checkbook, because they spent it on Gucci bags and massage parlors and everything you can think of — in addition to what was necessary.”

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But never mind the GOP’s reflexive machinations. The stakes for the president’s re-election couldn’t be higher, economically speaking. The Newark Star-Ledger reported that analysts estimate property damage on the eastern seaboard could reach $20 billion, but that business losses could go to $30 billion.

The six states affected the most by Sandy contribute about 20 percent of the United States’ $15 trillion gross domestic product, the Star-Ledger reported. That comes to about $57 billion a week the region contributes to the national GDP.

And despite the president’s early attempts at bending the bureaucracies of federal disaster relief to his will, people in the storm zone will grow impatient, hungry for results. It’s happening already on Staten Island, the New York City borough whose neighborhoods and infrastructure fared worse in the storm than any other location in the city. News reports in recent days found Sandy survivors on Staten Island angrily demanding faster action.

Staten Islander Nicole Malliotakis told CBS News: “We are far from fine, and the fact that the mayor wants to have a marathon this weekend when we have people who lost either their lives or lost their entire house. I mean, it's unbelievable to me.”

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AND THIS just in from the Unintended Consequences Department: With all the attention paid this campaign to voter suppression by conservative legislatures, it’s sobering to think that, if there’s anything to an NBC News report released on Friday, Superstorm Sandy may do more to suppress the vote by accident than any human endeavor on purpose.

NBC News reported that President Obama could lose up to 340,000 votes as a direct result of the storm. ““Sandy has the potential to reduce Obama's national popular vote share by depressing turnout in highly Democratic areas along the Eastern Seaboard,” Dr. Michael McDonald of George Mason University told NBC News. McDonald maintains the United States Election Project Web site, which monitors early voting trends.

“The storm is unlikely to change the Electoral College outcome, as Obama is heavily favored to win the affected states,” McDonald said. “A turnout drop could be the difference in a close national election, and thus could shape the political discourse over important policy issues in a possible Obama second term.”

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There’s no escaping it: For an administration accustomed to the heavy lift, the Sandy recovery may be the heaviest yet.

There’s chin-pulling going on right now; choices are being made by undecided voters and others (the ones who decided not to tell anyone they were undecided). In these literally final hours of the 2012 campaign, many of them are coming to a decision about Barack Obama’s fitness to lead the nation as president for a second term.

In this era of the short attention span, they’re likely to use his handling of the Sandy crisis as a litmus test — perhaps, in their minds, the last of four years of litmus tests — for making that decision.

“In crisis, opportunity,” the saying goes. What may hang in the balance is President Obama’s understanding of how the two are intertwined, and his skills at disentangling them.

Image credits: Obama as comforter: via MSNBC. Obama and Christie: MSNBC. Cars in the Financial District, NYC: AP/Richard Drew. Rollercoaster destroyed: Associated Press. Tanker aground: AP/Sean Sweeney. King: U.S. House photograph (public domain). Obama campaign stop: via MSNBC.

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