Letter From DC: Flood Insurance, Earthquake Insurance, And Unique Places (That Don’t Exist)

by Eli Lehrer on July 12, 2011

photo by Accidental-Tourist/Flickr, used under a Creative Commons license

A bill to reform the National Flood Insurance Program (H.R. 1309) is coming before the House of Representatives today. On balance, it’s a good bill: it reauthorizes the flood program and moves it towards actuarial adequacy. It would set the stage for privatization. A bunch of amendments will also come forward. Some thoughts on them:

Best Amendment: Jeff Flake (R-AZ) proposes an amendment (#3) that would strike the very worst part of the bill before the Senate: the expansion of the National Flood Insurance Program to include business interruption and living expenses coverage. The new coverage’s should never have passed out of committee and should die on the House Floor. The amendment is vitally important.

Worst Amendment:  Several Florida Republicans offer an amendment (#11) to gut the bill and make it impossible to move towards risk based rates. This is a terrible idea and needs to be defeated. Other bad proposals include amendments that would  Suspend mandatory purchase and force FEMA to lie to people about risks in high risk areas.

A Rare Time Heartland Will Support Spending (And Why): Rep. Maxine Waters (D-CA) is about as far left as they come. That said, just as a wrong clock is right twice and day and even a spending bill can actually cut government once in awhile. Rep. Waters’ amendment 4, which reauthorizes and streamlines several mitigation programs, is actually a good policy. If NFIP pays to rebuild the same house a three times and runs up $1 million in debt to do so—something that happens all the time—the entire $1 million (which taxpayers have to repay) remains off budget and doesn’t score as spending. If, on the other hand, hydrologists say that a house that has been destroyed once is almost sure to be destroyed again and FEMA offers the owners a buyout, then everything spent counts as “spending” even though it’s a near certainty that not spending the money will result in more spending down the line. This makes no sense. FEMA’s buyout programs are far from perfect and, in the current fiscal situation, I’m not crazy about Rep. Waters’ idea that they should have a higher authorization. But, all in all, she’s right that the amendments make sense.

I wish I could support it…but: Rep. Candice Miller has an amendment that would abolish NFIP altogether and replace it with interstate compacts. If I were a member of Congress, I’d be sorely tempted to support it myself. NFIP needs to go. But eliminating it right away isn’t a good option: it would carry a sizable budget score–there would be no NFIP revenue and the program would still have obligations including almost $18 billion in debt—and, without truly accurate maps, it would be difficult to find private sector coverage anywhere. Furthermore, Rep. Miller’s proposal that states create interstate compacts to write flood insurance isn’t workable and would probably discourage private players (who are going to be reluctant anyway) from entering the market.  Finally, passage of the amendment would make conference impossible since such an amendment almost certainly couldn’t ever pass the Senate.


On Thursday, Heartland and the Heritage Foundation are going to be sponsoring a briefing at 10:00 a.m.  at the Heritage Foundation House Annex. We have a great lineup and will be presenting some new data that shows just what a bad idea national earthquake insurance is. We need attendees. Come one, come all!


I think society as a whole is much better off for Internet sellers, free trade, national chain retailers, and the like. (Wal-Mart alone increases the typical family’s yearly spending power by over $1,000.) They’re efficient and far better (on average) than the local chains they replaced.

But I can’t help but as to be distressed by the fact that every place is a lot like every other place. I figured that Vermont, where I was two weeks ago for a wedding, would remain different. It was when I spent a summer at Middlebury College almost 15 years ago and, to some extent, still feels a little different.

But even here things are changing. The likely most famous product from Vermont (Ben and Jerry’s ice cream) and its leading tourist attraction (the B&J factory) are both wholly owned by the giant conglomerate Unilever.  Green Mountain Coffee, probably the second best known product from the state, likewise, is now sold at national chains like Boston Market. And, in the quirky, fun college town of Burlington, the most recommended restaurant on Tripadvisor is American Flatbread which is excellent…but also, until it closed just a few weeks back, had a location about 15 minutes from my home.

Until next week,

Eli Lehrer, vice president for Washington operations

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  • Clay

    Hey Eli – Clay here from American Flatbread…Just to clarify for you and your readers, the Burlington American Flatbread is open. We did close for a week for renovations but are back in the swing of things and just celebrated the 7 year anniversary! u00a0Come on in when you get a chance.

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