A New Wall Street Looting Scheme: Disaster Savings Accounts

[marmar]

from Naked Capitalism:


A New Wall Street Looting Scheme: Disaster Savings Accounts
Posted on March 21, 2014 by Yves Smith


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? .................(more)

The complete piece is at: http://www.nakedcapitalism.com/2014/03/wall-street-looting-disaster-savings-account.html

[Demeter]

1. Unbelievable chutzpah from these idiots

I suppose with this "disaster savings account" we can dispense with police and fire protection, the EPA, the Nuclear Regulatory Commission, and any other public health bureau....

[L0oniX]

2. When you won't prosecute criminals they become brazen and bold.

[truth2power]

3. This is patently absurd...

Even allowing for the fact (mentioned in the OP) that how many people have that amount of discretionary income to put aside, $5000 would be a drop in the bucket as a remedy if a real disaster occurred.

And while we're on the subject of out-of-pocket expenses, I wonder what the median average deductible, per year, is under the ACA. Would a person put that amount aside, just in case, before or after setting aside the $5000?

Doesn't it seem like our overlords are loading an undue financial burden on us?

[Triana]

4. BULLSHIT. People with no- or low-paying jobs can't even afford rent or food

How the HELL are they supposed to afford:

Retirement savings
Personal Medical Savings
Disaster Savings

These are ALL things that ought to be publicly funded - by TAX DOLLARS - including and ESPECIALLY tax dollars from the wealthy and big corporations for whom most of the biggest tax loopholes have been SLAMMED SHUT so that they MUST contribute to the society, the infrastructure, and the population that sustains their profit-making business.

It's the cost of CIVILIZATION. And if they don't want to pay it - tell them to GET. OUT. of this country and disallow any imports from them from elsewhere. IOW, tell them to Go To HELL.

As is, they're sending the rest of US there whilst they live in luxury, tax-free, off of our hides, and chiding us sneeringly to save money for this and save money for that and save money for something else -- money most of us DO NOT HAVE because there are no goddamned jobs or only below poverty-wage jobs that one cannot even subsist on much less save for ANYTHING.

BULLSHIT.

BULLSHIT.

BULLSHIT.

[dixiegrrrrl]

5. The R Street Institute background:

Wiki says:
The R Street Institute (R Street) is a non-profit American think tank founded on June 1, 2012 in Washington, D.C. by former employees of the Heartland Institute’s Center on Finance, Insurance and Real Estate.
The institute’s mission statement pledges support for “free markets; limited, effective government; and responsible environmental stewardship.”

Taht Heartland Institute managed to shoot itself in the foot, lost funding, so now it is, for all intents and purpsoes, the R Street Institute.
funded by the Corpocracy.

[hueymahl]

6. I have a slightly different take on this

I think you are right, for low-income folks, asking them to save more is impossible. Government sponsored protections are the only way to go.

But for everyone else, any program that results in more savings is a good thing, both for individual families and the economy as a whole. And we are not talking about just the 1% - probably the top 50% could save more than they currently are.

Who gets hammered the hardest on tax rates? When you factor in expiring tax breaks, increasing marginal rates and and expiration of ACA support, middle income families (say $50k+ per year for argument sake) are facing marginal tax rates well in excess of 50%. Anything that will allow these families to save more money and provide more flexibility in their budget, I am all for.

As far as the 1% benefitting from this, I just don't see it. Even if it is not phased out above a number (and I frankly don't know - but it should), the benefits flowing to the truly wealthy are tiny (any amount is not just, but to deny the benefits of a good program to millions of families because you are concerned a small subset could unjustly benefit is something I just don't support).

If your argument is that this will somehow lead to a reduction in government support in disasters, I just don't see that either. Too many business and voter interests for that to happen.

I guess my point is, lets not let our (just and proper) anger at the 1% cloud our perception of what could be a worthwhile program.