The Folly of Flood Insurance; Election Quid Pro Quo; Solving Our Spending Problem

The Folly of Flood Insurance
Over the years, the federal government has shelled out a total of $2 million to repeatedly rebuild a flood-ravaged home in Humble, Texas, assessed at just $116,000. Another home, in Wilkinson County, Miss., worth $69,900, has been flooded 34 times since 1978 and collected $663,000 in insurance payments.

The National Flood Insurance Program has made efforts to stop paying out on such “repetitive-loss properties,” which account for more than a third of its costs. But somehow they keep showing up on the books, especially in the Gulf of Mexico states from Texas to Florida.

For David Conrad of the National Wildlife Federation, such outlays are the purest example of the folly of flood insurance. “It does seem to fit Albert Einstein’s definition of insanity—to somehow expect something different when you do the same thing over and over again.”

—The Week

Election Quid Pro Quo
One Detroit councilwoman seems to think that a bailout of Detroit ought to be a direct reward for helping re-elect Barack Obama. “Our people in an overwhelming way supported the re-election of this President and there ought to be a quid pro quo,” said Councilwoman JoAnn Watson. “That’s what you do.”

Wow. That’s what you do.

That’s the shameless mindset today among some in American cities and states that have irresponsibly overspent.

—Augusta (Ga.) Chronicle

Solving Our Spending Problem
We need perspective [on spending], and perspective is what percentages are for. People understand percentages. For instance, Americans saw their wealth plummet 40% during the recession. Median income fell 8% and the value of retirement accounts declined 7%. Meanwhile, over that same period, the federal government grewits spending from $4.9 trillion to $5.9 trillion, a 20% increase.

The only way to build political support for spending restraint is something like this: An across-the-board 1% cut in spending—all spending.  And a real cut, not just an adjustment, in scheduled growth.

Over the past few years, Americans have cut back on their lifestyles by far more than 1%. It will be hard to demagogue successfully against a 1% reduction in government spending. And guess what? If we cut federal spending by only 1% for five years, we balance the federal budget without any need for tax increases. We solve a spending problem with spending restraint, returning spending to Clinton-era levels.

—Tom Giovanetti, president, Institute for Policy Innovation

Obama’s Hostile Politics
The endless proliferation of anti-business interventions by government, and the sight of more of the same coming over the horizon from Barack Obama’s appointees in the federal bureaucracies, create the one thing that has long stifled economic activity in countries around the world—uncertainty about what the rules of the game are, and the unpredictability of how specifically those rules will continue to change in a hostile political environment.

Both history and contemporary data show that countries prosper more when there are stable and dependable rules, under which people can make investments without having to fear unpredictable new government interventions before these investments can pay off.

A great myth has grown up that President Franklin D. Roosevelt saved the American economy with his interventions during the Great Depression of the 1930s. But a 2004 economic study concluded that government interventions had prolonged the Great Depression by several years. Obama is repeating policies that failed under FDR.

—Thomas Sowell, Investor’s Business Daily

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