TCS Letter to Senate: Oppose S. 1846; Support Toomey Amendment

TCS Letter to Senate: Oppose S. 1846; Support Toomey Amendment

Budget & Tax, Infrastructure,  | Quick Take
Jan 28, 2014  | 3 min read | Print Article

Earlier today, TCS sent a letter to the office of every senator, urging legislators to oppose S.1846, a bill that would roll back crucial flood insurance reforms.



Oppose S. 1846 Flood Insurance Subsidy Protection bill; Support Toomey Amendment to Responsibly Address Premium Sticker Shock

January 28, 2014

Dear Senator,

Taxpayers for Common Sense strongly opposes S. 1846, the so-called “Homeowner Flood Insurance Affordability Act.” The legislation, which will be voted on this week, is fundamentally flawed and, according to the Congressional Budget Office, will accelerate the complete insolvency of the federal flood insurance program. The bill effectively guts reforms adopted overwhelmingly just a year and a half ago. The bill delays gradual increases in subsidized flood insurance premiums for remapped properties and recently sold homes for at least four years – longer than the flood insurance program is authorized.

Any effort to argue the reform delay bill costs nothing requires ignoring the CBO score which states that it will cost taxpayers more than $900 million over five years. The legislation will also reduce flood insurance premium revenue by $2.1 billion and will make the program hit the $30 billion borrowing cap in seven years, resulting in insolvency and forcing the program to operate on a hand-to-mouth basis, paying claims as premiums become available. That is how a ten year score of zero is achieved. In other words S. 1846 would create a flood insurance pyramid scheme.

There is a better way.

A far better alternative to outright delay is an amendment being proposed by Sen. Pat Toomey (R-PA). The Toomey amendment would phase in all rate increases (second homes, resold and remapped properties) at 25% of the existing rate each year. So a $400 premium would be $500 next year, $625 the year after that, and $781.25 in year four, when the mandated affordability study would be completed and could be acted on by Congress. Importantly, the slower phase in would be paid for within the program, with a $40 annual surcharge on all flood insurance policies ($80 for those with an AGI over $500,000).

The flood insurance program is more than $24 billion in debt to the taxpayer, and increases in the program’s borrowing authority after Superstorm Sandy were justified on the basis of reform. To put the debt in perspective, the program took in $3.6 billion in premium revenue in 2012. There are 5.6 million flood insurance policies nationwide, while there are 130 million housing units. Yes, there are very vocal backers of flood insurance subsidies, but this relatively small program places an outsized burden on all taxpayers. We urge you to support the Toomey Amendment and oppose S. 1846 absent its adoption. For more information contact me or steve[at] or 202-546-8500.


Ryan Alexander


Extinguishing Tax Extenders