Texans affected by Hurricane Harvey, including my family and me,
appreciate the outpouring of support from across the country. President Donald
Trump has even pledged to donate one million dollars to relief efforts. These
private donations will be much more valuable than the as much as 100 billion
dollars the federal government is expected to spend on relief and recovery.
Federal disaster assistance hinders effective recovery efforts, while federal
insurance subsidies increase the damage caused by natural disasters.
Federal disaster aid has existed since the early years of the
republic. In fact, it was a payment to disaster victims that inspired Davy
Crockett’s “Not Yours to Give” speech. However, the early federal role was
largely limited to sending checks. The federal government did not become
involved in managing disaster relief and recovery until the 20th century.
America did not even have a federal agency dedicated solely to disaster relief
until 1979, when President Jimmy Carter created the Federal Emergency
Management Agency (FEMA) by executive order. Yet, Americans somehow managed to
rebuild after natural disasters before 1979. For example, the people of
Galveston, Texas successfully rebuilt the city following a major hurricane that
destroyed the city in 1900.
FEMA’s well-documented inefficiencies are the inevitable result
of centralizing control over something as complex as disaster recovery in a
federal bureaucracy. When I served in Congress, I regularly voted against
federal disaster aid for my district. After the votes, I would hear from angry
constituents, many of whom would later tell me that after dealing with FEMA
they agreed that Texas would be better off without federal “help.”
Following
natural disasters, individuals who attempt to return to their own property —
much less try to repair the damage — withoutSwords into PlowsharesRon
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government permission can be
arrested and thrown in jail. Federal, state, and local officials often hinder
or even stop voluntary rescue and relief efforts.
government permission can be
arrested and thrown in jail. Federal, state, and local officials often hinder
or even stop voluntary rescue and relief efforts.
FEMA is not the only counterproductive disaster assistance program.
The National Flood Insurance Program was created to provide government-backed
insurance for properties that could not obtain private insurance on their own.
By overruling the market’s verdict that these properties should not be insured,
federal flood insurance encourages construction in flood-prone areas, thus
increasing the damage caused by flooding.
Just
as payroll taxes are unable to fully fund Social Security and Medicare, flood
insurance premiums are unable to fund the costs of flood insurance. Federal
flood insurance was almost $25 billion in the red before Hurricane Harvey.
Congress will no doubt appropriate funding to pay all flood insurance claims,
thus increasing the national debt. This in turn will cause the Federal Reserve
to print more money to monetize that debt, thus hastening the arrival of the
fiscal hurricane that will devastate the US economy. Yet, there is little talk
of offsetting any of the costs of hurricane relief with spending cuts!
Congress should start phasing out the federal flood insurance
program by forbidding the issuance of new flood insurance policies. It should
also begin reducing federal spending on disaster assistance. Instead, costs
associated with disaster recovery should be made 100-percent tax-deductible.
Those who suffered the worst should be completely exempted from all federal tax
liability for at least two years. Tax-free savings accounts could also help
individuals save money to help them bear the costs of a natural disaster.
The outpouring of private giving and volunteer relief efforts we
have witnessed over the past week shows that the American people can effectively
respond to natural disasters if the government would get out of their way.
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Dr. Ron Paul is a former member of Congress and Distinguished
Counselor to the Mises Institute.
Copyright © 2017 by RonPaul Institute. Permission to reprint in
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