tax dollars subsidy disaster prone flood insurance

When Taxpayers Pay People to Rebuild in Harm's Way
budget watchdog

As Coasts Rebuild, the US Pays for Future Catastrophes

Do good citizens subsidize speculators? Or give to disaster charities? This 2012 article is from The New York Times, Nov 18. Its subsequent commentary is of Nov 26 by Steve Ellis (VP of Taxpayers for Common Sense).

by Justin Gillis & Felicity Barringer

Across the nation, tens of billions of tax dollars have been spent on subsidizing coastal reconstruction in the aftermath of storms, usually with little consideration of whether it actually makes sense to keep rebuilding in disaster-prone areas.

Tax money goes toward putting things back as they were, essentially duplicating the vulnerability that existed before the hurricane.

At least $80 million, adjusted for inflation, has gone into patching up one island since 1979 — more than $60,000 for every permanent resident.

That does not include payments of $72 million to homeowners from the highly subsidized federal flood insurance program.

Lately, scientists, budget-conscious lawmakers and advocacy groups across the political spectrum have argued that these subsidies waste money, put lives at risk, and make no sense in an era of changing climate and rising seas.

A coalition in Washington called, made up of environmentalists, libertarians and budget watchdogs, contends that the subsidies have essentially become a destructive, unaffordable entitlement.

“The best thing that could possibly come out of Sandy is if the political establishment was willing to say, ‘Let’s have a conversation about how we do this differently the next time,’ ” said Dr. Young, a coastal geologist who directs the Program for the Study of Developed Shorelines at Western Carolina University.

Earlier this year, Congress passed changes to the federal flood insurance program that are supposed to raise historically low premiums and reduce homeowner incentives for rebuilding in the most hazardous areas.

Subsidies from the Stafford Act kick in when the president declares a federal disaster. In the same way flood insurance shields families from the financial consequences of rebuilding in risky areas, the Stafford Act shields local and state governments from the full implications of their decisions on land use.

In many other beachfront communities, the federal subsidies have helped people replace small beach shacks with larger, more valuable homes.

If private property owners want to assume the risks, that’s one thing. But if we find that we as taxpayers are assuming that risk without benefit, then we need to rethink that.

To read more

Steve Ellis:

The government can help residents and property owners to become less vulnerable. To do that we have to spend and invest wisely, and most of all, not subsidize living in harm’s way. Sometimes the best investment for governments and property owners is to move, not to rebuild.

We have to re-examine our subsidy systems that encourage high-risk development:
• The subsidized federal flood insurance program is more than $17 billion in debt, and its rates do not reflect the true risk.
• Federal storm protection efforts spend hundreds of millions of dollars pumping sand onto beaches, from which it erodes away every few years.
• Waivers of state and local cost-sharing of disaster funds remove “skin in the game” incentives to reduce future costs, spend wisely and quickly.

With sea level rise and predictions of more and more intense storms, the long-term solution is moving out of harm’s way, and the taxpayer’s job is to help that move, not inhibit it.

To read more

JJS: Behind the pretty face of helping unlucky families in an emergency is the reality. This subsidy, like most of them, go to landowners, developers, and bankers. Just about all government spending pumps up location values or, as in the case of coastal sites, keeps them high.

If helping landowners after one big disaster is right, what about helping non-owners, like the poor in New Orleans after Katrina? And what about helping anyone after a long series of small misfortunes? People on the coast get to enjoy the shore and rebuild at everyone else’s expense. Meanwhile, many other taxpayers must live in dull sprawl and endure one little setback after another. Why not help them out, too?

This particular subsidy -- bailing out storm victims -- shows what’s wrong with subsidies in general. They alter prices; here, they under-price insurance and over-price ocean-front lots. They’re expensive -- not just the outlay but the bureaucracy, too. They’re unfair, benefiting some while costing others. And they’re addictive, reinforcing the hierarchy of state over citizen.

Plus, subsidies are not even needed, ever. Instead, government could recover all the value of land and other natural resources and share that out. Individuals could use their share to give to outfits like the Red Cross or to rebuild after a disaster or live cheaply where it’s safer. Moving away would also benefit the environment, which in many places should’ve been left pristine anyway.

If government did recover all of a society’s spending for sites and resources, it’d have no excuse to tax earnings, buildings, and purchases. Then citizens, once out from under taxes yet receiving a dividend, could more easily afford to build on stilts in low-lying areas and afford full-cost insurance if they wanted to live in risky places. So government is not needed to be a lavish spender; all it’s needed to do is to defend rights, such as our right to a share of Earth’s worth.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

The Rich Get More From Government Than Anyone

End Polluter Welfare & Monopoly Welfare

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