Obligation to Repay

Open any newspaper and you will learn—up front with big headlines—that the guvmint needs more money for the FAA and a jillion other things. That’s why a small Wall Street Journal story on page seven last Friday surprised me so much. The guvmint, it seems, is hard at work on a new bill to "bolster" the National Flood Insurance Program (NFIP). Owners of property in flood plains depend on the guvmint for flood insurance—water damage as opposed to wind and other damage—since commercial carriers don’t want that market. The NFIP, according to the web site of Senator Trent Lott, Mississippi, "is administered by the insurance industry, but it is backed by the federal government in much the same way the Federal Deposit Insurance Corporation (FDIC) backs your bank." In other words, the commercial insurance carriers don’t want to put their money on the line so the guvmint—our generous guvmint—steps up to the plate. I used to wonder why the guvmint would agree to insure what the professional carriers wouldn’t. Why should the rest of us pay for others—often wealthy folks building second homes on the beach—to build where the risk of flood is so high? Ah, but Ralph, I was told, the owners do pay premiums. This isn’t charity. Now the truth outs. The WSJ informs us that the NFIP lost its collective you-know-what last year in hurricane-related damage. They borrowed from the U.S. Treasury to pay the claims. Not only that, but this new bill "would remove the flood-insurance program’s obligation to repay $20.8 billion in borrowings from the U.S. Treasury for last year’s hurricane-damage claims." In other words the NFIP borrowed it from us, and the guvmint wants to "remove the obligation to repay" us! $20.8 billion dollars! The debt didn’t go away, they just transferred it to the rest of us. If we repaid it—with no interest—at the rate of $10 million per year it would take us—are you ready for this—2,080 years to pay it off! All of this, just so some people can build in risky places—places in which much scientific study indicates we have overbuilt already. Why do we do it? I don’t care what you are told—we do it because the people who want it done have powerful lobby groups.   Remember this when the guvmint says it isn’t possible to cut the federal budget. We want to post your comments. Please click on the comment box at the top.