NU Online News Service, June 10, 5:45 p.m. — Washington
Bush administration officials are pressing Republican leaders to support terrorism insurance legislation, but they stopped short today of endorsing the bill introduced Friday by Democratic leaders.
“The absence of federal legislation is having a palpable and severe effect on our economy and is costing America’s workers their jobs,” top Bush administration officials say in a letter sent today to Senate Minority Leader Trent Lott, R-Miss.
The letter was signed by Treasury Secretary Paul O’Neill, Office of Management and Budget Director Mitchell E. Daniels, National Economic Council Director Lawrence B. Lindsey and Council of Economic Advisors Director R. Glenn Hubbard.
Without terrorism insurance legislation, the letter says, the economic impact of another terrorist attack would be much larger than the Sept. 11, 2001, attack, leading to major bankruptcies, layoffs and loan defaults.
However, the letter says the legislation must not allow for excessive litigation against American companies.
Two provisions are essential in any legislation to avoid this problem, the letter says:
- All cases arising out of terrorist attacks should be resolved in a federal court in a consolidated action.
- The victims of terrorism should not have to pay punitive damages.
“We would recommend that the President not sign any legislation that leaves the American economy and victims of terrorist acts subject to predatory lawsuits and punitive damages,” the letter says.
S. 2600, the bill that was introduced Friday by Democratic leaders, addresses only one of these issues. Under S. 2600, all claims for property damage, personal injury or death filed against American companies would be handled by a federal court. All state-based causes of action would be preempted.
However, S. 2600 does not address the issue of punitive damages against American companies.
Under the parliamentary rules that will govern consideration of S. 2600 on the Senate floor, those who want to ban punitive damages will be able to offer amendments to that effect.
While the House passed a terrorism insurance bill last November, the issue has been tied up in the Senate due to the tort reform dispute as well as, some sources say, lingering questions among Republicans over the need for the legislation.
But the Bush administration letter says the process must move forward.
“Prompt action by the Senate on this vitally important legislation is needed now,” the letter says.
Under S. 2600, following a terrorist attack, the federal government would pay 80% of claims above a company-by-company deductible for the first $10 billion in losses.
The government would pay 90% of losses between $10 billion and $100 billion. It would be up to Congress to determine the next step if losses exceeded $100 billion.
The program would expire Dec. 31, 2002, but it could be extended for one more year upon a determination by the Treasury Secretary that an extension was needed.
Although the program would limit coverage to property-casualty insurance, S. 2600 also calls for a study, to be completed within nine months, on the need for a similar program for life insurance.