Push For More Tax Revenue From Life Insurers Seems Unlikely Now
Its looking less and less likely that life insurance products will be targeted as revenue raisers by Congress this year.
Two industry lobbyists, both of whom asked not to be identified, say the atmosphere on Capitol Hill has changed completely in the wake of the national tragedy that struck on Sept. 11.
Prior to the terrorist attack, they agree, the rapidly eroding non-Social Security surplus was setting the stage for an intense partisan battle over where to find revenues to pay for government appropriations.
In particular, they say, there would have been a bitter political conflict over any suggestion by the Bush administration that the Social Security surplus, the so-called “lock box,” be tapped to pay for non-Social Security spending.
But all that has changed now. The lobbyists agree that in the wake of the terrorist tragedy, there is a new bipartisan spirit on Capitol Hill, and a general agreement that the Social Security surplus will be used to create an economic stimulus package and pay for government appropriations.
Indeed, they say, they expect Congress to put together an omnibus appropriations billthat is, one major bill subject to a single up-or-down vote instead of separate votes on every element of government appropriationsand then get out of town.
There very likely will not be any revenue raisers in this omnibus approach.
The lobbyists cite two reasons for this. First, they say, Congress wants to maintain unity during a time of national crisis and possible armed conflict. Anything controversial will be put to the side.
Second, they say, Congress is genuinely concerned about the insurance industry, which is working to resolve claims arising from the terrorist attacks.
Although there is no reason to believe life insurers will not be able to pay claims, they say, Congress is not likely to add to the industrys financial burdens at this time.
Before Sept. 11, one lobbyist says, the expectation was that Congress would be in session into December. But now, he says, it looks like Congress may adjourn by mid-October.
Regarding the Sept. 11 terrorist attack, the American Council of Life Insurers, Washington, is examining whether some modest federal legislation might be needed as insurers work to pay claims.
Jack Dolan, a spokesman for ACLI, says that first and foremost, the life insurance industry is financially strong. It does not need any assistance from Capitol Hill to pay death benefits.
There are some legal issues on the table, however, that could arise as life insurers work to pay claims promptly, Dolan says. Life insurers are working with regulators on these issues, he says, and are still evaluating whether federal legislation might be needed.