In the California Wildfire thread, someone posted to this article saying California s requesting $40 billion in recovery funding. The article says:
The aid would go toward “immediate and long-term recovery work needed to rebuild lives and properties,” according to the letter. The request includes $16.8 billion in public assistance funding, $9.9 billion for house and business repairs, $9.61 billion in business loans and grants and $2 billion in low-income housing tax credits.
I feel the tendency to say the feds ought to pay what it takes to help out these folk who suffered a tragedy. But I also wonder how narrowly tailored such requests from states are/ought to be. Do affected states “pad” such requests, hoping to pay for infrastructure improvements, wishlists, or other assistance not strictly related to the specific disaster? Instead of rebuilding lost structures, woul dit be better to - say - build large numbers of multi-family affordable housing? Is that a legitimate use of such funds?
And, while it seems like “blaming the victim,” if someone lacked fire insurance, to what extent should their losses be covered by the feds?
I realize this sounds heartless. But my cynical side fears that a lot of folk who don’t really NEED this help will be getting it, while the most needy folk will continue living their lives of quiet desperation. I vaguely suspect I may have asked similar questions concerning a previous hurricane or something. Finally, I’ve been shocked to see the amount of such relief Illinois (where I live) has received in recent years. So I’m not criticizing California and Florida.
Yes. First, that’s how negotiation is done, you ask for more than you need hoping to get enough for your needs. After that states will do anything to get more money from the federal government. They all get some, all would prefer to get more.
This is not a new problem, and the fact that a multi-millionaire living on the beach in Malibu may get paid our hard-earned tax money is worrisome. Fortunately, I don’t think this happens very often. It’s fair to assume there are a variety of checks disaster relief applications have to go through before they are deemed worthy of any kind of Government payout.
I think the bigger issue is whether we should provide funds to anybody who makes a risky decision, such as building a house on an unstable hill or by not purchasing property insurance, knowing they will get bailed out by if things go terrible wrong. I think you have to draw the line somewhere, but where you draw the line, and how consistently you stick to it, may be harder to do in practice that you might think.
Not an expert, but ISTR Trump removed some Biden policies requiring structures must be built back better or relocated, to avoid repeat failures.
Around here the standard issue is folk building in floodplains, with the same structure rebuilt many times after repeated - and anticipated - floods.
My not entirely rational brain often thinks, why subsidize folk building in wildfire/hurricane zones, when there are plenty of areas in the Midwest that do not experience such recurrent disasters. Yeah, I know that is where the jobs are, but that sorta leads to circular logic.
As I admitted, IL has had its hand out for plenty of disaster relief. But for whatever reason I can’t recall the repeated disasters affecting Chicago/Milwaukee/Detroit/…
I agree the nation as a whole ought to help out states when in need. But I have a hard time appreciating that when it comes to encouraging comparatively riskier behavior.
I think that homeowners, rental and business structure insurance should be modified to include coverage for all natural disasters: floods, hurricanes, tornadoes, earthquakes, wildfires, etc. To the argument that a huge number of losses could destroy an insurance company there is reinsurance. Thus if people enjoy the benefits of living in these riskier areas they should pay the costs. This will also encourage state and local governments to set standards lessening the risks.
Thus the federal government should only be helping pay for short term public costs while the disaster is happening and immediate aftermath, public infrastructure and to help the poor.
I have long argued for all-hazards no-excuses always-pays-100-percent insurance.
I believe the public would be horrified to discover how hugely expensive it would be. “So be it” would be my answer, but lotsa politicians would not want to be roasted alive for what they did to their constituents’ budgets.
Remember, reinsurance doesn’t create money from nothing. It’s just another layer of risk pooling done by another layer of profit-seeking entity. The insured consumer is still the only entity in the chain bringing fresh money to pay premuims.
Unfortunately, we’re headed into an era of more widespread, more damaging, and more expensive natural disasters. Coastal areas will be particularly affected, but so will any area in a floodplain, tornado alley, or forested region.
In a sane universe we would have started fighting climate change years ago. At the very least we would have warned people of this very known, totally forecast era and told them that the money to rebuild would be drained rapidly until nothing was left.
Obviously, such warnings would send housing values down to near nothing. The losers would include some of the richest people, who love to build on coasts and near forests, but also some of the poorest people, who are forced to live in regions that are otherwise unwanted. Where do such people go after their housing and lives are taken away from them? We already see these areas in housing built near factories that generate rivers of waste and create cancer clusters. We’re not doing much of anything there.
Again, in a sane world, the federal government - the last resort - would have plans to deal with disasters. Some of those plans would have to include incentives not to rebuild in the most hazardous zones. But they would also have to work to rebuild services around those zones - schools, fire and police, utilities - and affordable housing for those displaced and penniless rather than merely paving over the destroyed areas and putting up no go signs.
Disaster relief should be part, a small part, of a gigantic multi-trillion dollar infrastructure plan for climate mitigation that includes a huge job program to train workers in all the manual fields that will generate. Ending the tax cuts already scheduled to end and allowing the IRS to pursue people who are already evading paying the taxes due would raise $5 trillion over the next decade. Everybody’s lives would be greatly increased, except tax evaders.
This is logical, but of course corruption can enter the equation here as well. Who decides where “risky” is? And who’s palm needs to get greased to make that place less risky?
And what about places that are already built-up, and climate change has increased risk there? Are those people screwed, or do you, ya know, downgrade the risk or bend the stats a little in that area because those people are moneyed, or are poor?
I was of course speaking hypothetically, and I should have said “In a perfect world, we would make it clear that if you choose to build in a “risky” area you do so at your own peril, and you shouldn’t expect a handout if things don’t work out”. Note that the word “risky” is in quotes. Unfortunately, we don’t live in a perfect world, and implementing such a policy is fraught with issues, such as the ones you mentioned.
Ideally, elected government, either local, state, federal, or some combination, would be able to fairly determine where is and where isn’t a risky place to build housing, as opposed to say insurance companies. Some places would be obviously risky, but most places wouldn’t be, which is why it can’t and will never be implemented.
Not only would the public be horrified, but the nature of insurance would spread the cost across the risk-taking and the non-risk-taking alike. So the homeowners in Chicago/Milwaukee/Detroit @Dinsdale spoke of would be hit by huge premiums, despite not living in high-risk zones.
Of course you could try relocating everyone in California to the Midwest, but then you’d put 40 million more people in the path of our trio of floods, blizzards, and tornadoes.
Exactly the problem; there’s not really many places that are both desirable to live in and not prone to regular natural disasters. Human beings prefer to live in places that are prone to natural disasters because the phenomenon that make the land livable and useful for humans also produce natural disasters. And moving everyone to deserts and wastelands where nothing ever happens would both make everyone very unhappy and cost a lot more than disaster relief.
The practical solution is to just require everyone to be as disaster proofed as possible. It’s just that nobody wants to pay for that and there’s an unwillingness to make people do it (much less pay them to do so), so it doesn’t get done.
A primary problem, as I think was pointed out in another thread, is that the value of property is increasing, the amount of risk is increasing in large part due to climate change and generous land development policies, but…the cost to the end user (insurance policyholder) has not kept pace with the other two legs of the stool. So, someone’s gotta fill in the gap, and that has been the government, with disaster relief. If you can either lessen property value or reduce risks, and increase cost to pololicyholders, then you may be able to balance things out, but until then…
I’m gonna have to look into this more. I was shocked when I saw the amount of disaster relief Illinois pulls. Having lived in.near Chicago my 60+ years, I’m trying to recall a flood/blizzard/tornado that came close to - pick a - California wildfire or Florida hurricane. The Chicago and Peshtigo fires were some time ago, and New Madrid further still.
My suspicion is that Illinois’ success in pulling in federal disaster relief is more a victory of political clout. Tornadoes rarely strike around the Chicago area, and have never cut a swath thru the city itself. I readily acknowledge that too much building is allowed in flood plains. A blizzard might collapse an occasional roof, but if you aren’t a dummy (or the unfortunate experiencing a tru emergency at that time), you just hunker down, eat what is in the cupboards, and head out when the roads are cleared in a day or 2.
How frequently do mammoth natural disasters striking Milwaukee/Detroit/Indianapolis/Cleveland/Minneapolis… Not to mention the smaller towns in between.
In Illinois, it seems the impact of such disasters occurs mostly far south of Chicago - where fewer people live. Paraphrasing a comic I heard after the LA fires, you could burn a heck of a lot of Kansas/Nebraska/the Dakotas for a fraction of the damage to LA!
Not necessarily. You’re 100% right that part of insurance is risk-spreading. But it’s stratified risk spreading. Male teen drivers pay more for car insurance than old ladies do.
So we have two distinct problems to solve.
One is ensuring total industry-wide collective premiums accurately reflect total industry-wide collective risk exposure. Politicians answering to the demands of their constituents have incrementally ensured this is far from true and the difference is now unsustainably huge. It’s huger in high risk areas, but it’s true everywhere. Even someone in a very safe place is underpaying for insurance for their actual 2025 risks.
The second problem is the one you allude to, ensuring the individual premiums accurately reflect individual risk. Only when that’s true can the market function correctly and people will naturally make sound decisions as they “vote with their wallet” on what risks to run. Right now most of us in risky areas are voting with someone else’s wallet that we like living here.
Here in hurricane country, there are large premium discounts for having a properly built house, one that won’t blow away. The price difference can be massive. Whether you call that a “preparedness discount” or an “unpreparedness surcharge” is a matter of psychological marketing; the result is the same. Putting the premium burden where it belongs: more on the unprepared.
