Securing Growth and Robust Leadership in American Aviation Act

Floor Speech

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Mr. PAUL. We can today renew the National Flood Program and reform it. All it takes is for the Senators assembled here not to object to the reforms.

I think that flood insurance provided by the taxpayer, subsidized by the taxpayer, shouldn't be for rich people or for their vacation home or their beach homes. Government has no business insuring rich people and their second homes. So I have some proposals to reform this system. We are being asked, though, to extend the flood program without any reforms, without any reforms to protect the taxpayers. Like many Federal programs, the flood insurance is well-intentioned, but it very well may be the best real-life example of a moral hazard.

The program covers over 5 million policyholders and provides over $1 trillion in coverage. We are told that the program is funded through insurance premiums. But charging well below the market price of insurance and capping how much these rates can rise inevitably leads to shortfalls.

A 2014 report by the Government Accountability Office found that the flood program collected as much as $17 billion fewer in premiums than what the market would have dictated. So when the program inevitably found itself in need of money, in theory, it borrowed that money from the taxpayers, not that the taxpayers had any choice in the matter. They took it. As they often are, they were on the hook regardless of whether they wanted to be or not.

Just a few years ago, the flood program owed over $30 billion to the taxpayers. Congress later canceled $16 billion in debt, but the flood program has not made any further repayment to the taxpayers and now stands at over $20 billion in debt.

In short, it is a subsidy. It is a gift. It is the taxpayers giving people who have homes along the coast subsidized rates, and we all have to pay for it.

You might say: Well, maybe some poor people have no place to go; the government has a role in that, but a lot of these homes are people's second homes.

I say we should limit the insurance to houses under a certain amount, modest homes. Some guy has a $5 million mansion on the coast of Florida should not get his insurance through the government. We shouldn't all have to pay for the insurance for some somebody who has a $5 million home.

The taxpayers are expected to cough up money whenever the program needs it, but the program doesn't seem to be in a hurry to pay the taxpayer back. But perhaps the greatest insult to the taxpayer is the lack of true limits on the delinquent program. There are no limits on how many claims that can be filed and how much money can be received by a policyholder. Rather than encourage people to leave flood-prone areas, it encourages people to stay and rebuild.

And, in thousands of instances, the program encourages people to rebuild and rebuild and rebuild. According to the PEW Charitable Trusts, over 150,000 properties have been rebuilt over and over again. In fact, 25 to 30 percent of flood program claims are made by policyholders whose properties flood time and again.

There is no learning curve here. The government provides you something for a subsidy and you got your beach home and it keeps getting flooded and you just keep building if the government will pay for it. Have Uncle Sam pay for it. Have your neighbors pay for it.

Over 2,000 properties have flooded more than 10 times. They don't move; they just keep rebuilding in an area that is a flood zone.

One home in Batchelor, LA, flooded 40 times and received a total of $428,000 in flood payments. It would have been cheaper to buy him a new home in a neighborhood that doesn't flood.

Can you imagine having to withstand the ordeal of your home flooding 10, 20, 40 times? Well, the taxpayer doesn't have to imagine paying for it because they are stuck with the bill.

Adding insult to injury, the Congressional Budget Office found that the flood program tends to benefit the wealthy and that 23 percent of subsidized coastal properties were not even the policy owner's first house. We are talking about vacation houses that average, ordinary people who are suffering to go to the grocery store are having to pay for the insurance for some guy's vacation home.

Yes, it is true. The government forces the taxpayer to rebuild the summer homes of the rich. In fact, sometimes it seems that the flood program caters directly to the wealthy. Nearly 80 percent of these flood policies are located in counties that rank with the top 20 percent of income.

Enough is enough. It is an insult to rob from the taxpayer to give to the wealthy. That is why I offer an amendment that would require the flood program to cover only primary residences, no vacation houses, and establish a cap so that only modestly priced houses would be in it.

I agree that there is a disruption. If it ends immediately, there would be a disruption. We can have an interim.

My offer today, if accepted, if not objected to, would be: Today we fix this. We can stand right here today and fix this if there is no objection. We would continue the program only for primary residences, only under a certain amount, and it would continue. We would finally reform it.

So, therefore, I ask the Senator to modify his request so that the Paul amendment at the desk be considered and agreed to; the bill, as amended, be considered read a third time and passed, and that the motion to reconsider be considered made and laid upon the table.

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Mr. PAUL. Twenty-three percent of all homes that are insured under this program, whether they are in Louisiana or any other coastal State, are second homes or vacation homes.

I would be perfectly willing to negotiate what the actual price of the home is that can be in this situation, and I would offer to modify the amendment from $250,000 to $350,000 to allow more homes to be in. But saying the median is $433,000--well, the limit right now is infinite. There is no limit. You can have a $5 million vacation home, and the government is going to subsidize it.

If we don't subsidize these houses, does that mean we are discouraging people who have wealth or have second homes? No. This has nothing to do with that. It is saying the taxpayer shouldn't subsidize rich people.

The thing is, the reform will be objected to today, and there will not be any reform to this program, and these programs go on year after year because no one will bring to light what is actually happening here.

If you were to ask the American people today ``Do you think we should be subsidizing flood insurance for people's beach house,'' I think they would say ``No. Buy your own damn insurance if you have a beach house.

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