When it comes to free-market fiscal policy, Republicans are always manufacturing excuses to exempt themselves from their own doctrine on numerous issues.  There are always excuses why specific industries must be recipients of government interventions.  They say that exporters cannot function without the Ex-Im Bank; farmers cannot subsist without government welfare despite record high prices; the financial markets cannot survive without bailouts.  The latest exception to free-market doctrine that is being considered in Congress is the flood insurance program.

The National Flood Insurance Program (NFIP) was created in 1968 to provide insurance to those living in flood-risk areas.  Ever since the last long-term NFIP reauthorization expired, Congress has passed 17 stop-gap extensions.  Not surprisingly, the program has racked up $18 billion in debt during that tumultuous time.  The latest extension expires at the end of May.  There will be a need for another short-term extension, but Congress must not pass a long-term extension that does not contain significant reforms.

We must understand that there is an imbalance of power in the political system of any democracy in that the forces of statism have an innate advantage over the defenders of freedom. It takes but one legislative or administrative victory for statism to succeed in guiding society on an indelible path towards dependency.  We cannot perpetuate the free-market, but we can perpetuate statism by creating inveterate dependency constituencies.  Statism enjoys the inherent advantage of self-perpetuation through its own pernicious activities that engender a continued need for the government programs.

Decades’ worth of government incentives to live in flood-prone regions have enticed thousands of homeowners into purchasing houses in areas that will forever necessitate more subsidies.  80 years’ worth of farm subsidies and crop insurance have created near-immutable levels of dependency in our farming communities.  Decades’ worth of housing subsidies have created a reality in which 90% of all mortgages are backed by Fannie and Freddie.


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