Federal Responses to Emergencies Shouldn’t be a Fiscal Disaster

Weekly WastebasketFederal Responses to Emergencies Shouldn’t be a Fiscal DisasterThere is a federal role in responding to emergencies, but it must be reformed.

Infrastructure,  | Weekly Wastebasket
Mar 22, 2019  | 6 min read | Print Article

Record setting winter flooding in the Great Plains is the latest emergency to bring federal disaster policies to the forefront. Happening on the heels of a Presidential Budget Request with an unprecedented reliance on credibility stretching “emergency” spending to appear fiscally responsible, it begs an important question: How can the federal government responsibly help communities and individuals prepare for and respond to disasters?

There is a federal role in times of disaster. Managing the effects of natural disasters like flooding, hurricanes, tornadoes, earthquakes, wildfires or other large-scale events are beyond the physical and fiscal ability of any single state, community, or individual. Certainly, the private market can (and does) manage many types of risk and should play a greater role in disaster recovery. But in the end Americans are a generous people that will come to the aid of communities. We can afford to, if we do it right.

Preventing federal emergency response from evolving into fiscal disaster requires planning.  Nobody knows exactly where or when disaster will strike, but we do know some things. Flood plains flood. Droughts happen. Tornados strike. Sometime, somewhere, a disaster will hit.  So we, as individuals, communities, and a nation, should prepare. Too often, however, Congress and the president don’t want to make tough choices.

Planning for disaster requires discipline. Setting money aside for a rainy day means you can’t spend it on something else, whether that’s padding the budget of an agency you like or cutting taxes you don’t. For too many years, the increased resistance to setting budget priorities has resulted in disaster creep – lawmakers lowering the threshold for what constitutes a disaster or shoehorning non-disaster related spending into emergency response bills. And there are too many instances of federal policy discouraging or even outright preventing communities and individuals from better preparing for disaster.

The moment danger has passed, recent events should lead to immediate reforms in a number of federal programs.

Reform the National Flood Insurance Program (NFIP)

We have long led a bipartisan chorus calling for reforms to this troubled program that has borrowed more than $36 billion from the Treasury to pay off claims. Needed steps – reducing excessive subsidies, providing means-tested premium assistance to those who need it, investing in updated mapping of actual flood risk, increased federal and local efforts in mitigating this risk, and shifting more of the risk onto the private sector.

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Reduce Risk in the Farm Safety Net

We support a federal safety net for agricultural businesses, provided investments of tax dollars are wise and efficient. That means limiting assistance based on need and focusing programs only on risks too costly or complex for farmers to manage independently.

Congress has settled on accomplishing this through federally subsidized crop insurance, which while not perfect, is perfectible, and “supplemental agriculture disaster” programs for livestock owners that often don’t qualify for crop insurance.  All of these programs are permanently authorized, meaning they cut checks without a deficit-financed emergency spending bill from Congress, and require some amount of cost-share to implement.

The disaster supplemental being drafted threatens to incentivize businesses to abandon crop insurance in pursuit of “free” taxpayer cash. In an act of legislative lunacy, the bill allows the Secretary of Agriculture to use the $3 billion in ad hoc aid to “pay for past or future crop insurance premiums.” In other words, billions of dollars in unbudgeted “emergency” spending will subsidize future costs of already subsidized insurance policies – or refund premiums paid in the years farmers didn’t suffer a calamity. No insurance company in the world would be profitable if they functioned this way.

Community Development Block Grants (CDBG) – Help Communities Better Prepare

Finally, this may not be a popular point-of-view to express right now, but the point of federal disaster relief is not to make people, communities, and states whole. It is to help them rebuild. And they should rebuild in a way that “pre-sponds” to future disasters, and helps reduce the likelihood that disaster relief dollars will be needed in the future. So, federal funding should only be used for smart rebuilding outside the floodplain or elevating structures at least two feet above projected future flood levels. Rebuilding smarter and safer must be a part of recovering from a disaster.

The government has a place and a role when disasters hit the nation – no doubt. But federal cash must do more than help communities survive disaster. And for that, Congress and the president need to make some hard choices to help communities and individuals anticipate and properly manage risk. Maintaining the failed status quo puts people in harm’s way at the taxpayer’s expense. That’s fiscally irresponsible and morally reckless.