WASHINGTON -- Trial lawyers, one of the nation's most formidable pressure groups, have throttled "emergency" legislation deemed essential to the nation's economy in the wake of the Sept. 11 terrorist attack. This week, however, they may meet their match. The White House has put together a diverse coalition behind a long-stalled bill that provides government aid for anti-terrorism insurance.
The diversity is represented by the fact that Edward Sullivan, president of the AFL-CIO Building Trades Council, will lead a delegation of hard-hats to a White House meeting today. What's more, Sullivan is scheduled to introduce President Bush, who will make his first public comments in behalf of federal insurance help. They will try to overcome opposition by the trial lawyers to real limitations on lawsuits brought by victims of terrorism.
Standing by Bush's side besides Sullivan will be hotel magnates Willard Marriott and Thomas Pritzker (Hyatt Corp.), Teamsters President James Hoffa and CEO David Kramer of GMAC Commercial Mortgage. They contend that the U.S. economy has been living dangerously because of uninsured property, inhibiting new construction and depressing commercial real estate.
Apart from serious economic consequences, the alignment of forces gives pause to Democratic strategists. As on environmental questions, traditional blue-collar labor Democrats are allying themselves -- at least temporarily -- with the Republican president. Feminists, environmentalists and trial lawyers may not comprise a winning hand.
The need for help from the federal government seemed so obvious last Sept. 11 that the House hurriedly passed an insurance aid bill in late November, with the Senate expected to follow suit before year's end. It did not, because of a provision in the House limiting liability for terrorist loan claims. Democratic Sen. Christopher Dodd, representing insurance interests in his state of Connecticut, had worked out a compromise with the Senate Banking Committee's two top members: Democrat Paul Sarbanes of Maryland and Republican Phil Gramm of Texas.
Everybody in Washington thought a deal had been reached, but the compromise was not good enough for the trial lawyers. They demand the ability to sue not only for economic damages but also punitive damages, which is where the big bucks are.
Senate Majority Leader Tom Daschle blocked action on the bill because it contains the fatal flaw of "tort reform" -- that is, limitations on liability. While saying a month ago that "I am very hopeful that we can take up terrorism insurance," Daschle added that "the real question is whether or not people are going to use it as a vehicle to get changes in tort law." In other words: if you limit liability, forget about the bill.
An astounding argument for this point of view has been made by Carlton Carl of the Association of Trial Lawyers of America (ATLA). "What if a pipeline company hires a terrorist who's on the FBI's ten-most-wanted list, and that terrorist blows up an airline?" Carl asked. "Should that company be subject to punitive damages?" Faulty argumentation, however, cannot undermine the political power created by years of heavy political contributions by the trial lawyers.
Further attempts at negotiations by Dodd failed. Most recently, Democratic Sen. Charles Schumer of New York has been working with Treasury Secretary Paul O'Neill to close what Schumer calls "an open wound on our nation's economy" without incurring the wrath of the trial lawyers.
Going into this week, no progress had been made. Non-partisan pleas for legislation from the General Accounting Office (GAO) and Federal Reserve Chairman Alan Greenspan accomplished nothing.
Why has little or nothing been done to press this critically important bill for more than four months? Insurance companies are not the most popular of business enterprises, and referring to the legislation as an "insurance bailout" has not helped. Nor have commercial realtors or hotel owners wanted to broadcast that they stand naked without terrorism insurance. Since Sept. 11, the White House has been reluctant to engage in heated legislative conflict.
Nevertheless, with the administration's economists fearful of inaction, the president now is moving. He is mobilizing bankers, commercial realtors, pension fund managers, labor leaders and entrepreneurs to back the insurance industry. The fact that the outcome is still very uncertain testifies to the power of the trial lawyers.
Note to Editors: My recent column on antitrust political contributions incorrectly referred to E. Floyd Kvamme as President Bush's science adviser when he in fact is co-chairman of the President's Council of Advisers on Science and Technology. Also, I incorrectly cited a study as estimating the Microsoft suit would cost California's software developers and consumers $80 billion for the next three years. That, in fact, is a national number, with the cost to California estimated at $11 billion.