Author Archive

Memory of September 11, 2001 from the White House grounds

Sunday, September 11th, 2011

On the morning of September 11, 2001, I was at work as a Program Associate Director at the Office of Management and Budget (OMB—the President’s budget office. Specifically, I was in the Old Executive Office Building, which is within the White House complex. My colleagues and I were in the daily morning meeting with the Director, Mitch Daniels (now Governor of Indiana).

It was an uneventful meeting until one of our colleagues came in late and said that a plane just crashed into one of the towers of the World Trade Center. I suspect that many in the room had the same thought that I had: “How terrible, a Piper Cub or Cessna propeller plane gone tragically off course.” After a modest delay, the meeting resumed for another half hour or so. After it adjourned, we all left the Director’s office and stood in front of the TV in the outer-office, and realized for the first time watching CNN that it was a jetliner, not a small plane. We were all aghast, and watched in horror for a while. We all thought it was a terrible, terrible accident.

I then left and went downstairs to the cafeteria to get a cup of coffee. By the time I got back to the second floor, my assistant was in the hallway waiting for me and told me that another plane hit and that the news reports are saying that it is a terrorist attack. I was stunned! Everyone was. We all had TVs tuned to CNN in our offices, and we were glued to them.

After a few conversations about how this was our generation’s Pearl Harbor and that war was sure to follow, security personnel were moving frantically through the building telling everyone to evacuate. We didn’t know why then, but quickly realized that this was either protocol for such emergencies or that we were directly under threat of a similar attack. There was much confusion and fear, and we all left the building. Other buildings around us had evacuated as well, and there were thousands of people milling about the streets trying to find out what was going on.

We soon learned from random sources in the street that a plane had hit the Pentagon, and that another was on its way to Washington. Speculation was that either the White House or the Capitol was the target. I thought, “Four planes were hijacked and used as missiles? What’s going on?” I was with my mentor, Sean O’Keefe, then the Deputy Director of OMB, and other OMB colleagues. We were desperate for news and to connect with the Director for coordination and direction, but cell phones were mostly inoperable. We found ourselves standing by a street vendor’s cart crowded together trying to listen to a transistor radio for news.

At that moment, I heard Sean O’Keefe mutter something like, “This smells like Al Qaeda.” This was the first time I had heard this name/term, and after asking him what it was, he told me that it was a terrorist group that the government had been tracking. The thought that a terrorist group could execute such a coordinated attack on the United States successfully was an extremely humbling and disorienting thought. I had been at OMB for about 4 months, and I was still adjusting to the awe of working in the White House complex. Now I was there during one of the most vicious acts of war against the nation I loved and served.

The streets were gridlocked with cars, and people filled the sidewalks. One surreal moment I remember was when I heard the distant sound of an airplane getting closer and louder. Everyone else…I mean every one of the thousands of people in the vicinity also heard it and we all looked up in horror, given what had been happening that morning. After one of our fighter jets zoomed by, we all simultaneously sighed in relief, and some of us began laughing nervously because we all had the exact same fear and relief in the exact same moment. It was like the surreal scene from the Alfred Hitchcock movie, The Birds, where everyone in the street was terrified of what was coming down from the sky above.

Our little group from OMB finally made our way 10-15 blocks away to a law office at which one of our colleagues used to work. The lawyers and staff there were great. They basically let us take over their main conference room, where we all gathered to watch the news and take turns calling home and other loved ones to let them know we were okay. We stayed there most of the day, and after gridlock had died down, I was able to get my car and drive home to my apartment on Capitol Hill. After a few drinks at my local watering hole, I went to my apartment, went to bed, and began to cry myself to sleep. The world had changed and I didn’t know what was next.

The next morning at the daily meeting in the Director’s office, the first order of business was to determine how long we would allow people to stay home before we would begin to compel staff to return to work. I don’t know the percentage, but a fair share of people did not come to work that day, and it was completely understandable. Schools were closed, people needed to be with their children, and people were just downright afraid of what might happen. It was that day that I learned that some of my staff, who worked on the 9th floor of the New Executive Office Building, across Pennsylvania Ave from the White House complex, had actually seen the plane hit the Pentagon. They described the horrifying experience.

About 3-4 weeks after the attack, I travelled to New York City with a small delegation of Administration officials to visit with business leaders to discuss ways to get business activity in the city back up and running. After the meeting, we were given a tour of Ground Zero. It was extraordinary to see a big hole in such a densely populated city, steel and ruble still smoldering, with a smell that was like none other I had experienced. We all wore masks, but while it protected us from the toxic soot still lingering in the air, the smell permeated everything. You could see giant bent and broken steel beams everywhere, including lodged in neighboring buildings.

Many people lost family and friends that fateful day. I knew one person who died in the Pentagon attack, a recent graduate from the graduate school I attended at Syracuse University—Brady K. Howell (http://projects.washingtonpost.com/911victims/brady-k-howell/). He was 26 years old. May his and others’ souls who perished that day rest in peace. May God continue to bless and heal the hearts of the many families who lost loved ones that day. May we all never forget.

Author: Dr. Lloyd Blanchard, Director of Public Performance Management, IEM

Flooding continues 5 days after Irene

Friday, September 2nd, 2011

Author: Dr. Lloyd Blanchard, Director of Public Performance Management, IEM

We are now five days past Hurricane Irene sweeping up the east coast, and a number of communities remain flooded. This extended flooding will certainly add to the economic damages projected earlier. Based on data from the National Weather Service, we show those communities that remain flooded below as of 11am today (September 2, 2011). The water level above flood stage represents the depth of the flooding.


Hurricane Irene: Economic Loss Estimates

Sunday, August 28th, 2011

On Saturday, August 27, 2011, Hurricane Irene struck the eastern seaboard of the United States, starting as a Category 3 hurricane (with winds up to 130 miles per hour), but remained a Category 1 hurricane (with winds up to 95 mph) for much of its northward path, and Sunday morning was downgraded to a tropical storm.

IEM estimates a total economic impact of between $2.2 billion and $2.6 billion, distributed according to table below. These estimates account for expected damage associated with storm winds, storm surge and flooding, and represent the expected replacement and repair costs of damaged property and normal business interruption losses (e.g., they do not include potential losses associated with closing stock markets). Though this storm will touch over 28 million people, we estimate a relatively small amount of sheltering requirements. The strength of the winds will not likely cause as much damage as the resulting flooding, and this will depend on many factors (e.g. coastal development, soil saturation, flood control capacity, length and depth of rivers and tributaries).

Economic Loss Estimates

Hurricane Irene Economic Loss Estimates

* Major cities are separate from counties, except New York City which has a number of counties.

Below are maps showing the top wind speeds in the counties affected by Irene. As we compile the data, we will show flooding in a similar manner. Stay tuned!

Hurricane-Irene_map-of-peak-gusts_MD-DEClick map to enlarge. Divisions in map represent designated census tract areas on August 26, 2011


Hurricane-Irene_map-of-peak-gusts_NJClick map to enlarge. Divisions in map represent designated census tract areas on August 26, 2011

 

Hurricane-Irene_map-of-peak-gusts_NY-CTClick map to enlarge. Divisions in map represent designated census tract areas on August 26, 2011

For additional information, please contact Dr. Lloyd Blanchard at 703-414-8141, or at lloyd.blanchard@iem.com.

Making sense of the debt ceiling debate

Thursday, July 28th, 2011

Author: Dr. Lloyd Blanchard, Director of Public Performance Management, IEM

The debt ceiling debate has gripped the nation so much that we have focused on the political game of brinksmanship and lost focus on the two basic questions underlying the debate. First, what will happen if the debt ceiling is not raised? Second, is the nation’s level of debt too high? Let’s look at the data.

The answer to the first question is…we don’t know. We have never been here before. Oh, we have approached the debt ceiling many times, but raising it was never in question…until now.

Will we default? Not likely, because the Constitution demands that we don’t. If all proposed deals to reduce spending as a condition to raise the debt ceiling fail, Congress will likely pass a one-sentence bill to raise it. For how long and by how much is unknown. The markets seem to maintain confidence that the debt ceiling will be raised.

If Congress doesn’t raise it, will we default? Yes, and the market consequences would be dire. The 3 rating agencies would likely downgrade the nation’s sovereign credit rating. Such a downgrade would raise interest rates on US Treasury securities, creating major losses in the market.

If they don’t raise it, can the US pay its bills? No. According to the Bipartisan Policy Center, the Treasury is expected to run out of cash around August 2nd.  For the rest of August, the government is expected to collect $172.4 billion in revenues and must pay $306.7 billion in obligations. This leaves a $132.4 billion gap (just for August) that would normally be covered through borrowing. In August, about $500 billion in Treasury securities will mature, and while usually these are simply “rolled over” (borrow by selling new securities to pay the principal and interest on the maturing securities), the present debt limit would prevent this. Other big obligations in August include $50 billion in Medicare/Medicaid payments, $49 billion in Social Security payments, $32 billion in payments to Department of Defense vendors, $20 billion in Department of Education payments, $17 billion in federal employee salaries and benefits (including active duty military), and $13 billion in unemployment insurance payments, among others.

The answer to the second question is…yes, the debt level is at an historically high level, comparable only to levels in response to the Great Depression. (more…)

The Mississippi River Flood: How bad could it get?

Friday, May 13th, 2011

Author: Dr. Lloyd Blanchard, Director of Public Performance Management, IEM

By now, many Americans are aware of the major flooding of the Mississippi River. The river’s water level is reaching record heights not seen since the 1920s and 30s. How bad is it? This blog post tries to answer this question for the lay reader. In short, it’s very bad.

The news to date has been dominated by the flooding in Memphis, TN, where the nation’s largest river crested at nearly 48 feet on Tuesday, May 10. What does this mean? The level at which the river begins to flow over its bank, but not flood any buildings, is 28 feet. This is called the “action” stage by flood experts. The “flood” stage is the level above which life and property are threatened. At Memphis, the river’s flood stage is 34 feet. We are well beyond this. Damages will be severe. (more…)

Economic Losses From New Zealand’s Recent Earthquake Could Reach $5–6 Billion US

Monday, September 27th, 2010

Author: Dr. Lloyd Blanchard, IEM Consultant

In the early morning of September 4, 2010, a 7.1 magnitude earthquake struck the South Island of New Zealand. Widespread damage resulted, primarily centered on Christchurch, the largest city on the South Island with a population of approximately 372,000. This earthquake is the worst in the country’s history.

IEM estimates total damage costs (insured losses and uninsured damages) of $5 to $6 billion US (NZ$6.8 billion to NZ$8.2 billion). (more…)

The Scale and Economic Impact of the Haiti Disaster

Tuesday, January 26th, 2010

Author: Dr. Lloyd Blanchard, Director of Public Performance Management, IEM

The scale of death and destruction in Haiti as a result of the earthquake on January 12 (and its aftershocks) is difficult to imagine, even with constant news coverage and video. Part of my job is to estimate economic damages that result from natural disasters, and my research on Haiti and past earthquakes suggests that this disaster is on an unprecedented scale. (See our loss estimates here: http://www.iem.com/NewsArticle.php?news_id=66)

The 2004 Indian Ocean tsunami killed over 200,000 people across 15 countries. This scale of human loss is expected in Haiti with a population of 8.8 million—about as many people in the Chicago area.  This is absolutely staggering!

Most death toll estimates from disasters are expressed in terms of the number of deaths per 10,000 in the population, or per 1,000 in population as in the case of big events like the 2004 tsunami. In Haiti’s case, it can be expressed relative to 100 people in the population. We estimate the Haitian death toll between 173,000 and 207,000, or around 2 deaths per every 100 persons.

There is a unique fact about human and economic losses from natural disasters. If a disaster occurs in an economically developed country, one can expect high economic losses, but few deaths. The opposite is generally true when a disaster hits less economically developed countries—fewer economic losses and many more deaths.

Here are a few examples:

  • Hurricane Katrina (2005) is the most costly natural disaster in the history of the United States, at a reported $125 billion, but only 1,800 people died as a result.
  • The 1994 Northridge earthquake in California cost around $30 billion, yet only 60 people are reported to have died.
  • Consider the 2004 Indian Ocean tsunami costs and death tolls for the 3 most affected countries:
    • Indonesia: $4.4 billion in costs, 166,000 deaths
    • Sri Lanka: $1.3 billion in costs, 35,000 deaths
    • India: $1 billion in costs, 16,000 deaths

This pattern is largely because developed countries have more expensive physical infrastructure –often in harm’s way—as well as more advanced protective measures. Haiti’s poorly constructed buildings are likely the primary reason for such a high rate of death.

Haiti’s economic losses could exceed the total value of its annual production, around $7 billion. Our initial estimates of $6 to 9 billion for property losses is a projection of the reconstructed property costs, which will far surpass the value of the destroyed property. The international community will likely help Haiti rebuild to modern building standards. IEM’s $2 to 3 billion estimate in business interruption losses is for the first year only. Economic recovery will be a multi-year process that will depend in part on how fast basic infrastructure is restored and lives are brought back to a sense of normalcy.