“I am outraged by the increased costs of flood insurance premiums that have resulted from the Biggert-Waters Act. I certainly did not intend for these types of outrageous premiums to occur for any homeowner. When I agreed to coauthor this legislation, our goal was to create a bipartisan solution to repair our National Flood Insurance Program. Neither Democrats nor Republicans envisioned it would reap the kind of harm and heartache that may result from this law going into effect. Plainly put, I am committed to fixing the unintended consequences of the Biggert-Waters Flood Insurance law.” Maxine Waters, upon learning that the legislation she co-authored would result in increased flood premiums to millions of Americans. [For her full statement, go to link here. For a description of the Biggert-Waters Act, go to my post here.]
Hmmm. Do I have this right? Congresswoman Maxine Waters, Ranking Member of the House Committee on Financial Services, didn’t realize the legislative progeny that bears her name would result in higher premiums for homeowners once the artificial federal subsidy went away? She didn’t realize that the National Flood Insurance Program (“NFIP”) owes the U.S. Treasury approximately $24 billion, due to losses not covered by homeowners’ premium dollars?
As a part of her namesake law, the General Accounting Office (“GAO”) published the following statement:
GAO estimated that with the changes in the Biggert-Waters Act approximately 438,000 policies no longer are eligible for subsidies, including about 345,000 policies for nonprimary residences, about 87,000 business policies, and about 9,000 policies for single-family properties that had severe-repetitive losses. Subsidies on most of the approximately 715,000 remaining subsidized policies are expected to be eliminated over time as properties are sold or coverage lapses, as are previous exemptions from rate increases after flood zone map revisions. Reducing the financial impact of remaining subsidized policies on NFIP generally could involve accelerating elimination of subsidies, targeting assistance for subsidies, or expanding mitigation efforts, or some combination. Each approach has advantages and disadvantages. In GAO’s 2008 study about rate-setting, GAO noted that the losses generated by NFIP have created substantial financial exposure for the federal government and U.S. taxpayers–due in part to its rate-setting process.
Gosh! Are we to understand that the folks at the GAO never shared their findings with Congresswoman Waters? How rude! The least they could have done was tell her the findings were available on their website! No wonder she was shocked to learn that her constituents might have to dig into their own pockets to pay for the soothing calm of rippling waters and crashing waves. Undoubtedly, she just assumed that since American Taxpayers had been absorbing these losses since the enactment of the NFIP in 1968, that they would continue to do so. After all, isn’t that why we’ve been running budget deficits and increasing our county’s debt ceiling all these year? It’s the American Way!
But wait! How could Congresswoman Waters not know? Only a couple of pages into her law, there is a pretty clear warning of what’s to come:
PREMIUM ADJUSTMENT TO REFLECT CURRENT RISK OF FLOOD. ‘…upon the effective date of any revised or updated flood insurance rate map under this Act, the Flood Disaster Protection Act of 1973, or the Biggert-Waters Flood Insurance Reform Act of 2012, any property located in an area that is participating in the national flood insurance program shall have the risk premium rate charged for flood insurance on such property adjusted to accurately reflect the current risk of flood to such property….’ (Emphasis added.)
Wow! Is it possible Maxine never read the law? That no one on her staff gave her the Cliff Notes version? How could this be? Oh! I get it! She subscribes to the Nancy Pelosi approach to understanding federal legislation: “Pass the bill to find out what’s in it.”
The Take-Away. That Maxine Waters called flood insurance premium increases an “unintended consequence” of the law that bears her name, underscores everything that is wrong with politicians today: As a group, on both sides of the aisle, many are (a) too lazy, (b) too dumb, and/or (c) too self-absorbed, to recognize how stupid they look admitting they don’t understand the laws they pass. And in an effort to make sure the American people understand that the rest of Congress was equally clueless, she underscored the collective stupidity of her peers for passing the law she co-authored:
Neither Democrats nor Republicans envisioned it would reap the kind of harm and heartache that may result from this law going into effect.
Translation: “Don’t blame me! They ask me to put my name to the law because it was catchy, ‘Waters, Flooding….get it?’ Just because I co-authored the bill didn’t mean I was supposed to read it! Right? The rest of Congress agreed to this. They were supposed to read it. Blame them!”
OK, Maxine. You’re all a bunch of idiots. ~PCQ
