After Hurricane Harvey barreled into Texas and ahead of the undetermined destruction the Southeast faces as Hurricane Irma makes landfall in Florida, the estimated cost of the recent natural disasters remains uncertain.
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In an interview with FOX Business’ Stuart Varney of Varney & Co., American Action Forum president Doug Holtz-Eakin said taxpayers may be on the hook for hundreds of billions of dollars of massive wealth destruction in the short-term.
“There’s wealth destruction literally and the question is how big will that price tag be. It’s unknown at this moment and then who’s going to pick up the tab for that loss and a big chunk of it will be the taxpayers. It will be in [the] form of disaster relief. It will be in the form of small business loans,” he said.
The cost burden may fall in the form of taxpayer-backed flood insurance where programs are already billions of dollars in the red, according to Holtz-Eakin.
“There’s a lot of taxpayer exposure here, but you are going to some impasse on the private insurers as well, even those with good reinsurance are not going to be able to dodge this,” he said.
Holtz-Eakin is urging Congress to pass legislation to reform the flood insurance programs to appropriately assess the risks and cost for homeowners in places that Federal Emergency Management Agency (FEMA) designates as high-risk flood areas.
“One would hope that this would be a wakeup call, that we see the Congress say, ‘Okay we got to price this stuff appropriately and stop telling people to build things in places where they are doom to get destroyed,’ but we’ve never seen those kind of real reforms stick,” he said.