In 2012, something amazing happened: Republicans and Democrats came together during a bitter election-year campaign and fixed the National Flood Insurance Program.
The federal government had been subsidizing multiple thousands of property owners who live in flood-prone areas. In fixing the program, they ended the program’s increasing debt, making it fiscally and environmentally sustainable.
Trouble is, this bi-partisan reform only lasted two years. In March of 2014, Congress, both Republicans and Democrats, reversed themselves and gutted the improvements they had made. Learn about this story, and understand its implications from, “Hell and High Water,” by Michael Grunwald, found in the May 19, 2014, edition of “Time.”
Background: Congress created The National Flood Insurance Program in 1968, a few years after Hurricane Betsy had battered New Orleans, costing property owners more than a billion dollars. Insurers had refused to insure properties in flood-prone areas, so Congress stepped in to offer “taxpayer-assisted protections for existing structures.” At the time NFIP raised insurance rates and standards for new construction to reflect the financial risks of building in flood plains. The program worked well for a while. But over time, it became less rigorous about risk and more generous about rates. FEMA redrew high-risk flood areas, ignoring the worst-case scenario storms. Doing this encouraged more people to live in high-risk areas. Many of the insured were able to repeatedly collect insurance claims, especially those who could afford to buy waterfront property.
Hurricane Katrina exposed this “disaster waiting to happen” in 2005. NFIP had to borrow more than $18 billion from the U.S. Treasury to cover its debts. There was no way to recover the losses through raising rates on homeowners.
Both the left and the right were angry for different reasons. The right was angry at the taxpayer subsidies and the left was upset because building continued in dangerous flood-plain areas. Even the powerful National Association of Realtors went along with a desire to end the abuses because it hurt their sales.
Los Angeles Democratic Rep. Maxine Waters was the 2012 bill’s author. Rep. Judy Biggert, a Republican from southern Illinois, aided her in getting the bill passed to end insurance subsidies to second homes built in flood-plains and businesses and property in high risk areas that had made repeated damage claims. The bill also accurately updated flood-plain maps to reflect the worst-case scenarios.
The common sense approach drew support from many groups, both Democrat and Republican. Even President Obama agreed and signed the bill.
From a rational view, neither Democratic leaders nor Republicans favored changing the law, but politics entered in during the 2014 election year. Louisiana Democrat Sen. Mary Landrieu pushed Harry Reid, senate majority leader, to repeal the law, telling him the Democrats could lose control of the Senate if she lost her election. Rep.
Waters and Michael Grimm, a Republican from Staten Island whose district had been battered by Hurricane Sandy, passed a similar bill in the House. Neither House majority leader Eric Cantor nor President Obama wanted to pay the political price of reform.
The repeal passed with President Obama giving the nod to Sen. Landrieu to make the announcement.
It’s easy to blame politicians for bowing to political pressure in an election year, but it’s also a comment on voters who like the idea in theory of passing reforms, but not in practice when it will cost them money. As seas begin to rise, the costs to the taxpayers of this repeal will also increase, but facing both climate change and common sense laws to deal with reality are just elephants in the room invisible to those who refuse to see.