A New Wall Street Looting Scheme: Disaster Savings Accounts

As famed short seller David Einhorn says, no matter how bad you think it is, it’s worse. We’ve got proof of his dictum in the form of a new looting scheme, the Disaster Savings Account Act. Since the financiers haven’t yet gotten their hands on Social Security, they are looking for new worlds to plunder. Here’s the blurb from one of its promoters:

An Open Letter to the House and Senate:
Support Measures to Encourage Private Disaster Mitigation

Dear Member of Congress, 

We write to urge you to support the Disaster Savings Account Act introduced by Rep. Dennis Ross, R-Fla., and Sen. Jim Inhofe, R-Okla. The act, which allows individuals to deduct up to $5,000 per year to spend on disaster mitigation or recovery, is a strong step toward ensuring Americans are kept safe from natural disasters and extreme weather events. 

In 2011 and 2012 alone, 25 separate disasters each caused more than $1 billion in damage. Since 1996, there have been 15 natural disasters that have cost the Federal Emergency Management Agency more than $500 million, with totals for several of those events running into the billions. This pattern is unsustainable. By encouraging individuals to use their own dollars to prepare for disasters, the Disaster Savings Account Act reduces future financial liabilities for the federal government and, most crucially, saves lives by guaranteeing communities are better prepared before disaster strikes. 

With the anticipated rollback of 2012′s reforms to the National Flood Insurance Program, it’s more important than ever to take steps to prevent damage from flood events. NFIP is already $25 billion in debt, and future storm events will further erode its balance sheet. But increased mitigation can help reduce this impact. 

Beyond stemming the impact from floods, the Disaster Savings Account Act will diminish the effects of many other catastrophic events, from wildfires to tornadoes to hail storms. Already, California is experiencing its driest year yet, increasing the risk of wildfires, while 46 tornadoes have ripped across the South and Midwest. As of March 12, ten disaster areas already have been named in 2014. 

The stakes are incredibly high. Motivating individuals to assess their natural disaster risks and prepare accordingly should be a top priority. While it isn’t the federal government’s role to come into communities and mitigate against every possible disaster, offering incentives to those looking to prepare privately is a reasonable step for Congress to take. 

Therefore we ask that you support the Disaster Savings Account Act and move the legislation to passage.
Sincerely,
Lori Sanders
R Street Institute

This is an unvarnished effort to use climate change as a cover to funnel more money to Wall Street via a tax break, which of course will prove useful only to people with discretionary income, as in top 20% earners. So of course, as is always the case with neoliberal programs, lower income people must be made to suffer because they deserve it.

And the excuse is that this sop to Wall Street will help cut disaster relief spending. First, that is never gonna occur. Not helping people in distress, is a great way to assure unfavorable media coverage. Remember what Katrina did for Bush?

Second, aside from the cynical political interest angle (and we are starting with the cynical elements because this proposal is so barmy), there is a much bigger reason government steps in when disasters strike: they can mobilize resources. What do you think someone is going to do with their disaster savings account when they are stuck with roads washed out, no electricity, and no working gas pumps on any routes out? You need government intervention to help with evacuation and trucking food and other needed support and services (like the equivalent of MASH units in really serious events, say a large earthquake in a densely populated area).

Moreover, the “every man for himself” approach which these accounts presuppose almost assures worst-case outcomes: looting and/or overly aggressive defensive responses to suspected looters (you can imagine someone coming to check and see if people are safe being shot for their intended act of concern) and public health issues (failure to drain water properly and cordon off various risks, like hazardous stored chemicals; the need to provide sanitary facilities, etc).

So please, e-mail or call your Congressman and Senators and tell them what a horrid idea this is and how you are firmly opposed to this ham-handed subsidy to Wall Street. 

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