Letter from Washington: Flood reform a rare opportunity for bipartisanship

by Eli Lehrer on January 31, 2012

On issues ranging from heath care to financial regulation, Democrats and Republicans in Congress have almost nothing in common. And since most Americans say they want their political leaders to work together regardless of political party, their failure to cooperate on even the most trivial issues has sent Congress’ approval rating to all-time lows.

In this context, it’s mystifying that one of the few major pieces of legislation with genuine bipartisan support remains stuck in the Senate’s legislative limbo.

The bill in question, which proposes a set of reforms to the National Flood Insurance Program, would save money, help protect the environment and bring economic benefits to Mississippi. It’s something that should move forward sooner rather than later, and I’m frustrated that it hasn’t.

As most OOTS readers already know, since 1968, the federally backed NFIP has provided nearly all flood insurance in the United States. Although it has a de facto monopoly, NFIP hasn’t been an enormous business success. Its creators promised it would break even in the long run, but the program currently owes the United States Treasury more than $18 billion and has no practical way to pay it back. Likewise, although intended to discourage building in flood-prone areas, NFIP has actually encouraged it. Finally, because it’s difficult to finalize real estate transactions without flood insurance, periodic lapses as a result of Congress’ failure to act have wreaked havoc in real estate markets around the country.

For all of these problems, however, years of work in Congress have resulted in a common-ground set of solutions that passed the House of Representatives and an important Senate committee by enormous margins.

The bill would save money by limiting subsidies for people who own build, or rebuild in the most flood-prone parts of the country. A large part of the flood program’s costs stem from subsidies provided to areas such as South Florida that experience hurricane strikes and flooding as many years as not. Raising premiums for those currently getting subsidies would put the program on more solid ground while imposing little or no consequences for most people in areas like Mississippi with real but less frequent hurricane risks.

Proposed restrictions on providing flood insurance for new construction, as well as improved efforts to map the areas likely to flood, also will help the environment. The current flood insurance program tacitly provides subsidies to builders who destroy wetlands, ravage wildlife habitat and damage sensitive coasts. The proposed reforms don’t limit owners’ ability to use their own property as they see fit; they just end this taxpayer subsidy for irresponsible development.

Finally, and most importantly for the economy of the Gulf Coast, the passage of comprehensive reforms to the flood insurance program would end the continuing series of flood insurance lapses that make it difficult to close real estate transactions. This series of non-renewals, which has continued for half a decade, does enormous harm to a real estate market still struggling to recover.

The proposed national flood insurance reform bill offers something for almost everyone: It saves money for taxpayers, protects the environment, and would help local economies in the affected areas. If Congress wants to prove it can accomplish something good for the American people, the Senate should bring the bill up for a vote as soon as it possibly can. The nation as a whole – and the Gulf Coast in particular— can’t afford any more dilly-dallying. The Senate leadership of both parties needs to act sooner rather than later.


Over at The Huffington Post, I imagine a scenario where a President Mitt Romney (elected in 2008) implemented a plan that was a carbon copy of the one he created in Massachusetts. Basically, the same plan as Obamacare. (I stretch a bunch of things for the sake of humor and making my point although I do think that a President Mitt Romney, elected in 2008, would have, indeed, implemented a similar plan.)

As a conservative who disagrees with the great majority of President Obama’s major domestic policies—I like his foreign policy except with regard to Israel—I’m trying to make a serious point. The fact that the Patient Protection and Affordable Care is generally a bad bill for the country doesn’t mean that some aspects of it aren’t altogether good (increased use of electronic medical records, more people buying health coverage for themselves) or that others aren’t politically impossible to reverse (people in their early 20s remaining their parents’ health insurance). A “replace” plan has to consist of more than saying: “It bad! It kill jobs! We hate!”

We need some actual meat on the bones and a workable alternative. To date, we don’t really have one that answers some of the questions Obamacare seeks to answer, however imperfectly. When Heartland tried to organize a conference on the topic, virtually nobody came. And that’s a huge problem that stems from being in the opposition, despite having control of one house of the legislature. I doubt Democrats would have done any better. But if Republicans want to do something, it’s well worth thinking about.


I think my testimony in North Carolina this past week went pretty well. My prediction, for whatever it’s worth, is that reform is going to happen to the Tarheel State’s auto insurance market but it will take all of the stars aligning for something to pass in 2012. Most likely, 2012 will be a time to work out the kinks and come up with a proposal that can pass the Legislature and be signed into law during 2013.

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