National Disaster Fund A Bad Idea
Okay, we set up a national (or natural) disaster fund and pour taxpayers’ money into it. The next time there’s a hailstorm or hurricane or flood there’ll be a demand from stricken families and devastated businesses and vocal mayors that generous lashings of cash be sent their way. This will be a great relief to insurance companies who will resist claims more forcefully knowing that their clients will join the queue for hand-outs from the fund.
Why should councils and businesses make their own provision for disaster if the public expectation is that Granny State will always be there to gather up claimants to her ample bosoms and let flow her balming milk?
A fund may have strict guidelines to start (only infrastructure, no private coverage etc) but you watch them get stretched with each new disaster. After all, any government is going to look cold-hearted if it says no. And global warming means those disasters will come thick and fast and be more devastating. But – here’s another problem – what makes a disaster? The damage done by a routine hail storm will be classified as a national event if it hits a marginal seat or a “battleground” state.
The demand for such a fund is effectively an attempt to have the taxpayer assume responsibility for the expenses that are part of the cost of doing business, especially in flood or hurricane-prone regions, or the real liability of insurance companies.
It is effectively another bid to extend taxpayer responsibility and the size of the public sector and the Federal government ought to listen to its Treasury advisers before even nodding in this particular direction.