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Oversight needed to get conservation compliance right

April 28, 2015, 8:00 AM

Ever since they were first signed into law by then-President Ronald Reagan in 1985, the so-called “conservation compliance” provisions of America’s agricultural support programs have stood as prime examples of what a conservative, market-based approach to environmental policy might entail. Like Reagan’s other great conservation achievement—the Coastal Barrier Resources Act—conservation compliance confronts an environmental problem by reducing the footprint of government and ensuring recipients of government aid are accountable to taxpayers.

This approach shows promise both as a means to steward the environment and to limit taxpayer exposure to risk. However, inconsistent enforcement of the provisions have limited their effectiveness. This paper will describe the principles behind conservation compliance, its benefits and explore appropriate implementation strategies as new regulations are promulgated. It argues that proper implementation of conservation compliance should be a leading environmental priority for the Republican-controlled Congress.

Libertarian groups press McConnell on surveillance reform

April 27, 2015, 4:15 PM

From The Hill:

“Today’s domestic surveillance programs are just the tip of the iceberg compared to how the NSA could use its current authority to spy on Americans’ communications on the Internet and future technologies we haven’t even imagined,” the group wrote in the letter to McConnell and Minority Leader Harry Reid (D-Nev.). 

The letter was signed by 13 groups, including TechFreedom, R Street Institute, FreedomWorks and the Competitive Enterprise Institute. 

Coalition letter to Senate leadership on USA PATRIOT Act

April 27, 2015, 11:28 AM

Dear Majority Leader McConnell and Minority Leader Reid:

As organizations and individuals dedicated to free markets and constitutionally limited government, we write to express our strong opposition to the Senate’s latest attempt to fast-track an unamended reauthorization of expiring provisions of the USA PATRIOT Act without meaningful reforms to protect Americans’ privacy.

In the two years since Americans learned of the NSA’s mass surveillance, they have grown increasingly skeptical about whether the government’s intrusive surveillance programs serve the public interest — and rightly so: the speculative benefits of these programs simply are not worth their cost, in constitutional, practical or economic terms.

Section 215 of the USA PATRIOT Act, the statutory basis for bulk collection of domestic telephone records, is set to expire May 31, 2015. The Senate has a duty to carefully evaluate existing programs before voting on whether to simply reauthorize them without reforms — especially because lawmakers in 2001 didn’t set out to create a vast surveillance state. Indeed, the PATRIOT Act’s primary author, Rep. James Sensenbrenner, R-Wis., has denounced this administration’s sweeping interpretation of Section 215 as greatly exceeding what Congress intended.

The reasons to reform Section 215 are compelling.

Blanket surveillance violates basic constitutional values. Our forefathers threw off the yoke of colonial rule in large part because of British surveillance of innocent Americans for “national security” purposes. The Fourth Amendment originated with Virginia’s June 1776 Declaration of Rights, which denounced “general warrants” as “grievous and oppressive.” For 223 years, the Constitution’s prohibition against mass surveillance has stood alongside free speech and the right to bear arms as the crown jewels of our civil liberties.

These mass surveillance programs are unnecessary and costly. The government has identified only one case in which bulk collection of telephone records might have been useful in helping “connect the dots” faster about national security threats. But even in this case, the FBI waited two months after using the NSA’s telephone metadata database before tapping the suspect’s phone. The Privacy and Civil Liberties Oversight Board found that the bulk collection of Americans’ phone records under Section 215 made no concrete difference in any counterterrorism investigation. The privacy intrusion of such programs heavily outweighs any conjectural national security benefit as a supposed “insurance policy.”

Bulk collection undermines consumer confidence in U.S. Internet businesses. Studies estimate that current surveillance programs could, overall, cost the American cloud computing industry between $22 billion and $180 billion over three years in direct costs and lost revenue. Growing suspicion of American products around the world helps foreign competitors gain a competitive edge — from social networks to hardware. This helps foreign governments surveil and censor such systems while hampering U.S. signals intelligence. To help restore global trust in U.S. tech products and services, Congress must take meaningful steps to protect privacy from overbroad government surveillance.

Legislative sunsets offer a valuable opportunity for careful reconsideration. Understanding the need for careful evaluation and scrutiny in the years following the passage of the PATRIOT Act, legislators wisely included a sunset provision requiring future reauthorization of Section 215. By not taking the opportunity for careful reconsideration, Congress risks becoming subordinate to the administration’s creative reinterpretation of the inevitable statutory ambiguities. Sunsets are especially important when dealing with fast-changing technologies, which can quickly upset the balance of power between citizens and their government. Today’s domestic surveillance programs are just the tip of the iceberg compared to how the NSA could use its current authority to spy on Americans’ communicationson the Internet and future technologies we haven’t even imagined.

For all these reasons, we strongly urge the U.S. Senate not to renew the expiring PATRIOT provisions, especially Section 215, without significant reform.

Libertarian groups urge McConnell to change course on surveillance

April 27, 2015, 10:46 AM

From Politico:

TechFreedom, the R Street Institute and a coalition of other limited-government groups are today asking Senate Majority Leader Mitch McConnell to drop his clean reauthorization of the PATRIOT Act and his effort to fast-track it through the chamber. In a letter to McConnell and Minority Leader Harry Reid, the groups outline a series of reforms they want when Congress addresses surveillance laws set to expire at the end of next month. “[Americans] have grown increasingly skeptical about whether the government’s intrusive surveillance programs serve the public interest — and rightly so,” they write. “The Senate has a duty to carefully evaluate existing programs before voting on whether to simply reauthorize them without reforms.”

The groups say the NSA’s mass surveillance practices are unconstitutional, unnecessary and costly. They also say it “undermines consumer confidence in U.S. Internet companies” and gives foreign competitors an advantage abroad. More than a dozen groups have signed on to the letter, including the National Taxpayers Union and FreedomWorks. The letter: http://bit.ly/1E9xn7o

Catrina Rorke joins R Street as director of energy policy

April 27, 2015, 9:40 AM

WASHINGTON (April 27, 2015) – The R Street Institute is proud to announce Catrina Rorke has joined the organization as director of energy policy.

Rorke brings with her significant experience in energy policy, having worked as policy adviser to former Rep. Bob Inglis, R-S.C. While working with Inglis’ office, Rorke oversaw the drafting of climate change legislation and spearheaded efforts to better communicate climate science to Republican members of Congress.

“We couldn’t have found a better person than Catrina to head our energy program,” said Eli Lehrer, president of R Street. “The combination of her knowledge of the issues and her relationships with influential lawmakers and stakeholders will be a fantastic asset to R Street’s work on these issues.”

In her most recent position, Rorke served as director of energy policy at the American Action Forum, where she founded the organization’s energy policy portfolio.

“I’m thrilled to be joining R Street to address the important energy issues facing us today,” said Rorke. “In its short history, R Street has proven itself a valuable and influential resource in the space and I’m eager to help take that to the next level.”

Rorke has also worked on energy issues at Lighthouse Consulting Group and the National Oceanic and Atmospheric Administration. She is a graduate of the University of North Carolina and received a master’s degree in public administration from Columbia University, with a concentration in environmental and science policy.

 

A ‘believer’ takes over conservative carbon tax effort

April 27, 2015, 9:21 AM

From ClimateWire:

The first time Catrina Rorke worked on a carbon tax, it got her boss fired.

Now, she has another shot. The millennial 30-year-old, with bold-rimmed glasses and a composite political identity, is the first director of energy policy for the R Street Institute, a conservative think tank formed almost three years ago when its founder, Eli Lehrer, broke away from the Heartland Institute over its contravening positions on climate change.

Rorke will shoulder R Street’s growing energy program at a time when it’s expanding into state policies on clean electricity, like solar, and other “no duh” issues, such as grid and pipeline infrastructure, she said. Keystone XL is among them.

But the gem in her new job is the group’s work on a revenue-neutral carbon tax that some conservative policy professionals see as a key to broader tax reform. R Street is among the first Republican outfits to push for it, and Rorke said, “I’m a believer.”

She has been since 2008. That’s when Rorke signed up for a six-month stint in then-Rep. Bob Inglis’ (R-S.C.) office as a presidential management fellow with the National Oceanic and Atmospheric Administration. She anticipated a beginner’s course in politics. Not so much.

“I get to his office and he says, ‘Why don’t you help me write a carbon tax bill?'” she recalled.

A couple of drafts were in the works, but the heavy lifting was still to come. Inglis called Rorke “the principal” aide on the bill, along with Garth Meter, his legislative director. Not only did she help write the final bill, something she had never done before, but she also searched around Capitol Hill for Republican supporters — not an easy task, considering that the GOP was unifying against the Democratic push for cap and trade.

Still, she helped convince one.

EPA a ‘horrible solution’ to warming

Sen. Jeff Flake (R-Ariz.), then a congressman, came aboard as a co-sponsor, and the bill was introduced in early 2009 as an alternative to cap and trade. Rorke and her colleagues were “elated.” They thought Flake’s high-profile endorsement might open the floodgates.

It did, but not in the way they had hoped. Inglis was attacked politically, and in 2010, he drew a conservative primary opponent in Rep. Trey Gowdy, who won the June runoff in a landslide. Afterward, Inglis said his belief in climate change led to his defeat (ClimateWire, Nov. 22, 2010).

The experience has had lasting influence on Rorke, who seems to believe that addressing climate change will require some political crossbreeding. Democrats do a better job of seeing the problem, but she doesn’t trust them to fix it. Republicans have the solution, but they’re largely blind to the risks.

“I am convinced that Democrats don’t think a price signal works,” Rorke said over coffee recently. “I don’t think that they would ever buy into a carbon price signal without the EPA still implementing the Clean Power Plan. And those two things are not possible. You need one or the other. I think the Clean Power Plan is a horrible solution. It’s not going to reduce emissions at a rate that’s great. It’s hard to implement.”

On the other hand, she added, “I’m really disappointed that a lot of elected conservatives don’t get on board and think that climate change is a problem. I find that deeply disappointing, because it’s a problem that their party is made to solve.”

Rorke seems to dislike labels. She doesn’t call herself a Republican, but she’s spent most of her professional life working for them. She’s been at the American Action Forum, a group founded by Republican economist Douglas Holtz-Eakin, for the last 3½ years. She was director of its energy and environment program, and although Holtz-Eakin has expressed support for carbon taxing, the group doesn’t emphasize it.

Lehrer, president of R Street, said Rorke will focus on “smart, small government energy policy and conservative solutions to climate change.” She begins today.

Inglis joked that he might try to recruit Rorke if he weren’t a board member of R Street. He runs the Energy and Enterprise Institute at George Mason University but recalled when he and NOAA got into a “bidding war” for Rorke in 2009.

“We stole her fair and square,” he said.

Michigan House could vote this week on auto insurance reforms

April 27, 2015, 8:00 AM

For a brief moment early this year, social media made James Robertson an international celebrity. The story of the 56–year-old Detroit man whose commute involved both an arduous bus ride and walking 21 miles every day inspired an online fundraising campaign that in short order raised more than $350,000.

The funds allowed Robertson to buy a new 2015 Ford Taurus. But perhaps more importantly, they’ll take care of what, for many Michiganders, is the single-highest cost associated with owning a car: auto insurance.

Thanks in large part to the state’s unique personal injury protection system, which requires insurers provide unlimited lifetime medical benefits for auto accidents, Michigan consistently ranks among the top five states in the nation for high auto insurance. In recent years the average price for car insurance in Michigan has been more than $2,000 per year, reaching as high as $10,000 in Detroit.

Those astronomical costs have contributed significantly to uninsured rates of 17 percent statewide and 60 percent in Detroit. Combined with a massive insurance fraud problem — Secretary of State Ruth Johnson estimates fraud costs Michigan drivers more than $220 million a year – and you’ve got the recipe for one of the most dysfunctional insurance markets in the country.

But after years of fits and starts, real reform may actually finally be on the verge of reality for Michigan. We noted back on April 17 that the state Senate successfully pushed through a bill that includes a number of ideas we at R Street have been promoting for years: creation of a fraud bureau; payment reforms; and an overhaul of the state-run Michigan Catastrophic Claims Association.

Now, it’s the House of Representatives’ turn, with action expected this week. Following seven hours of hearings held over a three-day period, the House Insurance Committee voted 9-to-6 late last week to approve its amended version of S.B. 248. Unlike the Senate bill, which would calculate appropriate medical charges based on the average of fees paid by private health insurers, the House version includes an explicit fee schedule for medical providers, allowing them to charge auto insurers no more than 150 percent of the rates they currently charge Medicare.

A more problematic tweak is a requirement that, for two years, Michigan auto insurers must roll back rates by $100 per-driver. This was a brazenly political move made to smooth over some of the expected backlash from those who say the bill doesn’t do enough to address rate. Insurance Committee Chairman Tom Leonard, R-DeWitt, bragged that the rollback will save the state’s 7 million drivers some $700 million annually.

But it also will be particularly problematic in a state whose auto insurance market, as we showed in our 2014 Insurance Regulation Report Card, has averaged a loss ratio of 122.8 over the last five years. That means Michigan auto insurers regularly pay out nearly a quarter more in claims and claims adjustment expenses than they collect in premiums.

Not only does that mean there has been no profit, but there haven’t been enough premiums even to pay such basic expenses as agent commissions. Michigan’s five-year loss ratio was a whopping six standard deviations above the mean of the 50 states and nearly double the 69.0 ratio of the next-highest state, Oklahoma.

The House bill is also structured to avoid the potential of a public referendum to block the changes. The bill includes a $150,000 appropriation, specifically because state law prohibits the public from voting on appropriations measures. This may not be the most democratic of provisions, but it’s also not an idle concern. Earlier reform efforts have twice been scuttled by such referenda.

Nonetheless, the trade-off might be one Michigan insurers are willing to take for the chance at serious long-term reforms, which include creating an industry-funded fraud bureau (based on one that has been successful in Pennsylvania) to tackle a problem of rampant suspicious claims and a restructuring of the MCCA from a reinsurer to a writer of mandatory excess coverage. The latter shift will help clear up what has long been one of the biggest’s balance sheet risks for the state’s insurance industry – the potential that the authority might not be able to make good on all of its obligations.

And whatever its failings, the bill certainly would be better than an alternative plan by Detroit Mayor Mike Duggan to create a city-run insurance company.

We’re going to start our own insurance company that we call D-Insurance… It’s going to take us a while, but we’re starting the process this summer and we’re going to keep going until we give people an affordable car insurance option.

It’s fitting that would be the name of the company, which Duggan also plans to roll out as a more formal proposal this week, as “D” is the grade Michigan earned in our 2014 report card. Even if the reform plan now under consideration in the House deserves no better than a B-, that’s still a marked improvement.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

Pointier Heads: Efficiency shrinks while government grows

April 27, 2015, 7:30 AM

I had my first reckoning with big government in a small town in New Jersey. The incident remains startlingly fresh in my mind, although it was years ago. A traffic island on a main road, perhaps 20 feet in length, was being demolished. Perched above the brightly vested construction workers was a white metal sign with black letters. The cost of the project was close to $500,000, much of it provided by the U.S. Department of Transportation. I was gobsmacked. The community’s average household income was north of $100,000. The project was plainly local, not interstate commerce by any stretch of the imagination. Why were the feds paying anything?

This, in a nutshell, is an example of what John DiIulio calls “leviathan by proxy.” The federal government now spends $3.5 trillion annually, much of which is transferred to state and local governments and private organizations. In 2012, for example, the Department of Health and Human Services gave out 81,000 grants amounting to $350 billion. The Department of Defense relies on 710,000 contractors. States and localities reap $600 billion in federal funds every year. Approximately 56,000 not-for-profit organizations receive federal largesse.

DiIulio brings leviathan’s scope into focus with this chilling challenge:

Just try to name ten adult U.S. citizens you know who have never received any federal, state, local or intergovernmental payments, loans, subsidies, grants, contracts, or other benefits whatsoever. (O.K., can you name just five?) Or just try to identify any activity in which you engage; any space that you traverse; any building that you enter (including your own private home); any product or service that you produce, buy or sell (including private health insurance); or, for that matter, any air that you breathe on which there is no government policy, program, or regulation. (Give up?)

How did we get here?

It’s a complex story, one DiIulio can’t fully tell in this trim volume. He points out that a big piece of it comes down to elected officials rationally pursuing their short-term interests (i.e., reelection) at the country’s long-term cost. Congressmen rail against big government and trash federal bureaucrats, but simultaneously promise the public more and more benefits. Our representatives authorize new programs and appropriate more and more money, but fail to make taxpayers foot the bill immediately.

It is an insidious form of government that masks its size by borrowing and by using nonfederal actors to administer federal programs. Thus, America today is a “debt-financed, proxy-administered, superficially antistatist form of government” whose total government debt-to-GDP ratio topped 100 percent last year. The federal government has more than $16 trillion in debt, not counting various unfunded promises. (Medicare, DiIulio notes, is a $40 trillion unfunded liability.)

DiIulio’s ameliorative for our republic’s ills is counterintuitive: We can curb government growth and improve its performance by hiring one million more bureaucrats by 2035. The idea is not a batty one: Since 1960, federal spending has quintupled, yet the number of civil servants (two million) has remained flat.

With more federal employees, the public could better discern the size of the government. Work outsourced and granted to unaccountable proxies would be insourced to these new civil servants. Democratic accountability would be improved, as Congress could keep a closer eye on civil servants than is possible with sub-subcontractors and grantees scattered all over the nation. Costs might possibly be reduced, as funds would be transferred through fewer parties that each take a cut. (This is the “leaky bucket” problem that the late economist Arthur Okun identified long ago.)

Certainly, some agencies would benefit from more staff. It is very difficult for a bureaucrat at a desk in Washington to know whether the grant for a traffic island he approved actually has been well-expended. It seems doubtful, however, that Congress would take work and funds away from private proxies and give them to federal employees. Proxies vote and lobby aggressively. Additionally, as a Government Accountability Office study recently showed, federal employees, in effect, have lifetime tenure. Republicans will not go for a million more unionized lifers demanding annual raises. Perhaps the circle can be squared by authorizing agencies to hire more bureaucrats who are put on multiyear, performance-based contracts.

Still, we should not give up the pursuit of direct cuts to spending. Leaders of both chambers should schedule more votes to cut programs and spending than to authorize new ones. Congress could adopt a policy to vote on the president’s annual “kill list.” Officially titled “Cuts, Consolidations, and Savings,” the list is part of the annual presidential budget. It is a grab bag of billions of dollars in zombie programs. This BRAC-like process would allow congressmen to act on their professed small-government principles with less heat. Each year, Barack Obama has identified around 100 programs for elimination. One can envision a conservative president identifying far more.

Legislative project ideas for coders and noncoders

April 27, 2015, 7:00 AM

I thought it would be useful to identify legislative data projects in advance of the House’s annual Legislative Data and Transparency Conference and #Hack4Congress, a congressional hackathon the Congressional Data Coalition is co-hosting with our friends, the OpenGov Foundation. I have written about some ideas previously, and others are newly published or elaborations. Not all are mine, but I like them all.

Requiring tech savvy:

  • A robust roll-call vote comparison tool (more: see vote comparison tool)
  • An easy-but-smart search of the Congressional Record for member statements on a topic (more: see Congressional Record search)
  • A customizable daily or weekly email with all congressional hearings and floor votes, including committees and subcommittees, which at a click of a button would be added to your calendar (more: see open up draft legislation; also GovTrack’s webpage)
  • Congressional Research Service
    • CRS report freshness ratings (more)
    • One-stop source for Congressional Research Service reports (portal to search the Web) (more)
    • Build a tool that allows congressional offices to receive requests to publish CRS reports and to host the publication of those reports; bonus if it allows the member office to publish a list of all reports that a constituent/the public could request
  • A means to transform draft (pre-introduction) bills from PDF to a format that supports easy comparison, markup and public discussion (more: see open up draft legislation)
  • A user-friendly webpage for the federal law website LegisLink (more: see federal law online)
  • Build a dashboard that reports on all House and Senate personal and committee websites that indicates whether they are Secure Sockets Layer-compliant (Hypertext Transfer Protocol Secure)
  • Expand Capitol Bells to the Senate (see: Ted Henderson about Capitol Bells)
  • Build a congressional correspondence tracker that allows member offices to track all communications, automatically publish and thread letters and responses to the public (with redactions as appropriate)
  • Transform the Congressional Record into structured data
  • Transform the Constitution Annotated into structured data (pull it out of PDFs) (more: see public the Constitution Annotated as data)
  • Transform the entirety of House and Senate expenditure reports into structured data (CSVs) (more: see Sunlight blogpost and 1-pager)

For noncoders and coders:

  • Transform the Rules of the House of Representatives from PDF to TXT (or DOCX); ideally set up to reflect the organization of the document (e.g., indentations) (more: House Rules)
  • Transform the Rules of the Senate from HTML to something with proper indentations
  • Transform House and Senate Committee Rules from PDFs to TXT (or DOCX); ideally set up to reflect the organization of the document (e.g., indentations) (see: Rules of the Senate)
  • Build a wiki that links to or contains all the non-PDF versions of Chamber and Committee Rules (more: House committees; Senate committees)
  • Check House and Senate Committee websites to see if they work as HTTPS and compile as a list on a wiki (make a table)

Disruption can be a good thing

April 24, 2015, 12:51 PM

The ideal of a staid, heavily regulated industry that offers blue-collar jobs with respectable wages, pensions and strong community ties—usually lamented as a thing of the past by observers on both the left (Elizabeth Warren, Paul Krugman) and the right (Pat Buchanan, Rick Santorum)—does still exist. To find it, one need look no further than America’s electric utilities.

Whether they are stockholder-owned colossuses or customer co-ops, utilities operate mostly under regulated rates that guarantee profits. They face little competition. In 33 states, consumers have just one power provider to choose from in their region. Nationwide, more than 80 percent of residential power comes from monopolies or former monopolies.

These utilities pay nice dividends to stockholders, offer jobs for life to many employees and provide generous support for everything from civil rights organizations to art museums. Historically, the case for their status as “natural monopolies,” where competition would do more harm than good, has been so strong that it’s literally used as an example in major economics textbooks.

But new technologies—in particular, the growing availability of affordable, efficient rooftop solar panels—threaten to disrupt utilities’ business models in unpredictable ways. While this forthcoming disruption of the power grid may offer more good than bad, it also creates real uncertainties that policymakers will need to confront.

The major driver of change is that rooftop solar has finally come into its own. When first brought to market in the 1970s, rooftop solar panels generated power at a cost of more than $70 a watt. By the end of this year, low-cost manufacturers in China will begin offering panels that produce energy at a cost of around 40 cents a watt. Combined with leasing arrangements that let property owners install panels at little-to-no out-of-pocket cost and net-metering agreements that let them sell unused energy back to utilities (albeit under a variety of pricing schemes that are both complicated and controversial), the decision to install solar panels is becoming a simple one for many homeowners.

One recent study from the Rocky Mountain Institute, a think tank whose board is heavy with alternative energy investors, applies a rigorous model to conclude that, within two decades, solar will be fully cost competitive in many markets and for huge numbers of consumers. As one example, the study projects that, within 15 years, as much as a quarter of the power generated in New York’s Westchester County will come from solar panels. This could be a big problem for utilities. Rocky Mountain estimates they could lose nearly $35 billion in revenue. This amounts roughly to last year’s total revenues for the two largest electric utilities and is greater than the 20 largest utilities’ combined profits for 2014.

Even much smaller drops in revenue could be a big problem. The technology and business model of rooftop solar are most competitive in the areas where utilities make most of their profits. Because they generate the most energy during the sunny midday peak, when power generation is most costly and most profitable at the margin, even modest consumer use of the existing, relatively expensive solar panels can cut into some utilities’ bottom lines. Since they provide a direct substitute for some power plants run by existing utilities, rooftop solar panels establish a ceiling that would make future rate increases harder to sustain. Finally, since they reduce the need for some new types of power infrastructure, rooftop solar makes it harder for utilities to make the case to build new generation capacity. This is a potential problem because, in regulated markets, most of the cost of new infrastructure investment, plus a profit margin to reward investors, is built into utility rates according to a set formula.

Broader use of solar panels will reduce air pollution and the output of climate-change-causing greenhouse gases. It also likely will cut the bills consumers currently pay to utility-scale power companies. But this shift will cause real dislocations.

We live in an era of disruptive technologies, and in nearly every case, one can identify ways in which the new technology is inferior to what it replaced. Mobile phones supplanted more reliable landlines. Ridesharing services often provide smaller cars than taxicabs. Jet airplanes replaced more comfortable sleeper trains.

In this case, solar panels generate power only when the sun shines. Technologies to allow cost-efficient storage of solar energy at home are immature. Even with cutting-edge battery technology, few households will ever get all of their power from the sun. A system that combines widespread rooftop solar panels with a power grid hooked to major utility-scale power plants almost certainly would be less likely to suffer true blackouts than the current, totally centralized model. But individual rooftop solar systems can’t possibly include the elaborate redundancies of a typical utility power plant, much less the grid as a whole.

Undermining utilities’ business model also could have serious implications for the grid as a whole. A University of Minnesota study found overall electric power reliability dropped steadily between 1995 and 2010, though it has rebounded slightly since then. A profit and revenue shock to the utilities likely would limit resources available for basic care of the grid. Their guaranteed profits traditionally have allowed monopoly utilities to take on money-losing but beneficial activities, like running power lines to poorer areas. Existing utility regulations place a premium on both reliability and access. As access to cost-competitive solar power becomes more widespread, there may be a need for new funding mechanisms to assure these services get provided, or at least a simple recognition of the trade-offs involved.

New business models—like the “integrated grid” proposed by the Rocky Mountain study—may address some of these issues, but there’s no assurance they will work.

Whatever happens, utilities probably won’t end up in the poorhouse (they already manage to profit against stiff competition in wholesale markets), and the grid is very unlikely to collapse. But widespread rooftop solar inevitably will cause bumps in the road and leave some pining for the “good old days.” This doesn’t mean regulators should stand in the way of rooftop solar power. History shows that efforts to strangle disruptive industries almost never succeed anyway. But it does mean policymakers need to be aware that rooftop solar power is likely to have a broad range of impacts, some of them bad, most of them good, all of them disruptive

Testimony on fraud in Texas hail claims

April 24, 2015, 12:37 PM

Chairman Frullo, members, my name is Josiah Neeley and I am Texas director of the R Street Institute. R Street is a nonprofit, free-market think tank that specializes in insurance and other issues. I’m here today to speak in support of H.B. 3646.

H.B. 3646 is a timely attempt to deal with emerging problems of fraud and abuse in property insurance claims involving hail. Hail insurance claims have increased 84 percent since 2010,[1]

and between 2010 and 2012, Texas generated more than 320,000 hail insurance claims, double that of any other state.[2]

Not all of this increase can be blamed on changes in the weather. While Texas accounted for 16 percent of all hail claims from 2010 to 2012, 28 percent of the questionable claims during that period were filed in Texas.[3] Storm intensity also cannot explain why litigation over hail claims is becoming so much more common. Historically, only around 2 percent of property insurance claims result in a lawsuit.[4] Yet according to attorneys G. Brian Odom and Tyler McGuire, in Hildalgo County, 35 percent of recent hail damage claims have resulted in a lawsuit.[5]

H.B. 3646 is a modest attempt to reign in this abuse. The committee substitute to the bill provides enhanced notice requirements and helps to isolate the amount in controversy for purposes of attorneys’ fees and penalties, which will reduce the incentives for frivolous litigation.

While there are some elements of the bill with which we have concerns (for example, the tightening of licensing requirements for public adjusters), on the whole, H.B. 3646 is a positive step to ensure both consumer protection and the rule of law.

I would be happy to answer any questions.

[1] National Insurance Crime Bureau, “Number of Hail Damage Insurance Claims Up 84% Since 2010,” Insurance Journal, July 18, 2013. http://www.insurancejournal.com/news/national/2013/07/18/298895.htm

[2] David Fennig, “2010-2012 United States Hail Loss Claims and Questionable Claims,” National Insurance Crime Bureau, June 25, 2013. https://www.nicb.org/File%20Library/Public%20Affairs/2010-2012-US-Hail-Loss-Claims-and-QCs—Public.pdf

[3] Ibid.

[4] Supra, note 1.

[5] Ibid.

2016 presidential truck stop buffet: Plenty of options with reheated ideas

April 24, 2015, 11:49 AM

Most of us don’t talk about it, but we’ve been there. It’s late at night, way past the time when we should be eating. Then you see it up ahead on the horizon glowing in the dark night, Zeke’s Truck Stop Buffet…open 24 hours.

The choices are endless: brown chicken goop, almost dehydrated fried rice and even tuna sandwiches precariously situated over ice that melted several hours ago. At the end of the line, you’re greeted with Jell-O cubes and imitation Nilla Wafers.

You’ve seen it all before. In fact, you knew what you were getting into the moment you pulled over. But hey, you were hungry and this was your option. The bad news is that most of said options smell like sweaty feet.

Presidential politics aren’t much different than a truck-stop buffet. The campaigns already feel familiar, tired and conspicuously similar to the buffet’s refried beans that have been reheated one too many times.

I get it. This time, Hilary Clinton is more inevitable than the last time she was inevitable. At the same time, even my liberal friends are pining for some different choices that share their perspectives.

On the Republican side, we can see the circular firing squad forming. Most candidates know what they don’t like (i.e., things Obama does), but they also don’t have a specific plan to lead. The strategy has been the same for the last few cycles: Act more conservative than you really are and then run to a magic middle to have a chance in the general election.

Here’s a new idea for all the candidates: Try being the person you really are rather than who you think voters want you to be. Voters are craving authentic leadership. We don’t want someone to simply stir the warmers at the truck-stop buffet to make the options look more appealing; we want something different.

By this point, we know all the talking points. We expect Clinton to talk about her love of the middle class, the rich paying their fair share (more) and more government oversight of the marketplace. Republicans will likely talk about liberty, opportunity and all of the above energy.

Just like those imitation Nilla wafers, all of us know we’re not getting a taste of the real candidates.

So whether it’s Clinton, Cruz, Paul, Rubio or Warren, please give us a reason to keep driving past the presidential truck stop buffet. For the right leader, we just might be willing to pass the truck stop and keep on driving through the night into a new morning for America.

Testimony on Texas Windstorm Insurance Authority reform

April 24, 2015, 11:16 AM

Chairman Frullo, members, my name is Josiah Neeley and I am Texas director of the R Street Institute. R Street is a nonprofit, free-market think tank that specializes in insurance and other issues. I’m here today to speak against H.B. 696 and H.B. 2245.

I would like to commend the committee, Chairman Hunter and Rep. Bonnen for taking up this important issue. While TWIA’s financial situation has improved greatly in the last few years, it is still in need of serious reform to return it to its original role as a true insurer of last resort along the Texas coast.

However, several of the provisions in H.B. 696 and H.B. 2245 risk undermining even the progress that TWIA has made. For example, TWIA’s rates are, by its own calculations, 22 percent below what is necessary to be actuarially sound. It was only a few years ago that TWIA’s rates were 40 percent below this necessary minimum. TWIA has managed to make up the difference through small but regular annual rate increases. Both H.B. 696 and 2245 would restructure TWIA’s board in a manner that would likely preclude further rate increases. Instead, the bills mandate increased reliance on assessments of insurance companies and non-TWIA policyholders, who do not benefit from the program.

Rather than making it harder for TWIA to reach financial stability, reform legislation ought to build on the progress TWIA has already made. Right now, for example, TWIA is restricted from charging different rates within its territory based on geography. Simply allowing this tool would go a long way toward achieving actuarial soundness. TWIA has also launched a “depopulation portal,” a special website that makes it easier for private insurers to take on current TWIA policies on a voluntary basis. One company has already announced its intention to make offers on nearly 60,000 policies via the portal. Other states such as Florida and Louisiana have had a lot of success in using depopulation portals to get people back into the private insurance market, and Texas should look to strengthen the portal along similar lines.

I would be happy to answer any questions.

R Street praises Florida Legislature for limiting exposure faced by Citizens

April 23, 2015, 2:20 PM

TALLAHASSEE, Fla. (April 23, 2015) – The R Street Institute praised the Florida Legislature today for its unanimous passage of H.B. 715, sponsored by Rep. Holly Raschein, R-Key Largo.

The bill clarifies a provision enacted in 2013 that protects taxpayers and Florida’s environment by restricting new policies Citizens Property Insurance Corp. can write in the state’s riskiest and most environmentally sensitive coastal areas.

The bill stipulates that any structure built within a federally designated coastal wetland or seaward of the Coastal Construction Line after July 1, 2015 is not eligible for coverage under Citizens. Existing structures are exempt from this prohibition, unless their total square footage is subsequently increased by more than 25 percent. Sen. Lizbeth Benacquisto, R-Fort Myers, sponsored the companion bill in the Senate.

This concept, initially proposed by R Street in a January 2013 study titled “Coastal preservation through Citizens reform,” eliminates the government-subsidized incentive to develop areas most prone to wind and flooding, encourages smarter and more resilient development and prospectively reduces the amount of risk carried by Citizens, which will reduce the likelihood or severity of post-hurricane taxes to cover the state-run insurer’s future losses.

“Government should not provide incentives for development along the state’s riskiest, most environmentally sensitive areas by providing subsidized property insurance coverage to new beachfront condos and vacation homes,” said R Street Florida Director Christian Camara. “We salute Rep. Raschein and Sen. Benacquisto for shepherding this good bill through the process, and encourage Gov. Rick Scott to sign it into law.”

Tobacco control is getting it wrong

April 23, 2015, 9:51 AM

From CSPNet.com:

Anti-tobacco campaigns are getting it wrong, Dr. Brad Rodu, professor of medicine and holder of the endowed chair in tobacco harm reduction research at the University of Louisville, said during his presentation at the NATO Show in Las Vegas.

The American anti-smoking campaign is approximately 50 years old. Yet, by the Center for Disease Control & Prevention’s own numbers, there are still 42 million smokers and 400,000 smoking-related deaths per year, a figure Rodu said the CDC is not underestimating.

“Those numbers have not changed in the 20 years I’ve been involved in harm reduction,” Rodu said.

A big problem with the anti-smoking and anti-tobacco crusades is that they embrace an abstinence-only rhetoric. Even Food & Drug Administration (FDA)-approved nicotine replacement therapies (NRTs) are intended for only short-term use. Although, as Rodu pointed out, those “replacements” aren’t exactly a raging success.

“FDA-approved NRTs work for just 7% of smokers,” he said. “Can you think of another FDA-approved medication that works for just 7% of people? What if aspirin worked for less than 10% of people with headaches?”

What does work, according to Rodu and his 20 years of research, is the concept of a nicotine risk continuum—educating adult smokers on potentially less-harmful ways of consuming nicotine and giving them the choice.

“Smokers aren’t sick,” said Rodu. “They don’t want to be treated. They just want to have options.”

Unfortunately, too often, the public at large is not properly educated on reduced harm alternatives. During his NATO Show session, Rodu looked at the fallacies and realities of two such alternatives currently on the market: smokeless tobacco and electronic cigarettes.

The Real Risk of Smokeless

Rodu is an oral pathologist who has spent his entire career working in medical and cancer centers.

“I’d been taught smokeless tobacco use was basically a death sentence through mouth cancer,” he said. “But I wasn’t seeing this link in the people I was treating.”

This realization set in motion research that would define Rodu’s career as an alternative tobacco advocate. He came to find that moist and chewing tobacco use carry virtually no mouth cancer risks: only powder dry snuff. Rodu’s research showed that out of 100,000 people, three non-smokeless users might get mouth cancer, three moist or chewing tobacco consumers might get mouth cancer; for powder dry snuff, that number is more like 12.

“The link between powder dry snuff and mouth cancer was reported in 1981 and was applied to every single smokeless tobacco product,” said Rodu. “Anti-tobacco groups are still avoiding this truth. Everyone thinks it’s an enormous risk—it’s not.”

Same Campaign, New Product

Unfortunately, similar misconceptions are being spread about the e-vapor category.

“The same unscientific and irresponsible campaign against smokeless tobacco is now starting to be conducted with e-cigarettes,” Rodu said, and proceeded to debunk some of the biggest myths reported about the category:

  • The ingredients are poisonous. There are very few ingredients in e-liquids: nicotine, water, flavoring and propylene glycol. “Propylene Glycol is what produces fog at a rock concert,” Rodu said. “It’s considered a generally safe agent by the FDA.”
  • They produce formaldehyde. “This doesn’t happen at normal levels,” said Rodu. “They cranked the voltage way up to levels that would have created a horrible taste. No vaper would do that. You would get similar formaldehyde levels from eating charred toast from a toaster.”
  • They are a gateway for teens to smoking. “In fact, we are witnessing a historic decline in teen smoking, there’s no doubt about that,” he said. “It’s clear that e-cig use is growing (in teens)—but look at how drastically smoking rates are declining. If e-cigs were a gateway, wouldn’t it be the other way around?”

Ultimately, Rodu expressed optimism about the future of tobacco alternatives and the role retailers can play.

With two decades of experience in the world of tobacco research and policy, some 40 scientific articles in the field of harm reduction and authoring a successful blog and book on tobacco harm reduction, Rodu said it’s actually tobacco retail events like the NATO Show that excite him.

“I’m a little nervous. I’ve been waiting 20 years to make this presentation,” he said, while also marveling at the very thought of a cancer researcher presenting at a tobacco trade show.

“I’ve been trying to reach out to consumers to show them options and alternatives for using tobacco in a different way,” said Rodu. “It has been very difficult given the anti-tobacco campaigns we’ve all experienced. I see reaching out to retailers as really, really important.”

He concluded, “This transformation is taking place. The winners are consumers, public health … and the tobacco industry and retailers. If you endorse and embrace this transformation of tobacco, you can help your consumers live longer and healthier lives, you can keep them satisfied and you can also pay the bills.”

Meet the NSA’s ridiculous recycling mascot, ‘Dunk’

April 23, 2015, 9:45 AM

The National Security Agency will likely get a gift from Senate Majority Leader Mitch McConnell this week: a massive reauthorization of their metadata collection and surveillance program, codified in the PATRIOT Act. Even though the NSA’s practice of invading privacy to collect cell phone information is uniformly unpopular with both parties, and measures have been taken to reform the process and even interrupt the NSA’s authority, in pursuit of a perfect record of completion for the Senate, McConnell is bypassing objectors and shoving the bill through. It could allow the NSA to keep scanning your phone bills for evidence of your terrorist activities through 2020.

Not everyone is pleased. After all, measures were already in place to take on NSA reforms over the summer, and this bill would supercede those efforts, bipartisan or not. And while the NSA has had internal debates over whether collecting cell phone users’ data in bulk was a worthwhile practice, they’ve since switched their focus to other efforts: namely, getting kids to recycle using a vaguely menacing-looking 3D animated recycling bin named, of all things, “Dunk.”

Recycling might not be the first thing people think of when they hear about the National Security Agency, but the spy agency wants to change that.

The Fort Meade, Md., institution has a new pro-recycling mascot named “Dunk” that it’s using as part of an effort to get students in Maryland schools to cut down on their trash.

In a new eight-minute video released ahead of Wednesday’s Earth Day, Dunk — a blue, anthropomorphized recycling bin — explained the NSA’s commitment to recycling. Then, it offered students a project of their own.

“To keep as much material out of local landfills as possible, NSA has operated recycling programs for decades,” Dunk says in the video, noting that the agency recycles about 13 million pounds of garbage every year.

Does the NSA really need to spend money convincing schoolchildren that their surveillance programs are environmentally friendly? Why is it the responsibility of the National Security Administration to promote recycling? Are we really that close to a Mad Max-style water shortage that would threaten the very fabric of our fair nation? And has anyone filled those same children in on what, exactly, the NSA is recycling? And who approved this expenditure? I fear we may never know, because like most things involving the NSA, the information surrounding Dunk’s introduction is scarce.

Fortunately for Dunk, however, he’s not the only animated creature in residence at the NSA. Thanks to a generous grant from the federal government, the NSA has several characters that, as friendly neighborhood spies, aim to teach kids about the exciting world of cryptography. Decipher Dog and Crypto Cat, two of the NSA’s top animated agents, are the stars of the NSA’s CryptoKids program, where they teach students about various code-cracking methods. Dunk, of course, is not a cryptographer, and his lessons teach more “traditional” NSA methods, like sorting through someone else’s garbage

The video urges school students to perform a “waste audit” by analyzing trash to find how much can be recycled instead of sent to a landfill. Then, they should come up with ways to reduce the amount of trash, such as using reusable plastic bottles or lunch bags.

Free-market groups support fast-track trade authority

April 23, 2015, 8:00 AM

Dear Speaker Boehner and Leader McConnell:

On behalf of the free-market, taxpayer advocacy, and limited government grassroots and public policy organizations listed below, we urge you to pass Trade Promotion Authority (TPA) as soon as possible.

TPA is a necessary step to get Congress moving on a long-stalled trade agenda. Without it, there is little hope that this Congress will make any progress on advancing free trade, a conservative public policy goal which all our organizations support.

TPA gives the executive branch the authority needed to finalize trade agreements, while Congress retains a robust amount of control, oversight, and transparency; ultimately Congress has an up-or-down vote on every specific trade agreement.

By definition, the term of this TPA will extend beyond the current administration and into the next one—the goal here is to advance America’s free trade agenda this century, and not to be mired in the stalled trade failures of the recent past.

We believe that tariffs are taxes on trade, and ultimately would like to see a world free of government interference in international commerce. Passing TPA is a necessary step toward getting the ball rolling on that long term policy goal, and we therefore urge you to pass Trade Promotion Authority.

Sincerely,

Amy Noone Frederick
60 Plus Association

Phil Kerpen
American Commitment

Dan Schneider
American Conservative Union

Stephen DeMaura
Americans for Job Security

Grover Norquist
Americans for Tax Reform

Jeffrey L. Mazzella
Center for Individual Freedom

Chip Faulkner
Citizens for Limited Taxation

Iain Murray
Competitive Enterprise Institute

April Ponnuru
Conservative Reform Network

Thomas A. Schatz
Council for Citizens Against Government Waste

Steven J. Duffield
Crossroads GPS

Katie McAuliffe
Digital Liberty

Brian Baker
Ending Spending

George Landrith
Frontiers of Freedom

Louie Hunter
Georgia Center Right Coalition

Andrew Langer
Institute for Liberty

Brian McClung
Minnesota Center-Right Coalition

Brandon Arnold
National Taxpayers Union

Lori Sanders
R Street

Paul Gessing
Rio Grande Foundation

David Williams
Taxpayers Protection Alliance

Mike Thompson
Thomas Jefferson Institute For Public Policy

 

SmarterSafer letter on federal flood standards

April 23, 2015, 7:00 AM

To Whom It May Concern:

SmarterSafer, a coalition of environmental organizations, taxpayer advocates, insurance representatives, housing and mitigation groups is pleased to submit comments on the Federal Flood Risk Management Standards. SmarterSafer supports the adoption of standards designed to protect taxpayer investments when federal funds are used in flood hazard areas and looks forward to working with the Administration as the standards are implemented.

Natural disasters wreak havoc on communities and their residents. The scale and cost of natural disasters has been on the rise; so too has the federal share of disaster costs and the amount the federal government spends to clean up and rebuild after a disaster strikes. Unfortunately, while the federal spending post-disaster has dramatically increased over the last few decades, spending on proven, pre-disaster planning and mitigation still falls woefully short of what is needed to better protect people and their property. We know that mitigation, and smarter safer building protects facilities and people and their property. For every one dollar spent on disaster mitigation, four dollars are saved on post-disaster recovery and rebuilding. Investing in strengthening communities today is cost-effective and proven to reduce damage and resulting costs post-disaster.

The Federal Flood Risk Management Standards seek to better protect people from harmful flooding in areas that face flood risks. By establishing standards that incorporate the best science on flooding, and requiring federal funds only be used to build at safe elevations, not only are people and property better protected, but federal investments are protected for the long-run. When federal funds are being used to build or rebuild structures or to subsidize structures, the government should ensure the taxpayer investments are being made in safe, resilient ways.

The Federal Flood Risk Management Standards, coupled with a renewed focus on mitigation, including nature-based approaches, could help protect taxpayers’ investments from having to be spent to repair that facility again in the next event. SmarterSafer, supports the adoption of these standards, however, we urge you consider flexibility in application of the standard to ensure that communities can best prepare for changing requirements. In addition, it is critical that implementation take into account the increased cost on low-income communities and low-income families, if these standards are applied to affordable housing programs and funding.

Thank you for considering our comments,

SmarterSafer

MEMBERS

Environmental Organizations

American Rivers
Center for Climate and Energy Solutions (C2ES)
Ceres
ConservAmerica
Defenders of Wildlife
Natural Resources Defense Council
National Wildlife Federation
Sierra Club
The Nature Conservancy

Consumer and Taxpayer Advocates
Coalition to Reduce Spending
R Street
National Taxpayers Union
Taxpayers for Common Sense
Taxpayers Protection Alliance

Insurer Interests
Allianz of America
Association of Bermuda Insurers and Reinsurers
The Chubb Corporation
Liberty Mutual Group
National Association of Mutual Insurance Companies (NAMIC)
National Flood Determination Association
Reinsurance Association of America
SwissRe
USAA

Mitigation Interests
Natural Hazard Mitigation Association
National Fire Protection Association

Housing
National Housing Conference
National Leased Housing Association

ALLIED ORGANIZATIONS
American Consumer Institute
Association of State Floodplain Managers
Center for Clean Air Policy
Friends of the Earth
Institute for Liberty
Property Casualty Insurers Association of America
Union of Concerned Scientists
Zurich

Whether they like it or hate it, conservatives must look to California

April 22, 2015, 2:11 PM

The State of California is fun to mock, easy to condemn and, particularly for many conservatives and libertarians, simple to write off. A little perspective from outside the state is an excellent reminder of just how far off it has been written.

Last week, on a flight to Arkansas from Los Angeles, I was seated next to a young woman with a southern-fried accent as thick as the region’s famously stifling midsummer humidity. She was pleasant to chat with. However, her regional charm faltered when I asked her what she thought of her time in the Golden State.

Rolling her eyes and assuming a sober expression, she quickly ran through this list: “It’s too expensive, needlessly thirsty, often broke and always preachy.”  

Her critical evaluation of California, amusing at the time for the intensity of its delivery, neatly summarized the case against the prevailing statist governing philosophy in Sacramento. Sadly, she was correct.

The high cost of living; the increasingly desperate water situation; the state’s mercurial budget; and its ever-present sense of a social mission are all products of that portion of the California electorate that pines to impose fairness and give order to the world, from the top down.

Unsurprisingly, no conservative red-stater and certainly no conservative southerner, wants any part of the California experiment. In fact, there is always glee when California’s shortcomings and problems make news. And yet, California should not be abandoned by conservatives from other parts of the country.

While the state is rife with the fringy left, more conservatives live in California than in any other state. While that’s a largely pointless statistic from a local political perspective, it underscores the larger idea that the national voice of conservatism is incomplete without California conservatives.

That voice will be significant because, though California conservatives long have been politically marginalized within their own state, they are better-positioned than any other subset of the movement to develop a policy-driven vision for a sustainable national right-wing coalition. For example, how better to deal with national issues regarding water diversion, high-speed rail and carbon taxes than by seeking the counsel of California conservatives?

What’s more, California is coping with an increasingly strained infrastructure brought about by years of political shifting of dedicated funds and unmanageable obligations to public employees with outsized political clout. This fate awaits the rest of the nation, and given its unfortunate precociousness, California may be where conservatives will write their policy playbook for the next 20 years.

In short, while California conservatives are outnumbered, don’t think that they are naïve or unproductive.

Toward the end of my flight, I asked the woman if she would ever willingly come back to California.

Of course,” she said. “I live in San Jose.”

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.

Why disaster policy matters

April 22, 2015, 12:09 PM

A major plot point of the most recent season of Netflix’s House of Cards saw fictional President Frank Underwood try to exploit the Stafford Act’s vague definition of a “disaster” to divert the Federal Emergency Management Agency’s entire budget toward an equally ill-defined job-placement and wage-support program called “America Works.”

This being Hollywood, the plan was, of course, absolutely ridiculous and would spark congressional lawsuits – if not, indeed, impeachment proceedings – should any real-life president ever attempt something similar. But kudos to the show’s producers for shining a light on the little-known Stafford Act. America Works would be a terrible idea, but the notion that American disaster-response policy needs a major overhaul is not.

Originally passed in 1974 to provide a rational process for appropriating federal disaster-response funds, replacing the largely ad hoc responses that previously had been the norm, use of the Stafford Act has exploded in recent years. The number of federal disaster declarations spiked from 16 in 1988 to 242 in 2011. Moreover, as a new report from the SmarterSafer Coalition shows, with each new catastrophe, the proportion of the cost of recovery borne by federal taxpayers continues to grow.

This is not a coincidence. The more the federal government spends on cleaning up disasters after the fact, the more businesses and individuals are encouraged to build in, and move to, disaster-prone areas. The vicious cycle continues as more and more risk is transferred from the private sector onto the backs of taxpayers.

The facts are incontrovertible. Research by Erwann Michel-Kerjan at the Wharton School’s Risk Management and Decision Processes Center shows pretty definitively that federal disaster assistance crowds out private insurance coverage. In an April 2014 paper, Michel-Kerjan estimates that residents in zip codes that receive significant disaster aid subsequently reduce their insurance coverage by an average of $17,000. Individuals who receive direct assistance from the federal government drop about $6,400 in coverage for every $1,000 in aid they receive.

The Stafford Act, which leaves the federal government on the hook for 75 percent of the cost of post-disaster aid, isn’t the only problem. The U.S. Forest Service has seen the percentage of its budget devoted to managing fires shoot up from 13 percent in 1991 to 40 percent in 2012, as the overall federal bill for wildfire maintenance has grown from $440 million in 1985 to $1.7 billion in 2013. The National Flood Insurance Program, which makes use of outdated flood maps and charges inappropriately low rates for older and frequently flooded properties, is now $23 billion in debt to federal taxpayers, with virtually no prospect to ever pay off that debt.

Even leaving aside the potential impacts of climate change, current disaster policy undoubtedly has contributed to what was already a massive shift in settlement patterns toward disaster-prone areas. The 1990s and 2000s saw 2.2 million new housing units built in coastal regions, with roughly a third of the U.S. population now living in low-lying, flood-prone areas along the coast. In the West, housing units in “wild-and-urban” interface regions have grown 52 percent since 1970, with 1.2 million of those homes at high risk of wildfires.

Clearly, these trends are unsustainable. At the current rate of growth, federal disaster spending through programs like the NFIP and Federal Crop Insurance Corp. is expected to grow by between 54 and 110 percent by the end of the century. The U.S. Department of Agriculture projects the number of acres burned by wildfires each year to double by 2050. Taking into account both current spending and settlement patterns, and rising sea levels, by 2100, areas deemed to lie in floodplains could grow by 45 percent for rivers and 55 percent for coastal areas; flood damages could reach $360 billion and hurricane damages could reach $422 billion.

These aren’t just the paranoid Chicken Little fantasies of the environmental left. They are the hard-nosed, dollars-and-cents calculations of the global insurance industry, which as of 2012 found itself on the hook for $10.6 trillion of U.S. coastal property, up 20 percent from $8.9 trillion just five years earlier. And with a huge and growing portion of these costs actually borne by taxpayers, they should be a serious concern to anyone who considers himself or herself a fiscal conservative.

It is that overlap of concerns, from elements that might ordinarily be considered “strange bedfellows,” that explains the genesis of SmarterSafer, of which R Street (originally in our previous incarnation as the Heartland Institute’s Center on Finance, Insurance and Real Estate) is a founding member. Our new report, “Bracing for the Storm,” represents the final product of nearly a year of deliberations and debate among our 30 very disparate members – everyone from environmental organizations like American Rivers and the National Wildlife Federation to budget watchdogs like Taxpayers for Common Sense and the National Taxpayers Union to major insurers and reinsurers like Allianz, Chubb, Liberty Mutual, Swiss Re and USAA.

The report contains a number of detailed recommendations, but they all come down to the two basic themes of removing federal subsidies for risk-taking and shifting federal investments to mitigating the risk of disasters before they happen, rather than merely responding to them after they occur. As the following chart makes clear, this is the precise opposite of federal spending priorities today.

Beyond that general focus, the report also calls for three crucial reforms:

  1. Tie the federal share of disaster-response spending to concrete mitigation and preparedness benchmarks, so that communities that better prepare receive more post-disaster aid and communities that don’t receive less.
  2. Shift more flood risk back to the private insurance market, phasing in accurate rates for the National Flood Insurance Program and reserving subsidies solely for those who can’t afford insurance premiums.
  3. Create a central, high-level federal office dedicated to coordinating among multiple levels of government resources that go toward disaster preparedness, rather than simply disaster response.

One hopes that’s an agenda that proves much more palatable to our real-life lawmakers than America Works did in Frank Underwood’s fictional Washington.

This work is licensed under a Creative Commons Attribution-NoDerivs 3.0 Unported License.