Politics as usual

Posted: Nov 22, 2001 12:00 AM
WASHINGTON -- A desperately needed bill to protect the nation's insurance industry and the greater economy after Sept. 11 remains in dire peril, thanks to the financial pressure group that exerts the most influence over the Democratic Party: the plaintiff trial lawyers of America. Nothing better demonstrates that the war against terrorism sometimes conceals, but surely does not repeal, politics as usual. A bill to keep insurance going in the face of future terrorist threats is more vital to the economy than the now enacted airline security act or the embattled economic stimulus bill (as was suggested by Robert Rubin, the Democratic former secretary of the Treasury, in meetings with lawmakers). The threat to insurance by the terrorists is a greater menace than the savings and loan crisis a decade ago. Actually, the relief bill is no more a subsidy for insurance companies' magnates than the misnamed savings and loan bailout was special interest legislation. Nothing happens in the American economy without insurance. There is widespread agreement that economic revival is impossible unless a way is found to protect insurance coverage. Yet, this most important anti-terrorist legislation is in limbo. The insurance bill faces serious obstacles to passage before final adjournment of Congress next month, threatening havoc for the real estate and construction industries, which have been saving the American economy. The problem is the need for a provision limiting punitive damages in cases of terrorism, insisted upon by Republicans and the Bush administration and concurred in by a few influential Democrats. However, the argument that federal protection for insurance should not enrich trial lawyers energized their lobby and all its awesome power. Because House Republicans who generally run with the trial lawyers are not the type that can easily defy their party, limitation on liability is likely to pass the House. But at best, that leaves a rancorous Senate-House conference where compromise will not be easy. Plaintiff lawyers burst upon the national scene some 30 years ago, spawning tort legislation in an attempt to limit a torrent of lawsuits and damage verdicts. Out of self-protection, the American Trial Lawyers Association created a new and potent lobby that eclipsed even organized labor as the most powerful friend of the Democratic Party. This is not strictly a partisan struggle. Super-investor Warren Buffett, neither a Republican nor a conservative, wrote in The Washington Post Monday that the new terrorism insurance law "should sharply limit private lawsuits seeking to place blame on some party involved." Sen. Christopher Dodd, who has often supported tort reform as a Democrat from insurance-rich Connecticut, drafted a cap on punitive damages from terrorism. He was aided by Sen. Paul Sarbanes, the liberal Democratic Banking Committee chairman (along with Sarbanes' Republican predecessor at Banking, Sen. Phil Gramm). That was before the trial lawyers came down hard. Their champion, combative 79-year-old Sen. Ernest (Fritz) Hollings, went into action. With the help of Senate Majority Leader Tom Daschle, the bill was stalled. An insurance bill reaches the House floor next week, and an anti-punitive damage amendment comes up for a vote. House Majority Leader Dick Armey is determined. "We are going to put it in," Armey told me, "We're not going to let this bill out of the House without it." In short: no cap on punitive damages, no bill. Armey is backed in this position by President Bush, but Bush's post-Sept. 11 remarks have been limited almost exclusively to the war on terrorism. He has not uttered one word publicly on limiting punitive damages. Republicans in Congress grumble privately that the president is more interested in maintaining his 90 percent popularity amid cheers from liberal pundits rather than getting involved in the gritty business of governing. The president's own lieutenants have no doubts about what is at stake here. One of Bush's chief economic advisers privately refers to the insurance measure as "the" terrorism bill, dwarfing in importance all others. Then he adds that trial lawyers have prevented its passage so far and make its future questionable. Here is an issue that cries for a president to speak out, but that is difficult while he is seeking support from all the voters.