Senate Passes NFIP Borrowing Increase

WASHINGTON—The Senate passed legislation Friday night that includes a provision to increase the borrowing authority of the National Flood Insurance Program by one-third.

The increase is part of the Hurricane Sandy Emergency Assistance Supplemental legislation that passed 62-32, the fifth time Congress worked post-Christmas since the 1930s.

The bill faces an uncertain future in the House. Its fate is tied to the ability of the Senate leadership to craft a bill that the House will accept to avert the so-called "fiscal cliff."

The NFIP bill passed the Senate against the background of an advisory issued by the Federal Emergency Management Agency earlier in the day to write-your-own insurers indicating that the NFIP will run out of money to pay claims from Superstorm Sandy within two weeks.

"This critical package will help the residents of the mid-Atlantic and northeastern states recover from the devastation wrought by Hurricane Sandy," says Senate Majority Leader Harry Reid, D-Nev.

"State and federal authorities have worked together effectively to help the victims, but more help is needed for the recovery to continue," he adds. "This bill provides those additional resources."

Reid says the House should act immediately in order for Congress to "continue its long-standing tradition of helping our fellow Americans in the aftermath of a natural disaster."

One impediment to final passage of the Hurricane Sandy emergency assistance package is that conservative House Republicans see the $60.4 billion measure as overkill, going beyond helping states hit hard by Sandy and allowing them to upgrade their infrastructure.

"Before we release another round of federal dollars, let's have all the information we need to make the best possible decision," says Jennifer Hing, a spokeswoman for Rep. Hal Rogers, R-Ken., chairman of the House Appropriations Committee "Congress has already approved $7.1 billion, and FEMA has not indicated that more is needed at this point."

Concerning the NFIP, the program has $20.775 billion in existing borrowing authority. The bill passed Friday night would raise NFIP borrowing authority by a third, to $30.4 billion.

The bill was passed hours after President Obama told the nation that "the hour for immediate action is here" on a deal to avert the fiscal cliff that would sharply increase  taxes and make deep cuts in federal spending, and threnthen to plunge the U.S. economy into recession.

Friday evening members of the congressional leadership emerged from talks with President Obama saying that compromise to avoid the fiscal cliff  is possible. Part of the deal currently being negotiated by the Senate leadership would allow the current estate tax levels to remain the same, a key issue for insurance agents.

The expectation, say insurance industry officals, that the Sandy aid package, including an increase in FEMA borrowing authority, would be tucked into the fiscal cliff deal. Those officials acknowledge that it faces long odds of passage in the House in its current form. However, given that the Senate is drafting compromise legislation that would likely include the Sandy aid package, House officials might be forced to accept it on a "take it or leave it" basis.

Sen. Charles Schumer, D-N.Y., is said to be playing a key role in shepherding the $60.4 billion Sandy aid package through the Senate—and, hopefully through a reluctant House.

President Obama, speaking Friday after meeting with the Congressional leadership, says both the House and Senate should allow a vote on basic items, including provisions preserving tax cuts for middle-class Americans while extending unemployment benefits for the long-term jobless and working toward a foundation for a broader deal.

After the White House meeting, Reid issued a statement calling it "productive," adding that he is hopeful that Congress will be able to avoid the fiscal cliff.

"At President Obama's request, I am readying a bill for a vote by Monday that will prevent a tax hike on middle-class families making up to $250,000, and that will include the additional, critical provisions outlined by President Obama."

He adds that, "In the next twenty-four hours, I look forward to hearing any good-faith proposals [Senate Minority Leader Mitch] McConnell [R-Ky.] has for altering this bill."