The U.S. Senate Budget Committee is a special entity. The commission was established in 1974 in response to President Richard Nixon’s “withholding” of congressional appropriations to prevent spending on projects he disapproved of. This resulted in a constitutional crisis because the U.S. Constitution gave Congress fiscal power. In response, Congress worked with the Senate Budget Committee to enact the Congressional Budget and Impoundment Control Act of 1974. The committee’s official role is to “draft a budget plan for Congress and oversee and enforce rules governing spending, revenue, and the federal budget.”
During the two years of the 118th Congress (2023-2024), the Commission strayed from this mission. It held 43 hearings, only a handful of which focused on the state budget. Twenty-four of them dealt with the economic impacts of climate change. Committee Ranking Member Chuck Grassley (R-Iowa) stated in an April 2024 letter that majority committee Chairman Sheldon Whitehouse (D) was egged on by unqualified expert witness testimony. Next, the committee was used to conduct an alarmist and disastrous crusade. Grassley was responding to a March 2024 letter from the White House to committee Republicans in which he addressed their complaints. Grassley also said in the letter that other committees, such as the Environment and Public Works Committee and the Finance Committee, have primary jurisdiction over climate change policy.
With Republicans taking control of the Senate on January 3, 2025, the Republican senator will succeed Whitehouse as chairman, which could steer the committee in a new direction. Looking back at the hearings of the 118th Congress and looking forward to the hearings of the 119th Congress, we humbly offer some suggestions and opinions to help the Senate Budget Committee create value. After all, there is much work to be done to address our country’s $1.8 trillion deficit and $33 trillion debt burden.
- Restore focus on essential tasks. In 2023-2024, few budget committee hearings will actually focus on the budget. In addition to 24 people focusing on climate change, others discussed unrelated issues such as reproductive freedom, immigration and income inequality.
- Give the other party a chance. There is a shady tradition at congressional hearings in which the majority releases testimony before the hearing. This nasty ploy deprives the few of enough time to read and digest the majority’s proposals. The committee’s December 18 hearing took this abuse to an extreme. The hearing was accompanied by two lengthy reports: the 36-page “Uncovering the Economic Costs of Climate Change” report and the 84-page “Next Fall: The climate-driven insurance crisis is here and it’s going to get worse,” which is high on technology and data. Both reports were released hours before the hearing, giving the minority group valuable time to familiarize themselves with their contents. It’s hard to give a book report on a book you haven’t had the chance to read.
- Stop picking data. The committee has a history of cherry-picking sources and data. For example, it used arguments and data from a report prepared by Securing Our Future, a broad-based organization whose partners focus on ideology rather than science. One such partner is Connecticut Citizens Action, which describes itself as “engaging Connecticut residents in changing power relations to build a more just society.”
- Read more related information. The hearing on December 18, 2024 was supposed to focus on information requested by the insurance company on November 2, 2013 regarding the non-renewal of the policy. In this case, renewal data cannot accurately reflect the behavior of insurance companies. A more informative analysis simply looks at an insurer’s losses and combined ratios by state and smaller segments. Therefore, the Commission’s premise that non-renewal is a major indicator of climate change-driven insurer exits is wrong, as is its conclusion that reliance on such data is wrong.
- Relax and exaggerate. The Budget Committee has been the source of unfounded alarmist claims that the insurance industry is on the verge of collapse and mired in a crisis caused by climate change. The committee report stated that “Climate change poses new systemic risks to the U.S. economy; systemic risks may spread beyond directly affected sectors and cause widespread economic losses. The main risk is the collapse of the insurance industry, affecting mortgage Lending and housing markets. The argument goes as follows: Climate change is exacerbating property damage, driving up insurance premiums and causing insurance companies to stop offering coverage. As a result, homeowners are abandoning their homes, exacerbating the loss in home value and exacerbating the housing crisis. , triggering a massive systemic financial crisis and crippling our economy—especially if carbon emissions are not curbed immediately.
- Report good news. The committee commented that insurance availability and affordability are particularly serious issues in Florida and California. What their analysis fails to report is that these are special circumstances. Florida’s insurance-related woes stem from rampant frivolous litigation, while California’s problems stem from insurance regulations that effectively limit insurance companies from pricing policies at risk-adjusted rates. However, the situation in both states has improved. Florida’s tort reform measure passed in 2023 could help stabilize the insurance market, and California’s insurance regulator is beginning to allow insurers to incorporate climate trends and reinsurance costs into pricing.
- Cut wasteful government programs. Commission missed opportunity to comment on two climate change-related areas Do Impact Budget: Government spending on flood damage and huge subsidies to crop insurance buyers. Currently, the government’s flood insurance program has liabilities of $20.5 billion. The federal crop insurance program subsidizes two-thirds of farmers’ insurance costs. Therefore, flood insurance and crop insurance are sources of substantial disaster compensation. The budget could benefit from cutting these wasteful programs or introducing free market principles. (Elon and Vivek, are you listening?)
- Promote resilient buildings. The best protection against losses caused by natural disasters, including those exacerbated by climate change, is resilient building. Building sturdy homes, following building codes, and avoiding hazardous construction can reduce the need for federal disaster relief. Successful programs include Fortified Alabama Homes, where homes with “reinforced” roofs sell for 7 percent more than homes without “reinforced” roofs. Forest Resilience Bonds effectively bring in private capital to help control wildfire risk in California.
- Tell the truth about the financial situation of the insurance company. Although the Budget Committee insisted that insurance companies were failing and Florida home prices were falling, that was not the case. Florida’s median home price has been stable at around $400,000 over the past two years (up from $250,000 in 2020). During the same period, property and casualty insurance industry surplus increased from $929 billion to $1.13 trillion through the third quarter of 2024, with a combined ratio of 97.8%, the healthiest financial performance in the past five years.
The Senate Budget Committee has important responsibilities. Pray that the 119th Congress will work constructively to reduce our nation’s dire debt and deficit. If not, you can rely on R Street to egg it on.
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