NEW YORK - The U.S. government can't keep paying to repair homes that flood over and over, says a leading House Republican.
"The federal government is encouraging and subsidizing people to live in harm's way," said Rep. Jeb Hensarling in an appearance on CNBC Thursday. "At some point God is telling you to move."
Hensarling, chairman of the House Financial Services Committee, was referring to the National Flood Insurance Program. The federal insurance covers flood damage for homes, which most most homeowner policies do not cover.
Buyers purchasing a property at risk of flooding are generally required by mortgage lenders to have a government flood policy.
The statement caused many people in places like Meyerland, which consistently floods, to react.
"I was thinking, 'Ouch' you just offended so many people, I don't think you know what you just said," said Genevieve Rowland, a local real estate agent. "He is making a point ... I believe it could have been phrased much more differently."
He cited a modest home outside of Baton Rouge, Louisiana, that has flooded more than 40 times and has cost the program nearly $500,000. Another home in Houston worth $100,000 has filed $1 million in claims due to multiple floods, he said.
However, Meyerland residents who have taken the brunt of Harvey said there is a lot more to consider before making final decisions.
"We have no control over the floodwaters and development over the suburbs," said Duane Hendricks, who has lived in Meyerland for 47 years.
He and his neighbors said the flooding did not happen when they bought their home decades ago.
"It was insensitive in the fact that again he's not looking at the whole picture," said neighbor Dean Lowry.
Lowry cited drainage issues. Other Meyerland residents said while flooding was not an issue, now they are almost expecting to flood every time there is a big rainfall.
Hensarling's statement comes while FFIP is under consideration for major reform.
Statistics back up Hensarling's concern that homes that have been damaged by multiple floods are draining the program. Less than 1 percent of nearly 5 million flood insurance policyholders collect 25-30 percent of the claims because they file repeatedly, according to analysis by the Pew Charitable Trusts.
"We would be better off, they would be better off if frankly we bought out a lot of these properties and returned them to moisture-absorbing soil and had it be part of a flood control plan," he said. "Maybe we pay for the home once, maybe we even pay for it twice, but at some point the taxpayer has got to quit paying and you've got to move."
The flood insurance program was nearly $25 billion in debt even before Hurricanes Harvey, Irma and Maria hit. Estimates are that those storms will cause tens of billions dollars in additional claims.
"We have a bankrupt program that is essentially funded by a bankrupt nation," he said, citing the fact that the total national debt has now hit $20 trillion. But getting reform for the program through Congress is tough, he admitted.
"A lot of these communities are concerned about the loss of their tax base," he said. "Other people look upon this as essentially a form of entitlement spending, having federal taxpayers subsidize their premiums. So this is tough political sledding."
He said he still hopes reform can pass.
Some Meyerland residents believe the congressman makes a point, but perhaps his delivery could have been more sensitive.
"A lot of these people are still in shock and for him to say something like that, I believe that he could have phrased it much more differently," said Rowland.
Hensarling released the following statement about his comments:
“For the victims who paid for flood insurance policies with the National Flood Insurance Program, their claims need to be paid and paid now. Helping victims right now is paramount. Congress must then finally get serious about fixing the NFIP because in its current form the program is unsustainable and perverse. It is a government monopoly that subsidizes people to live in harm’s way. It actually encourages the building and re-building – and re-building again – of homes and businesses in flood-prone areas. That is neither smart nor compassionate.
“We cannot watch another family lose everything – risking their lives and the lives of the first responders sent to rescue them – because the National Flood Insurance Program’s seal of government approval fooled them into thinking they were safe.
“The flood insurance reform legislation passed by the House Financial Services Committee protects homeowners by requiring the NFIP to clearly communicate their full flood risks and provides more than $1 billion to help them elevate their homes and make them more resistant to flooding. It also protects hardworking taxpayers with common sense changes to begin phasing out taxpayer-provided subsidies for properties that flood over and over again. Our legislation also gives everyone the opportunity to access lower-cost flood insurance by opening the NFIP up to private market competition.”
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