fema

Naked Body Scanners — Coming to a Neighborhood Near You!

by Alex Schibuola on November 30, 2010 · 1 comment

in Nanny State, Personal Liberty

Well, you can forget the airports-only naked body scanners — they’re now coming to a neighborhood near you. Forbes reports that “American Science & Engineering. . .has sold U.S. and foreign government agencies more than 500 backscatter X-ray scanners mounted in vans that can be driven past neighboring vehicles to see their contents.”

My take: This whole War on Terror is getting out of hand. What happened to the Fourth Amendment (i.e., no unreasonable searches and seizures without probable cause)?

The Department of Homeland Security’s mission statement says that their ”overriding and urgent mission is to lead the unified national effort to secure the country and preserve our freedoms. . . . The citizens of the United States must have the utmost confidence that the Department can execute both of these missions ['both' refers to terrorism and natural disaster response].”

“Preserve our freedoms”? How does having federal agents put their hands down my pants or take naked photos of me preserve my freedom?

“Citizens of the United States must have the utmost confidence”? What does “must” mean? Quite frankly, I don’t think the government could run a lemonade stand efficiently.

As my colleague Hans Bader astutely pointed out in a recent blog post, the government failed to stop the Christmas bomber last year and that the “TSA often fails to detect explosive ingredients and fake bombs in performance tests. A study found that the TSA is more than twice as likely to fail to detect a bomb as the private security firms it replaced.” Ask the people of New Orleans how satisfied they are with DHS’s FEMA response to Hurricane Katrina.

It’s about time to have a chat about national security and freedom. Unfortunately, we have to recognize that there’s a trade-off involved that is all too easily ignored. If freedom is our end, we have to recognize that the means to “preserve” it might undo the whole thing.

Insurance Lessons from Alabama

by Michelle Minton on October 25, 2010

in Insurance, Precaution & Risk, Regulation

While Alabama certainly has some ambiguous laws and archaic regulations, the federal government ought to take a lesson from Alabama when it comes to property insurance.

In an effort to keep the state’s insurer of last resort solvent (meaning it will have enough money to pay the claims people are likely to file), Bob Groves, manager of the state-run insurer, announced that they will no longer issue policies for homes built over or standing in water.

People who currently hold policies on a building in or over water can keep the insurance as long as they own the building and pay the premiums. But the association will not cover the new owners, and it will drop coverage when water encroaches on a building that is now on land.

While this will only affect 400 out of the 18,000+ policies held by the Alabama Insurance Underwriting Association, over time this policy will make the state-run insurer more stable and could potentially shrink the facility a little.

This is policy the federal flood insurance facility should emulate. As I wrote back in August, when it comes to the National Flood Insurance Program, a division of FEMA, some in Congress have been doing just the opposite. They are attempting to expand coverage so not only are homes that repeatedly flood covered, but also homes that are likely to suffer wind damage.

One of the results of NFIP’s covering high-risk properties and undercharging premiums is that its debt has ballooned and it requested a bailout to the tune of about $20 billion.

The problem occurs when the government, either state or federal, starts underwriting property insurance at reduced rates. This encourages people to continue risky behavior, to forgo mitigation efforts (like cutting down trees, raising property, hardening roof structures), to continue building in risky areas, and it pushes out private insurers who can not compete with taxpayer-funded insurance facilities.

While the best case scenario is that the Alabama state-run insurer gets completely out of the market, this is one small step toward solvency. At least they are less likely now to need a bailout from the federal government (the American taxpayers). Hopefully those in Congress will learn a little something from the Yellowhammer State.

Government Insurance: Guaranteed to Fail

by Michelle Minton on August 27, 2010 · 2 comments

in Insurance, Odds & Ends

Few observers were shocked when the Federal Emergency Management Association (FEMA) asked for a nearly $20 billion bailout of its National Flood Insurance Program (NFIP). For years groups and individuals have warned that NFIP was underfunded and increasing its liability each year by not encouraging consumers to move or alter their homes in a way that would limit future losses. The availability of government provided insurance allowed people to continue building in at-risk areas like Florida’s coastline. The big problem? Government run insurance providers are not motivated to charge adequate rates, keep costs down, or encourage consumers to alter their homes to prevent further damage. As this USA Today article cites a notable anecdote that, unfortunately, isn’t all that uncommon:

In Wilkinson County, Miss., a home has been flooded 34 times since 1978.

Extraordinary as the damage may be, even more extraordinary is that an insurer has paid claims every time, required no flood proofing, never raised premiums after a claim and vowed to continue insuring the house. Forever.

The home’s value is $69,900. Yet the total insurance payments are nearly 10 times that: $663,000.

It’s no surprise that the insurer faces huge financial problems.

The insurer? The federal government.

Government run programs fail to send the appropriate “safety” signals about consumer behavior, but their presence in the market also makes it more difficult for private insurance companies to compete. In Florida, for example, the state-run wind insurer (Citizens Insurance Corp.) was meant as a “last resort” for consumers who could not find coverage anywhere in the market. Eventually, the company charged rates that were so low that private insurance companies could not compete and chose to leave the state, resulting in more people becoming reliant on the government-backed programs.

For these reasons, CEI along with a diverse coalition of consumer, taxpayer, and environmental groups vehemently opposed proposals to expand the National Flood Insurance Program to include other perils, like wind.

Back in 2008, former CEI Senior Fellow Eli Lehrer had this to say about plans to expand the National Flood Insurance Program:

“…America’s most important flood control program-the none-too-creatively named National Flood Insurance Program (NFIP)- faces serious troubles. In its current state, it drains the Treasury, damages the environment, and encourages unwise development. At minimum, it needs a restructuring that puts environmental and fiscal responsibility ahead of the questionable short-term desire of some for lower insurance rates in flood-prone areas.

Given that it sells insurance for less than any private company would, the program is a fiscal disaster. Although it theoretically, “borrows” money from the Treasury rather than actually raiding it, its fiscal state doesnt really make it possible for NFIP to pay back its debts. Right now, it owes the Treasury almost $18 billion and has no practical way to pay it back.”

Not only was this fiscal head-on-collision ignored by many in congress, some wanted to increase the liability it owed by adding wind coverage-that is, allowing the federal government to cover hurricane damage. With states like Florida getting hit hard nearly every season the potential liability would be enormous.

“Findings by research firm Towers Perrin predicted losses up to $200 billion if a federal program replaces private sector catastrophic wind insurance.”

If Americans want to avoid these fiscal catastrophes in the future, we must get the government out of the business of private enterprise and allow profit-motivated companies offer rates that actually reflect the risk of certain behavior. If consumers don’t like the cost of insurance for a potential home on the beach then they might consider buying a home far away from the dangers of hurricane winds, rather than relying on US taxpayers to bail them out after their home is damaged year after year.

FEMA — Fraudulent Emergency Mismanagement Agency

by Jonathan Tolman on January 15, 2009 · 1 comment

in Odds & Ends, Politics as Usual

President Bush has declared an emergency in the District of Columbia for the inauguration of his successor. This unprecedented move will allow FEMA to reimburse state and local governments. In reality the DC government doesn’t really view the inaugural as an emergency so much as a reason to throw a giant 5 day party. In December the DC city council passed emergency legislation allowing all bars, restaurants, and nightclubs to serve alcohol until 5 am and to stay open for 24 hours from January 17th through January 20th.

Given the number of people expected to attend the inaugural this is pretty much a security nightmare for the metropolitan police. Since this is a larger than usual inaugural, the $15 million that Congress has already appropriated to the DC government is already spoken for. Which means the DC government is on the hook for paying the triple overtime for the police, fire and ambulance services that they would need so people can keep drinking and partying into the wee hours of the morning. By declaring an emergency FEMA can now reimburse DC for security, public health and safety related expenses (at 100 percent federal funding) during the emergency. And guess when the declared emergency is? January 17th through January 21st. Coincidence? I think not.

Now I have no problem with DC wanting to throw a big party. I just don’t think that the American taxpayers should foot the bill. Bush declaring such an emergency is beyond the pale.