WSJ: Taxpayers Get Soaked

[question everything]

The Wall Street Journal

Taxpayers Get Soaked

May 24, 2006; Page A14

(snip)

The federal government says some 120,000 properties nationwide have received "multiple" taxpayer subsidized flood insurance payments -- at a cost of $7.25 billion. An astounding 26,000 of those have received four or more flood payments. One property in Houston flooded 16 times and sucked up $807,000 in repairs -- seven times its market value. The owner keeps rebuilding, mother nature keeps tearing it down, and hapless taxpayers keep footing the bill.

(snip)

The fact that many flood payments go to wealthy owners of beachfront vacation homes seems to have eluded politicians in both parties. Dauphin Island off the coast of Alabama, for example, is one of the nation's most vulnerable barrier islands and has lost nearly 500 expensive vacation homes and rental properties since 1979. The island has nonetheless received more than $21 million in federal flood payments. Congress is equally oblivious to the basic business concept that insurance is supposed to cover its costs via premiums. NFIP premiums currently cover just 60% of expenditures, which explains why the program is $21 billion in debt.

Now the feds want to make the problem worse with the tens of billions of dollars they are spending on home reconstruction in New Orleans. J. Robert Hunter, who directed the flood program for 10 years, warns that thousands of homes with repetitive losses are scheduled to be rebuilt despite the huge risks of damage from the next hurricane. He recently told the Senate Banking Committee that homes built to FEMA's specifications immediately prior to Katrina were elevated 12 or 13 feet too low -- an error of astonishing magnitude. "People all over the country are building what they think are safe homes," he warned. "But, to varying degrees . . . they are in peril."

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The most prudent reform strategy will be proposed this week by Senate Banking Chairman Richard Shelby. The Alabama Republican would move the program toward actuarial soundness by charging risk-based premiums. The riskier region you build in, the higher premiums you will pay. This would require updating maps of flood regions, which in places like New Orleans are now tragically obsolete. Mr. Shelby also argues that there's no reason for taxpayers to underwrite insurance for luxury or vacation homes, or for repetitive loss properties.

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URL for this article:
http://online.wsj.com/article/SB114843155832561324.html (subscription)

[ThomCat]

1. I actually agree with most of this.

I think they'd twist this to screw poor people, and then applaude as only wealthier areas got rebuilt. But if they could account for risk and repeated flooding in the cost of their coverage I'd love to see a lot of rich people booted out of their rediculous summer homes.

Or better yet, how about placing income limits on who can get this federal insurance.

What right do they have to own homes on flood planes that we pay for? They already have money. This program should be for local residences and businesses of people who cannot afford to relocate.

[applegrove]

2. Exactly. No mistake the lowlands in NO were filled with less fortunate and

middle class. Look at the map of any town or city. Are people who choose to live in "winter" going to have to taxes at a higher rate.. at a federal level?

What is this obssession the GOP has with making people pay who cannot afford to. Don't they realize that 30% of USA taxes go to the Pentagon which benefits shareholders? Should they pay for that.. not according to means or income in a progressive system.. but according to the risk of their stock portfolio in terms of national debt?

[Jeffersons Ghost]

3. where's the cash for the 9th Ward

still no power. still lacking sawage... and the bushists aren't even close to prepared for the upcoming season. Hey, maybe they can finally find some republicans next year who need the New Orleans trailers FEMA bought.