(Updates with R Street Institute in 19th paragraph.)
By John McCormick and Annie Linskey
April 17 (Bloomberg) -- Democrats are exploring a new attack line against the Koch brothers and Republican allies, telling voters the billionaire energy executives want to let home flood insurance premiums soar to help corporate America.
It’s a potentially potent message in coastal states such as Louisiana, Georgia and North Carolina, where U.S. Senate elections in November are critical in the fight for control of the chamber. The flood insurance debate also has surfaced in Mississippi, where it may harm a Senate candidate aligned with the limited-government Tea Party movement who is pursuing a primary challenge against a Republican incumbent.
The issue’s emergence follows congressional votes last month that averted steep premium increases in the more than $3 billion annual flood insurance market. The legislative action angered some in the Tea Party movement, who say those living near water should bear the risk, not taxpayers now responsible for $24 billion in flood insurance debt.
“The problem with flood insurance is the same problem we have with health insurance, agricultural crop insurance, student loans and everything else,” U.S. Representative Paul Broun, a Republican competing for an open Senate seat in Georgia, said at a March 29 candidate forum. “It’s the federal government getting involved in things it shouldn’t.”
Broun joins U.S. Representative Phil Gingrey, another Republican running in Georgia’s Senate race, in opposing rate subsidies. Should either win the nomination, Democrats would almost certainly use their statements against them, especially in the state’s coastal region.
Congress in 2012 voted to revise the nation’s flood insurance program so that those living in flood-prone areas would be required to pay closer to market rates for coverage often required to secure a mortgage. As the law was put into effect, homeowners received bills that in some cases spiked to $23,000 from $3,600 a year. Lawmakers heard from angry constituents and, in March the Senate and House voted to erase much of the 2012 law.
Nowhere are the politics of flooding more powerful than in Louisiana, where Democratic U.S. Senator Mary Landrieu faces a tough re-election challenge from U.S. Representative Bill Cassidy. Hurricane Katrina in 2005 flooded 80 percent of New Orleans and displaced 400,000 residents there, as part of billions of dollars of destruction along the Gulf Coast.
“This is going to be a pretty significant issue in the election here and I think probably in a lot of states,” said John Cummins, Cassidy’s campaign communications director.
Both Landrieu and Cassidy took leadership roles in passing this year’s measure to keep rates low for the 480,000 policy holders in Louisiana and millions in other states. That hasn’t kept the Senate Majority PAC, a super-political action committee defending Democrats, from attacking Cassidy because of the support he’s getting in taking on Landrieu.
“The out-of-state billionaire Koch brothers funded the fight to let flood insurance premiums soar, helping the insurance companies,” says a television ad the group has run in Louisiana since March 25. “Now they’re spending millions to buy a Senate seat for Bill Cassidy, so he can fight for them.”
Through April 14, the ad ran 1,264 times statewide on broadcast television at an estimated cost of $389,000, according to New York-based Kantar Media’s CMAG data. The Senate Majority PAC is funded in part by Michael Bloomberg, the former New York City mayor who is founder and majority owner of Bloomberg News parent Bloomberg LP.
A Washington Post fact-check analysis called the ad a “nonsensical attack” that is “an example of a very deceptive technique: stringing together a variety of true (or semi-true) statements in an effort to completely mislead viewers.”
The Post was critical of the ad in part because it fails to point out that Cassidy fought against Americans for Prosperity, a limited-government group funded by Charles and David Koch, and others opposed to changes in the 2012 flood insurance law.
Ty Matsdorf, a spokesman for the Senate Majority PAC, didn’t respond to questions about the commercial.
Levi Russell, a spokesman for Americans for Prosperity, said in an e-mail the ad had been “skewered” by fact checkers, and he included a link to the Post analysis.
American Bridge 21st Century, a political action committee that does research to boost Democrats, also weighed in on the issue April 11 with a report that focuses on the Koch brothers and suggests they put Louisiana homeowners at risk.
“When Congress, backed by a wide bipartisan coalition, was preparing to halt the harmful effects the flood insurance hikes were having on Louisiana, the Koch brothers tried to intervene and kill the legislation,” the group says on its website. “Their Tea Party-affiliated group, Americans for Prosperity, backed plans to end all federal flood insurance subsidies.”
FreedomWorks was one of the most outspoken groups lobbying against the legislation to keep rates from rapidly rising. The group, a Washington-based advocate for small government, let lawmakers know their votes on the bill would be used in its annual ratings scorecard.
The R Street Institute, a Washington-based group that supports limited government, also opposed the bill. Andrew Moylan, a senior fellow, said the new law “re-breaks the flood insurance program.”
The R Street group’s board includes a representative from State Farm Mutual Automobile Insurance Co., based in Bloomington, Illinois, the biggest U.S. car and home insurer.
A Bloomberg review of the House and Senate votes shows Tea Party-aligned members largely opposed the bill, with the exceptions being mostly from coastal areas.
In both chambers, about a third of members who have voted with Americans for Prosperity 70 percent or more of the time broke ranks to support the legislation.
In the Senate, Tea Party-aligned members who backed the bill include Republicans Ted Cruz of Texas, Marco Rubio of Florida and Jeff Sessions of Alabama, all coastal states. Senator Rand Paul of Kentucky, a Tea Party favorite whose state is landlocked, voted against the measure.
The legislation, which President Barack Obama signed on March 21, limits increases that were mandated by the 2012 law that was intended to cut the flood-insurance fund’s debt.
In North Carolina, those backing incumbent Democratic Senator Kay Hagan may also broach the issue, following the Louisiana example. Koch-funded groups have targeted Hagan as eight Republicans vie in a May 6 primary for the nomination to run against her.
Among Republicans, six-term Senator Thad Cochran of Mississippi is spotlighting the flood insurance issue as he faces off against state Senator Chris McDaniel, a Tea Party-aligned candidate challenging him in a June 3 primary.
“Thad Cochran worked tirelessly to ensure Mississippi homeowners and small business owners were not hit with unfair, massive flood insurance premium increases,” Cochran campaign spokesman Jordan Russell said in a statement. “Chris McDaniel refuses to take a position on the issue because the Washington groups bankrolling his campaign are opposed to it.”
McDaniel spokesman Noel Fritsch said his candidate “doesn’t support pulling the rug out from people who have been promised help, but believes we need to introduce responsible reforms to protect American taxpayers in the long run.”
Nature has the potential to bring additional attention to the issue during this campaign year. The North Atlantic hurricane season starts June 1 and ends Nov. 30.