House passes tax bill that includes flood insurance reforms
With just two more days before the National Flood Insurance Program is set to expire, the U.S. House voted to reform and extend the program for five years as part of a bill that also would extend the expiring tax cuts, including cuts to the payroll tax.
Passed by a 234-193 largely party-line vote, the House tax bill includes provisions of the five-year flood insurance reform bill the chamber passed earlier this year. The flood insurance reforms include phasing in actuarial premiums for many of the roughly one-fifth of NFIP policyholders who currently pay subsidized rates, increasing penalties on lenders who fail to enforce coverage requirements and directing FEMA to explore alternative options for managing catastrophic risks, such as through catastrophe bonds or private reinsurance.
Republican leaders claimed the flood provisions would offset $4.5 billion of the cost of extending the tax cuts. Alas, the Congressional Budget Office disagreed, scoring those provisions as offering no budget savings and estimating the overall bill would add $25.3 billion to the federal deficit.
The NFIP remains roughly $18 billion in debt to the federal Treasury, largely from claims incurred during Hurricane Katrina in 2005.
The House bill faces significant opposition from Democrats, including a veto threat from President Barack Obama. Senate Majority Leader Harry Reid, D-Nev., has said he would consider legislation that did not include budget offsets, but that his caucus would not support any measure that looks to pay for extension of the tax cuts by freezing federal pay.
Without a vote to extend the program, the NFIP currently is set to expire with the end of the current continuing resolution on Dec. 16. The Senate has passed a bill that would extend the program through May 31, 2012, but that measure has not been taken up in the House.
