Congress's foot-dragging on TRIA couldn't come at a worse time

Hensarling, perhaps betting on a GOP takeover in the Senate, continued to push his own TRIA reauthorization bill, H.R. 4871, the TRIA Reform Act of 2014, that gradually raises the program trigger and then after five years provides a federal backstop only for nuclear, biological, radiological, and/or chemical (NBCR) events. The bill would end TRIA as we know it.

Injecting this kind of uncertainty into something as important as the continued availability of terrorism coverage plays havoc with our nation's economy. Middle-market commercial policyholders could face an availability crisis if the federal backstop is effectively gutted, as some have proposed. This is not solely a concern of marquee properties in large East Coast cities; terrorism cover is essential for businesses across the U.S., from shopping centers in the Midwest to oil rigs in the Gulf of Mexico.

This is also an inopportune time for cutbacks on the federal terrorism insurance backstop, which costs the federal government no money.

In September, President Obama declared the Islamic State of Iraq and Syria (ISIS) a "severe threat" to the U.S. and ordered airstrikes on ISIS targets in Syria. The real fear that ISIS could initiate terrorist attacks against the U.S. prompted the Insurance Information Institute (I.I.I.) to issue a report calling for a quick renewal of TRIA in response.

I.I.I.'s rationale makes sense. If the risk of terrorism is increasing, shouldn't we be increasing – not decreasing – preparations to deal with that threat?

The cause of such congressional unpredictability is a basic difference of opinion about the proper role of government. Some legislators believe the federal government has a legitimate role in assisting the business community, especially in matters of protecting the public. Other legislators believe just as passionately that the role of government in business should be greatly reduced, no matter what the intention.

Until this basic philosophical difference moves closer to being resolved – or until the advocates of one approach or the other gain a clear, sustained political advantage – there will be more uncertainty.

For many decades, there was a general consensus that sometimes it's to everyone's advantage for the federal government to partner with the business community and occasionally take a supporting role. To quote President Calvin Coolidge, "The business of America is business." The concept of government encouraging business activity and development through methods including tax credits and abatements, grants and low-interest loans, has enjoyed widespread support from both political parties. It has not lost that broad support.

In recent years, however, a strain of libertarianism has crept into the body politic that opposes government doing anything to assist business, other than reducing taxes. While this is a minority view, in our current divided political landscape, punctuated by hyper-partisanship and an unwillingness to compromise, this perspective could thwart pro-business policies that have already achieved broad consensus and success.

This is why we see opposition to a terrorism insurance backstop that doesn't cost the federal government anything unless there is a terrorist attack. Similarly, when there is a natural catastrophe of sufficient devastation, the public demands a response from government if the insurance industry is unable to insure the risk. This has the unintended consequence of setting an expectation that government will always respond, leading people to be irresponsible and not purchase insurance. That's why it makes sense to define in advance the parameters of any contingent government assistance in legislation like TRIA, rather than leaving it to be determined in the wake of a disaster when emotions are running high.

There are honest, patriotic people in Congress who truly believe in limiting the role of government. The beauty of our representative government is that the people, through their elected representatives, are the ultimate decision-makers.

Looking at the dysfunction in Washington, D.C., we can take comfort in the fact that insurance is regulated by the states.  Supreme Court Chief Justice John Roberts has observed that "Government that is closest to the people is apt to be more responsive to their legitimate concerns and needs," adding that problems arise when people "from far off places with no understanding of the local community try to tell people what they should do."

There are still people who argue that insurance should be regulated by the federal government. Fortunately, this idea remains an outlier, unsupported except by those seeking the advantage over their competitors that such a federal regime would confer. Would we want the federal folks whose failings led to the financial crisis in banking and securities put in charge of insurance? No way.

The idea that serious disagreements about issues that affect the insurance industry will be truly settled now that the November elections are over flies in the face of recent history. Chances are that this one election will not heal the partisan divide causing all the gridlock. To the contrary, not much will be resolved by this one election cycle. It will just lead to the next cycle, which has already started.

Citizens need to demand a higher standard of performance from the people they select to represent them. Failure to get things accomplished should carry a heavier penalty at the polls. We've tried ideological combat for several decades and it doesn't work very well.