Show Me The Money

money

As a follow up to my previous blog, I would like to comment on the financial issues of both The federal Flood program and the Federal Emergency Management Agency (FEMA) in general. Several years ago the Federal Flood Administration, which is a division of FEMA was financially sound and the premiums charged were roughly equal to the claims paid. Katrina and the Mississippi floods changed all of that and the program was quickly put in the red. Subsequent storms including the latest Hurricane Sandy have exasperated the situation and the Flood program is considerably in debt. FEMA is actually worse off because it has no income source and since the United States has to borrow 40% of its budget, FEMA is part of that borrowing. In other words the Chinese and other creditors are financing the FEMA relief effort. When our President says, “tell us what you need” to the afflicted regions, he must know that there is no reserve or rainy day fund to help. It is not even taxpayer money since all of the taxes have been used for other things and we still have to borrow over one trillion dollars a year to pay remaining expenses-irrespective of FEMA. FEMA is a necessary and important Agency but it is unfunded-just like the Social Security Fund, which should have trillions in cash but really has nothing but “IOUs” in its coffers. FEMA’s noble mission may be disaster aid and assistance but its stewardship is just plain disaster.

The author of this blog, Guy Hatfield CPCU CIC, can be reached at 203.256.5660.

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