A provision tucked into the debt ceiling legislation is rekindling debate about the nation's ability to pay for soaring catastrophe losses as coastal development and carbon dioxide emissions continue to rise.
The nation has struggled for years to find an effective way to help communities rebuild homes, businesses and infrastructure after natural disasters. Now, in a collision between downward federal spending and an upward presence of catastrophes, Congress is moving to pre-fund disasters.
The last-minute legislation approved by Congress last week to raise the debt ceiling creates a disaster fund that will carry billions of dollars for recovery in hard-hit areas. The fund is a money-saving effort proposed by the president's bipartisan fiscal commission last December in its report "The Moment of Truth."
The fund could reduce stress on the deficit by preventing the need for emergency supplemental appropriations made in the wake of a crisis. Those unplanned expenses are not included in the budget, so it amounts to new debt.
But the provision's emphasis on savings is seen by some as a pathway to reduced disaster funding, even as Americans are witnessing a historic period of active hurricanes, intensifying floods and more violent thunderstorms.
"They're dumbing down, if you will, the dollar value," said retired Adm. James Loy, who held senior posts overseeing national security during the George W. Bush administration. "What they're really suggesting is the federal government is going to spend less in the future, when in fact every projection that we see suggests more storms."
The fund's balance will be determined by averaging the cost of disasters over the past 10 years, minus the least and most expensive events. That rules out mega-outliers like Hurricane Katrina, which required an emergency outlay from Congress amounting to $122 billion.
But some observers are concerned by the fund's reliance on past disasters to determine future damage. Catastrophes a decade ago threatened fewer developments along coastlines, and damage from thunderstorms has broken records every year since 2008.
Plan 'falls short'
For those reasons, the funding formula is "flawed," said Joshua Saks, who works on water resource issues for the National Wildlife Federation.
"It won't be enough money," he added. "When you calculate backwards, you won't see what you need for the future."
The disaster fund is being described as a boilerplate attempt at reducing the cost of inevitable disasters. But it fails to answer the most complicated questions related to preparedness for climate change, observers say.
It doesn't provide policies, for example, to encourage stronger building standards, or to prevent construction in the first place. There is no related mitigation funding to help residents in dangerous areas harden their homes, a key to preventing death and injury, and also taxpayer expenses.
"It falls short of actually planning in a smart way [to] reduce the taxpayers' exposure," said former Rep. Ron Klein (D-Fla.), who championed legislation to create a federal reinsurance program paid for by coastal states, rather than taxpayers nationwide.
The idea, however, was met with controversy by environmentalists and conservatives. Climate advocates claim that a national program aiming to establish government-backed, low-cost insurance could encourage more building in areas prone to hurricane damage and sea level rise. That might degrade natural areas that diminish storm damage.
But supporters, like Loy and protectingamerica.org, believe government reinsurance is the answer to years of haphazard -- and expensive -- disaster funding. The federal premiums paid by homeowners in states that voluntarily establish state-based catastrophe reinsurance programs would reduce the cost of emergency funding on taxpayers who live in safer places, Loy said.
The perfect time for federal reinsurance?
The state programs would cover smaller disasters, and federal reinsurance would pay out during the mega-catastrophes seen once every five or 10 years, he said. Either way, the funding would be provided by people who live in harm's way, not by taxpayers at large, he added. The program's premiums would be structured to avoid appropriations by Congress.
In addition, those premiums would provide at least $15 million annually for mitigation efforts to harden homes.
Loy is hopeful that the 12-member commission created by the debt ceiling legislation to find $1.2 trillion in deficit savings by Thanksgiving will consider his draft bill for federal reinsurance.
"It just seems that it's an absolutely perfect time for the Congress as it's contemplating the second phase of the deficit legislation," Loy said. "This way, taxpayers living in Idaho or Montana or wherever who are hardly ever confronted by these nightmares ... are not all of a sudden watching those appropriated funds go to simple storm relief."
But it's likely that the nation's debate about responding to catastrophes will endure beyond this session of Congress. The House, which passed a version of Klein's reinsurance bill, the "Homeowners' Defense Act," in the last Congress, is increasingly conservative. Many members are hostile toward large government programs that interfere with personal decisions, perhaps including where and how to build a home.
Moreover, opponents say federal reinsurance could cloud the nation's credit rating even if the program successfully pays for damages from collected premiums.
Eli Lehrer, vice president of the Heartland Institute, a conservative think tank, claims that the program would increase the nation's liability after Standard & Poor's knocked the United States' credit score down a notch.
"It's just foolish to take on a massive new contingent liability, even if in the long run you're positive you can cover it. It's enormously irresponsible at this point," Lehrer said. "The almost certain reaction is a further downgrade in debt."