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Opinion: Columnists

Manhattan Moment: Sandy and the entitled

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Washington isn't interested in chopping entitlement spending. In fact, both parties are now creating a new entitlement: no-questions-asked disaster aid, on demand and without apology.

An "entitlement," like Social Security, is something middle-class Americans of all (and no) political stripes expect. But Americans don't think of it as welfare. They think they paid for it through their tax dollars. And entitlements are expensive. Massive disaster "aid" fits that definition.

Consider last week's Sandy vote for $9.7 billion in what the media called "disaster relief." It was a vote for Washington to borrow more without fixing the problem that led to the new debt.

The vote allowed the National Flood Insurance Program, run by FEMA, to increase its borrowing by nearly 50 percent, to nearly $28 billion.

The flood-insurance program needs to pay off Sandy claims to New York and New Jersey homeowners. Private insurers won't insure coastal residents against the risk of flooding, so people buy it from the government. Why won't insurers provide this insurance? Because they know the property is likely to flood.

Washington should allow people to heed that market signal. People would know either to move inland (away from places with "River," "Ocean," "Beach," "Bay" or "Shore" in the name) or expect to shell out at least once in their residency for rebuilding. Instead, Washington obliterates the market's signal by bailing people out.

What was supposed to be a modest program to encourage people to build stronger in return for insurance cover when LBJ created it in 1968 covers 5.5 million property owners with nearly $1.3 trillion worth of insured property. As usual, when taxpayers subsidize something, they get more of it.

To put it in perspective, that's 13.4 percent of the value of all of America's home mortgages.

After a flood, some politicians tilt at "reform." But many of the reforms they propose would make the problem worse. Thanks to a 1994 "reform" sponsored by Sen. John Kerry, D-Mass., Sandy likely will add hundreds of thousands more to the subsidized flood-insurance rolls. Only 169,008 New York and 236,067 New Jersey households participate in the program now, and the 1994 change requires uninsured homeowners who accept other types of aid to enroll.

"The federal flood-insurance program is broken and bankrupt," Kerry said back then. The spur for his reform nearly two decades ago? $100 million in new borrowing for Midwest floods.

Members of Congress should have asked questions before flagging through this latest debt increase. Is it right for people who choose to live in smaller apartments or houses inland, even in a big city like New York, to subsidize people who choose a larger house with the water view?

Is it right to encourage developers to build in coastal areas, even though it puts people in harm's way and strains governments during a hurricane?

Congress should have waited, too, to see if the feds work with New York to insist that people rebuilding do so under stronger building codes. That's politically difficult, because it increases construction costs.

Only 67 Republicans voted against this Sandy tranche. Several mumbled against Congress' failure to find "offsetting cuts" for the Sandy spending, as if it's good to take money away from roads and bridges to give to middle-class homeowners.

Members of Congress from disaster-prone states will vote through the bigger $50 billion Sandy aid package, too, because they'll want their own disaster aid when the time comes.

And affected voters will insist on it. The New York papers are full of tales of able-boded, amply employed people who aren't grateful for what fellow citizens might give them -- but are demanding such aid.

Politicians who aren't brave enough to suggest that someone who lives on the beach pay the cost associated with living on the beach will never be brave enough to tackle, say, Medicare.

Nicole Gelinas is a contributing editor to the Manhattan Institute's City Journal. Follow her on Twitter at @nicolegelinas.

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