Katrina Relief and Federal Spending and Deficits,

The Center on Budget and Policy Priorities analyzes the relationshiop between Katrina relief and other Federal spending.

• Even with the hefty Katrina relief and recovery costs, total projected federal spending will not be high by historical standards. If relief and recovery from Katrina costs $150 billion over the next five years, total federal spending over this period is projected to equal, on average, 20 percent of GDP. … [T]his level of spending will be lower, as a share of the economy, than federal spending in every year from 1975 through 1996. …
  
• Total projected federal revenues are low by historical standards. Total revenues in 2006 through 2010 are projected to average 17.2 percent of GDP. (This assumes that expiring tax cuts and relief from the Alternative Minimum Tax are continued.) This is lower than in any year from 1977 through 2002. …
  
• The tax cuts enacted in 2001 and 2003 cost more each year than the total amount likely to be spent on Katrina. …
  
• The costs of Iraq also are likely to exceed the costs of Katrina. According to the Congressional Research Service, a total of $192 billion has been appropriated for the war in Iraq. …
  
• Spending for Katrina will add relatively little to the large deficits already projected for the next 10 years. …