The smoke and mirrors game that’s been played with federal hurricane relief dollars appears to be causing a bit of confusion for Californians:
Hurricane Katrina, which killed more than 1,300 people, has had a dual effect on homeowners in the Bay Area, where geologists project a 62 percent probability of a magnitude 6.7 or greater earthquake in the next 26 years.
Some Californians called their insurance agents and signed up for quake coverage. But for many others, watching billions of dollars in federal aid pour into the Gulf Coast merely bolstered a sense that the government would come to the rescue after a big earthquake.
Until recently (as in… this weekend), it was assumed that the vast majority of homeowners in New Orleans did not have flood insurance. In fact, the illustrious Cato Institute said exactly that in September:
“Although flood insurance is heavily subsidized, many — even most — property owners in New Orleans do not buy this insurance, expecting the federal government to bail them out whether or not they are insured,” said Cato Institute Chairman William Niskanen in testimony to Congress about the disaster in September.
Oops. Like so many myths and assumptions about NOLA, this turns out to be false, and Polimom (along with Eugene Robinson and many others) took the bait. You’d think we’d have learned our lesson about all these misconceptions by now, wouldn’t you?
Members of Congress rose up in righteous indignation to scold residents of New Orleans, one of the most vulnerable cities in America, for failing to buy federal flood insurance and then coming hat in hand and asking to be bailed out with federal money.
The irony, now revealed in data painstakingly worked up by aides to Donald Powell, the Bush administration’s liaison to the disaster zone, is that Louisiana was a more enthusiastic participant in the National Flood Insurance Program than any other state in the nation.
So – the majority of homes in New Orleans had flood insurance after all, but since the federal government handles that insurance (via FEMA), the insurance settlements are getting mixed into the overall “federal relief” numbers. Californians are doing exactly what Da Po’ Boy and Bayou St. John David have long predicted: getting confused about federal “assistance” money, which includes insurance payments.
Leaving aside the rather crucial difference between failed levees in Louisiana and earthquake fault lines in California, Polimom can only gape in wonder at the stupidity of not owning earthquake insurance when the values of homes are so incredibly high. Yet it appears that only 14% of people in California have it. Amazing.
Californians have built vast metropolises atop seismic faults, but 86 percent of the state’s homeowners have no quake insurance, a proportion that has crept upward as memories of past quakes fade.
Gallons of metaphorical ink have been wasted on criticizing New Orleans, yet it seems the folks in Louisiana had a much better grip on reality than those in California have. However, if they insist on gambling with these expensive properties, I suppose we should let them. The end result might be, finally, a crash in those home values, and some relief for people who’d like to buy out there.
I’ve been looking for a summer home on the beach, personally. Maybe they’ll help me out.
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