National Flood Insurance Program

The National Flood Insurance Program: Solving Congress’s Samaritan’s Dilemma

from The Gray Area:
If we are going to reign in spending in this country, we have to look at everywhere the government spends. Disaster relief is one of those places. That's why i agree witht eh analysis below from CATO on 'solving the samaritan's dilemma'.
from CATO Policy Analysis,
The National Flood Insurance Program

Who should pay for the damages caused by natural disaster? The American ethos has long called on personal responsibility and private charity, rather than broad public aid, to secure people’s welfare. Although public emergency services play a vital role during and immediately after a catastrophe, this ethos looks to private insurance and disaster‐​oriented organizations, such as the Red Cross, to be the main modes of recovery from a flood or storm, as well as prior care in siting and constructing buildings to blunt the effects of wind and rain. Despite this, the federal government has often come to the financial assistance of Americans harmed by mass calamity. But public aid crowds out private relief and dampens incentives for private insurance and damage prevention. Policymakers thus face the Samaritan’s dilemma: either render aid after a catastrophe or else withhold aid to encourage people in calamity‐​prone areas to purchase disaster insurance, take preemptive measures to reduce losses, and build robust private charity systems. To achieve the latter, elected policymakers must effectively “precommit” to not rendering financial aid, warding against the temptation to backtrack when the public sees heart‐​rending images of disaster victims. Congress created the National Flood Insurance Program in 1968 to escape the Samaritan’s dilemma in a politically palatable way. Despite its flaws, the program is preferable to a return to the regular appropriating of ad hoc aid, which was the case before the program was implemented. The most important step Congress can take is to return to the original intention that it charge unsubsidized, actuarially fair rates for structures covered under the program. More From CATO Policy Analysis:

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