The U.S. government-run National Flood Insurance Program is about to expire or (to put it more affirmatively) it is up for renewal by the end of this month. There is an unexpected matter of timing involved, though: had Hurricane Harvey dissipated at sea, there would likely have been a simple bipartisan extension of the program. The NFIP, first created in 1968, has been reauthorized 17 times since, usually with little fuss. But Harvey has made the politics of the program quite contentious.
This contentiousness is aggravated by another matter of timing. NFIP must be renewed and the Texas coastline must be rebuilt, just as Congress also faces the necessity of raising the U.S. Treasury’s debt ceiling. The Treasury Secretary, in the course of a recent television appearance, made the connection explicit.
Reuters has quoted Emily Naden, a spokesperson with the Building Owners and Managers Association, who said that the BOMA supports reform of the NFIP, but who adds that avoiding an expiration and any resulting lapse in coverage, has to have priority over reform. A lapse, she said, “would be incredibly detrimental to all of our policy members.”
Why does NFIP need reform? According to the Coalition for Sustainable Flood Insurance, there are several good reasons: “maintaining premium affordability, keeping the NFIP on sound financial footing, ensuring taxpayer protection, and accurately communicating and reducing risk.”
Right Wing View
On Labor Day, The Hill ran an opinion piece by J. Robert Hunter, headlined “After Harvey, Congress can’t ignore broken government flood insurance.” He wrote that before reauthorizing the NFIP, Congress should answer a “critical question: why are we building so many structures in very high-risk areas of the nation?” This is the question of “moral hazard,” does subsidized insurance create the disasters that it mitigates? Would ‘structures’ in effect migrate inland, away from flood zones, in the absence of the NFIP, lessening the disastrous quality of hurricane strikes along the coast? And, if so, is it really in the interests of the country to short-circuit that migration?
Hunter’s discussion presumes climate change as a fact, and he writes that as flood risk worsens given this fact, it isn’t clear that FEMA is “capturing the new danger.” Congress, he says, must investigate that matter.
The libertarians of the Cato Institute have expressed their own views about moral hazards and related issues. As Cato’s Ike Brannon writes, a bill put before the House of Representatives earlier this year contemplates “important steps in moving the U.S. towards a private flood insurance market.”
There is a general consensus that the NFIP is dysfunctional. Politico, which no one thinks of as “right wing,” has said as much. But the question of what to do about it is very much an open one among those who have studied the matter.
Left Wing View
On the left, post-catastrophe relief is often used to make broader points about safety nets. Harvey has been no exception.
Matthew Yglesias tweeted, “It’s interesting that single-payer flood insurance doesn’t seem very controversial.” Of course this is a reference to health insurance, specifically to the cause of extending Medicare-style insurance (the “single payer” being the U.S. Treasury) to all lawful U.S. residents. That idea, of coutrse, is very controversial and was one of the key fault lines between supporters of Senator Sanders and of Secretary Clinton during the Democratic Party’s primary season in 2016.
Yglesias, a regular contributor to the leftward website Vox, was clearly challenging those on the right, or even perhaps those in the Hillary-esque center-left in the U.S., to explain the difference between a single-payer policy for treating illness versus a single payer policy for rebuilding homes after a hurricane.
It should be noted that Yglesias’ argument-by-analogy limps rather badly, if only because single-payer flood insurance in any full sense is very controversial: private insurers remain very much in the residential flood damage field.
Others on the left have used the Harvey aftermath to make very different points. CrazyPoliticsUS tweets that while the State of Texas is “making it harder for its people to get flood insurance … now allows open carry swords & machetes.”