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Life Health > Life Insurance

GOP Disarray Is Stalling The Industrys Agenda

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By Arthur D. Postal

Through no fault of its own, the life insurance industry is finding its legislative agenda caught up in the disarray now crippling Congress.

And, worse for the industry, there is no sign that the logjam will soon end.

At the moment, Republican committee chairmen in the House and Senate are working on appropriations bills for the current year as well as attempting to show the American people that they can move to reduce the exploding budget deficit.

But, effectively, Congress is in limbo. At press time, it was waiting to see what happens to Karl Rove, the president’s key advisor, and I. Lewis Libby, Vice President Cheney’s chief of staff.

The turmoil over the President’s nomination of Harriet Miers to the Supreme Court was another factor in the disarray among Republicans before she withdrew her nomination on Oct. 27.

And they also are awaiting the fate of former House Majority Leader Tom DeLay, R-Texas. For House Republicans, the hope is that whether he is convicted, acquitted or has his indictment thrown out, that he will get the body language of his party and decide not to return as majority leader.

For Democrats, the opposite is true. They hope DeLay returns and continues to serve as a symbol for Republican disarray.

In the interim, all the hard work and respect the insurance industry is winning for how it is managing its agenda is being lost in the vacuum created by outside events.

It is a vacuum created by President Bush’s sudden inability to control the congressional agenda, and because Republicans no longer fear DeLay’s ability to retaliate if the party’s moderate and conservative wings do what they do best– disagree.

The prayer among Republicans is that an ugly fight over DeLay’s return can be avoided, and that in the event the President’s key men are implicated criminally in the effort to out a CIA undercover agent, that the President will move quickly to pull a President Clinton and get an entirely new crew to run the White House to show he is in charge.

The latter is seen as more likely to occur in the near term. The thinking is that if Rove and/or Libby is indicted, the President will use that as an excuse to bring in new blood.

One of the heads seen likely to roll is chief of staff Andrew Card, the thinking is. And two beneficiaries of such change are seen as Joshua Bolten, director of the Office of Management and Budget, and Ken Mehlman, currently chairman of the Republican National Committee.

In the interim, the insurance industry agenda sits.

However, there are several positives for the industry.

One is that despite its disarray, Congress will act on extension of the Terrorism Risk Insurance Act before it departs.

While it did not win mandated coverage for group life in the Terrorism Risk Insurance Act when it was first passed in late 2002, it now appears likely that whatever Congress does with TRIA, a provision will be included mandating coverage of group life insurance.

Equally important, it appears that the issue of repeal of the estate tax, something the industry opposes, is one that has come and gone. Senate Majority Leader William Frist, R-Tenn., continually says that the Senate will deal with the issue this fall, but the consensus is that he won’t because repeal lacks the 60 votes needed for passage. As one industry lobbyist put it last week, “The best time for the Republicans to get this bill through was last January and February. Now, support for it clearly has declined as the issues Congress has in front of it have changed.”

As Kimberly Olson Dorgan, senior vice president, federal relations, at the American Council of Life Insurers, added, “We anticipate that there will be a vote on repeal before the end of the year and that effort will be defeated because they don’t have the 60 votes for full repeal.”

Dorgan predicts that “reform and lowering of applicable tax rates on estates are likely to be taken up next year.” What is needed, she says, is “something that the federal government can sustain over time. And the industry is looking for certainty.”

The insurance industry does have one major concern going into next year–the recommendations of a tax reform panel that will issue its report Nov. 1.

Michael I. Kerley, senior vice president for federal relations at the National Association of Insurance and Financial Advisors, said, “If President Bush makes a strong effort to have the Congress deal with his ‘savings’ proposals next year, we have our work cut out for us because one of those proposals would deliver a death blow to life insurance and annuities, not to mention employer-provided health insurance and flexible savings accounts and health savings accounts.

“We will have to await the full report, but, from the descriptions we have seen so far, the tax reform panel’s proposals would have a terribly negative impact on the life and health insurance industries,” Kerley said.

On the Hill, next year is a long time away. For now, it’s a wait-and-see game.

The best time for the Republicans to get this bill through was last January and February,” said one lobbyist regarding repeal of the estate tax. “Now, support for it clearly has declined as the issues Congress has in front of it have changed.”


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