- The Washington Times - Tuesday, June 17, 2008

Legislation that would allow the federal government to reinsure homeowners in cases where their insurance doesn’t cover the cost of repairs could be the beginning of massive new spending with an unknown price tag. We call it a catastrophe.

The Homeowners’ Defense Act would force taxpayers to cover the costs for home repairs that were caused by hurricanes in high-risk coastal areas. The legislation was introduced by two lawmakers from Palm Beach County, Fla. The coastal town of Palm Beach has an estimated per capita income of $107,000. Yet this legislation would hoist the costs of homeowner repairs onto American taxpayers - many of whom are struggling to put groceries on their table.

The House bill was sponsored by Democratic Florida Reps. Ron Klein of Boca Raton and Tim Mahoney of Palm Beach Gardens. The House passed its version. The Senate legislation was introduced by Hillary Clinton and immediately backed by Democrats Mary Landrieu of Louisiana and Bill Nelson of Florida, and Republican Mel Martinez, also of Florida. Barack Obama signed on as a cosponsor, as well.

The catastrophe bill would create a new independent nonprofit called the National Catastrophe Risk Consortium. It also would create an inventory of the risk obligations for states and reinsurance companies, and act as an insurance company middleman between the federal government and homeowners. Also, the bill instructs the Treasury Department to implement an insurance stabilization program to make liquidity loans and catastrophic loans to qualified reinsurance programs, ensure their solvency and improve the availability and affordability of homeowners’ insurance.

How much would this program cost? Nobody knows.



America already has a National Flood Insurance Program. Its average premium is an estimated $3,700 per year. Most families, however, cannot afford coverage. Also worth noting is the fact that floods - whether caused by torrential downpours like those that recently occurred in Iowa or caused by hurricanes like Katrina, which ravaged the Gulf Coast - are America’s No. 1 natural disaster and the only one that occurs in all 50 states and the District of Columbia. There is also a terrorism disaster insurance program, which was prompted by the September 11 attacks and was reauthorized last year.

Pardon the pun, but the flood gates are loose and the Democrats are ready to break them wide open.

If the Florida-Louisiana coalition is able to get this through the Senate, what’s to stop North Carolina, South Carolina, Alabama, Mississippi and Texas from looking for their share? Then what’s to stop California from requesting federal wild fire and earthquake insurance? Or federal tornado insurance for Midwestern states?

The potential for fiscal disaster are limitless, which is why the legislation has stalled in the Senate. President Bush, meanwhile, has rightly threatened a veto.

The presumptive presidential nominees have weighed in, too. Barack Obama said he supports federal disaster insurance guarantees, and he and Florida Democrats are already attacking John McCain for opposing it. Even Florida’s Republican governor - Charlie Crist, whose name is making the rounds as a potential McCain running mate - supports the idea. Indeed, Mr. Crist’s similar state program is the catalyst for the federal legislation. He has endorsed Mr. McCain despite the Arizona senator’s opposition.

Last month, Mr. Obama signed on as one of three co-sponsors to a Cat Fund amendment by Florida Democratic Sen. Bill Nelson. Democratic Sens. Hillary Rodham Clinton of New York and Mary Landrieu of Louisiana were also co-sponsors.

Mr. McCain has been quoted as saying he was “not in favor of spending $200 billion a year simply for the state of Florida.” He also has said that reforming the Federal Emergency Management Agency - not national disaster insurance - is the answer for homeowners. We urge Mr. McCain not to waiver. He should stand firm to avoid a fiscal disaster.

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