Opinion by Kip Hansen – 24 March 2021

In response to my essay last week, Sea Level and the Jersey Shore, many readers asked questions and expressed their personal opinions about what is known in the United States as Federal Flood Insurance.  More accurately, it is called the National Flood Insurance Program (NFIP).  The basic idea is that the Federal Government (our national government) has an insurance that it sells to homeowners in flood risk areas and requires that insurance in support of  loans secured by buildings in certain designated flood risk zones (note that this is a government program and thus is nearly infinitely complicated, but that’s the general idea.)

In response to massive losses experienced by the National Flood Insurance Program in recent decades, the US Congress has attempted to pass new laws governing the program to rectify what they see as long-standing problems in the program.  The basic flaw each attempts to repair is that the cost of the insurance is deemed too high for lowest value homes and far too low for the highest value homes.

In short, the rich and very-rich build hugely expensive homes in the areas of the most risk – within feet of the pounding waves on Long Island, NY or Montoloking, NJ – and get cut-rate federal flood insurance to cover their losses when their summer mansion is damaged by storms.

The latest attempt to correct this absurdity had been stalled, probably stopped in its tracks, by Senator Chuck Schumer of New York, the Democratic majority leader of the US Senate.   The venerable (sic) NY Times   carried the story today titled: “Chuck Schumer Stalls Climate Overhaul of Flood Insurance Program”. 

Why does he object?  The Times says:  “The Federal Emergency Management Agency was preparing to announce new rates for federal flood insurance on April 1, so that the prices people pay would more accurately reflect the risks they face. The change would very likely help reduce Americans’ vulnerability to floods and hurricanes by discouraging construction in high-risk areas. But it would also increase insurance costs for some households, making it a tough sell politically.” and, more importantly for Schumer:  “The new system would mean steeper rates for some high-value homes, and the southern shore of Long Island includes the Hamptons, which have some of the most expensive real estate in the country.”

These “steeper rates” would apply to those who live in an area where “The average sales price in the Hamptons soared 46% in the quarter to just over $2 million, according to a report from Douglas Elliman and Miller Samuel.” [ source: CNBC ]

But what is the purpose of the National Flood Insurance Program?  “…the twofold purposes of the NFIP to share the risk of flood losses through flood insurance and to reduce flood damages by restricting floodplain development”.   Part of its very purpose is to make building in flood prone areas, like beach-fronts, prohibitively expensive thus discourage such foolish development

Those with a real interest in this topic should read the NY Times article.

My view  has already been expressed in my opinion piece on the Jersey Shore:

“I don’t think that New Jersey will ever really pass —  or if passed,  enforce —  building restrictions on the rich and super-rich.  It is only the middle-classes that will bear the brunt of new restrictive building codes that will, in the end,  mean that only the rich and super-rich can afford to ignore the obvious, present-day threats of building homes on ephemeral sandbars – if their beach house gets swept away, insurance will build it back and in the meantime, they can live in their third home in the woods of Vermont or New Hampshire or move temporarily to their condo in the islands. “   

The same overall rule applies to Federal Flood Insurance – the rich and super-rich won’t like rate increases, but they can afford them.  The poor in this rate change actually get a reduction while the middle class get what looks to me to be a fair and affordable increase – estimated by the Times to be in the range of $20 a month.  Power- and influence-hungry politicians will tend to act in their own re-election self-interest and use their positions to shield their rich and super-rich campaign donors from the need to pay their own way and subject themselves to the reasonable regulations the government that imposes on the rest of the population. 

Those not well-schooled in the system of government that we have in the United States will not realize that Senator Schumer has no legitimate right, authority or power to interfere with the FEMA plan to adjust rates in the flood insurance program.  His doing so is a simple abuse of power and represents malfeasance within FEMA if they comply.   Senator Schumer is the one of the two elected senators for the State of New York, and is the Democratic [party] majority leader of the US Senate.  The Senate is one-half of the Legislative Branch of the U.S. Federal Government.  The Federal Emergency Management Agency, on the other hand, is an agency of the United States Department of Homeland Security, which itself is part of the Executive Branch of the Federal Government, which is headed by the sitting President of the United States.

Neither the US Senate or its Majority Leader have any authority whatever, except by rank political coercion, over any of the agencies that reside in the Executive Branch.   Adjustments made to programs operated by FEMA in the public interest are not legally subject to control by the objections of single US Senator.

Oh, did I mention politics?  What are the politics of these people – rich and very rich donors to political candidates running for federal offices – that the good Senator Schumer from New York is protecting from steeper flood insurance rates?   Those blue areas – The Hamptons.

Note:  Politically active citizens in the United States can express their displeasure (or pleasure) by writing to their representatives in Congress – in this or any other topic that interests them.    To email your representative in the House, use this link and supply your zip code.  The name and email function (as an envelope icon) appear on the left.  For your US Senators, the US Senate contact page helps you search for your Senator  (and then gives postal mail addresses and phone numbers, along with a “contact” link, which, if you are lucky, leads to an email functionality).

So, if you wonder why these long-standing idiocies continue – such as repeatedly rebuilding the homes of millionaires built in the riskiest places in the country at Federal expense (meaning, using your tax money) —  the answer is simple:  POLITICS AS USUAL.

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Authors Comment:

The above represents my personal opinion and in no way reflective of the opinions or political positions of the owners and operators of this web site, including but not restricted to, Anthony Watts.   The posting of this Opinion Essay here does not imply their agreement with my expressed opinions. 

Government is hard – and as Mark Twain quipped – expensive.  “I think I can say, and say with pride, that we have some legislatures [and legislators – kh] that bring higher prices than any in the world.”

Thus, we will continue to pay for the greed of land developers in Texas that build hundreds of homes in harm’s way on known flood plains and the self-indulgence of the rich who just must have a multi-million-dollar summer home on the beach.

Starting comments with my name – “Kip …”  will insure I see them if you are talking to me.

Thanks for reading.

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March 23, 2021 at 09:06PM