Tragedy Brings Expensive Bailouts to Private Industry
In U.S. Plan, Taxpayers Would Cover Terror Claims
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After his speech on October 11, Bush was asked by a journalist why US citizens were not being told to sacrifice. Bush responded that they were sacrificing, by enduring longer waiting times at airports. Neither the journalist nor Bush thought to mention the huge corporate welfare handouts that are now being rushed through Congress, yet those will require a considerable financial sacrifice from every taxpayer. Here are some excerpts from a New York Times article, with supplementary editing by the Progress Report to highlight the disgusting nature of the bailouts. |
by Stephen Labaton with Joseph B. Treaster, and with numerous adjustments by the Progress Report
The Bush administration and Congress are preparing legislation to have taxpayers pay major insurance claims arising out of terrorist attacks, even though private insurance companies collected premiums for this purpose for years.The plan would make the insurers the second major industry, after the airlines, to receive corporate welfare handouts after the Sept. 11 attacks on the Pentagon and World Trade Center.
Some lawmakers question whether the plan would be an unjustified bailout, and whether the situation is as dire as corporations say.
A government program of subsidy to the insurance industry may help limit future rate increases. As the most likely terrorism targets, sites in Washington, New York and other major cities would benefit the most from such a plan and would rise in value without their owners lifting a finger.
While the airlines' $15 billion welfare handout helps to cover the costs associated with the attacks last month, the proposals for the insurers would instead cover the imagined, unknowable expenses from future terrorism.
Administration officials and lawmakers, prodded by heavy lobbying from the insurance, real estate, manufacturing and investment industries, say they already agree on the need for quick action.
Senator Charles A. Schumer, a member of the banking committee, said, "There has been a consensus achieved among the White House and everyone here that for an attack of terrorism, the taxpayers will have to be the insurer."
Insurers generally say they can survive the estimated losses from last month's attacks, but cannot bear the full risks of future attacks.
Officials say it is impossible to calculate whether the plan will wind up costing taxpayers little, or hundreds of billions of dollars, which taxpayers were forced to pay to cover insured deposits in a bailout of hundreds of failed savings and loan institutions sponsored by George Bush senior a decade ago.
The insurance welfare measure is expected to move swiftly because virtually nobody has been lobbying against it. But any such measure could encounter resistance from both Republicans who are skeptical of government involvement in the marketplace and Democrats who see it as an unjustified bailout.
Aides to two important lawmakers Senator Ernest F. Hollings, Democratic chairman of the Commerce Committee, and Representative Michael G. Oxley, Republican chairman of the House Financial Services Committee said last week that the lawmakers were urging colleagues to move slowly and assure themselves that a crisis truly existed.
But welfare-seeking industry groups have already lined up powerful support from influential lawmakers. Their high ranking on Congress's agenda was evident last week when they met with House leaders including the Speaker, J. Dennis Hastert, immediately after he conferred with Alan Greenspan, the chairman of the Federal Reserve, to discuss budget issues.
Why is it that businesses, economists and politicians praise the free market, but as soon as there is trouble, every industry seems to rush to government for handouts? Is the free market so weak that it can only survive in times of great general prosperity?
Why do Republicans and Democrats give up so quickly on the free market? Could there ever be a successful politician who favors a free market? Tell your views to The Progress Report:
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