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GAO on Flood Insurance: Let the Private Sector Help
In last week's edition of The Taxpayer's Tab, we featured H.R. 3370 as the "Most-Friended" bill with 178 cosponsors in the House. The Homeowner Flood Insurance Affordability Act would delay a provision passed in 2012 that phases out the government's National Flood Insurance Program (NFIP) subsidies and charges higher premiums more in line with full-risk rates.
That law, the Biggert-Waters Flood Insurance Reform Act, also ordered the Government Accountability Office (GAO) to conduct a study on how to better incorporate private-sector solutions to the NFIP's financial woes. The GAO released their findings in a new report this week and suggested that reducing government involvement in the flood insurance market could benefit taxpayers in the long-run.
The NFIP's fiscal troubles have been well-documented over the years. The program has appeared on the GAO's "high-risk" list every year since 2006 and owes over $24 billion in debt; worse still, the program hasn't paid back any of the principal on the loans it's received since 2010. Unfortunately, taxpayers are ultimately responsible for digging the NFIP out of its mounting debt, and delaying premium increases would tack on an additional $900 million to that burden (as we noted in the Tab).
But as GAO points out, the damage could at least be contained going forward: "...[S]ome have suggested shifting exposure to the private sector and eliminating subsidized premium rates, so individual property owners -- not taxpayers -- would pay for their risk of flood loss."
In its report, GAO summarized a series of discussions it had with stakeholders that work within the industry to better understand how to transition towards a flood insurance market with greater private participation. That starts with making the marketplace more enticing for private firms to enter. Two key recommendations to make that a reality:
GAO suggests that there would still be a role for government involvement in the flood insurance market, but in line with previous recommendations, suggested that Congress should consider eliminating subsidized premiums and charge full-risk rates to all policyholders.
Stakeholders also voiced concern over a complicated regulatory environment that would need to be addressed before private firms decide entry into the market could be viable. Additionally, GAO supported means-testing as a possible solution to affordability issues: "Currently, subsidies are available regardless of a property owner's ability to afford a full-risk premium. Means testing the subsidies would ensure that only those who could not afford full-risk rates would receive assistance and should increase the amount in premiums NFIP collects to cover losses."
The full report is available online.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today the Center for International Policy’s Director of Arms and Security Project, William Hartung (a colleague of NTU’s), released a critical report disputing the number of jobs generated by the costly F-35 joint strike fighter program. The report also raises questions concerning the use of foreign contractors and Lockheed campaign contributions.
Fittingly entitled, “Promising the Sky: Pork Barrel Politics and the F-35 Combat Aircraft,” some of the significant findings of the report include:
According to the most recent Selective Acquisitions Report, the total cost for the F-35 program, including both the aircraft and engine subprograms, is $391.2 billion. Other, more inclusive estimates put that total much higher. Despite the program’s numerous setbacks, delays, cost increases, and engineering problems, lawmakers have nonetheless given the F-35 one pass after another. One of the major reasons for the lack of serious scrutiny the F-35 has received has been the repeated claims by military Keynesians that the program is an important “job creator of the highest order, a program that has a home in almost every state.”
This new report reinforces critics’ (NTU among them) arguments that funding for the F-35 shouldn’t be on autopilot. Further, the report underscores the need to apply new scrutiny to not only the F-35, but other major weapons systems as well. NTU has long held that the F-35 program has not adequately justified its huge appetite for taxpayer dollars. We have discussed options such as scrapping the B and C variants in joint reports with the R Street Institute as well as U.S. PIRG. Given the disparate values and goals of our partner institutions, the fact that both reports would put the F-35 under the spotlight is a clear indicator that it’s time to take a hard look at the program now..
Getting to the truth about the job-creator myth that has grown up around the F-35 is an important part of reexamining and rethinking how taxpayer funds are spent at the Pentagon. Now, as Mr. Hartung concludes his report, “…Congress and the executive branch can feel free to debate the future of the F-35 on its strategic merits, not pork barrel politics.”1 Comments | Post a Comment | Sign up for NTU Action Alerts
Will the President's Speech Price Taxpayers Out of Prosperity?
Join NTU online to win prizes and chat with your fellow taxpayers during the President’s State of the Union Address – and play our 2014 “Price the Proposals” game to test your budget brain power and win prizes!
In just one week, President Barack Obama will deliver his 2014 State of the Union (SOTU) Address to Congress and the nation. What policies will he propose? How much will his agenda add or cut from the budget? National Taxpayers Union wants to know what you think!
Before the end of the SOTU speech on January 28th, go to www.ntu.org/sotu2014 and make your guess about how much the Address might cost or save taxpayers. The closest guesses to our researchers’ analysis of the speech (without going over) could win:
Then, join us online during the speech!:
Our policy experts and grassroots advocates will give you up-to-the-second commentary and the real facts behind the President’s plans.
So, come on down and “Price the Proposals” during President Obama’s State of the Union “showcase” next Tuesday!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Taxpayer’s Tab Supplemental: NOAA Funding and H.R. 2413
In the latest edition of The Taxpayer’s Tab, NTU Foundation highlighted H.R. 2413 as the week’s Wildcard bill, which is the section where we highlight proposals we find particularly interesting but that do not fall into any of the other three bill highlight sections. The Weather Forecasting Improvement Act would dedicate new resources to the National Oceanic and Atmospheric Administration (NOAA) to research and predict “high impact weather events,” occurring both nationally and globally. More specifically, NOAA would receive funding to purchase new equipment and conduct research that improves its forecasting abilities ahead of extreme weather phenomena like Superstorm Sandy or last year’s Midwest tornadoes.
The text of the bill as introduced set an authorization of appropriations of $120 million for the years FY 2014-2017. The Congressional Budget Office (CBO) analyzed the bill to determine the outlays, i.e., the actual amount of federal spending that would occur as a result of the authorizations. CBO reported that the programs covered by the bill received funding of $80 million in FY 2013 but it was not sure of actual outlays for FY 2014. Beginning in FY 2015 spending would begin to increase from $89 million reaching $119 million in FY 2017. CBO also determined that additional funding ($42 million through FY 2017) would be required for research and planning. Based on this data, NTUF estimated that the bill would increase spending by a net of $115 million over four years.
That is what we wrote in the Tab, which went out to our subscribers last Thursday. Since the release, NTUF analysts have been contacted by staffers on the House Committee on Science, Space, and Technology to help clarify their position and intentions regarding H.R. 2413. The Committee staffers told us that they disagreed with the conclusion of the CBO report:
The Weather Forecasting Improvement Act does not increase the overall authorization for the National Oceanic and Atmospheric Administration. Instead, it prioritizes weather forecasting research from funds made available for research at NOAA. At present, NOAA spends more than twice as much on climate change research as it does on weather forecasting research. The bill, as amended and passed by the Committee in December, does not affect direct spending or revenues, contains no unfunded mandates, and does not does not increase the overall authorization for NOAA, NOAA’s Office of Oceanic and Atmospheric Research, or the Operations, Research, and Facilities account at [the Office of Oceanic and Atmospheric Research (OAR)].
In short, Committee staff say that H.R. 2413 transfers funds from NOAA climate change research to weather prediction research. However, there are a few things to consider in reading our article, reading the Committee’s response, and looking at the CBO cost estimate:
What this means for H.R. 2413: The Committee amended the bill and ordered it to be reported, which means staffers will prepare a written report about the bill including its intentions, section-by-section analysis, and cost information. After that, it would need to be placed on the House’s legislative calendar for floor consideration. In the event the language has been clarified as the Science Committee staff says, the bill would result in a transfer of existing funds and would not increase federal spending.
What this means for taxpayers: For Americans concerned with the accuracy of federally-funded meteorology, especially with regards to large destructive weather events like hurricanes and tornadoes, NOAA will have more resources to improve their predictions and models. This assumes that the redirected-funding for weather research yields better results.
What this means for NTUF’s article and BillTally score: Because the transfer changes were made in the amended version of H.R. 2413 and not the introduced version, we will still record the financial impact of the bill as we reported it in The Taxpayer’s Tab: $29 million ($115 million over four years). This score will be reflected in the agendas of H.R. 2413's sponsor and cosponsors when we release our First Session BillTally report in the coming months. It will likely have a marginal impact on an individual’s proposed spending agenda, but that will also depend on the Member’s other proposals.
Something to remember: NTU Foundation is a 501(c)3 organization and so does not take a stance on any legislation, candidates, or the fitness of currently serving officials to serve. BillTally and The Taxpayer’s Tab is intended to educate Americans on the proposals and spending that can affect the federal budget and their own pocketbooks. We are happy not only to write about the many measures being considered in Congress, but also to clarify our work as a bill evolves and makes its way through Congress.
Not a Taxpayer’s Tab subscriber? Get the most up-to-date research from the BillTally project and the spending trends of Congress now!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Obamacare features a fund which pays out to insurance companies when their costs exceed targets (read more about this in NTU's letter to the Hill).
The reason this particularly matters to taxpayers is the administration seems willing to "stretch" this power - meaning taxpayers could be bailing out insurance companies when whatever is banked in this fund (otherwise known as squat) runs out as Health and Human Services pays off those insurers because Obamacare is forcing them to offer excessively costly plans.
Make some noise on this issue by contacting your Representative and Senators and telling them to support that legislation! This is yet another way Obamacare is finding to hurt taxpayers, and we cannot afford it.2 Comments | Post a Comment | Sign up for NTU Action Alerts
Subscribe to NTU's podcast via iTunes!
Taxpayer's Protection Alliance's Michi Iljazi joins the podcast to breakdown what is in the massive, trillion-dollar, omnibus bill, and the Taxpayer Advocate's new report on all the areas the IRS needs work (it's a long report). Plus, the Outrage of the Week!0 Comments | Post a Comment | Sign up for NTU Action Alerts
Latest Taxpayer's Tab: Multi-Million Dollar Weather Forecasts
Winter storm Hercules -- and with it, a so-called "polar vortex" -- swept across much of the Midwest and Northeast U.S. earlier this month, bringing frigid temperatures and a flurry of media attention. Other extreme weather phenomena, such as last year's tornado outbreak in Oklahoma and 2012's superstorm Sandy, are fresh in the public's mind, and this week's edition of The Taxpayer's Tab features a Congressional proposal to improve meteorologists' ability to forecast them.
Congressman Jim Bridenstine (R-OK) introduced H.R. 2413, the Weather Forecasting Improvement Act of 2013, in order to provide additional funding to the National Ocean and Atmospheric Administration (NOAA). Specifically, the bill would provide $120 million to improve NOAA's reaction to "high impact weather events". The government currently spends about $80 million on weather forecasting initiatives, but some criticize the effectiveness of those programs. The legislation also funds and prioritizes additional research activities over the next few years.
Also in this week's edition:
More detail on these bills and their costs is available in the Tab.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Predict Cost of State of the Union Address, Win $50 Visa Gift Card!
Do the President’s words have weight or is talk cheap?
Join NTU online to win prizes and chat with your fellow taxpayers during the President’s State of the Union Address – and play our 2014 “Price the Proposals” game to test your budget brain power and win prizes!
On January 28th, President Barack Obama will deliver his 2014 State of the Union (SOTU) Address to Congress and the nation. In this speech, the President will have the opportunity to lay out his policy priorities for the next year. Will he present an agenda to get the deficit under control? Or, will taxpayers see the same old plans for more spending and higher taxes?
Americans could be in store for billions of savings or trillions in new obligations, either of which will affect the country for years to come. But what sort of dollar figure are we talking about? If you can correctly answer that question, you could win a $50 Visa gift card!
Back by popular demand, NTU’s “Price the Proposals” contest is taking the pulse of the nation. All you have to do is guess how much you think the President’s SOTU Address will change the federal budget (without going over) and the $50 could be yours! (Don’t worry, we have prizes for runners up, too.)
Then on the night of the speech, January 28th, join us across the web for up-to-the-minute commentary on the State of the Union Address and its fiscal impact. We’ll see you on Twitter, Facebook, and in our special SOTU chat room (on the Government Bytes blog)!0 Comments | Post a Comment | Sign up for NTU Action Alerts
America’s Unemployed Need Employment, Not Extensions
Republicans in the Senate threw the brakes on yet another extension of already extended federal unemployment benefits on Tuesday. The motion to invoke cloture on S. 1845, the Emergency Unemployment Compensation Extension Act, failed on a party-line vote. S. 1845 would have extended federal unemployment benefits through the end of March.
It’s easy to see why such a seemingly small, stop-gap measure, one that would provide tangible help to the many who are struggling to find employment during our ongoing economic downturn, would appear to be a no-brainer to some. However, as I explained in our vote alert issued last week:
The relatively short three-month timeline of this scheme belies its very real and substantial cost. The Congressional Budget Office estimates S. 1845 will increase the deficit by $6.6 billion in 2014. Despite a prolonged fight this fall over out-of-control federal spending, S. 1845 makes no attempt to offset these billions of dollars in new spending.
Our out-of-control national debt and significant deficits each year are creating considerable drag on our economy. It’s irresponsible of Congress to consider new spending without cost-saving reforms or commensurate spending cuts. When it became clear that offsets would be needed to try to move S. 1845 forward, Senator Reed (D-RI) who was also the lead sponsor of S. 1845, proposed an amendment that would have extended benefits for eleven months paid for by prohibiting “double dipping” and tacking on an additional year of spending caps that would keep the sequester in force until 2024. While it’s true that eliminating “double-dipping,” the practice of receiving both unemployment and disability benefits, would be a good, cost-saving reform, another year of sequester is little more than an accounting gimmick.
As evidenced by the Omnibus spending bill in Congress this week, legislators can’t appropriate within even the modest spending caps of the 2011 Budget Control Act now. Assuming they’ll do any better in 2024 is highly questionable. Luckily, the amendment failed, ensuring the cloture vote that followed was also doomed.
It’s worth wondering though, if the unemployment insurance extension was offset, would that be worth supporting? From a strictly budgetary perspective, making sure the new expenditure is paid for is of primary concern to taxpayers. However, research indicates that perpetually extending benefits doesn’t do the unemployed any favors. From the House Ways and Means Committee:
And despite Democrat claims that such spending on UI benefits is the “best stimulus,” all this record-setting benefit spending has bought is the slowest recovery on record. Perhaps not surprisingly, a new study identifies the EUC program as the cause of the painfully slow labor market recovery – as employers have withheld new job offers until after the Federal extended benefits program ends. Another study reinforces that such programs have been behind recent jobless recoveries.
The studies available at the links above illustrate that extending unemployment benefits increases unemployment as employers are discouraged from posting vacancies and workers are discouraged from searching, creating a lose-lose scenario for the labor market. At the same time, what vacancies are available tend not to go to the long-term unemployed. Because the longer someone is jobless, the harder it is to get hired, perpetual extensions provide the unemployed with little, if any, benefit.
As high unemployment rates continue year after year and increasing numbers of individuals stop trying to seek jobs at all, it’s clear that this business as usual approach to unemployment insurance is failing both taxpayers and the unemployed alike. Rather than rubber-stamp extensions, offset or not, legislators should take the time this national crisis deserves to consider real reforms. I mentioned just two in the vote alert:
Block-granting federal unemployment insurance would reduce federal meddling and empower states to ensure scarce dollars are allocated where they are most needed, thereby saving taxpayers money. Stricter guidelines to encourage job-seekers to get back to work sooner could help to disincentivize long-term unemployment, itself a hindrance to re-employment.
But there are lots of other great ideas out there that should be on the table as well. Just this month our friends at the R Street Institute rolled out their own proposals to help the unemployed get to where the work is, overcoming one of the biggest hindrances to employment the labor market is facing. The whole paper is worth a read. Congress can also take up other reforms to help spur job growth such as lowering the corporate tax rate, eliminating costly regulations, repealing the death tax, and many others.
Offsetting unemployment extensions is a good first step, but to really help the unemployed, Congress should let business get back to work.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Taxing Wireless to Pay for…West Virginia Tourism?!
File this one under bizarre tax legislation. Last week, West Virginia state Senator H. Truman Chafin introduced SB 259, which would hit wireless businesses with a $10 million tax hike to fund the West Virginia Division of Tourism.
According to the bill, the new revenue would be used “for the promotion and maintenance of outdoor activities including, but not limited to, skiing and white water rafting.”
While I enjoy carving up snowy mountains and navigating angry river rapids as much as the next guy, I fail to see why wireless companies should foot the bill for their promotion and maintenance. But maybe that’s just me.
Unfortunately, “hidden” cell phone tax legislation like SB 259 is all-too-common these days. In fact, the average nationwide tax burden on wireless service is a whopping 17.2 percent, including federal, state, and local taxes, according to a 2012 study by Scott Mackey of KSE Partners, LLP. To put things in perspective, the average tax rate on other goods and services is 7.4 percent. The study also found that, on average, wireless customers pay an extra $8.07 per month in taxes and fees as a result. That $8.07 is simply another regressive tax that hurts low-income earners in the midst of our stagnating economy and rising health care costs.
Instead of forcing wireless companies (and in turn, cell phone users) to cough up an extra $10 million for tourism, lawmakers in Charleston should focus on scaling back state spending, which soared in the Mountain State by 43 percent between 2000 and 2010.
To avoid higher wireless bills, West Virginia taxpayers should tell Senator Chafin and company that ski slopes, river rapids, and cell phones don’t mix.0 Comments | Post a Comment | Sign up for NTU Action Alerts