It wasn’t easy, but House Republicans, who battled through the summer and fall against members of their own party, finally managed to negotiate bipartisan passage of flood insurance reform last week. To secure sufficient buy-in from coastal Republicans, key concessions were made, but the final product was worth the compromise.”Everything is a compromise in Washington,” House Financial Services Committee Chairman Jeb Hensarling told the Washington Examiner two days after the vote. “You just try to compromise your policy, not your principle.”
The 21st Century Flood Reform Act passed last Wednesday, introduced by Rep. Sean Duffy, R-Wis., who is also a member of the Financial Services Committee, would open the government-controlled flood insurance market to private competition. Hensarling calls the legislation “revolutionary.”
“We took a great leap forward,” he said last Friday — not the best-chosen phrase, given its historical echoes. “The greatest conservative victory in the history of the program,” Hensarling added, “is to open it up to private market competition.”
The National Flood Insurance Program, created in 1968, offers insurance to homeowners and businesses at discounted rates based on risk assessments taken from flood maps. The result, for decades, has been taxpayer subsidies of homes on flood plains. Because property owners aren’t paying market rates for their insurance, the real cost of living in an area likely to be inundated is concealed. When properties are destroyed by hurricanes, they are often rebuilt in a way that would make not sense if the government were not subsidizing stupidity.
Last week’s bill will “break the government monopoly” if adopted by the Senate and signed by President Trump, Hensarling says. The bill falls far short of what the administration and many conservatives want, but it’s a step in the right direction.
Conservative reformers gave up language that would have disallowed new construction, phased out grandfathering provisions, and lowered protections for million-dollar buildings.
What Hensarling described as a “title dealing with repetitive loss properties” — houses are repeatedly destroyed and rebuilt — was also “watered down considerably.”
The bill passed includes all of the legislation proposed by Florida Reps. Dennis Ross, a Republican, and Kathy Castor, a Democrat, which cleared the Financial Services Committee on a 58-0 vote. In fact, Ross-Castor passed the House by a vote of 419-0 in 2016. The legislation is crucial to opening the market to competition. Even so, earlier this fall, Louisiana Republican Sens. Bill Cassidy and John Kennedy successfully pulled it from an FAA reauthorization bill.
Even for a Republican-controlled House, wrangling enough support for conservative flood insurance reform has been difficult because lawmakers with coastal constituencies worry about a voter backlash. As we reported in October, after the Financial Services Committee passed a slate of reform legislation earlier this year, roughly two dozen Republican members, most with coastal constituencies, sent leadership a letter expressing concerns.
“If you’re a conservative, you’re only a conservative until government subsidizes your constituents,” an exasperated Duffy said.
Nevertheless, after months of negotiations, only 14 Republicans voted against the bill, fewer than the number who signed the letter last July. That’s progress. For his part, Hensarling is “not sure the Senate is going to pass any bills,” but he “[hopes] the administration will put pressure” on the upper chamber to take up the charge.
After a rough hurricane season this year, the NFIP is an estimated $35 billion debt. The House reform legislation is not perfect, but at this point, it’s the least Congress can do to reform a broken system.
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