House GOP Nearing Compromise Plan on Terror Insurance

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Rep. Jeb Hensarling (R-TX) (R) listens during a news conference on Fannie Mae and Freddie Mac in the U.S. Capitol on March 31, 2011 in Washington, DC.
National Journal
Billy House
Aug. 27, 2014, 1 a.m.

House Re­pub­lic­an lead­ers are clos­ing in on a plan to reau­thor­ize a ter­ror­ism risk in­sur­ance pro­gram that would rep­res­ent a com­prom­ise with an already-passed Sen­ate ver­sion, but are pro­ceed­ing quietly amid wor­ries about a po­ten­tial con­ser­vat­ive back­lash.

Ini­tially en­acted after the Sept. 11, 2001, ter­ror at­tacks, the pro­gram is set to ex­pire at the end of 2014. The deal un­der dis­cus­sion would raise the threshold at which the fed­er­al cost-shar­ing pro­gram for in­sur­ance would kick in to $250 mil­lion in dam­ages from a ter­ror­ist strike, ac­cord­ing to House GOP lead­er­ship and oth­er sources.

“Something’s got to give,” a House GOP lead­er­ship aide said of the real­iz­a­tion by lead­ers that the stan­doff with the Sen­ate must end, amid build­ing pres­sure for ac­tion from a wide range of busi­nesses throughout the real es­tate, trans­port­a­tion, con­struc­tion, and man­u­fac­tur­ing sec­tors.

A Sen­ate bill passed 93-4 in Ju­ly would main­tain the ex­ist­ing $100 mil­lion threshold and bring only minor changes, while reau­thor­iz­ing the pro­gram for sev­en years. The fed­er­al back­stop has nev­er been needed, so far.

But House con­ser­vat­ives, led by Fin­an­cial Ser­vices Com­mit­tee Chair­man Jeb Hensarling of Texas, op­pose the Sen­ate ap­proach, and say big­ger changes are needed to pro­tect tax­pay­ers. They want to raise the “trig­ger” for the fed­er­al aid to $500 mil­lion in dam­ages and make oth­er al­ter­a­tions, as re­flec­ted in a bill passed by Hensarling’s com­mit­tee to ex­tend the pro­gram for five years.

“But if Hensarling tries to bring that bill to the House floor for a vote, he knows it won’t pass,” the House GOP lead­er­ship aide said.

Hensarling aides did not re­spond to re­quests for com­ment Tues­day. But Hensarling has hin­ted at a real­iz­a­tion that the bill passed by his com­mit­tee faces prob­lems.

That’s be­cause a com­bin­a­tion of Demo­crats and House Re­pub­lic­ans, mostly from the New York City re­gion and oth­er urb­an areas whose dis­tricts con­tain more po­ten­tial ter­ror­ist tar­gets, would be enough to block that meas­ure, say aides and law­makers. The op­pon­ents could in­clude Rep. Peter King, R-N.Y., who sup­ports full reau­thor­iz­a­tion. King could not be reached through a spokes­man.

“We have a di­verse Re­pub­lic­an caucus in the House. We have some mem­bers who be­lieve the re­forms go too far and we have a host of con­ser­vat­ives who feel the re­forms don’t go far enough,” Hensarling said in a state­ment in Ju­ly.

He also said at the time that he ex­pec­ted the pro­cess of find­ing a long-term plan to take sev­er­al months. There has since been talk of a po­ten­tial six-month ex­ten­sion of the cur­rent pro­gram, kick­ing a fi­nal reau­thor­iz­a­tion to a new Con­gress.

But it’s not clear that could pass the Sen­ate. And out­side groups from the in­sur­ance, busi­ness, con­struc­tion, and man­u­fac­tur­ing sec­tors are get­ting antsy. It was these groups that com­bined after 9/11 to push for ini­tial en­act­ment of the Ter­ror­ism Risk In­sur­ance Pro­gram in 2002 to help provide con­tin­ued cov­er­age in high-risk areas for such things as com­mer­cial build­ings and sta­di­ums.

With Demo­crat­ic buy-in, there ap­pears to be little doubt such a com­prom­ise could pass the House.

Still, a re­main­ing com­plic­a­tion is a lack of ap­pet­ite for any move that might ap­pear to pub­licly roll over Hensarling and oth­er con­ser­vat­ives””es­pe­cially pri­or to up­com­ing in­tern­al House GOP lead­er­ship elec­tions, to be held in Novem­ber.

A brew­ing battle over an­oth­er is­sue””op­pos­i­tion by Hensarling and oth­er con­ser­vat­ives to re­new­ing the Ex­port-Im­port Bank’s charter without ma­jor changes””only fur­ther adds to the polit­ic­al sens­it­iv­ity.

One hope is that a com­prom­ise of set­ting $250 mil­lion as the threshold for the ter­ror­ism in­sur­ance re­new­al can be sold in the next weeks to con­ser­vat­ives, in a way de­signed to avoid hand­ing them an em­bar­rass­ing de­feat. Even if it is not the ex­act ap­proach they want, it is less than what the Sen­ate has passed, and could be pitched to them as a vic­tory in that re­gard.

But for some out­side groups wait­ing for con­gres­sion­al ac­tion, such in­tern­al polit­ic­al man­euv­er­ing misses the point.

“Fail­ure to reau­thor­ize TRIA would have ser­i­ous con­sequences for US eco­nom­ic sta­bil­ity and se­cur­ity,” said Marty De­Poy, a spokes­man for the Co­ali­tion to In­sure Against Ter­ror­ism, on Tues­day. The group’s mem­ber­ship roster in­cludes a wide range, from the Amer­ic­an Bankers In­sur­ance As­so­ci­ation, to the In­sti­tute of Real Es­tate Man­age­ment, to the As­so­ci­ation of Art Mu­seum Dir­ect­ors and Hilton World­wide.

“Each time TRIA nears its ex­pir­a­tion, busi­ness own­ers struggle with the un­cer­tainty and fear that they may no longer be able to ob­tain the cov­er­age they need,” he ad­ded. “With lim­ited le­gis­lat­ive days be­fore the elec­tion, CI­AT mem­bers urge the House to move quickly to pass a reau­thor­iz­a­tion pro­pos­al so lead­ers in the House and Sen­ate can agree on a fi­nal bill for the pres­id­ent’s sig­na­ture.”

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