We agree with a bipartisan majority of the U.S. House that a 2012 bill to overhaul and keep solvent the federal flood insurance program went too far and wreaked havoc on homeowners in flood-prone areas including in South Carolina.
A new bill, which passed the House Tuesday and still faces Senate scrutiny, correctly aims to curtail some of the damage. That includes:
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While we support the bill because thousands of homeowners need the relief, we also believe that the bill is delaying the inevitable. Ultimately, homeowners must be weaned off subsidized flood insurance rates and must pay higher, risk-based rates if they choose to live in flood-prone areas. And in many states, it is simply illogical to rebuild in flood-prone areas devastated by storms.
The federal flood insurance program is now about $24 billion -- yes, billion -- in the red, primarily because of Hurricane Sandy and Hurricane Katrina. For all the talk from our conservative representatives that reducing federal debt is a priority, little political will exists to tackle this debt.
The bill does not reduce the insurance program's deficit. But it at least doesn't grow it. That's because the measure puts a surcharge on all flood insurance policies.
As Rep. Jeb Hensarling, R-Texas, said during the debate, the flood insurance program was "one reason America is going broke."
"It forces 96 percent of Americans to subsidize the remaining 4 percent, regardless of income or need," he added.
We appreciate his point, but also believe that the spectacularly-large rate increases that were coming down the pike under the 2012 law would have hindered the real estate market and slowed the economic recovery of cities across the country. And that's not good for anyone.
Homeowners needed and deserved relief from the unintended consequences of the sweeping 2012 reform.
As Rep. Mark Sanford, a cosponsor of the bill, said, "You can't solve the problem overnight, especially one that involves considerable financial exposure for the individual who, through not fault of their own, has relied on promises government has made in the past."
The House bill provides some temporary relief. And it may just be the vehicle to ease homeowners into inevitably higher rates.