President Strikes Deal with Senate Democrats in Spite of Republican Opposition

On November 19, more than a year after the September 11 attacks on New York and Washington, the Senate gave final passage (86 to 11) to legislation (HR 3210) that would provide federal monies to the property and casualty industry to cover future terrorism-related losses. With the conference report cleared by both the House and Senate, passage of the bill was a major lame-duck victory for President Bush, who strongly urged Congress to pass the measure before the end of the session.

Even though a conference committee was appointed in July to hammer out the differences between the House and Senate bills, negotiations were held up because of radical differences between the two measures. Many Republican leaders were preparing to take up the legislation next year; nevertheless, the President began negotiations with Senate Democrats – led by Christopher Dodd (D-CT) – in October in order to strike a deal before the start of the 108th Congress.

One unresolved issue was whether to ban punitive damage awards in terrorism-related civil lawsuits. The House bill contained such a ban, while the Senate legislation did not address issues of legal liability. Bush and Senate Democrats compromised on this provision, opting not to count punitive damages as insured losses subject to government assistance, but also opting not to handle other House provisions relating to non-economic damages and attorneys’ fee caps. House GOP leaders were reportedly troubled by this agreement because they wanted the President to negotiate for a deal more like the House-passed punitive damages ban, and more importantly, because they had not been consulted about this agreement.

In addition to House Republicans, some Republican Senators opposed the final measure. Phil Gramm (R-TX) – a proponent of the punitive damages ban – delayed consideration of the measure on November 15 and ultimately voted against the bill. The final bill would require the federal government to cover the costs of 90 percent of insurance claims connected to terrorist attacks that result in at least $5 million in insured losses (government aid would kick in after the costs of future insurance claims exceed $10 billion, and would be capped at $100 billion).

Many anti-poverty advocates and consumer groups are critical of what has been called the “insurance industry bailout” measure, arguing that the industry has a long record of redlining in low-income and minority communities – problems they would like to see addressed before Congress uses tax dollars to prop up the insurance industry. In addition, some advocates argue that if there are future terrorist attacks, billions of dollars of federal funds may be diverted from critical programs to pay off insurance claims. This would mean less money available for federal programs, including those benefiting low and moderate income Americans.

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