What’s So Bad About Opposing Federal Flood Insurance?
In a press release sent out today, liberal House candidate Pam Gulleson hits her opponent Kevin Cramer for being supported by a group (the Club for Growth) which opposes federal flood insurance programs.
“U.S. House Candidate Pam Gulleson called out opponent Kevin Cramer for his allegiance to extreme right-wing group Club for Growth, which advocates eliminating the federal flood insurance program and wants to strike all new flood insurance programs,” reads the Gulleson campaign’s press release. “It is fundamentally irresponsible for Cramer to depend on a group that wants to end federal flood insurance for financing his campaign,” said Gulleson. “If elected, would Cramer stand with North Dakotans in the case of a devastating flood? Or would he stand with the outside interests who seek to control his vote?”
I don’t know that Cramer has taken a specific position on flood insurance, but he’d be right to oppose it. Flood insurance is not something you can buy privately. It has essentially been nationalized, because private insurers wouldn’t insure properties in high-risk flood areas. The federal government took it over to provide taxpayer backing for that sort of risky insurance.
What this does, in effect, is create a moral hazard whereby property owners are encouraged to build (or re-build as the case may be) in areas at high risk for flooding with the taxpayers on the hook for the risk.
After a hurricane or a flood people often ask, “Why do people keep building their homes along that coast or along that river?” The answer is…why wouldn’t they as long as the federal government is going to bail them out every time they get flooded?
Gulleson is engaging in some low-brow politics here, seeking to play on the emotions of last year’s flooding to score points with voters. But setting emotion aside, federal flood insurance is bad public policy. We shouldn’t be giving incentive to risky behavior. If people want to build in high-risk flood areas let them do so knowing that they do it at their own risk.