Well, it’s June, which marks the beginning of the hurricane season and (this year) the end of the Democratic primaries. And you know what that means!
The presidential candidates are looking for some way to win votes in the battleground state of Florida; and Florida is looking for a bailout—or at least the promise of a bailout when the next big hurricane hits.
Florida-backed legislation, which has passed the U.S. House of Representatives but not the Senate, seeks to have the federal government become the national “reinsurer” in cases of catastrophic property losses, such as, oh, a major hurricane.
In essence, the federal government would pick up the tab in case of a huge disaster.
Florida is backing the legislation for two reasons. First, it can get hit hard and often by hurricanes, so it has a disproportionate financial interest in legislation that would redistribute money from taxpayers in other states to Florida.
In other words, you will have the honor of subsidizing the rebuilding of mansions on the Florida coast—mansions so close to the water that owners can almost step off their porch into the water.
But the other reason is that Florida Governor Crist has wrecked the insurance market in Florida through legislation that, in effect, drove out most of the property and casualty insurers. The governor then set up a disaster fund to help people rebuild after a hurricane, but most experts believe the program is grossly underfunded. If the “big one” hits, Florida won’t have nearly enough money.
Florida taxpayers simply are not being asked to pay the full cost of the risk they face. That’s good for elected officials as long as disaster doesn’t come.
And if it does come, other taxpayers would bail out Florida, which is also good for Florida elected officials.
And since it’s an election year and Florida is a swing state, it should come as no surprise that Democratic presidential candidate Barack Obama supports the legislation. And Hillary Clinton co-sponsored the Senate version of the bill, though that probably doesn’t matter now.
As for Republican presidential candidate John McCain, he seemed to imply support for the legislation a few months ago. But the Wall Street Journal quotes McCain advisor Doug Holtz-Eakin as being skeptical of the legislation. Let’s hope the Journal has it right.
How the country should pay for a huge natural disaster is a viable topic for political debate. But insulating one state’s citizens from bearing the full cost of their risk and trying to force other taxpayers to cover it simply encourages risky behavior—both from Florida homeowners and politicians.