A flood of red ink

The federal government is fraught with fiscally unsustainable programs. Social Security, Medicare and Medicaid are the biggest long-term threats to taxpayers, poised to swallow the entire budget just a few decades hence -- even with benefit reductions.

Flying much lower on the radar screen is the National Flood Insurance Program. Intended to protect homeowners in areas at high risk of flooding and reduce taxpayer liabilities following major natural disasters, the program offers policies through private insurance agents at steep discounts. But because premium costs don't reflect the elevated risk of living in floodplains, taxpayers who reside in areas at low risk of flooding are subsidizing the costs of claims.

In 2005, damage caused by Hurricanes Katrina and Rita put the plan $20 billion in the red. This summer's flooding in the Midwest and future storms will only increase that debt.

A few years ago, Congress seemed ready to reform the program and make its shaky finances more stable. Now, lawmakers are inclined to raise its debt ceiling and bank on periodic taxpayer bailouts.

"The early rhetoric was, 'We're going to fix this. We're not going to tolerate this continued exposure of taxpayers to unlimited subsidies,' " said Robert Hunter, a consumer advocate and former director of the flood program. "They've done nothing to fix it. It's just unbelievable."

Not really. Federal lawmakers are more concerned with their own re-election campaigns than the health of the nation's finances. So strong is the urge to hand out checks, one effort at "reform," passed last month by a House committee, would expand the program to cover wind damage resulting from tornadoes and hurricanes, burdening taxpayers with billions of dollars in additional liabilities.

"To really fix the program doesn't include a great deal of good news," said David John, an expert with the Heritage Foundation. "For a politician, this is a no-win situation. But unfortunately, delay makes it a no-win situation for the taxpayer."

Indeed, the lack of desire in Congress to make those who live in flood zones pay significantly higher premiums is especially discouraging. For if lawmakers can't address this relatively small and simple financial challenge, how will they ever muster the courage to tackle the country's multitrillion-dollar entitlement liabilities?