Archives: June, 2012

Senate Poised to Reform Flood Insurance

As I’ve written elsewhere, the National Flood Insurance Program (NFIP) has to rank as one of the most misguided and destructive federal programs.  In addition to subsidizing the destruction of the environment, it also encourages families to live in harm’s way.  The solution should be to end it and let the private market appropriately price the risk.  If Congress chooses not to end the NFIP, it should at least reduce the subsidies behind the program.  Surprisingly enough, S. 1940, currently on the Senate floor, does just that.

Over the next 9 years, S. 1940 would increase revenues under the NFIP by $4.7 billion, as estimated by CBO.  This is $4.7 billion that wouldn’t have to be paid by the taxpayer but instead would be paid by those who benefit from flood insurance.  My estimate is that this represents about half of the program’s current subsidies.  Such a major reduction in subsidies would also allow the private sector to have some chance at actually competing.

There have been some complaints raised that S. 1940 expands the program and “gasp” actually includes an “individual mandate” like ObamaCare.  Such misunderstands the nature of the NFIP.  The core nature of NFIP is that if a community wants to be eligible for federal disaster assistance, then it must participate in the NFIP and borrowers, in said community, with a federal mortgage, who live in the 100 year floodplain, must buy flood insurance.  S. 1940 extends that requirement, over a number of years, to homes with federal mortgages that exist behind dams, levees and other man-made structures.  As Hurricane Katrina taught us, having a levee is no absolute protection for either the homeowner or the taxpayer.  While dams and levees can reduce the frequency of flood loss, they do so at the cost of increasing the severity when it does happen.

The important point is that the current program and “residual risk” provisions of S.1940 do not require anyone to do anything.  Every community in America is free to leave the program.  Also homes within communities that stay can avoid the purchase requirement by not getting a federal mortgage (which the taxpayer stands behind).  If this encourages an expansion of a mortgage market not backed by the taxpayer, then all the better.  S.1940 also exempts small dollar premiums from the residual risk requirement.  The residual risk provisions would also incorporate into the premium pricing any real reduction in flood risk that results from a dam or levee.

Again the ultimate solution is to eliminate the NFIP, so that free individuals can choose which risk they take and which they pay others to bear.  Until then, reducing federal subsidies and forcing federal programs to more actually price risk will not only help protect the taxpayer, but also improve the functioning of our mortgage market.  S.1940, along with its residual risk requirements, is a step in that direction (and considerably better than the House version, which does actually increase the taxpayers’ exposure).

Stopping the EPA: the Long Game

Yesterday’s DC Court of Appeals ruling throwing out an omnibus petition against EPA’s first tranche of carbon dioxide restrictions rested largely on the Court’s decision that EPA’s “Endangerment Finding” from related global warming stands as is. In particular, it noted that the petitioners’ argument that “uncertainty” about climate change was not sufficient grounds to void the Finding.

Indeed, “uncertainty” is thin ice if EPA is in the business of saving us from almost-certain doom. A better argument would have been a direct assault on the Finding’s science, or rather, selective science.

But this is beyond the capabilities of most litigators, who simply aren’t trained to wade through the enormous technical literature on global warming and its effects. That’s about to change.

The next battle with EPA is likely to come over their proposed regulation that would essentially outlaw coal-fired electrical generation. Here at Cato, we are preparing the definitive answer to its Endangerment Finding.

With regard to climate change impacts in the U.S., the Finding relies primarily on one document, Global Climate Change Impacts in the United States. It was produced by the U.S. Global Change Research Program (USGCRP), a mélange of agencies all dependent upon climate change dollars. This document is about as inclusive as one would expect it to be—i.e. it avoids a massive amount of inconvenient science. You can find it here.

Since April, 2011, along with several colleagues around the country, I have been working on the scientific counter to the USGCRP document. It looks like it, section by section. It flows exactly like it. It has more references and notes—almost twice as many—as the USGCRP document. As in the adage, “you can take it to court.”

While it’s not yet in final copy, the latest draft is sufficient to give you the idea: this is the document to take down the Endangerment Finding. You can download it here.

We expect this document is going to figure heavily in the next round in the fight to prevent EPA from imposing scientifically senseless but economically disastrous restrictions on energy use.

Cuba Supports Democracy… In Other Countries

Cuba withdrew its ambassador in Paraguay after the constitutional impeachment of that country’s president. In a press release yesterday [in Spanish], the Castro regime, in power since 1959, stated that it “will not recognize any authority that does not emanate from legitimate suffrage.”

Should other countries apply the same rule to Cuba and start withdrawing their ambassadors in Havana?

Want a Disproven Belief? Government Schools Teach Good Science

Much is being made by school choice opponents of a report that a Christian school in Louisiana eligible to receive students in the state’s new voucher program uses a textbook that asserts the Loch Ness Monster is real and a dinosaur. Writes Washington Post education columnist Valerie Strauss:

This is where support of vouchers is leading us — to the public paying for a child to learn that the Loch Ness Monster was a dinosaur and co-existed with humans. This is important to Young Earth Creationists, who believe that Earth was created no longer than 10,000 years ago, not the 4.5 billion years estimated by science. They also believe that dinosaurs were on Noah’s Ark.

If people want to believe this and they want their children to learn it in school, that’s fine. The public shouldn’t have to pay for it.

I can certainly see why paying for this sort of thing would disturb a lot of people – it’s a major reason tax-credit programs, which let individuals and corporations choose to whom they will donate, are preferable to vouchers. Let’s, however, use this to confront another, extremely dubious belief that many would never challenge:  Government schooling leads to good science instruction.

First, no matter how loudly government-failure deniers might protest – the government is omnipotent, dammit! – government schooling does not overcome religious belief. The latest Gallup poll assessing views on human origins came out a few weeks ago, and found as it has since 1982: The vast majority of Americans believe that God created human beings, and a plurality believes that God created us in our “present form.” Only 15 percent hold that human beings evolved without any divine involvement. And this is with roughly 85 percent of students attending public schools.

Next, take a look at overall science achievement. According to the latest National Assessment of Educational Progress results, only 32 percent of U.S. eighth graders are “proficient” in science. And private versus public schools? 43 percent of private school students are proficient, versus 31 percent for public schools. A significant part of the difference is likely that private schools tend to serve better prepared kids, but the data certainly doesn’t suggest that public schooling beats private when it comes to science instruction.

Finally, there’s the reason government schools are so inept at teaching science: All people, no matter what their beliefs, are forced to support public schools – a perfect recipe for wrenching conflict. To avoid war without end, some 60 percent of high school biology teachers gloss over the mega flash-point that is evolution. The result is that no one, no matter what their beliefs, gets coherent biology instruction.

The solution to this is obvious: Let the people go! Let them freely choose what their children will learn, eliminating the need to fight. No longer force them to pay for “free” government schools, then pay again for education they like.

Unfortunately, all too often the self-proclaimed logic-driven defenders of science reject this argument. In part this is because of their heart-felt conviction that all children must learn proper science. That, however, has shackled them to the utterly illogical belief that some way, somehow, human and government reality will be magically overcome.

That’s more than just a little ironic.

Can Romney Win Young Voters?

NPR has a story on Mitt Romney’s hopes to win back some of the youth vote that went so heavily for Barack Obama in 2008, and today’s Diane Rehm show is looking at the politics of the generation gap.

I wrote about the youth vote earlier this month for the Huffington Post. I argued that Obama’s Bush-retread policies on Afghanistan, Iraq, and the war on drugs would reduce his appeal to young voters. And most importantly, I said:

Debt. And finally, perhaps the longest-term impact President Obama will have on today’s young people. The national debt has increased by $5 trillion, about 50 percent, during Obama’s 3-1/2 years in office. As a percentage of GDP, it’s the highest since World War II. The average amount of student loan debt is $25,000, but each American owes about $45,000 for the national debt.

Worse, the unfunded liabilities of Social Security, Medicare and other entitlements programs are estimated anywhere from $62 trillion to twice that much. That amounts to $500,000 to as much as a million dollars for every American household. The promises that government has made are unsustainable, and it’s today’s young workers who will end up holding the bag when the money runs out.

It’s not like Romney has any serious plan to reduce the debt burden on today’s young people, and if they really wanted to end the wars and avoid bankruptcy, they’d probably vote for Gary Johnson. But we can at least hope that in addition to promising college students cheaper loans, Romney and Obama will feel pressed to come up with actual policies that might bring the nation’s unfunded liabilities to less-than-Greek levels.

Census Bureau Confirms: DC Spends $29,409 / pupil

Four years ago, I wrote an op-ed for the Washington Post revealing that DC spent nearly $25,000 per pupil during the 2007-08 school year. I calculated this figure from the public budget documents of the District of Columbia, which I subsequently summarized and linked on this blog.

No education reporter followed up on my findings, and much lower per pupil figures continue to be reported to this day. My $25,000 figure was even greeted with skepticism by analysts at free market think tanks. One state education policy analyst wrote to say that my figure was “out of line with credible information,” and that I gave my critics “too much ammunition with this clearly questionable set of statistics.”

Indeed, the Census Bureau figures for DC’s total K-12 expenditures were substantially lower than mine. I made a note to track down the discrepancy, but other projects intervened. When I updated my calculation to use DC budget estimates for the 2008-09 school year, I found that District spending had risen to over $28,000 / pupil. The comparable number for that year reported by the Bureau of the Census was just $18,181 (which you get by dividing the total expenditure figure in Table 1 by the enrollment figure in Table 15).

So you can see why most folks were skeptical. Skeptical, but wrong.

Back in March of this year I asked my then research intern to contact the Census Bureau and ask where they got their total spending data. It turns out, they got them from a DCPS official. We presented evidence to the Bureau that that DCPS official had missed a few line items when completing the Census Bureau’s forms—to the tune of about $400 million. The Census Bureau agreed and is in the process of obtaining corrected data for the 2008-09 year. In the meantime, they made sure to ask DC officials to include all relevant items when filling out their forms for the 2009-10 school year. The result: Census Bureau data now show DC spent a total of $29,409 per pupil (obtained by dividing total expenditures in Table 1 by enrollment in Table 15). This is just a bit higher than my calculation for the preceding year.

Kudos to the Census Bureau for taking the initiative and getting DC to accurately report its public school expenditures. Now that education reporters can simply open a Census Bureau .pdf file and divide one number by another, I wonder if any will report what DC really spends per pupil? I suspect that they still will not, continuing to mislead the general public, but I would be delighted to be proven wrong.

Oh, and, BTW, this spending figure is about triple what the DC voucher program spends per pupil—and the voucher students have a much higher graduation rate and perform as well or better academically.


The Message from Montana

The Supreme Court issued a summary opinion overturning Montana’s restrictions on corporate spending on electoral speech. The court did so 5-4 along the lines you might expect. As John Samples points out in this short video, the court’s opinion in Citizens United that “political speech does not lose First Amendment protection simply because its source is a corporation” is not as settled as fans of freewheeling political communication might hope.

To overturn Citizens United, lawmakers might pursue a Constitutional amendment that would allow Congress to prohibit funding of electoral speech. But as Samples notes, a number of proposed amendments go far beyond banning corporate political speech and simply outlaw all private spending to influence elections. One should presume that such a ban could include Sharpies and posterboard for your standard-issue homemade political sign or the purchase of certain Shepard Fairey prints.