NEW YORK (CNN/Money) -
The cost of caring for victims of Hurricane Katrina and rebuilding the areas it wiped out could cost the federal government up to $200 billion, much higher than previous estimates, a newspaper report said Wednesday.
The Wall Street Journal, citing early congressional estimates, said costs of $150 billion to $200 billion would top the initial tab for recovering from the Sept. 11 attacks and might make Katrina the costliest natural disaster in U.S. history.
While the early forecasts are likely to change, some lawmakers are already discussing creating a new government body to manage the costs, not unlike an effort by Herbert Hoover, then Commerce secretary, after flooding in the same area in the 1920s, the report said.
The process of paying for relief and repair is probably going to be a "three- to four-year exercise," Sen. Judd Gregg, the New Hampshire Republican who heads the Budget Committee, was quoted as saying.
The Federal Emergency Management Agency is burning through $1 billion to $2 billion a day, the report said, quoting estimates by officials, adding that the $10.5 billion set aside last week in an emergency measure for relief efforts would be gone in a few days.
The officials expect to ask for another $40 billion shortly, the newspaper said, noting that by itself would bring the cost of cleaning up after Katrina to more than triple the federal cost of the four big hurricanes that hit Florida last year.
Yet that is expected to be just an initial payment on a tab that is likely to keep rising, since the storm's swath was so wide and so many people need help with food, housing and health care costs from federal programs that didn't exist when the infamous 1920s floods hit the region, it said.
Approval for the spending is all but certain, the newspaper said, noting that Louisiana is a key swing state courted by Republicans and Democrats alike. Neither party will want to appear to be short-changing the effort, it added.
For more on the economic impact of Katrina, click here.
Will the storm's effects include slowing the Fed's rate hikes? Click here for more.