The R Street Institute is deeply disappointed that U.S. House leaders have scheduled a vote today on H.R. 2266, a measure that would cancel $16 billion of the National Flood Insurance Program’s debt to taxpayers without making badly needed changes in the program’s structure.
While the measure’s primary purpose to provide emergency supplemental appropriations for victims of Hurricanes Harvey, Irma, Maria and Nate is an important priority, the decision to forgive a debt of this size, rather than raise the program’s borrowing authority, sets a dangerous precedent and sets back the cause of flood insurance reform.
“The fundamental structural problems of the NFIP have long been apparent, which is why it has been included on the Government Accountability Office’s list of high-risk programs since 2006,” R Street Senior Fellow R.J. Lehmann said. “As currently structured, the program loses an average of $1.4 billion every year, subsidizes the premiums of 85 percent of its coastal policyholders and degrades the environment by encouraging development in environmentally sensitive wetlands and coastal barrier islands.”
“To wipe away billions of dollars that this unsustainable program owes to American taxpayers without taking basic steps to reform its underlying structure is irresponsible and unconscionable,” Lehmann added.
Should the House pass the measure as currently written, R Street urges members of the U.S. Senate to amend the measure to raise the program’s borrowing cap, rather than forgive its debt. The measure also should be paired with the White House’s recommendations to disallow participation in the NFIP for new construction and severe repetitive loss properties; a mandate that the Federal Emergency Management Agency update its floodplain mapping, including through the use of Light Detection Ranging (LIDAR) surveying; and by including the text of S.563, the Flood Insurance Market Parity and Modernization Act, which would clarify which flood insurance policies written by private carriers satisfy the federal mandatory purchase requirement.