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Floor Speech

Like many Federal programs, the flood program is well-intentioned, but it may very well be the best real-life example of a moral hazard.

The program covers about 5 million policyholders and provides over $1 trillion in coverage. We were told that the program is funded through insurance premiums. But charging below the market price on insurance and capping how much these rates can rise inevitably has led to shortfalls. They are out of money.

They are always out of money.

A 2014 report by the Government Accountability Office found that the flood program collected as much as $17 billion fewer in premiums than the market would have demanded.

So when the program inevitably found itself in need of money, it, in theory, ``borrowed'' from the taxpayers--not that the taxpayers had any choice in the matter. As they often are, they were on the hook regardless of whether we want to be or not.

Just a few years ago, the flood program owed over $30 billion to the taxpayers. Congress later just canceled that debt.

Poof, it is gone. It disappeared.

But the flood program has not made any further repayments to the taxpayers and today still owes over $20 billion in debt. So the taxpayers are expected to cough up money whenever the program needs it, but the program doesn't seem to be in a hurry to pay the taxpayers back.

But perhaps the greatest insult to the taxpayers is the lack of true limits on this delinquent program. There are no limits on how many claims can be filed or how much money can be received by a policyholder filing multiple claims. Rather than encourage people to leave flood- prone areas, it encourages people to stay and rebuild where it continues to flood.

In thousands of instances, the program encourages people to rebuild and rebuild and rebuild again. According to the Pew Charitable Trusts, over 150,000 properties have been rebuilt over and over again.

They say the definition of insanity is doing things over and over again and never understanding you are doing the wrong thing.

In fact, 25 to 30 percent of flood program claims are made by policyholders whose properties flood time and time again. Over 2,000 properties have flooded over than 10 times. We bail them out every time.

One home in Batchelor, LA, flooded 40 times and received a total of $428,000 in flood insurance payments. It doesn't seem like we are learning our lesson. It doesn't seem like that is encouraging good building behavior. It is encouraging the opposite.

If you can believe it, that isn't even the most times a house has been paid for. In Virginia, one home flooded 41 times and received more than $600,000 in payments. It is argued, no matter how much a home is worth, that the Federal Government will only cover the first $350,000 in flood insurance coverage--$250,000 for the structure, another $100,000 for the contents.

That is true.

But the $350,000 limit is only applied per event. That is how you wind up with a home that floods 40 times and gets paid over $400,000. What if the home that flooded 40 times was paid 350,000 times? What if it is a $10 million home, and it has $300,000 worth of damage 40 times? That would mean the policyholder would receive $14 million from the government program.

It was also mentioned during previous debates that there really isn't a private flood insurance market. Well, there is a private insurance market that will cover beyond $350,000. Rich people use the government to insure their beach house up to 350, and then they buy private insurance on top of that. So there is a market and would be a market at whatever number we set.

The government flood program is a disaster for many reasons, but chief among them is that it crowds out the private market for the first $350,000 in losses. That is why the private flood insurance market is so small.

Madam President, $350,000 coverage per event may be enough for most people, but instead of allowing private markets to work, the government has put the primary responsibility of flood losses on taxpayers.

Can you imagine having to withstand the ordeal of your home flooding 10, 20, or 40 times? Well, the taxpayers do not have to imagine paying to rebuild the same home time and time again because that is the reality of the current program.

Adding insult to injury, the Congressional Budget Office found that the flood program tends to benefit the wealthy and that 23 percent of the subsidized coastal properties were not even the policy's primary residence.

So one out of five homes that the taxpayer--people who don't live on the gulf shore, people who don't live on the Atlantic coast, people who don't live on the Pacific Ocean--people who live in Middle America are insuring the second homes of rich people. One in five of the homes being insured are rich people. Ordinary taxpayers in Kansas or Kentucky are asked to pay for the insurance for the second home of rich people.

How in the world would that make any sense? The government forces the taxpayers to pay and rebuild the elite summer homes of the rich. It is estimated that the national average replacement cost of homes in government flood insurance programs--that these homes are valued at over $400,000. So the average home of this government program that is supposed to help the poor--the average home that we are insuring, that the government is insuring--is worth over $400,000, and it is people's second house.

How in the world is that something we should keep borrowing billions and billions of dollars to insure rich people's homes?

In fact, sometimes it seems the flood program caters directly to the wealthy. Nearly 80 percent of the flood program's policies are located in counties that rank within the top 20 percent of income. Enough is enough. It is an insult to rob the taxpayers to give to the wealthy.

This is why I offered an amendment that would require the flood program to only cover your primary residence. So if this is your only house and for some misbegotten reason you have to keep building in a flood zone, you would be eligible. If it is your beach house, you are not eligible. If it is your second house, you wouldn't be eligible.

We also might put a cap on it. We might say: Well, if you have more than a half-a-million-dollar house, you have to buy your own insurance; the government doesn't pay for that.

These are reasonable amendments, reasonable reforms, reasonable changes that have been offered for years and never get done because people come with the song and dance of people needing help and we must help people, but nobody ever says: Are some of these people, people who should be helping themselves?

And that is why it is always bankrupt.

So what I would recommend is that my amendment be added to this bill. We can reauthorize the program. We can re-fund it. But we would now limit who it goes to. The money would not go to homes over $500,000, and it would have to be your primary home, not your second home. To me, that is a modest proposal. It won't fix the whole thing, but it is very, very reasonable.

So I will offer that today. If the Senator from Louisiana wants to pass this tonight, we can pass it tonight. All he has to do is agree to my amendment.

No one is here to object. It is a unanimous consent arrangement. He can agree right now. We will pass it. The program will, from now on, exclude people with homes over half a million, and it will exclude people where it is their second beach house. How reasonable is that? He can do it tonight.

So, therefore, I ask the Senator to modify his request so that the Paul amendment at the desk be considered and agreed to; the bill as amended be considered read a third time and passed; and the motion to reconsider be considered made and laid upon the table.

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Mr. PAUL. The program costs billions of dollars. It is $30, $40, $50 billion in the hole, anyway you want to measure it. Something has got to be done.

What would those reforms be? What would the most obvious reform be for a flood program that is billions of dollars in the hole? Why don't you tell rich people: Buy your own insurance.

Does that mean I don't like rich people? No. Probably nobody in this body more appreciates success and people who work hard and make a good living--nothing against that, other than we shouldn't give them free stuff.

I mean, I am all for them. If you have got a yacht, invite me over. But I am not for buying insurance for your yacht with taxpayer money. That doesn't mean I don't appreciate that you are wealthy and you have got a yacht. I will ride on your yacht. I will come to your party. But I am not going to buy your insurance with the taxpayer money, which is billions of dollars in the hole with this just one program. The whole government is $2 trillion in the hole.

So let the record reflect that I offered to amend this program, let it go on, and we exclude only the homes of people who have homes-- second homes--over $500,000. And that was rejected.

So I have another offer. This will be the second amendment, and this offer will be, if $500,000 for your second home means you are still poor and you need help from the government, what about if your second home costs $2 million or more, should we buy your insurance? Should the government subsidize your insurance?

So I brought along a couple of pictures, and these are pictures of some people that you might have heard of their homes.

This is President Biden's home in Rehoboth Beach, DE. It is worth $2,700,000, and, yes, it is eligible for government insurance. Does anybody think we should be buying insurance for President Biden's home?

Let's see what else we have.

Oh, Nicholas Cage--boy, that is a nice house--4.2 million, in New Orleans, also eligible for government insurance.

Look, I love Nicholas Cage. I would go to parties at his house too. I love his movies. I would pay 20 bucks to go to the movies. Actually, I don't want to pay 20 bucks. I would pay to go see his movies, but I don't think we should buy insurance for his home. If he can get a $4.2 million home, I bet you he can buy his own insurance.

Let's see who else is eligible for government insurance. Oh, Matt Damon--he has had a lot of good movies. Man, he must be doing great. His place costs $20 million, and it is eligible for government insurance too.

Do you think Matt Damon would be embarrassed to find out that the government is subsidizing his first $250,000? Shouldn't we all be embarrassed?

The program is $16 billion in the hole, and we want to renew a program without any reforms. Just keep doing it. Keep losing money. Just keep doing the same thing.

Maybe Matt Damon can buy his own insurance.

Who else has a house that would be eligible for insurance? Oh, Phil Collins--he made some good music. He must have made some great music. His home is worth $40 million, in Biscayne Bay, FL, also eligible for government insurance.

So I can't imagine how we couldn't come to a compromise. So if ordinary people have second homes that are $500,000 beach homes, if we just went up to $2 million, then we are only going to be clipping Phil Collins and Nicholas Cage and a few others.

Do we have anybody else? Let's see who else we have.

Oh, now Cher, she has been doing well for a long time. She has a $42 million place in Miami Beach, also eligible for government insurance.

You know, we could go on and on. But the thing is, this doesn't mean we don't like rich people or appreciate their success. I am all for it. I am just not for giving them free stuff. Why would we give them subsidized insurance?

So what I will offer now is a second amendment, and this one might be easier to accept. And realize that this could be accepted right now. This entire program could be reauthorized with these amendments tonight if the Senator from Louisiana will accept this amendment.

This amendment would say that if your house is worth more than $2 million, and it is your second home, that it wouldn't be eligible for government insurance.

That would be pretty easy. You know, it still would have significant savings, because there are quite a few homes out there. And do you think they would figure out a place to buy insurance? Sure, they would. A market would develop immediately. So therefore I ask the Senator to modify his request so that the Paul amendment at the desk, the second Paul amendment, be considered and agreed to; the bill, as amended, be considered read a third time and passed; and that the motion to reconsider be considered made and laid upon the table.

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Mr. PAUL. Well, if it weren't subsidized insurance and if it were a market price for insurance, it wouldn't lose $16 billion a year. By definition, if you lose $16 billion a year, you are not charging enough in premiums, so you have subsidized premiums.

This is a subsidized government insurance program that, even with the subsidized premiums, is woefully inadequate. It is accumulating tens of billions of dollars of debt. It is currently $20 billion in the hole. We have a problem here. I haven't really heard how we are going to fix this, and one obvious, easy way would be that people who can afford to should maybe pay the full price for their insurance and maybe not a subsidized price.

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