An intense effort is underway to bring to zero the budget cost of the Senate's version of legislation extending the federal backstop for terrorism risk, so the bill can be enacted by the end of the year.
The purpose of the initiative is to set the stage for prompt action on final legislation when Congress returns Dec. 3, and that during the vacation period talks can be held between Senate Banking and House Financial Services Committee staffers to establish common ground on a final bill.
The effort involves all interested parties, including insurers, policyholders, the Congressional Budget Office and the staff of the Senate Banking Committee, according to multiple sources.
In comments Oct. 29, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, warned that if no provisions included in the more expansive House bill are included, he will demand an extension of the current bill until April 30, 2008 so that talks on a meaningful compromise can be held.
But the policyholder source said there is no appetite for a short-term extension and that the funding issue is the biggest hurdle.
This might be done by adding a provision to the bill mandating a fast-track "recoupment" process, through which the government can recover from insurers its outlays for an attack on an expedited basis, as estimated by the CBO.
The CBO said on Oct. 29 that the Senate version of legislation, passed by the Banking Committee Oct. 17, would cost the federal government an estimated $5.1 billion over the next 10 years. Actually, the legislation extends the program for seven years.
A potential solution is a mechanism recouping promptly the $5.1 billion–not the total cost of a terrorist attack–but "we're interested in any idea that would substantively resolve this," according to the source.
The problem is rules imposed by Democrats when they took over control of Congress in January that require any legislation that adds to government costs to be paid for.
The House bill, which would extend the program for 15 years, has a higher cost, $8.4 billion.
Joel Wood, lobbyist for the Council of Insurance Agents and Brokers, said he is unaware of any specific resolution on the CBO cost issue. "What I do know is that the clock is ticking, we've been down this road before, and the Senate bill has bipartisan support and the support of the administration," he said. "As much as we like the House version, we have an outstanding opportunity at hand to get a seven-year extension of a program that is working."
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