Letter from Washington: Flooding the Hill

by Eli Lehrer on May 1, 2012 · View Comments

This week, The Heartland Institute and a number of other organizations will engage in a “Flood the Hill” campaign to make a final push to convince the Senate to pass a flood insurance reform bill. Although this wouldn’t be “the last step” —the bill would still need to go to conference and be signed by President Barack Obama —the House and Senate bills are close enough to one another and administration policy that both conference and signature will happen if the Senate passes a bill.

The stakes are pretty high: If the National Flood Insurance Program doesn’t get renewed by the end of May, it’s quite possible it won’t get renewed this year at all. And then the House and Senate will have to start all over. And Congress will have wasted a golden opportunity to get things right at long last. The big problem: FEMA, as OOTS editor R.J. Lehmann has reported, has “gone rogue” and called for a “clean” two-year extension that will not make any real reforms.

This would be a huge mistake. The bills currently before the House and Senate are both fiscally and environmentally responsible. On the fiscal side, both bills raise rates on properties that have been subsidized for decades, while simultaneously improving maps to make sure that rates are determined correctly in the first place. Likewise, the possibility of private risk transfer for a portion of the flood insurance program’s liability will begin to open up the possibility of private flood insurance. Environmentally, the higher rates will discourage construction in places where it should not happen and new maps will make it easier to preserve nature.

All in all, the bill is a winner. To my knowledge, no interest group besides FEMA itself dislikes them. So why the delay?  On that front, I’ve heard three theories,  all of which may be true.

First, Senate Banking Committee Chairman Tim Johnson, D-S.D., generally one of the more free-market members of his caucus, simply isn’t being enthusiastic or energetic enough in moving the bill forward. A few pretty well-placed people have told me this and I give it some credence.

Second, the administration (despite stated policy to the contrary) doesn’t really want the bill because it is going to make some people angry. Some people (most of them well-connected and well-off) are going to pay much higher premiums after the bill passes. While better maps may reduce premiums or end mandatory purchase requirements for many, this isn’t going to win votes, while higher premiums could lose them.

Third, some agents groups (although not the National Association of Professional Insurance Agents, which is actually very much in favor of the bill) are secretly opposing the bill because it doesn’t really provide things agents want, like business interruption and finished basement coverage.

All of this is just theoretical right now. I don’t know how or why the bill isn’t moving forward; it could just be Washington inertia and the press of other things to do. But flood insurance reform must move forward now.


In the next few months, Heartland and some of its other partners are going to be working on efforts to reform the Price-Anderson Act. We’re just in the process of starting meetings and deciding on the route we’ll take but, whatever happens, it’s clear we’ll be working to privatize significantly more nuclear industry liability than is private today.

I say this as a fan of nuclear power: with proper safeguards, it’s safe, essentially pollution-free and, whatever the downside, is better than burning the coal we use to generate most electricity. Like any other form of energy, however, nuclear power should sink or swim on the basis of market forces rather than ideology or affection for one type of energy generation over another.


A Senate vote on the Small Business Lending Enhancement Act, sponsored by Sen. Mark Udall, D-Colo., could take place in the very near future. The bill deserves speedy Senate passage: it’s a commonsense deregulatory measure Republicans need to support in greater numbers than they have.

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