It's not every day you get told off by an ex-FEMA director as well as a retired admiral and former deputy secretary of homeland security. But that's exactly what happened to me last week when I received a letter from James Lee Witt (pictured above) and James M. Loy, who now co-chair ProtectingAmerica.Org. The pair took issue with my recent recap of how well I had predicted the top stories of 2007, at least in terms of my take on the advance of their cause--to establish a national catastrophe fund. Read on for their critique and my response.
Dear Mr. Friedman:
You recently reviewed your predictions for 2007 [click here to read what I said] and declared that you were right in predicting that there would be lots of talk but little action in Congress on establishing a national catastrophe fund.
It’s one thing to be wrong about a prediction; it happens every day. But you couldn’t be more wrong about what did, in fact, happen in Congress on creating a national CAT fund.
The fact is, the House of Representatives, by a bipartisan vote and a more than 100-vote margin, passed HR 3355, the “Homeowners Defense Act of 2007.”
The Speaker of the House and the Chairman of the House Financial Services Committee declared the creation of a CAT fund, “a national priority.” The bill was introduced, hearings were held and passage was secured, all in a matter of a few months.
That’s more than talk. That’s definitive action and historic progress on a bill that will help better prepare and protect consumers and help rejuvenate the homeowners market for the 60 percent of America that is exposed to massive hurricanes and major earthquakes.
In addition to the recent definitive action in the House, the front-runners among the Democratic and Republican candidates for President have endorsed the concept and the bill itself.
They recognize that the status quo is unacceptable and that consumers deserve a better way.
The 2008 forecast: definitive action in the US Senate is inevitable.
Contrary to your 2007 prediction, progress was made in Congress and America is half-way to better protection from catastrophes. Action will certainly come in the U.S. Senate; we hope it comes before the next catastrophe strikes.
Sincerely,
James Lee Witt
Admiral James M. Loy (USCG Ret.)
Co-Chairs, ProtectingAmerica.Org
Sam Responds:
First of all, I obviously overstated my case by saying there was "little action" on this cause in Congress. There obviously was a lot of "activity." Whether it will amount to anything in terms of definitive "action"--as in enacting the concept into law--is just as doubtful this year as it was last. Even if the Senate does get on board with the bill passed by the House--no sure thing--the veto pen of President George W. Bush will loom just as large.
I don't need a crystal ball to tell me that there is no way this bill will become law in this Congress, with this White House, this year.
That might very well change after Election Day, with a new President in power. If a Democrat is elected, the chances for passage at some point are much higher. Still, unless there is another major catastrophe (no big stretch to imagine), the new President will likely focus on Iraq, the economy, health care reform and other, more politically pressing issues first.
However, if a Republican is elected, the odds go way down. Your best bet would be if Rudy Giuliani is elected (that does seem a bit of stretch right now), but even he might not push the disaster fund concept wholeheartedly once in office, no matter how desperately he is pandering to Floridians today to get their primary vote.
In any case, thanks for the feedback, and good luck to both of you! Just because I didn't think the concept would go anywhere last year--or this year, for that matter--doesn't mean I don't think it might not be a good idea down the road. The way catastrophe-recovery is funded right now is an insane roller coaster ride that a national cat fund might stabilize.
What do you folks out there think?
Comments (4)
Sam and Secretary Watt:
I can only hope that this type of legislation fails along with universal health care. The government CANNOT solve any individual problems.
The facts are pretty clear if either of you care to look at them. There has never, ever been a successful government-run insurance company anywhere in the world, in the history of mankind! All have failed from the NFIP, to Citizens, to the New Jersey Auto JUA to the UK's NHS and Canada's health care system.
Socialism is an illusion and a lie, and it might feel good to have flood insurance or catastrophic coverage handled by the government, it only works in the short term.
In the long run, it only destroys the private market (N.J. Auto JUA), bankrupts the entities (NFIP) and erodes the benefits to the citizens (U.K.'s socialized medicine). As painful as it is to swallow, only the free market works.
SAM RESPONDS:
Really? What about Unemployment Insurance? State disability funds? Social Security? Medicare? Take away any of those programs and you have a society marked by far greater and more widespread poverty than we have now.
I am no socialist, but no blind capitalist, either. The best system is a blending of the two to provide a social safety net for when the private market doesn't work for everyone--as when we have 50 million uninsured for health care.
Posted by Tiger | January 28, 2008 10:43 AM
Posted on January 28, 2008 10:43
Isn't it a little premature to proclaim Social Security and Medicare as successes?
You wouldn't measure the success of a flood insurance program until a flood actually occurs and we shouldn't measure the success of programs like Social Security and Medicare until they have to deal with a demographic bulge like the one they are facing over the next 30 years.
Time will tell, but early indications do not look good.
SAM RESPONDS:
Honestly, where would we be today without these two programs? A huge number of elderly people would absolutely be living in poverty, if they hadn't died prematurely for lack of adequate medical care. For decades, these programs have proven invaluable to securing a basic quality of life.
What would the alternative be?
Posted by Observer | January 29, 2008 9:17 AM
Posted on January 29, 2008 09:17
I would have to agree with "Observer" here. Neither Medicare nor Social Security has proven itself in the long haul.
Both programs are currently going broke, and that, mind you, is with the majority of the population paying to support the minority of the population.
I for one don't ever expect to collect Social Security or Medicare benefits because I do not believe the federal government is competent enough to hold on to that money for me.
When the tide turns and the minority is paying for the majority, even the total elimination of "pork barrel" spending will not save that dog.
As for the issue of "securing a quality of life." Had it not been for the safety net of Social Security and Medicare, "most" of these people would have participated in some other type of program, either retirement or disability.
Washington needs desperately to simplify its thinking. You cannot use your car payment to pay your credit card and then borrow from Peter to make the car payment.
I was taught this in the 5th grade, but funny enough all those Harvard and Wharton graduates in Washington have not figured this out yet.
I guess in reality using someone else's money is a lot easier than using your own. If everyone in the House, the Senate and Congress had to rely on the same system we do, I guarantee that business would be run differently.
SAM RESPONDS:
I believe you are a bit cavalier about Social Security and Medicare's value, Michael. Today we have 50 million without health coverage, and even with 401 (k)s widely available, few are saving anywhere near enough for their retirement. Without these two programs, we'd have elderly people dying in the streets, and many living on them.
Posted by Michael Burnell | January 29, 2008 12:55 PM
Posted on January 29, 2008 12:55
I can certainly see the value of Social Security and Medicare, but like most other government-run insurance programs, the premiums it collects are insufficient for the promises it makes.
I am not declaring the intent of these programs a failure. I am declaring their administration a failure (or better put, a failure waiting to happen).
In any government-administered program, there is simply too much political pressure that prevents the government from collecting adequate premiums.
By the way, let's go ahead and add the Pension Benefit Guaranty Corporation to the "government insurance programs destined to fail" list.
Also, if these programs are bailed out by sharp future tax increases to cover their current shortfalls, that is still a failure IMO.
Posted by Observer | January 29, 2008 3:42 PM
Posted on January 29, 2008 15:42