Terrorism risk insurance bill faces budget obstacles
Frank suffered a setback last week when the Congressional Budget Office ruled that the bill, which would reauthorize and expand the program for 15 years, would cost the federal government $3.7 billion over a five-year period and $10.4 billion over a 10-year period. Facing the budget scoring, House leaders pulled the bill that was slated for the floor Tuesday because it carried no offsets.
Frank said he is exploring attaching language to the bill that will state that no funds would be spent until after an attack. If an attack occurred, Congress would then have to vote again to release the money. "It would be... 'nothing will be spent if this happens.' Then there will have to be another vote to release the funds, which I'm sure would come," Frank said.
Frank said he would have preferred to have secured a waiver of budget rules, but Democratic House leadership has not granted one this year in the face of anticipated GOP criticism. Minority Whip Roy Blunt, R-Mo., raised the issue during a colloquy with Majority Leader Steny Hoyer, D-Md., Friday. Hoyer told Blunt that leadership would put the bill on the floor next week after working through the pay/go issue.
"Clearly, there is no payout if a terror attack doesn't happen. There is a contingency that would have to happen ...We're trying to address that," Hoyer said. Frank said he was bewildered by the CBO estimate because, he argued, if an attack occurred, it probably would cost more than $10 billion, possibly as much as $200 billion.
"I don't know how they get a $10 billion terrorist attack ... It's letting the process take over the substance," he said, referring to the CBO estimate as "Sanskrit."
CBO in its estimate noted that "there is no reliable way to predict how much insured damage terrorists might cause in any specific year." But it added the estimate reflects the weighted average based on the opinion of many experts, with outcomes that ranged from no attack to a catastrophic one.
The agency said the cost could be considered in a similar vein as the amount of insurance premium needed to offset the government's cost for providing the program. Under the program, insurers pay no premium for federal assistance.
Frank said he planned to make minor technical changes to the bill in a manager's amendment but no substantive changes.
The bill would require insurance companies to make available coverage for a nuclear, biological, chemical or radiological attack, a provision bitterly opposed by smaller carriers. They hope to strike the provision in the forthcoming Senate TRIA bill. That language is strongly supported by the real estate industry and some large insurers, who argue it is essential to have such coverage because the private market cannot underwrite such risks.