When Will Congress Get Serious?
/In case you have been deluding yourself into thinking that Congress may be getting even a little serious in its stewardship of taxpayer money, you need to follow two bills currently making their way through the legislative sausage grinder.
We start with a Senate bill, co-sponsored by Menendez (D) of New Jersey and Isakson (R) of Georgia to modify the National Flood Insurance Program (NFIP). That bill has passed the Senate today by a bipartisan vote of 67-32. NFIP is the program by which the federal government provides subsidized insurance for homeowners in flood zones, most notably on or near the beach. And who own homes on and near the beach? In many cases the richest of the rich. That is why federal subsidies to oceanfront homeowners have been proposed by the Manhattan Contrarian as one of only two nominations for "worst possible public policy." To get an idea who benefits from these things, get a look at Billy Joel's oceanfront estate located at Sagaponack, New York.
NFIP has been around since at least the 60s, and everybody who thought about it knew it was way underpriced, but somehow the big storms missed most of the valuable property until after 2000. Then came the likes Katrina, Rita, and Wilma in 2005, and suddenly NFIP was completely broke and in debt around $20 billion to the Treasury. In an article here from April 2013 in Property Casualty 360, R.J. Lehmann of the R Street Institute estimates that the hole will be more like $30 billion by the time all the claims from Sandy (2012) are paid.
In 2012 Congress pretended it was going to get tough by passing something called the Biggert-Waters Reform Act, which supposedly was going to gradually phase in "full-risk rates" for properties in the program. Here is the government's website on Biggert-Waters. They say that rates for non-primary residences were going to increase 25% per year until "full-risk rates" were achieved. Now that's tough! Of course, primary residences were exempted completely so long as they had been built before the area was designated a flood zone. After all, you wouldn't want to treat those rich homeowners like grown-ups, would you?
Well, in 2013 the first round of the premium increases started to kick in, and Congress may be crumbling like a stale cookie. According to an article in the New York Times online today:
[O]ver the past year, millions of coastal property owners were hit with flood insurance rate increases that sent their premiums soaring up to five or 10 times the previous amounts. As their insurance bills soared and their property values plummeted, homeowners begged lawmakers to block or delay the Biggert-Waters provisions.
And here's the quote from the official Senator of the Plutocracy:
“When this bill passes the House, millions of homeowners across America will breathe a sigh of relief,” said Senator Charles E. Schumer, Democrat of New York.
According to the Times article, the basic idea of the Senate bill is to delay the premium increases otherwise coming from Biggert-Waters.
What's really funny is how policy, if really bad enough, can make strange bedfellows out of people who otherwise can't agree on anything. For example, according to this article in Insurance Journal, the Obama White House and OMB are actually opposing the Senate bill:
The OMB said the Administration’s preference is that Congress retain the Biggert-Waters Flood Insurance Reform Act because delaying the reforms would add to the $24 billion deficit of the National Flood Insurance Program (NFIP). It urged Congress to find a way instead to target relief to “economically distressed policyholders.”
That actually sounds pretty good, although might I be so impolite as to ask exactly how "economically stressed" someone might be when they own a second home at the beach? Meanwhile, others noted as opposing this monstrosity are various environmental groups. Remember, even a stopped clock is right twice a day.
The (maybe) good news is that the prospects for this bill in the House are not that great, and there are actually some serious opponents. To me, this is a litmus test for the Republicans: If they can't stop this one, what's the point?
And to illustrate that further, we have another bill working its way through Congress, and this one has just passed the Republican-controlled House. The vote was 251-166, also bipartisan. It's the $100 billion per year Farm Bill. According to this from the EPA, only about 1.5 million people in the U.S. have farming as their principal occupation -- so this is about $67,000 for each of them per year.
Yes, it's a big goody-bag with handouts for everybody who took the time and effort to stick their hand out. Followers of farm bills know that the game is to combine into one bill vast handouts for farmers and their attendants, to get the rural states, with the food stamp program, to get the urban states. We'll just pass out money to everybody and nobody has to pay!
Fox News has the story on the Farm Bill here, and it couldn't be more disheartening. There are lists of examples of the goodies for everybody, like:
[A] boost in money for crop insurance popular in the Midwest; higher rice and peanut subsidies for Southern farmers; and renewal of federal land payments for Western states.
So has there been any effort at all by anyone to get spending under control? How about those heartless conservatives?
Some House conservatives were not happy with the new bill. They originally wanted to dial back food stamp spending by $4 billion a year; the new bill cuts $800 million a year -- which represents about 1 percent of the $80 billion-a-year program.
So the food stamp program has more than doubled over the past 5 years, from spending $37.6 billion in 2008 to $79.6 billion in 2013, and the heartless conservatives want to try for a big 5% cut back to around $76 billion. And what has been achieved is all of 1%. And even that is just the removal of a single item of transparent fraud, namely a practice of some states of giving some people who don't need it a small heating subsidy which in turn automatically qualifies them for food stamps even though they do not meet income and asset criteria. Frankly, this is pathetic.