This afternoon, the House easily passed legislation expanding FEMA’s borrowing authority to meet claims related to Super-Storm Sandy. The bill would authorize over $9 Billion in new borrowing for FEMA’s National Flood Insurance Program, in order to meet claims made by policy holders. It is the legitimate component of Sandy relief. The illegitimate, pork-laden component comes up for a vote around January 15th.
FEMA operates the National Flood Insurance Program, insuring homeowners and businesses against the costs of flooding damage. It currently has almost $8 Billion in reserves to pay claims, which is short of what it needs to meet claims arising from Sandy. The new borrowing authority will allow FEMA to meet its claims obligations.
NFIP is a flawed program, but having collected premiums from policy holders it needs to meet its obligations. Rep. Steve King (R-IA) told Breitbart News:
The insurance policy holders affected by Sandy have a contractual guarantee backed by Congress that we met today. Because Congress has created its own monopoly over flood insurance and mismanaged the risk/premium ratios, we have no ground to stand on to deny legitimate insurance claims to the victims of Sandy. I would have liked to have seen offsets, and I will continue to fight for offsets in any future disaster relief bills.
King and his colleagues will get an opportunity to fight for offsets when the broader Sandy relief bill comes up for a vote in the House around January 15th. At the end of 2012, the Senate approved a massive $60 Billion relief bill for the Northeast coping with damage from Sandy.
Spending unrelated to the storm has already attracted criticism. There is $150 million appropriated for Alaskan fisheries as well as millions of dollars for the Smithsonian for roof repairs. No doubt, further scrutiny will identify far more unrelated, pork-barrel spending in the relief bill.
More disturbing, though less reported, however, is the fact that the bulk of the relief will be channeled through HUD’s Community Development Block Grant Program (CDBG).
CDBG grants are primarily targeted at affordable housing and anti-poverty programs. State and local governments have wide discretion of how these grants are spent. The guidelines for qualifying for CDBG funding are intentionally very broad and flexible.
For example, before its unraveling, ACORN routinely received hundreds of thousands of dollars a year in CDBG funding.
Almost a third of the total Senate-approved funding, $17 Billion, would be funneled through the CDBG program. This funding mechanism was selected at the express wishes of the Obama Administration.
No doubt, there is some needed relief for the victims of Sandy. And, no doubt, a large portion of the CDBG funding will be directed towards worthwhile programs directly benefiting these programs. That said, a disaster shouldn’t provide an excuse for irresponsible spending.
When the House takes up this broader package later this month, it will provide a good litmus test on whether the new Republican majority is serious about tackling wasteful spending.