Patiently awaiting the Golden Years

Trouble in Paradise

By Randall Poulton | Sep 27, 2017

In the 1830s, Florida was described as “swampy, low, excessively hot, sickly and repulsive in all its features.” In fact, our future president Zachary Taylor said he “wouldn’t trade a square foot of Michigan or Ohio for a square mile of Florida.”

While developers have drained some of the swamps, most of the state is still barely above sea level and life without air conditioning is miserable. Just ask the millions people who lost their power as a result of hurricane Irma.

But the sand, sun and endless miles of beautiful blue waters have proved irresistible. Today, Florida boosts the fourth-biggest population in our country.

But there is Trouble in Paradise. The Florida peninsula is about 400 miles long by 200 miles wide and the whole thing is an ancient sand beach with the land along both coasts flat as a pancake. The middle of the peninsula does have a few low hills. In fact, the high point is Sugarloaf Mountain (I am not making this up!). But unlike Maine’s Sugarloaf, there is no ski area and the “summit” is just 312 feet above sea level!

Major metropolitan areas like Tampa and Miami are built right on the shoreline, where the fragile sands of the ancient beaches meet the dynamic waters of today’s oceans. Virtually all the coastal development is in the 100-year floodplain. Many of these buildings are “hurricane bait,” doomed to be washed away or blown apart.

Just how much of the Florida’s built environment is at risk of flooding is best observed by boat. You really have to see it to believe it. The density and scale of shoreland development is breathtaking. In many cases, buildings that started out as “fishing camps” or rustic beach house bungalows have morphed into architecturally elaborate mega-mansions with manicured lawns and dock systems fit for a marina.

Seemingly, millions of rich folks have temporarily imposed their idea of paradise on God’s land of mangroves and sand dunes. And it is all hurricane bait. Hold that picture.

Over the years, our government has been asked to do ever more to house, feed and generally care for its citizens. These duties are nowhere in the Constitution. Relatively recent arrivals to the feed bag of taxpayer dollars are Social Security (1935), Medicare (1965), the Federal Flood insurance program (1968) and Obamacare (2010).

While, in theory, these are all “pay-for-play” programs, the fact is they all run at a deficit (as does the Postal Service, but at least this governmental duty springs from the Constitution). When our government is asked to do more for its citizenry, it has three options to pay for it: raise taxes, borrow money or cut the funding of some other program.

This is important — just three options — raise taxes, borrow or cut. Borrowing is the easy option, which is why, as a country, we are nearly $20 trillion in debt. Ironically, today many folks think we should spend billions more each year on “expanding Medicaid” (translation: providing taxpayer-funded free health insurance to able-bodied adults). But I digress.

Okay, back to Florida. Private insurance companies know better than to insure buildings that are doomed. Or, if they do issue a policy, the premiums are sky high and there is copious fine print, e.g., flooding due to wind-driven rain is typically not covered.

So, to spur development in flood-prone areas, in 1968 our government invented the National Flood Insurance Program (NFIP). The government would now offer low-cost insurance to folks who construct or own buildings in the doomed zone. Brilliant! Worse, what was sold as pay-to-play has evolved into heavily subsidized (by all taxpayers) insurance.

Whether the government never fully understood the risk and associated costs of providing flood insurance or the taxpayers were simply swindled matters not at this point. In Florida alone, NFIP is on the hook for $42 billion in real estate, much of it located in the doomed zone. Here is what the non-partisan General Accounting Office had to say about the NFIP before Harvey and Irma:

(The NFIP) likely will not generate sufficient revenues to repay the billions of dollars borrowed from the Department of the Treasury to cover claims from the 2005 and 2012 hurricanes or potential claims related to future catastrophic losses. This lack of sufficient revenue highlights what have been structural weaknesses in how the program is funded.

Since the program offers rates that do not fully reflect the risk of flooding, NFIP’s overall rate-setting structure was not designed to be actuarially sound in the aggregate; nor was it intended to generate sufficient funds to fully cover all losses. As of March 2016, FEMA owed Treasury $23 billion, up from $20 billion as of November 2012.

And there is yet more Trouble in Paradise. The NFIP is set to “expire” on Dec. 8. The last time this happened (five years ago), Congress voted to kick the leaky can down the road. In Florida alone, there are approximately 1.7 million properties covered by the NFIP. This is because, one way or another, almost all mortgages are federally backed (as I said, banks are smart, why take a risk by yourself when big gov is willing to help).

Accordingly, practically everyone with a property in the doomed zone must purchase flood insurance. Given this complication, it is very unlikely that Congress will kill the NFIP. The bankers will send an army of lobbyists to Washington to make double-sure this does not happen.

NFIP premiums and deductibles most likely will go up (sound familiar — just like Obamacare), but there is no way the program will ever be pay-for-play. To do so would mean premiums of north of $3,000/year, just for flood insurance. So, to continue the NFIP, the government’s choices will be (all together now): raise taxes, borrow more money or cut another program.

In the end, I forecast the taxpayers will end up holding the bag — again. So the next time there is a hurricane beating the snot out of Florida, don’t feel so smug about living up here in the frozen tundra. You and I will be paying to rebuild paradise!

This month’s did you know:

FEMA’s responsibilities include more than helping the common folks when there is a natural disaster. They create the notoriously inaccurate flood maps, and the aforementioned NFIP also resides under FEMA’s umbrella.

But, did you ever hear of the “Continuity of Government” program (COG) or the “National Preparedness Directorate” (NPD)? Of course not. That is because our government prefers to treat its citizens like mushrooms — kept in the dark and fed bull doo-doo.

COG and NPD are FEMA programs designed to protect certain “chosen ones” from being incinerated in a nuclear attack or vaporized in some other catastrophic scenario. At a moment’s notice, several thousand pre-selected government officials, business tycoons and military leaders (i.e., the “chosen ones”) will be evacuated to massive secret underground bunkers run by FEMA: Mount Weather in Berryville, Virginia, will be the new Capitol and Raven Rock in Waynesboro, Pennsylvania, will be the new Pentagon. These and other similar FEMA doomsday facilities are staffed and operating 24/7/365.

Randall Poulton lives in Winterport. He writes a monthly column for The Republican Journal.

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