Interviewer: Congressman, first off, did you like what you were hearing from Boehner and the Republican leadership on the fiscal cliff?
Ron Paul: Well, there were a couple of things in there that I could say sounded good, but the problem is, there’s no credibility. When I’m going around the country, people that I talk to generally don’t believe anything they hear, they just don’t trust them. Somebody said, “Oh yea, we want to work together, that’s fine. Oh yes, we won’t raise taxes”, they don’t believe that. It just goes on and on and they’re just looking for the truth. And they say, “Well, all we need is a little compromise”. Well, nobody expects that, because they don’t admit the truth, and the truth is that we’re broke. And how do we compromise? The only way we can compromise is by coming clean on what you’re going to cut. But instead, they’re trying to find out how they’re going to agree on what they’re going to protect. So I don’t think I’ve heard the answer. They talk about this fiscal cliff, but I actually, in my mind, work with the assumption that we’re already over the cliff, we’re just wondering how we’re going to land.
Interviewer: Really? So you’re working on the assumption that we are not going to get this solved?
Ron Paul: No, it’s unsolvable, because you have to cut spending. And the conservative candidate for president said we should increase the spending by 2 trillion dollars for the military, and have more drones.
Interviewer: And that was one of the reasons I know, Congressman, why you did not go ahead and endorse Governor Romney.
Ron Paul: We don’t need another war, we are broke.
Interviewer: Well, Congressman, the matter is that this is a minority opinion, what you’re espousing is a minority opinion right now, because most believe and hope that the two sides will come together with some sort of deal. Is there any circumstance under which you believe the GOP and the Republicans would accept any type of tax increases?
Neil Cavuto: Look, they might ultimately do a good job, but we thought it was a little early to do the back-slapping when a lot of their constituents were doing the finger-raising. On the phone with us now is Texas Congressman, Ron Paul. Congressman, I had your colleague from Pennsylvania saying, “Give FEMA another 14 million dollars right now even if you have to go into debt to pay for it”. What say you?
Ron Paul: I think that’s a bad idea. When is it going to stop, where is the limit? And, evidently, there are no limits, they’re already 18 million dollars in debt, and they’ll spend another 14 million dollars for a program that causes people to do dumb things. I mean, this is why people build on the beaches and on the coasts, because the market doesn’t provide insurance for them, but the government does. So people who don’t get to build nice houses on the beach, have to pay for the rebuilding of it. It’s a terrible program, and I’ve had this position for a long time, and I get many, many times more calls complaining about FEMA than I ever get complaining about my position on FEMA. So it’s never hurt me politically and the people aren’t even with this. But I have to say, though, that when the trouble hits, we have this program and I try to make these things work, but, quite frankly, they can’t work. They’re just going to help drive us into bankruptcy and all this will have to end.
Neil Cavuto: You know, – I know you risk it, and I admire you for that – you always look cruel when you say no to FEMA because you know a thing or two about FEMA’s track record. And, even now, I’m worried for people on the scene and folks in Stanton Island, New York beleaguered borough over there where they keep saying, “Help is on the way, help is on the way”. FEMA’s there, but water bottles aren’t there, basic creature comforts aren’t there, the basic supplies they needed were delayed. And if it weren’t for private funding efforts and the likes of Wal-Mart getting involved, as much as that retailer did after Katrina, there would be no help there. But now we’re getting word, Congressman, from FEMA administrator, Craig Fugate, that, “More than 210 million dollars has been approved for individuals to assist with housing and other disaster related needs”. The problem with that money seems to be that it’s not immediately dispersed, you can approve it, but it doesn’t mean it gets into the hands of those affected right away, it could be weeks or month, right?
Ron Paul: Yes, and that’s when their congressman will be called and that’s when we will get our calls and people would beg and plead. They’d been told that they paid their flood insurance, so they ask when are they going to get the relief. And it’s very, very difficult, it’s bureaucratic, it’s very, very slow, it’s very inefficient. And, you know, when the private companies have insurance, I think they do get the checks to the people much, much quicker. But FEMA is an obstacle, it gets in the way of local authority. For the first 200 years of our history, the federal government was never involved in natural disasters. And after Katrina, you think the people and the government and the politicians would wake up and say, “Maybe this isn’t the best way to do things”. But no, it continues in the same way, we never change our way. And none of this is going to end until we declare our bankruptcy and admit that we don’t have any money. And the congressman that casually said “14 billion dollars is no big deal”, well, where does he think it comes from, it comes from poor people. Because, if you borrow it, they’re indebted; if you don’t borrow it and you print it, they get the inflation, or you get the business cycle and they end up without their jobs. And they think it’s for free? They have to wake up and see that everything costs something, every time the government spends money, it is a cost and a tax and it comes back and, unfortunately, it hits the middle class more than anybody else, especially the low/middle income class who try to survive. They suffer the most with all these programs, even with this pretence that they’re going to take care of us forever.
Hurricane Sandy was one of the worst natural disasters the east coast has ever seen. Clean-up and recovery will take months, if not years and estimates run in the tens of billions of dollars. Parts of New York and New Jersey will never be the same. Entire seashore communities have been wiped out, but the determination to rebuild has been lauded as courageous and admirable. Yet as with all natural disasters, Sandy raises uncomfortable questions about the extent to which taxpayers should fund the cleanup and the extent to which government programs create moral hazards.
For example, FEMA and the National Flood Insurance Program (NFIP) are expected to pick up the tab for much of the flood damage caused by the hurricane. Of course this will mean more federal debt and inflation for the rest of us, since the program only has about $4 billion to work with and is already $18 billion in debt from hurricanes Katrina and Rita. Many think there is a need for the government to provide flood insurance of this kind. After all, the market would never provide insurance in flood prone areas at an affordable price. But shouldn’t that tell us something?
Shouldn’t that tell us that it is a losing proposition to insure homes in coastal areas and flood plains often threatened by severe and destructive weather patterns? And if it’s a losing proposition, should taxpayers subsidize the inevitable losses arising from federal flood insurance?
The NFIP disguises the real cost of flood insurance in flood prone areas, which influences homebuilding and sales in such areas. Recklessly taking unwise risks when risk is underpriced is known as moral hazard. When politicians decide that private insurance premiums are too high, as with houses built in flood plains, the solution is to under price the risk through federal subsidies. The obvious and expected outcome is more danger to life and limb when disaster strikes.
Even NFIP has been forced to raise rates significantly in coastal areas, and is now dropping second homes from coverage altogether,
Many assume it is compassionate to entrust government central planners with disaster recovery. However, the greatest compassion brings results, not just good intentions. And we’ve seen how bureaucratic organizations like FEMA mismanaged recovery and relief in the wake of hurricanes Katrina and Ike. Organizations such as the Red Cross and private companies like Home Depot and Duracell have already stepped in admirably to help those in need, and we can only hope FEMA has learned this time not to impede and frustrate private efforts as they have in the past.
Above all, my thoughts and prayers are with the victims of Hurricane Sandy in this tremendously difficult time and hope they can get their lives put back together as quickly and seamlessly as possible.
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John Stossel: Tonight, we explode a few myths about elections and natural disasters. Here’s the first: I’m told that Hurricane Sandy is proof that we need a powerful federal government, namely FEMA, which provides emergency management. This just makes sense to people: we have a big disaster across state lines, who but the feds can help. Just like New York Times declared, week, “A big storm requires big government”. Very few politicians are skeptical about that, so it’s a relief to turn to former presidential candidate, Ron Paul. Dr. Paul, you say it’s a myth that we need FEMA?
Ron Paul: I certainly think so, because it causes more harm than good. We’ve handled floods and disasters for 204 years before we had FEMA, and the states and the volunteers and the local communities did quite well. I’ve taken this position for a long time, it’s not just recently. I’ve taken it since I was first in office, and I kept getting re-elected, because people in my district got tired of FEMA. All they had was headaches, they got locked into their insurance and it’s a bureaucracy and I’ve tried to help them get through the bureaucracy. But they just come in and take over.
John Stossel: But it’s a big problem, it crosses state lines, the Feds have to have some role?
Ron Paul: No, they don’t have to. What we should have is a real insurance. The problem is, the insurance program causes many of the problems, because they say, “Well, you have to have insurance”. The market won’t sell insurance to you, and that’s telling you that it’s too dangerous. So rich people get insurance subsidized by poor people, and they go and build on beaches and they have a good time and their houses get washed away and the poor people pay to rebuild their houses.
John Stossel: It was interesting that this week, before the storm hit, the President held a press conference, not at FEMA’s offices, but at the Red Cross. Here’s a clip:
Barack Obama: The reason we’re here is because the Red Cross knows what it’s doing when it comes to emergency responses.
John Stossel: So what’s he saying there, the Red Cross, not FEMA, knows what it’s doing, and FEMA doesn’t? Sounds like he’s admitting it.
Ron Paul: Yea, that was good politics, but, unfortunately, from my experience here in my district, the Red Cross and others were inhabited by FEMA. They would come in and stop it. Think of the difference between how evacuation occurred in New York after 9/11, all the volunteers shipped boats and things, thousands of people there were evacuated. And the opposite happened in Katrina, because FEMA got in and had control. But this giving up on individuals helping neighbors and local government doing things is a serious problem and it’s one of the reasons why we’re totally bankrupt. Because all this money that’s going to go out here in the next few months because of this storm … there is no money in the bank and there’s really no money in FEMA, the insurance is broke. So they’re going to just borrow it and print it and make our problems worse. They’ll take and centralize the power, the power will be in Washington DC, and it’s bureaucratic and it’s very inefficient.
John Stossel: Well, thank you, Dr. Paul, and thank you for all you’ve done to wake people up.
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