Out of the Storm News
WASHINGTON (Nov. 8, 2013) – Efforts to delay reform of the National Flood Insurance Program must be resisted to protect taxpayers, the R Street Institute and 15 other conservative, libertarian and taxpayer groups write in a letter to every member of Congress.
As called for under the Biggert-Waters Flood Insurance Reform Act of 2012, the NFIP is set to transition some of the roughly 1.1 million participants currently receiving premium subsidies to risk-based rates. The groups argue this change “was a necessary improvement to a troubled program in massive debt to taxpayers.”
“NFIP is $28 billion in debt to taxpayers and without the improvements passed last year, this number will only continue to rise,” the groups write. “Given the grueling battle Congress just held over the nation’s debt ceiling, it is odd that some are pushing an extension of subsidies that would cause NFIP to more quickly hit its own borrowing cap of just over $30 billion.”
Moreover, the groups point out that existing subsidies disproportionately benefit wealthier homeowners, noting that among 29 percent of properties are in counties among the top 10 percent in income and 29 percent are in counties in the top 10 percent in home values.
“Passage of Biggert-Waters last year was a step in the right direction of a freer flood insurance market that is not built on payouts from taxpayers,” the groups write. “Gutting that reform by eliminating its central component of phased-out subsidies for would undo that progress and put taxpayers on the hook for billions more in NFIP costs.”
In addition to R Street, other signatories include representatives of the American Conservative Union, American Consumer Institute, Americans for Prosperity, Americans for Tax Reform, Club for Growth, Competitive Enterprise Institute, ConservAmerica, Cost of Government Center, FreedomWorks, Heritage Action for America, Less Government, Let Freedom Ring, National Taxpayers Union, Taxpayers for Common Sense and the Taxpayers Protection Alliance.
Text of the full letter can be found here:
E-cigarettes are gaining traction as legitimate harm-reduction alternatives for cigarette smokers, but one nagging question persists: should vaping be permitted in interior public spaces?
With few exceptions, indoor smoking bans, which protect nonsmokers from exposure to thousands of airborne toxins, are now the standard. Tobacco prohibitionists would extend these measures to cover e-cigarette vapor. E-cigarette enthusiasts insist they should be able to vape wherever they like, since their products’ vapor is harmless. I’ll suggest a compromise that will please no one in these polarized factions.
E-cig fans point to scientific evidence that suggests that e-cigarette vapor confers extremely low health risks. The Food and Drug Administration reports that adverse events related to e-cigarettes are virtually nonexistent, and it is unlikely that inhaling a mist of water, propylene glycol or glycerin, nicotine and flavors – even for an extended period – will lead to any medical illness.
Consumer Advocates for Smoke-Free Alternatives funded a study of e-cigarette aerosols by Igor Burstyn at Drexel University’s Department of Environmental and Occupational Health. He concluded that:
There is no evidence that vaping produces inhalable exposures to contaminants of the aerosol that would warrant health concerns by the standards that are used to ensure safety of workplaces…the aerosol generated during vaping as a whole (contaminants plus declared ingredients), if it were an emission from industrial process, creates personal exposures that would justify surveillance of health among exposed persons in conjunction with investigation of means to keep health effects as low as reasonably achievable. Exposures of bystanders are likely to be orders of magnitude less, and thus pose no apparent concern.
Professor Burstyn’s report on his thorough investigation has not yet been published in a peer-reviewed forum.
The problem is that, however innocuous e-cigarette aerosols are, a bystander exposure level that is “orders of magnitude” lower than for vapers is still not zero. Modern indoor environments are remarkably free of obvious airborne contaminants, such as smoke or noxious odors. As a society, we frown upon indoor emissions of all types. Interestingly, unobserved e-cig use is effectively undetectable, as resulting vapors dissipate almost instantly. Vapers often suggest that indoor e-cig bans will force them outside, where they may return to deadly cigarettes. The reality is they can stay indoors and continue vaping, so long as they are discreet – no one will know.
Still, it is unreasonable for vapers to expect that they will be given a free pass to use e-cigarettes in every interior public space. The fact that e-cigarette aerosols are low-exposure and low-risk for bystanders does not make a compelling case to allow them.
Vapers should realize that the vast majority of Americans do not use any form of tobacco, are ill-informed at best about e-cigarettes, and are uncomfortable with others exhaling clouds of an unknown substance.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
Like most Americans, I enjoy attending live entertainment events. But also like most Americans, I find the complex world of online ticket sales as user-friendly as the Healthcare.gov website. Navigating a mass of specialty pre-sales, credit card promotions, online ticket queues and a swath of venue and seller fees makes attempting to attend a concert or sporting event a costly and complicated experience.
Which is why I tend to prefer to get my tickets secondhand, on an open market on StubHub, where I might pay a little more than the suggested retail price of the ticket, but can choose my seats and my budget in a straightforward, ostensibly free-market atmosphere.
I suppose if I were really pressed for time, I could also purchase my tickets from someone holding them up in a fan shape outside of an event venue. But in most states, despite the secondary online markets where tickets can sell for more than face value, selling tickets person-to-person on a street corner for even a penny over the printed price is a crime.
The law, of course, that prohibits person-to-person sales of tickets over face value, is unquestionably designed to curb a market and preserve the profits of a few, while ostensibly making tickets more expensive for the average consumer. Under the guise of preventing counterfeiting and venue integrity – and eliminating middle men – ticket companies have long objected to any change in the law that opens ticket sales up to the free market, even as technology and consumer demand has long passed them by.
In Michigan, Rep. Tim Kelly has introduced a bill that would loosen the ban on person-to-person ticket sales, or ticket “scalping,” allowing free competition in a secondary marketplace for event tickets. In the Legislature and in the public square, there has been little opposition. From those who are working to protect their stranglehold on ticket sales, however, there have been a few thin arguments.
Clearly, venues and ticket sellers are concerned about activities like counterfeiting, scalping and “bulk ticket purchases,” all of which, they say, ruin the consumer’s purchasing experience. But innovations in technology like electronic ticketing have already made counterfeiting tickets more difficult, and while the practice of counterfeiting is a serious crime, it has little to do with consumer choice.
Scalping and bulk ticket purchases already happen, as anyone who has ever attempted to purchase a wristband for a summer music festival like Lollapalooza already knows; “scalpers” or “ticket sales companies” purchase nearly all of a festival’s wristband passes and turn to sites like StubHub to sell them at twice their face value, with the blessing of ticket sales companies who have forged deals with online retailers like StubHub specifically to allow ticket resales. Consumers still pay, sometimes twice face value for tickets to these events, but because the transactions take place on a clean, well-designed website that accepts credit cards and allows users to trumpet their purchases on social media, rather than through an exchange outside of the music venue itself, they are magically deemed acceptable.
That makes the law inconsistent at best and a troublesome burden on the free market at worst.
Ultimately, opposition to allowing person-to-person ticket reselling is about maintaining a strict hold on profit. Ticketmaster, for example, already controls more than 80 percent of ticket sales, but is one of the most vocal opponents of ticket re-selling. Unless, of course, you sell the ticket through Ticketmaster’s own online resale website, where Ticketmaster is able to take a cut of any profits made by reselling a ticket for more than face value, and can charge a fee to transfer the tickets from one consumer to another.
In any other industry, we would consider this kind of inconsistent law, which protects the profits of a small group of producers, a travesty. But in the realm of event ticket sales, we are uniquely willing to stifle the free market, even if it means more convenience to the consumer, and even if it means that these retailers who have their own secondary markets might be able to make an even greater profit on particularly rare tickets.
The Michigan law is a good start that should expand to other states, as the free market opens and consumers are presented with a greater landscape of choices when purchasing their event tickets, and an inconsistent, outdated law gets corrected.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
American Enterprise Institute President Arthur Brooks recently claimed the right needs to declare a ceasefire on the safety net, a controversial statement for the leader of what is arguably Washington’s top center-right think tank. According to Brooks, those in need want three things – transformation, relief, and opportunity.
Forthcoming research from Mark Rank of Washington University in St. Louis, Thomas Hirschl of Cornell University and Kirk Foster of University of South Carolina helps to bolster his case. Their research shows that during the last 40 years, almost 40 percent of Americans lived in poverty for at least one year between the ages of 25 and 60. But while many Americans find themselves falling on hard times, only 11.6 percent spend five or more years in poverty. Even more importantly, only 6.1 percent of adults in this range spend five consecutive years in poverty, and less than 2 percent stay there longer than ten years.
So for a large swath of Americans, poverty is a temporary circumstance. Many of these Americans take advantage of means-tested welfare programs while they are there. But most of them move out of poverty, and out of the programs.
However, given the 11.6 percent figure, it’s worth noting that many Americans either are hovering around the poverty line or slipping back into poverty through repetitive hardship. It wouldn’t appear, though, that these individuals aren’t trying to take advantage of opportunity, or, as the harsher rhetoric would have it, becoming dependents. The reentry into poverty is more likely due to some combination of the changing nature of work, family hardship and lack of educational attainment.
Brooks called the ability to provide a safety net one of the Western world’s greatest achievements. With 40 percent of Americans experiencing extreme want at some point in their lives and too many living at the edge of poverty for extended periods, Republicans would do well to think through Brooks’ message.
Certainly incentives matter, and welfare programs should always be structured as a hand up, but this snapshot view of 40 years of economic life in America shows it to be uncertain and difficult. It adds to the already large literature on decreased mobility, stagnating wages and broken civil society. But it also shows that Americans are taking opportunities as they find them and attempting to move up. Conservatives should tread carefully when discussing a side of life so many Americans have experienced and programs in which even more Americans have taken part.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
The following comments by R Street Policy Analyst Lori Sanders were delivered at the Environmental Protection Agency’s Nov. 7 public listening session on regulation of carbon emissions from existing power plants.
I’m Lori Sanders, and on behalf of the R Street Institute, a free-market think tank headquartered in Washington, D.C., I’d like to thank you for the opportunity to speak on the record today regarding our concerns with the forthcoming EPA regulations on power plants and industrial sources of greenhouse gas emissions like carbon dioxide.
The president has outlined an expensive and complex scheme for EPA to regulate greenhouse gas emissions from existing power plants. This policy is likely to cause serious disruptions to electricity generation and to the economy as a whole. Earlier executive action had already applied stricter standards for building new electricity generation facilities, effectively making it impossible to build coal-fired power plants due to their high concentrations of carbon dioxide emissions.
But applying the heavy hand of the EPA to existing facilities is poised to be a game changer. A centralized, command-and-control regulatory scheme is likely to be extremely expensive, unevenly applied, and opaque for businesses and consumers. The result will be large deadweight losses associated with compliance for what are ultimately relatively small reductions in global carbon dioxide emissions.
In fact, it seems highly likely that this strategy will leave the U.S. less able to deal with the consequences of climate change in the future, as it will have little effect on global temperatures while having substantial negative impacts on our economic vitality. We strongly believe that the best defense against a changing climate is to have a wealthy and prosperous society that can afford to deal with its effects.
To be clear, we at the R Street Institute recognize the scientific consensus on climate change and are well aware of the negative impacts that it might hold for the United States. That is why we have been actively engaged in trying to offer solutions that will allow our nation to protect against these effects without unduly empowering government or harming our economy.
First and foremost, the federal government should stop encouraging behavior that exacerbates negative climate impacts. For example, our National Flood Insurance Program has spent billions subsidizing policies for people living on the coast, putting them at risk should sea levels rise substantially and placing them in the path of natural disasters.
Second, Congress and the administration should work to craft a market-based alternative to this regulatory scheme that relies on a price signal for carbon dioxide in the context of revenue-neutral tax reform. Such a plan could provide an economically-efficient alternative to EPA dictates that could address emissions without growing government.
November 7, 2013
An Open Letter to the United States Congress: Don’t Gut Flood Insurance Reform by Extending Subsidies!
Dear Member of Congress,
On behalf of the millions of members of the undersigned organizations, we write to urge you to oppose efforts to extend wasteful flood insurance subsidies for an additional four years. Last year’s overhaul of the National Flood Insurance Program (NFIP), the Biggert-Waters Flood Insurance Reform Act of 2012, included important changes to the program’s structure to reduce costs to taxpayers and risks to homeowners. The crux of that reform, a phase-out of subsidies to transition more participants to risk-based rates, was a necessary improvement to a troubled program in massive debt to taxpayers. Efforts to delay these changes must be resisted.
The purpose of transitioning to market-based rates is to better align insurance costs with flood risk. Persistent subsidies for flood-prone areas will place more people and more property in the path of the next big storm, raising both the human and financial cost of any significant weather event.
At a time when our nation faces tough fiscal challenges, the market-based reforms in Biggert-Waters put the deeply indebted flood insurance program on sounder fiscal footing by scaling back huge taxpayer subsidies. NFIP is $28 billion in debt to taxpayers and without the improvements passed last year, this number will only continue to rise. Given the grueling battle Congress just held over the nation’s debt ceiling, it is odd that some are pushing an extension of subsidies that would cause NFIP to more quickly hit its own borrowing cap of just over $30 billion.
Further, it is important to understand where the majority of subsidies actually flow. 29 percent of the properties located where NFIP operates are in counties with the highest 10 percent of income, and 43 percent of subsidized properties are in counties in the top 10 percent of all home values. Extending subsidies to these homes is simply not justifiable.
Finally, the recently released flood maps from the Federal Emergency Management Agency cast doubt on some of the wilder claims of total loss roughly once every ten years, properties for which mitigation or buyouts might be appropriate.
Passage of Biggert-Waters last year was a step in the right direction of a freer flood insurance market that is not built on payouts from taxpayers. Gutting that reform by eliminating its central component of phased-out subsidies for would undo that progress and put taxpayers on the hook for billions more in NFIP costs. We urge you to resist such efforts.
Andrew Moylan, R Street Institute
Larry Hart, American Conservative Union
Steve Pociask, American Consumer Institute
Christine Hanson, Americans for Prosperity
Grover Norquist, Americans for Tax Reform
John Tate, Campaign for Liberty
Chris Chocola, Club for Growth
Iain Murray, Competitive Enterprise Institute
Rob Sisson, ConservAmerica
Mattie Duppler, Cost of Government Center
Matt Kibbe, FreedomWorks
Michael A. Needham, Heritage Action for America
Seton Motley, Less Government
Colin Hanna, Let Freedom Ring
Pete Sepp, National Taxpayers Union
Ryan Alexander, Taxpayers for Common Sense
David Williams, Taxpayers Protection Alliance
The Obamacare rollout has been a disaster. In sharp contrast to the devastating technological effectiveness of President Obama’s 2012 campaign, HealthCare.gov has become the butt of jokes not just from Republicans, but also from supporters like Jon Stewart and The New Yorker. Meanwhile, it has become excruciatingly clear that the very structure of the law is punishing large swaths of the president’s own demographic base—the young. As David Frum observes:
The ACA was ingeniously designed to deliver benefits to Democratic constituencies and impose costs on Republican ones. The big surprise in the ACA rollout is that this design is going awry. It’s not only plutocrats and one-percenters who will find themselves worse off; not only the comparatively affluent retirees enrolled in Medicare Plus programs. Self-employed professionals who earn too much to qualify for ACA subsidies will soon discover what I have discovered: They are paying more for a worse product.
Obamacare offloads the cost of providing insurance substantially below market price to older consumers by frontloading its costs onto the self-employed and already financially-squeezed millennial generation. In fact, it does this by design. But while this unhealthy arrangement might warm Obamacare’s “losers” to the GOP’s critique of the law (or even dissuade them from signing up for insurance), it isn’t going to upend party dynamics. The GOP needs to have a better alternative on offer than what Democrats are proposing, and the credibility to have its alternative taken seriously. Republicans have neither. What is more, young people appear to have noticed, given that 51 percent of them still hold a positive opinion of Obamacare.
Start with the lack of a better alternative. While anyone who watched Ted Cruz’s epic filibuster knows very well that the GOP has strong feelings about health care, it lacks a consensus around reform. This is not to say that no plans exist: Rep. Tom Price of Georgia, for instance, has offered up an interesting if overlooked proposal. Conservative wonks have outlined numerous approaches. But the party itself has not endorsed or officially put forth anything approaching a competing plan. Since Congressional Republicans failed to participate in the legislative process that produced Obamacare in the first place, that’s a problem.
Given the understandable economic anxiety of young people, many of whom have yet to feel the effects of “rate shock” because the law also allows them to remain on their parents’ plans until the age of 26, the idea of turning to a party that would take away even a temporary life raft, with no constructive alternative, is unacceptable to them. But even if the GOP introduced a bill that would really address the problem of rising health-care costs, and give every young person the opportunity to afford a solid insurance plan, and ran on it starting tomorrow, it wouldn’t make much of a difference. The GOP would not be trusted to make good on such an offer by most Americans generally, or by young people in particular.
Let us not forget that a few weeks ago, the GOP stood at its lowest approval rating in the history of the Gallup poll, and that post-shutdown anger may have motivated voters in Virginia to elect Terry McAuliffe over Ken Cuccinelli. The backlash will probably ebb by next year, but that presumes that the more belligerent forces within the GOP won’t try to reproduce this unpleasant episode in the next CR battle, once more plunging the GOP’s numbers into the depths of the abyss. With young people, their numbers are already there, for a few key reasons.
First of all, the GOP is madly, impossibly out of touch with the next generation on social issues (which many of them actually prioritize over economic concerns). Millennials overwhelmingly support gay marriage, for instance, whereas the GOP still stands in thrall to a section of the electorate that is literally dying off, as George Will puts it. This is symptomatic of a much larger disconnect between Republicans and young people, as many are simply ambivalent about religion. Fully 25 percent of millennials have no religious affiliation at all, according to a Gospel Coalition poll taken last year, and 62 percent view Christianity as excessively judgmental. Unsurprisingly, this translates into more liberal social views—six in ten young people favor at least some legal means to get an abortion, according to the same poll, for instance. Social conservatives might rightly point out that young people have the wrong impression, but they will have difficulty being heard when one of their standard bearers insists that rape can’t result in pregnancy.
What’s more, the GOP’s economic agenda, which ought to be seen as both realistic and aspirational, is too often pushed by its activist exponents as an opportunity to punish “freeloaders” and even their own offspring. This odd sentiment was documented by the sociologist Theda Skocpol:
Some of those ‘people who don’t work’ are the young. Deficit hawks on the think tank circuit like to talk about ballooning government spending on Social Security and Medicare—programs that benefit the elderly—as ‘generational theft.’ But the tea party rank and file, 70 percent to 75 percent of whom are over 45, are concerned about a very different generational struggle. This is a revolt of the grandparents’ generation—at least the conservative grandparents—and they are worried the feckless youth are taking over the country and emptying the state’s coffers. These young ‘freeloaders” include the tea partiers’ own relatives.
‘Charles’ told the researchers, ‘My grandson, he’s 14 and he asked, ‘Why should I work, why can’t I just get free money?’ ‘Nancy’ complained about a nephew who had ‘been on welfare his whole life.’ ‘The conditions for young adults to establish themselves have changed radically,’ Ms. Skocpol told me. ‘It is harder for young adults. They may live at home longer. And that manifests itself in ways that are easy to condemn morally. The older generation is having a little trouble understanding what is happening to their children and especially grandchildren.’
It is simply too easy for young people to look at the GOP and see reactionary baby boomers operating out of a misguided nostalgia, decrying federal spending while yelling at the government to get its hands off their Medicare. These flaws might be easily dismissed, even by young voters, if the party had a record of healthy reform. But as far as young people are concerned, Republicans are directly responsible for our current economic woes.
Kristen Soltis Anderson at the Winston Group has been described as “the Republican Party’s leading millennial pollster.” Her report, issued under the aegis of the College Republican National Committee (CRNC) earlier this year, described the problems Republicans face with young people and is worth a second look. See page 32 of the report, where Anderson shows that 51 percent of young people blame the Great Recession on Republican economic policies, while 55 percent blame it on (wait for it) the wars in Iraq and Afghanistan. Obamacare’s early failures will only get Republicans so far. To quote Anderson’s report:
For those respondents who said they approved of the job Obama had been doing as president, the number one word they used? ‘Trying.’ He was trying. Young voters were disappointed in Obama’s performance, but gave him credit for attempting to improve the situation. In our focus groups, many respondents strongly defended President Obama even while acknowledging the mediocrity of the last four years.
And the Republicans? Young people simply don’t trust them. In fact, despite agreeing with the GOP that raising taxes on small businesses is detrimental, young people still trust Democrats more than Republicans to make it easier to start businesses and get jobs. Why? To quote Anderson again:
In our focus group of young aspiring entrepreneurs who voted for Obama, respondents noted that Republicans were the more ‘pro-business’ party. Yet when asked why they voted Democratic despite their desire to start a business themselves, the responses were clear: ‘I don’t think [the Republicans] would make it easier for small businesses.’ ‘A corporation, maybe, absolutely. A small business?’ ‘The Republican Party would make it really easy to start a business and have a successful business if you already have that capital in your bank account, because you’re not losing that money. But we’re all sitting on our own various debts and our student loans, and the Republican Party isn’t helping us with any of that.’
Put this together, and you get a bleak picture: Young people believe that while President Obama’s policies (Obamacare chief among them) might be mediocre or worse than nothing, they give the president credit for trying to make things better. Whereas they hold the GOP responsible for a recession that has cost many of them the careers they were raised to expect, a view apparently confirmed by a party that seems to openly favor big companies and the already rich. Obamacare’s glitches—and cancellation notices—however off-putting, won’t transform this perception. The Affordable Care Act might be on the whole bad for the young and healthy, but until Republicans present a unified alternative in good faith, and engage in practical reforms, they will remain shut out of the conversation.
WASHINGTON (Nov. 7, 2013) -– In light of recent attention over the closure of the National Parks System during October’s federal government shutdown, a new paper from the R Street Institute calls on conservatives and liberals both to re-evaluate their federal conservation priorities, including expanding opportunities to use federal lands to spur the recreation economy.
In a new report, set to be published Nov. 12, R Street Associate Fellow Ryan Cooper poses that the classic dichotomy of “the environment” versus “the economy” is woefully incomplete. Just as environmental devastation can cause social and economic problems, a small-government approach to environmental preservation can be a source of economic benefits.
“Government-lite” conservation is an approach where federal lands are opened up to visitation consistent with the long-term health of the attractions, founded on a good working relationship with local communities. This approach can create long-term economic benefits in nearby “gateway” communities and the nation as a whole, while preserving America’s natural heritage.
“It’s a moderate path between total preservation and totally unrestricted resource exploitation, conserving those places that lure tourists, while still permitting resource extraction and devolving authority to states or the private sector where appropriate,” Cooper writes.
R Street invites you to join Cooper and local business leaders for a teleconference discussion of the issues raised in his paper.
DATE: Nov. 12, 2013
TIME: 2 p.m. EST/11 a.m. PST
DIAL-IN NUMBER: 1-800-356-8278
CONFERENCE CODE: 127706
JMI and the R Street Institute recommend ten reforms to fix Florida’s property insurance marketplace without raising rates
TALLAHASSEE, Fla. (Nov. 7, 2013) – On the heels of certain reforms in Florida’s 2013 Legislative Session, the James Madison Institute and the R Street Institute today released a policy study that outlines pragmatic reforms that would have a meaningful effect on stabilizing the Florida property insurance market without requiring big hikes in primary insurance rates.
The study — titled “Ten Reforms to Fix Florida’s Property Insurance Marketplace – Without Raising Rates” — reports that, despite storm risks, Florida has seen its population and its built environment grow dramatically; growth has increased the state’s coastal exposure by $2.9 trillion, the most of any state.
Additionally, the report notes that the property insurance market is plagued by uncertainty, government intrusion and regulatory overreach, and that there is an ongoing risk that multiple government agencies might levy assessments on property insurance policies after a major storm or series of lesser storms poses a meaningful risk.
“What makes Florida unique is not only the meteorological risks it faces, but its political, regulatory, tort and judicial environment,” writes R Street Senior Fellow R. J. Lehmann, the study’s author. “For too long, Florida has bet its public safety and fiscal health on the weather, but the state’s ongoing, statistically implausible winning streak cannot continue indefinitely.”
Reforms recommended include:
1. Implement the Hager incremental Cat Fund reduction plan
- To take advantage of falling private reinsurance rates, gradually reduce the Cat Fund’s mandatory coverage by $3 billion over a three-year period, but allow an “override” in an emergency situation or if private reinsurance rates spike to permit the Cat Fund to return to offering up to $17 billion in coverage.
- Revamp the current nine-member Cat Fund Advisory Council to include financial advisors, actuaries and other experts.
2. Establish requirements for “assignment of benefits” provisions
- Third parties that enter “assignment of benefits” arrangements with insureds should be bound by the same contract requirements as the original policyholder.
- To protect consumers, assignment of benefits agreements should include an opt-out period for those who may have felt compelled into signing over their insurance benefits under pressure by a vendor or the stressful circumstances surrounding a claim.
3. Implement incremental Citizens eligibility reform with a “circuit breaker”
- Increase the eligibility standard for Citizens – currently at 15 percent— by 2.5 percentage points until it reaches 100 percent.
- To avoid rate increases, the hike in eligibility requirements would take effect only in years in which overall prices decline.
4. Allow excess and surplus lines carriers to do voluntary take-outs from Citizens
- Only surplus lines insurers meeting strict financial criteria should be allowed to take policies out of Citizens.
- They should maintain at least $50 million in surplus; receive or maintain an A.M. Best Financial Strength Rating of A- or better; maintain resources to cover a 100-year probable maximum loss at least twice in a hurricane season; and gree to provide coverage substantially similar to that of Citizens.
5. Remove non-primary residences from Citizens and continue reduction of Citizens’ maximum coverage
- Continue annual reduction in Citizens’ coverage limit for two additional years, until it reaches $500,000.
- Examine an effective way of removing non-primary residences from Citizens.
6. Expand 2013′s coastal preservation concept to bar other state programs from providing coastal subsidizes
- End government-funded incentives for development seaward of the CCCL and in areas lying within the Coastal Barrier Resources System, with exceptions for public safety, wildlife protection and recreation.
- Private citizens should be free to develop their own land at their own expense, but government should not fund, subsidize or otherwise encourage development in high-risk and/or environmentally sensitive areas.
7. Implement tough, new Citizens and Cat Fund conflict-of-interest policies and make protecting taxpayers a focus of both entities
- Reexamine both Citizens and the Cat Fund’s core missions to include protecting taxpayers as a focus of each organization.
- This may require: taxpayer-protection clauses as part of the job descriptions of all senior management; requiring an annual hearing on taxpayer protection; requiring an independent report on taxpayer protection each year that examines discretionary expenditures and organizational actions taken to reduce the likelihood or severity of post-hurricane assessments.
8. Create an expert panel to advise the state on the use of RESTORE Act funds
- Create an ad hoc panel of experts and task them with advising the state on how to best invest RESTORE Act funds on eligible projects that yield the greatest hurricane mitigation benefits
9. Establish fair settlement procedures
- Treat first- and third-party claims in the same manner.
- Require all claimants to submit written notification to the Department of Financial Services of an insurer’s failure to pay a claim, waiting at least 60 days before filing a lawsuit alleging bad faith during this period by tendering either the amount demanded in the notice or the applicable policy limits.
- Require third-party claimants to provide basic notice to an insurer of his or her loss ad establishing a set, reasonable time frame – such as 45 days – for an insurer to pay either an agreed-upon amount of the policy limits.
10. Require an annual report on the combined post-storm bonding capacity of Citizens, the Cat Fund and the Florida Insurance Guaranty Association
- Direct the Investment Advisory Council of the State Board of Administration to provide an annual report estimating the bonding capacity of Citizens, Cat Fund and FIGA, taking into account the possibility that all would seek to execute bond issues in close proximity to one another following a hurricane season that adversely impacted Florida.
“Loopholes in the legal process have created fraud, increased litigation and unprincipled claims practices,” said Dr. Bob McClure, JMI president and CEO. “It’s unfortunate that interconnected policies pursued by the Legislature, previous governors, and the Office of Insurance Regulation have led to a dysfunctional property insurance system – one that has distorted pricing, undermined competition, and placed a heavy burden on the state’s taxpayers.”
In summary, the study encourages the Legislature to shrink its state-run, taxpayer-backed entities – Citizens Property Insurance and the Cat Fund – to decrease the likelihood or severity of post-hurricane taxes that could threaten to impair the state’s economic recovery. Additionally, the Legislature should take steps to address cost drivers that are adversely impacting consumers, even during these hurricane-free years and ultimately find market-based ways to discourage risky development in coastal areas also as to make Florida more physically resistant to storms.
“Although the ten proposals outlined in this study would not solve all of Florida’s insurance-related problems, they could make significant headway without raising rates on consumers during a fragile economic recovery,” said Lehmann.
The full study is available at:
Florida’s property insurance system remains broken and need of significant changes. Past studies from the James Madison Institute have demonstrated the challenges that Florida’s unstable property insurance market poses to the state government’s fiscal situation and to the state’s overall economy. The market is plagued by uncertainty, government intrusion, and regulatory overreach. Moreover, the ongoing risk that multiple government agencies might levy assessments on property insurance policies after a major storm or a series of lesser storms poses a meaningful risk to the state’s post-disaster economic recovery.
Over the past few years, legislative action and private sector innovation have somewhat diminished these risks, but more remains to be done. Some of the remaining reforms may be somewhat painful to those who benefit from the status quo, but a failure to act could exacerbate the kinds of pain that would occur following a major storm.
It is not news that Florida has been struck by more hurricanes than any other state. The state is a low-lying tropical peninsula jutting 500 miles into the most hurricane-active waters in the world, just as it was 20 years ago and 100 years ago. It has also experienced some of the most powerful and damaging storms. Indeed, the strongest hurricane to make landfall in the United States was the “Labor Day Hurricane” that struck Florida in 1935.
As of this writing, Florida had enjoyed eight years in which no hurricane made landfall. That was the longest such “drought” on record, but it is no cause for complacency.
Despite its storm risks, Florida has seen its population and its built environment grow dramatically. Indeed, the state’s population has almost tripled since 1970, growing from 6.7 million residents to more than 18 million. Even during the new century’s first decade, when many perceived a slump in Florida, the state still added more than three million residents and grew 17.6 percent.
This growth has increased Florida’s total coastal exposure to $2.9 trillion, the most of any state. Indeed, Florida has more property at risk than all of the other “hurricane alley” states (Virginia, North Carolina, South Carolina, Georgia, Alabama, Mississippi, Louisiana, and Texas) combined. Florida’s geographic location and the concentration of property in the state’s riskiest coastal areas are fundamental realities that can’t be changed. But they also have relatively little to do with the decisions by many major property insurers not to expand their business in Florida, and nothing to do with the instability of the state’s property insurance market. What makes Florida truly unique is not the meteorological risk it faces, but its political, regulatory, tort, and judicial environment.
According to the New York-based Insurance Information Institute, non-catastrophe claims in Florida have increased roughly 17 percent per year over the past decade. The cost passed on to consumers to cover these claims is exacerbated by legal loopholes that have led to unscrupulous claims practices, increased litigation, and fraud.
Moreover, the deliberate, interconnected policies pursued by the Legislature, previous governors, and the Office of Insurance Regulation (OIR) have led to a dysfunctional property insurance system that has distorted pricing, undermined competition, and placed a heavy burden on the state’s taxpayers. This has been accomplished through Florida’s two property insurance mechanisms: the Citizens Property Insurance Corp. and the Florida Hurricane Catastrophe Fund (Cat Fund).
For too long, Florida has bet its public safety and fiscal health on the weather, but the state’s ongoing statistically implausible winning streak cannot continue indefinitely. The risk of collapse is simply too great to put off fundamental changes any longer. This study, published jointly by R Street and the James Madison Institute, outlines pragmatic reforms that would have a meaningful effect on stabilizing the Florida property insurance market without requiring big hikes in primary insurance rates.
From the Daily Caller:
The idea of implementing a carbon tax in lieu of EPA regulations is also being pushed on the federal level by the R Street Institute — a group pushing a tax on carbon as a “conservative” solution to federal environmental regulations.
“While a revenue-neutral carbon tax would likely help reduce emissions, that’s not the primary reason the U.S. should consider one,” Andrew Moylan, a senior fellow with R Street, told the Daily Caller News Foundation in an email. “The top justifications are to allow for elimination of Obama’s expensive and heavy-handed EPA regulations and to improve economic efficiency.”
On the heels of certain reforms in Florida’s 2013 Legislative Session, the James Madison Institute and the R Street Institute released a policy study that outlines pragmatic reforms that would have a meaningful effect on stabilizing the Florida property insurance market without requiring big hikes in primary insurance rates…
When one thinks of ticket scalpers, one generally conjures a mental image of shady men waiting outside theaters offering scandalously overpriced tickets to late buyers from under several layers of trench coat. In Michigan, this less than savory image is only enhanced by the addition of criminality to a hypothetical ticket scalper. Yes, that’s right, in Michigan, reselling a ticket for even a penny over its face value is illegal, even for private citizens who can’t make events.
This unquestionably anti-market law limits who can sell particular commodities. It is, moreover, an odd example of an anti-market law in that it attempts to limit competition from more expensive sellers. There is no immediately obvious reason these sales would harm venues, who have already been paid for the tickets and fill their seats either way. The only question is who will ultimately pay the most for the privilege of sitting in those seats.
Michigan state Rep. Tim Kelly, R-Saginaw, recently introduced a bill that would lift the ban on ticket scalping, allowing free competition. Opposition has, so far been thin on the ground, though a few arguments have emerged against the idea, most of which are either plagued by inconsistency, or make little sense when applied to any other industry.
The first and most obvious complaint is that tickets might be counterfeited and sold at a ridiculously high rate. This, however, is not an argument for making scalping illegal, but for more aggressive fraud prosecution and better anti-counterfeiting measures. The existence of paperless tickets on sites like Ticketmaster (about whom, more in a moment) is one example of innovation rising to solve this problem without the necessity of law.
The second complaint is that venues have the right to attach whatever conditions to tickets they like — for instance, in the case of the National Football League attaching many anti-resale conditions to Super Bowl tickets. This is not an argument for a ban on scalping, although it relevant to the question of whether to ban restricted use tickets, as New Jersey does. Instead, it strips away a property right – the right to resell – from all event tickets, and thus would hurt those venues who would otherwise be fine with extended that right to ticket buyers.
In other contexts, the idea of a market middle man who profits from the resale of goods is not one we find inherently offensive. If we did, retailers wouldn’t exist.
The argument against permitting an open ticket market would be more resonant if there weren’t already major loopholes in the law that benefit powerful. Michigan bars the resale of tickets above face value, unless the reseller receives permission from the original seller. Sites like StubHub.com enter contracts with venues, promoters and sports teams that sanction them to resell tickets. Then there’s Ticketmaster, which already controls roughly 82 percent of the market for major venue ticketing services and is becoming a major player in the secondary market, as well. As Albert Foer, president of the American Antitrust Institute, pointed out in a recent New York Times op ed:
Ticketmaster says its restrictions on the resale and “gifting” of its paperless tickets act as safeguards against various practices: scalping; the bulk purchasing of tickets by automated software bots; and the use of counterfeit, stolen or lost tickets.
But in reality, the restrictions represent an effort to control the secondary-ticketing market and stifle competition from independent resellers and resale marketplaces like StubHub, where tickets are often sold for less than face value. (The American Antitrust Institute, of which I am president, received a modest contribution, in the form of sponsorship of a conference last year, from an advocacy group financed in part by StubHub.) Paperless tickets bought through Ticketmaster may be resold, for example, only through its own resale Web site, which often prohibits sales below face value, sets maximum sale prices and charges a fee for transfers.
Economist Mark Perry has been even more harsh, pointing out that in some cases, Ticketmaster’s fees end up adding as much as 29 percent to the face price of a ticket. This kind of skimming led comedian Louis CK to refuse to do business with the site, claiming its willingness to sell tickets for more than they actually cost hurts his fans, and by extension, him.
And, wouldn’t you know it, Ticketmaster has already come out against similar measures to this one, calling them “attempt[s] by out-of-state ticket scalpers to use legislation to shake the marketplace to protect their profits to the detriment of fans in Michigan.” Which is precisely what Ticketmaster itself, by virtue of selling paperless tickets which make competition harder, is doing. This kind of innovation on their part is not necessarily bad, but it is surely a stretch to ask Michigan to allow only one ticket resaler to operate within their state, while shutting out all the others.
Bottom line: The current law in Michigan is not merely anti-market, but inconsistent. Rep. Kelly;s bill is a step in the right correction with respect to both errors.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
In case you missed it, Vincent Orange and other District Council members want to commission a study to look into building an enormous, 100,000-seat stadium and recreational complex on the site that currently houses Robert F. Kennedy Stadium. Doing so would probably cost between $500 million and $1 billion, and, if recent moves are any indicator, such a deal would likely include hundreds of millions of taxpayer dollars going directly into the pockets of a wealthy team owner.
Building another sports arena to replace RFK would also compound previous land-use blunders that the district is still paying for today. The current stadium is almost always empty, and surrounded by a sea of vacant parking lots. There are only a handful of soccer games held at the stadium each year, and it operates at a $1 million loss to the district government. Once the new D.C. United Stadium opens, RFK will be essentially useless. Building another stadium in its place sets us up to be in the same situation down the line, as teams vacate for a newer stadium elsewhere.
Nearly any other use for the land would be an improvement over a stadium. Given the extreme shortage of affordable housing in the district, the best policy would be to auction it off in small parcels, zoned for mixed-use residential development. If built at a density roughly equal to the surrounding neighborhoods, the land could become home for thousands of people while making rent more affordable throughout the district. Doing so would require working with the National Park Service and, perhaps, an act of Congress, but so would the Superdome boondoggle.
Razing RFK and building housing wouldn’t even mean that we won’t have a stadium to enjoy, either. If we don’t waste our own public funds, there are probably nearby suckers in Maryland who will subsidize a stadium for us.
Spending large amounts of public money on a stadium to create economic growth is more becoming of a dying city like Detroit, and doesn’t make sense for Washington. To adapt a recent quote from Councilman Orange: “We’re at a point where we don’t need sports teams. Sports teams need us.”
From the Daily Caller
“The wind industry has very little to show after 20 years of preferential tax treatment; it remains woefully dependent on this federal support,” wrote conservative groups, including the American Energy Alliance, FreedomWorks and the R Street Institute. “Yet despite this consistent under-performance, Congress has repeatedly voted to extend the PTC, usually in 1- or 2-year increments.”
R Street was one of 102 organizations to sign this coalition letter calling on Congress to oppose extending federal wind subsidies. The organizations listed on the letter are diverse in size and scope, but they share one thing in common: Agreeing that now is the time to end special tax treatment for wind energy production.
Today, if polls are any guide, two events are at least likely: First, we can probably say with absolute certainty that Chris Christie will be reelected governor of New Jersey. Second, we can say with relative certainty that Ken Cuccinelli will not be elected governor of Virginia.
Let me rephrase that. Today, we are likely to witness a Republican winning in New Jersey by a blowout and losing in Virginia by a hair. Reading this, those with even a halfway competent knowledge of national politics post-1964 might justifiably wonder if they’ve stepped into bizarro world, moreso when you consider Sean Trende’s observation on the state of the New Jersey race:
If Christie matches his current numbers in the RCP Average, he would have the fourth-best showing of any Republican in the state in the post-World War II era. Only Sen. Clifford Case in his 1972 re-election, Dwight Eisenhower in the 1956 presidential re-election, and Gov. Tom Kean Sr. in his 1985 re-election put up better numbers.
Three factors make this even more impressive. First, the state’s demographics have pushed it in a more Democratic direction over the past 50 years, as more Hispanics and African-Americans have moved there.
Contrast Cuccinelli, who, according to PolicyMic, is likely to lose precisely because he hasn’t reckoned with changing demographics in his state:
McAuliffe’s superior finances have no doubt contributed to the candidate’s polling numbers. Yet regardless of whether McAuliffe’s win is due to successful fundraising or to his liberal stance on social issues, the Virginia gubernatorial elections could become an example of the powerful energy lobby’s failed attempts to outweigh the political interests of millennials, women, and minorities.
These two portraits raise an interesting question: How did Christie, who in every way looks and sounds like the “angry white male” that liberals deride, end up being more successful in a Northeastern, presumptively blue state than a hard charging, socially conservative Obamacare crusader like Cuccinelli was in a Southern, presumptively red state?
The answer is just as counterintuitive as the question. Despite the perception among many Northeasterners that southern red states (like Virginia) are reactionary, backwards hotbeds of racial and cultural homogeneity, the truth of the matter is that demographically, Southern states have electorates that look much more like the recent (and more hostile) demographics of the 2008 and 2012 elections than their Northeastern counterparts. Indeed, despite the GOP’s reputation as the “white party,” it actually loses some of the whitest states in the union by catastrophic margins.
Take, for instance, Alabama and Massachusetts. Alabama, which went for Romney by more than 20 points in the last election, actually is a mere 67 percent white, whereas the deep blue Massachusetts, which went for Obama by pretty much the same margin, is 76 percent white. Looking at Roper Center statistics for 2008, one sees that the composition of the 2008 electorate was about 74 percent white, whereas the 2012 electorate was only 72 percent white. This is a pretty clear indicator that Massachusetts, despite being much more liberal, is much closer to the 2004 electorate in composition, whereas Alabama looks much more like 2012, and yet is as red as they come. This pattern persists in almost every state you might choose to contrast from the Northeast vs the Deep South.
In fact, you might even be able to get away with comparing New Jersey, which, according to the Census Bureau, is 73.8 percent white, with Virginia, which is only 71.1 percent white and reaching the same conclusion. However, this data elides one specific piece of information, and that is that in New Jersey, the percentage of Hispanics (18.5 percent) is higher than the percentage in Virginia (8.4 percent), hence the Virginia electorate is technically more white if you don’t count the Hispanic vote as separate from the white vote.
However, when it comes to broad cultural signifiers, whatever the composition of Virginia and New Jersey, one clearly resembles the deep blue (and bright white) Massachusetts, whereas another clearly resembles the deep red (and less white) Alabama. And indeed, if you look at the states where Democrats are trying to make their biggest gains, almost all of them are in the Alabama region, with the biggest prize at this stage being North Carolina, not to mention the eventual Democratic goal of turning Texas blue.
Republicans, on the other hand, have no idea where to turn for their electoral votes, and seem determined merely to hunker down and defend the bits of the country they already have. I would suggest that the probable results of tonight’s election render this precisely the wrong approach, especially if you buy into Sean Trende’s work on the “missing white vote.” If tonight’s election shakes out as expected, then the most vital lesson that Republicans can take from it is that they ought to make the Democratic stronghold that is the Northeast their next target. After all, they already conquered one of its more diverse states and now hold it with one of the most popular governors in America – a governor who combines the in-your-face pugilism and conviction that is so popular among the Breitbart-ite Right (and who even Glenn Beck used to refer to as a font of “common sense porn”) with the policies and discipline of the more establishment right.
And whatever you think of Christie, the idea that a so-called “moderate” can not only be a conviction politician, but that such a form of politics is deeply attractive in Democratic strongholds, is one worth exploring as the GOP attempts to broaden its demographic base.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.
TALLAHASSEE, Fla. (Nov. 5, 2013) -– As Florida lawmakers ponder potential legislative responses to rising flood insurance rates, it is crucial no additional catastrophe risk burdens be placed on the backs of already-strapped taxpayers, R Street Institute Florida Director Christian Cámara argues in a new policy backgrounder.
Scheduled rate increases by the National Flood Insurance Program has led to the phase-out of premium subsidies for second homes, business properties and those that have seen severe repetitive losses, while other properties may see their rates increase due to updates in flood maps drawn by the Federal Emergency Management Agency.
The rate hikes have sparked some private sector interest in writing flood risks, from both the surplus lines market and admitted market insurers. As members of the Legislature gather in the state capital this week for interim meetings, Cámara suggested those concerned about flood insurance rates should look for ways to encourage this trend.
“Lawmakers should explore ways to establish a regulatory environment where private companies might consider offering flood coverage in Florida as an alternative to the NFIP by lifting the barriers to private sector innovation, which should include streamlining rate and form regulations,” Cámara wrote.
However, he also urged them to reject any proposal that calls for the creation of a state flood pool or fund. The expansion of any existing state-run insurance entity –such as on Citizens Property Insurance Corp. or the Florida Hurricane Catastrophe Fund – to cover flood should also be rejected, even if it is crafted to be “self-sufficient.”
“Florida has a well-documented history of conceiving state-run insurance programs that are initially well-intentioned and seemingly well-designed, but are eventually corrupted by the infusion of politics,” Cámara wrote.
The full text of the backgrounder can be found here:
With various provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 taking effect this year, there is growing concern that scheduled rate increases by the National Flood Insurance Program will have adverse effects on hundreds of thousands of Floridians who must carry flood coverage. Elected officials at the local, state and federal levels already have called for a delay in the implementation of the rate increases, and the Florida Cabinet and Legislature have both convened hearings and workshops to discuss the reforms, their potential effects, and what, if anything the state could do to temper the law’s negative impacts.
These are all valid concerns, but the best solution to this problem is to offer consumers more choices, rather than halting changes to the program, which most agree are necessary. As Florida lawmakers work to find solutions to alleviate the impact on NFIP reforms, they should take the attached principles into consideration.
Over at the VICE Podcast, R Street Senior Fellow Reihan Salam interviews Mark Kleiman of the University of California-Los Angeles, author of the book When Brute Force Fails. The pair discuss the challenges that still face the marijuana legalization movement, as well as ways to pare down America’s record prison population while simultaneously reducing crime.This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.