Warren Buffett once joked that only when the tide goes out do we realize who’s been swimming naked. Hurricane Harvey’s gale force winds and 50-plus inches of rain will give Houstonians a similarly embarrassing realization. Cable news channels fire-hosed viewers with minute-by-minute coverage of the Bayou City’s destruction, raking in advertisers’ dollars by pandering to television addicts’ insatiable appetite for vicarious pain and suffering. Devastation seems that much more enjoyable when it happens to a Trump-supporting, retrograde state somewhere below the Mason-Dixon line out there in flyover country.
Live reports provided an ethnographic jackpot for Democrat Party strategists to mine for the 2020 presidential election cycle. Risking their lives on humanitarian rescue missions, the sea dogs of the thoroughly deplorable Cajun Navy spiced their interviews with references to the “Republic of Texas.” Such catchphrases likely triggered stampedes of enlightened editors and beta-male production staff to the warm and cozy safe spaces provided in their Acela corridor newsrooms. How dare these trailer-park cretins, decked out in their Sunday best duck-hunting regalia and unironic facial hair, refer to Texas as anything other than an administrative branch of the federal Leviathan! New York Times subscribers and Lululemon sales staff, still sweaty from their killer SoulCycle workouts and interminable Uber rides home, turned on television coverage of the tragedy to spark some derisive laughter. The last thing these self-important elites needed as they snuggled with their cats and rejuvenating kale smoothies was to suffer through a harangue about states’ rights from three sopping-wet, overweight hillbillies and their hunting dog paddling a bass boat as they saved the life of a shell-shocked elderly black woman clutching her life’s belongings in a garbage bag.
Now, as the floodwaters recede, Houston’s naked swimmers will become apparent in the form of uncovered toxic-waste sites, uninsured homeowners, and a submerged federal flood-insurance program. The storm’s immediate effects include lost lives and ruined property. But those horrors will fade in our memory over the next several decades as Houston suffers under government policies designed to do anything but help victims of catastrophe.
Houston’s Highlands Acid Pit, dug in the 1950’s and filled with sulfuric acid and sludge from nearby refinery operations, still poses a threat to the local aquifer even after authorities removed more than 22,000 cubic feet of its hazardous materials in the 1980’s. Highlands resident Dwight Chandler, 62, fearful of Harvey’s effect on the local suppurating sore, fondly remembered, “My daddy talks about having bird dogs down there to run and the acid would eat the pads off their feet.” Even before the storm the government had tagged the pit as a potential hazard. But unlike the stoic television reporters who traded their investigative reporting duties for raincoats and live storm coverage, the EPA had more pressing issues to deal with than Highlands or the other toxic-waste dumps Harvey walloped. As journalists were documenting the damage to the 13 flooded Superfund sites, using “a boat to document the condition of one . . . but access[ing] others with a vehicle or on foot,” the EPA was claiming the locations had “not been accessible by response personnel.” Might be time for the EPA to outsource site-visit responsibilities to the Cajun Navy, provided it can secure work permits from the federal employees’ union.
In an ideal world, Harvey’s victims would spend the next few weeks haggling with their insurance companies over reimbursements. Unfortunately, the OECD reports that only ten percent of Americans have flood insurance of any kind. And Houston’s provident ten percent will soon learn they were sold a pig in a poke when they thought they had insured their property against flooding. Private insurers retreated from the flood-insurance market in the 1960’s after the companies mispriced several storms that destroyed their capital. Repeated mispricings eventually bankrupt private firms. So in 1968 the federal government created the National Flood Insurance Program (NFIP). The NFIP takes in roughly $4.3 billion in premiums each year, but pays out $3.7 billion in flood claims, $1.1 billion in commissions to brokers who assume none of the event risk, and $300 million in interest payments to the U.S. Treasury. Another $600 million in miscellaneous charges means the NFIP runs a $1.4 billion annual deficit, according to the CBO. But since the NFIP doesn’t have to worry about annoying details like capital sufficiency or bankruptcy the way private firms do, it flails about like a three-year-old learning to swim with financial arm floaties provided by the American taxpayer. Its $25 billion accumulated deficit from Hurricanes Katrina and Sandy in 2005 and 2012, respectively, amounts to nothing more than a nostalgic bookkeeping entry.
We can expect this unsustainable financial mess to worsen. According to estimates from the Natural Resources Defense Council, the ever-efficient federal government has spent about $5.5 billion to rebuild 30,000 houses since 1978. Those numbers might not seem so bad, until you read the footnote explaining that those same 30,000 houses represent a subset of the rebuilt population—“houses that have flooded as many as five times in a two- or three-year period.” The Council added, without joking, that it would have been cheaper for the government to buy the houses and knock them down rather than reconstruct them again and again. Try to find up-to-date flood maps of Houston’s Harris County: They don’t exist. Federal cartographers, driven by the same diligent work ethic and lucrative financial incentives as EPA site visitors, have enough trouble keeping up with Houston’s fast-paced real-estate development and whatever impact climate change has on the terrain. FEMA has reported that only 249,000 flood-insurance policies cover the 1.7 million housing units in Harris County. These policies pay a maximum of $250,000 to rebuild a house and just $100,000 for possessions. Saner voices can continue to oppose development in flood-prone areas. But as long as government subsidizes such moral hazards with below-market insurance coverage while simultaneously failing to map out where the flood risk lies, we should expect more deluges to drown our federal coffers in red ink.
Pig-in-a-poke policies are loath to pay out when the floods come, as Joanne Fogarty knows all too well. She is president of New York’s Rockaway Point Association, which represents 1,200 homeowners, a quarter of whom have yet to rebuild their homes some five years after Hurricane Sandy. In the wake of Harvey and Irma, she joined representatives of other neighborhood associations devastated by Sandy in Washington, D.C., to protest FEMA’s offers of “as little as $20,000 for $250,000 worth of damages,” according to the New York Post. “I feel horrible for the people . . . ” she said, “knowing the fight with the flood insurance program that’s coming up.”
Underscoring federal incompetence and the betrayal of citizens, Fogarty’s reflection on dealing with NFIP and FEMA serves as a dire warning to Houstonians: “The storm is the easy part.”
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