(Washington, DC) – With a new Congressional Budget Office (CBO) report confirming that implementing the Homeowners’ Defense Act – also known as the “Beach House Bailout” – would put taxpayers on the hook for a huge new federal outlay of tax dollars, SmarterSafer.org said the bill would be a down payment for unlimited taxpayer liabilities.
While the true cost of the bill is uncertain, independent estimates put the potential cost in the hundreds of billions of dollars per year. Even the CBO, following the specific budgeting procedures set by Congress, estimates that the cost would be at least $1.7 billion. With the real costs being much higher, and the bill benefitting Florida almost entirely, the bill’s proposed bailout is simply too big a burden to add to the shoulders of the American taxpayers.
The CBO estimates that implementing this legislation (H.R. 2555), introduced by Congressman Ron Klein (D-FL) would cost $1.7 billion over the 2011-2015 period, assuming appropriation of the necessary amounts beginning in 2011.
“At a time of skyrocketing deficits and our nation reaching a record $13 trillion debt, America simply cannot afford a ‘Beach House Bailout.’ The Homeowners’ Defense Act could cost $200 billion, and Americans will be asked to foot the bill. Due to loopholes in PAYGO rules, this bill will not be paid for by cutting other programs, but simply added to the growing deficit.
In addition to the upfront costs estimated by CBO, the Klein bill would have nearly unlimited potential liabilities on American taxpayers. According to a 2008 report by Robert Shapiro, it found that ‘in the event of another hurricane season comparable to the terrible events of 2005, these legislative changes could cost the federal government some $140 billion to $161 billion in 2009, $197 billion to $230 billion in 2013, and $278 billion to $332 billion in 2017.’
If enacted, the Homeowners’ Defense Act would cost taxpayers billions of dollars, discourage the private insurance market, displace the private insurance market with a new federal insurance system, and result in incentives to build in unsafe and environmentally fragile areas.”
SmarterSafer.org is a national coalition made up of a diverse set of voices united to support environmentally-responsible, fiscally-sound approaches that promote public safety. The Coalition strongly opposes legislative proposals that encourage people to build homes in hurricane-prone, environmentally-sensitive areas by creating new programs that directly or indirectly subsidize their homeowner’s insurance.