WASHINGTON -- Three months ago in a private letter, Senate
Majority Leader Tom Daschle opposed punitive damages against blameless
victims of terrorism. That letter came to light this week a few days after
Daschle's agent moved in the opposite direction.
The agent was Sen. Patrick Leahy, one of the heaviest Democratic
hitters. Meeting with Republican counterparts, he said the majority leader
had authorized him to handle a long-delayed Senate-House conference on the
terrorism insurance bill. In its current alignment, the conference would
reject the Senate provision for punitive damages, much less open the door to
more litigation as desired by trial lawyers. That is unacceptable to one of
the Democratic Party's most powerful constituencies: the trial lawyers.
Leahy denied to me he was blocking the conference, saying that
Daschle had asked him only "to get the bill unstuck." But two Senate sources
said they got the distinct impression from Leahy that he was trying to keep
it stuck by preventing the conference from meeting.
While Leahy is not even a member of the Banking Committee (which
has jurisdiction over terrorism insurance), he is chairman of the Judiciary
Committee who looks out for his former fellow trial lawyers. Holding up the
insurance bill has killed or delayed $12 billion worth of new real estate
projects, costing 300,000 construction jobs. Moody's Investors Service this
week continued to downgrade commercial paper because of no terrorism
The need for temporary federal help in insuring big construction
projects was recognized quickly in Washington after the Sept. 11 attacks. A
bill passed the Republican-controlled House, 227 to 193, with expectation of
Senate passage before Christmas.
Such expectation was premature. Any bill blocking court suits
for punitive damages was unacceptable to trial lawyers, and a change was
pressed by Leahy and Daschle. The catchphrase on the Senate floor by trial
lawyer advocates was that the bill could not become a vehicle for tort
reform. After six months of tortuous maneuvers, a compromise was reached:
punitive damages could be filed against private owners, but not the
government. The bill passed June 18.
On the next day, Daschle wrote to a supporter who had complained
about the long delay. The letter's political nature was indicated because it
was not on official U.S. Senate stationery but on a letterhead bearing the
inscription "Thomas A. Daschle" and the disclaimer "Not printed at
government expense." The response read like a form letter to mollify
supporters pressing for terrorism insurance.
Daschle began by blaming Republican Sens. Phil Gramm and Trent
Lott for the long delay, then made this commitment: "I believe that a
consensus package that will ensure that terrorism coverage is widely
available at affordable prices, that property owners who bear no blame for a
terrorist attack will not be liable for punitive damages, can -- indeed --
must be reached." He warned, however, that "all parties must put aside
secondary agendas" -- that is, interference with the trial lawyers.
Can property owners be free from punitive damages without
pursuing "secondary agendas"? The contradiction became clear when the trial
lawyers insisted on their full demands in the final version of the bill.
However, Sen. Christopher Dodd, influenced by the dominant insurance
industry in his state of Connecticut, could join Republicans for the
decisive vote against punitive damages in the Senate-House conference.
Another Democratic conferee, Sen. Charles Schumer, is under pressure from
New York business constituents to permit passage of the bill, but told me he
would not support "tort reform."
The only sure way to protect the right to sue for big dollars is
for the conference never to meet. Daschle returned from the August recess
blaming the Republicans for killing the terrorism insurance bill by turning
it into tort reform -- effectively pronouncing the bill dead.
President Bush often responds on the campaign, most recently at
Davenport, Iowa, Monday, declaring: "Congress needs to pass a bill that is
good for the hard hats of America, not good for the trial lawyers." He said
the same thing at the Carpenters Union Labor Day picnic in Pittsburgh. At
his side was Carpenters President Douglas McCarron, who had just contributed
over $1 million in union funds to keep Tom Daschle and Pat Leahy in Senate