Cato Podcast The Disaster Aid System: How FEMA Rewards Risk
Nov 20, 2025
Chris Edwards, a fiscal studies scholar at the Cato Institute, dives into the complex world of FEMA and its unintended consequences. He highlights how federal disaster aid encourages risky development in flood-prone areas, turning FEMA into a subsidy machine rather than a responsive aid organization. The discussion critiques the National Flood Insurance Program and reveals how bureaucratic hurdles can hinder effective disaster response. Edwards argues for returning responsibilities to states and warns against the federal expansion that undermines private charity and local efforts.
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Federalism And Mutual Aid Were Central
- Federal disaster response historically relied on federalism and mutual aid rather than centralization.
- Chris Edwards argues recent decades shifted power to Washington with harmful effects.
Federal Intervention Creates Bad Incentives
- Federal intervention increases red tape and slows relief and rebuilding.
- It also creates perverse incentives that reduce private and local preparedness.
Disaster Funds Favor A Few Wealthy States
- A few states and territories account for most catastrophic DRF obligations.
- Dominik Lett notes wealthy, disaster-prone states often have greater fiscal capacity to absorb costs.