10/30/2012 01:38 pm ET

FEMA Could Face $900M Storm Of Funding Cuts After Hurricane Sandy Blows Over

As The Federal Emergency Management Agency works to provide Americans with proper Hurricane Sandy relief, the agency also prepares to fight its own battle from within.

FEMA stands to lose about $878 million if the government’s automatic spending cuts go into effect by January 2013, the Washington Post reports. With a $14.3 billion budget to coordinate responses to natural disasters like Hurricane Sandy, FEMA could lose $580 million of its budget from disaster relief alone, according to a report by The National Association of Counties.

Cuts to FEMA’s budget are part of the debt-limit deal outlined by the Budget Control Act of 2011. The deal requires the government to cut the deficit by $1.2 trillion or accept automatic spending cuts across the board in programs such as Medicare and national defense.

FEMA currently has at is disposal close to $7.8 billion for Hurricane Sandy relief, according to Politico. In addition, Congress’s decision to raise the debt ceiling last year allows FEMA to access several billion in additional emergency funds.

“We have plenty of cash in the short term… but we will watch very closely,” a Senate Democratic aide told Politico. “We will not want to end the 112th Congress without making sure the disaster relief fund is sound for fiscal year 2013.”

FEMA faces the difficult decision on how to deploy resources in a natural disaster that has affected some of the most populated areas in the United States. Providing blankets, cots, diapers, generators, meals and water, the agency has focused most of its resources to the southern part of New Jersey, according to the New York Times. The storm hit New Jersey Monday evening with 80 mph winds. At least 28 people in the northeastern United States have been killed, according to NBC News.

The organization is working with The American Red Cross to provide shelters for those affected by the storm and with the Department of Health and Human Services to support hospital evacuations, according to FEMA’s blog.

This is FEMA’s biggest test since 2005 when the agency was widely criticized as slow to respond to victims in desperate need of relief. How FEMA responds this time around could have direct implications for the upcoming election as the agency’s inadequate response to Katrina reflected poorly on former President George W. Bush, the Boston Globe reports.

Even if spending cuts to FEMA do not take place in the beginning of the year, the organization will still have to confront a strict cap put in place for funding. $917 billion in cuts will occur over 10 years regardless of what lawmakers decide in January, according to the Post.

Early estimates of the storm’s total economic loss come in at $30 to $50 billion, the Wall Street Journal reports.

Hurricane Sandy