Terrorism Risk Insurance Extension Act of 2005

Mr. President, I recently returned from Iraq where I am proud to report that the men and women of the American military continue to perform magnificently. They are the best of America, and we owe them and their families a special debt of honor and gratitude.

Today, I am introducing legislation to strengthen our military and enact a ``Military Family Bill of Rights.'' My hope is that Congress will act quickly to build the military ready to meet the challenges of this century. That requires a larger Army, a larger Marine Corps, and better policies for Americans in uniform and their families.

We must begin by building a military sized and shaped for the challenges of the future. The military today, in particular the Army and the Marine Corps, is too small for the missions it faces. The evidence is everywhere.

In the past, the Army gave units 2 years to reset, re-train, and prepare between combat deployments. Instead the 3rd Infantry Division is headed back to Iraq after only one year. The 101st Airborne and the 4th Infantry Divisions are headed back later this year after less than 2 years. The First Marine Expeditionary Force is already in the middle of its second deployment to Iraq.

Even with this timetable, we have made ends meet only through large contributions from the National Guard and Reserve. But in planning the next rotation of U.S. forces, we are running out of Guard and Reserve units to call on because they've already been deployed. Fourteen of the National Guard's 15 most combat-ready units are either in Iraq now, recently demobilized, or on alert for duty in the coming year. Of the 205,000 Army Reservists, only about 37,000 remain available for deployment for the types of missions needed in Iraq. Last year the Army dipped into the Individual Ready Reserve. More recently, the Army has even begun to call back military retirees, ranging in age from their mid-40s to their late 60s.

The situation is so grave that Lt. General James Helmly, chief of the Army Reserve, recently warned that the reserves are ``rapidly degenerating into a broken force''--and cautioned that at this rate we will not be able to meet the needs of ``future missions.''

The war on terror--which we know requires a comprehensive approach-- will have a military component. Surprises happen and our armed forces must be ready to meet those challenges, wherever and whenever they occur.

Since the end of the Cold War, every major commitment of American military power, including the ``Air War'' in Kosovo, has required a sizeable commitment of American ground forces, at the very least to provide post-conflict security and stability. There's no technological substitute for boots on the ground, and we must always plan for the worst, so we never expose our troops to the unintended consequences of wishful thinking.

The CIA's internal think-tank, the National Intelligence Council, recently drew an important conclusion about conflict over the next 15 years: ``Weak governments, lagging economies, religious extremism, and youth bulges will align to create a perfect storm for internal conflict in certain regions.'' That's a warning about the danger of failed states--and this should be a wake-up call for American strategy.

Failed states can become havens for terrorists. It was a failed state in Afghanistan that provided a training ground for al-Qaida. It was a failed state where al-Qaida made its plans, grew its forces, and emerged to threaten our national security.

We need a comprehensive foreign policy strategy to deal with failed states, but we must also have a military ready to act if necessary. For the foreseeable future, the United States will need a

larger ground force. Failure to build one now will only diminish our national security in the future.

The war in Iraq proved that a lightning-fast, high-tech force can smash an opposing Army and drive to Baghdad in three weeks. But there is no substitute for a well-trained and equipped infantry to win the peace or secure a failed state. Those missions require an investment in the men and women of the American military--to expand their number, and to increase the number of forces that specialize in certain skills.

To meet these needs, this legislation will expand the Active Duty Army by 30,000 and the Marines by 10,000 personnel.

The men and women of the American military are sustained by the bonds they share within their unit, and by the love and strength they draw from home--from their families, their spouses, their children, their parents. Military families are unsung heroes who receive neither medals nor parades--giving everything they can to the men and women they love, men and women who have been called to war. They answered the call. And so must we--with a new commitment to smarter defense policies, like those I outlined earlier, and better care for military families.

So the legislation I offer today also includes a Military Family Bill of Rights, a set of policies enshrined in law, to provide assistance to the families of the American military.

Investing in military families isn't just an act of compassion--it's a smart investment in America's military. Good commanders know that while you may recruit an individual soldier or Marine, you ``retain'' a family. Nearly 50 percent of America's service members are married today. If we want to retain our most experienced service members, especially the non-commissioned officers that are the backbone of the Army and Marine Corps, we have to keep faith with their families. If we don't, and those experienced, enlisted leaders begin to leave, America will have a broken, ``hollow'' military.

We can begin by increasing the financial support military families receive. We can help them meet the increased expenses every military family faces when a loved-one is deployed. Thousands of reservists, for example, take a cut in pay when called to active duty. Some employers make up the difference in lost wages. We should reward those patriotic business leaders. And since small businesses don't have the workforces that make it possible to spread such costs, we should offer a Small Business Tax Credit to those who make up the difference between a reservist's civilian and military pay. This legislation would also establish Military Reservist Economic Injury Disaster Grants to buttress existing loan programs that help small-businesses survive when a vital employee, or even the owner, is mobilized. It also creates the Reservists Enterprise Transition and Sustainability Task Force to help small businesses prepare for and cope with the mobilization of reservist-employees and owners. For all service members, this legislation permits penalty free withdrawals from Individual Retirement Accounts for deployment-related expenses, such as increased child-care and other costs.

As many as one-in-five members of the National Guard and Reserves don't have health insurance. That is bad policy and bad for our national security. When units are mobilized, they count on all their personnel. But when a member of the National Guard or Reserve is mobilized, and unit members fail physicals because they haven't seen a doctor in 2 years, that's bad for readiness and that's bad for unit effectiveness. As part of the Military Family Bill of Rights, we will extend military health insurance eligibility to all members of the National Guard and Reserve, whether mobilized or not.

One of the unfortunate truths about war is that it takes lives--and mostly young lives. For their survivors, much of life remains, and we must be generous in our efforts to help them put their lives back together. Almost a year ago, I proposed increasing the military's death benefit to $250,000. When combined with the Servicemembers Group Life Insurance, a family would receive $500,000 when a loved-one dies in the service of our nation. No one can ever put a price on a life, but we ought to do what we can to help families coping with the worst of news. The President recently embraced a formula to reach the $500,000 threshold, and I'm glad he has joined this effort.

Our generosity must not stop there. At present, survivors of those killed in action have 180 days to move out of military housing. But for those with young children in school, 180 days may mean starting a school year in one State, and finishing it in another. With all the disruption the loss of a parent will bring to their lives, survivors should have the flexibility to stay in their homes for one year after the death of a service member. It's the least we can do for those who have paid the ultimate price.

But let's be honest: No piece of legislation will ever anticipate all the needs of America's military families. Someone will always fall through the cracks. And the legislation I intend to offer will try to fix that. Take the case of Jay Briseno. Jay was wounded in Iraq and left paralyzed from the neck down. The law authorizes the VA to provide $11,000 to modify a disabled veteran's vehicle, but it doesn't provide the resources a family needs to buy the specially out-fitted vehicle Jay needed. In his case, a generous member of the community donated the van the Briseno's now use to drive Jay to doctors appointments and hospital visits. And we are all grateful for that act of generosity. But no family should ever have to be so dependent on charity to meet a basic need.

Americans will do everything in our power to help military families. But not all Americans can afford to buy modified minivans for wounded veterans, and not all military families have the same needs. So as part of my Military Family Bill of Rights, we will establish a Military Family Relief Fund. Every American who pays taxes will be able to contribute by checking a box on their income tax returns. Just as we let Americans donate a few dollars to finance our presidential elections on their tax forms, we should give them this opportunity to say thank you to our troops. The program will meet the needs we can't expect with the flexibility and responsiveness our service members, veterans, and their families deserve.

Supporting military families must also extend beyond service in uniform--with programs across government to help with jobs, VA benefits, healthcare, and education.

Veterans possess great leadership and technical skills, but they often lack the financial resources to turn that potential into a viable enterprise. A recent report by the Small Business Administration stated that 22 percent of veterans plan to start or are starting a business when they leave the military. For service-disabled veterans, this number rises to 28 percent. So the legislation I introduce today will create a new program, administered by the Small Business Administration, to provide very-low interest loans, up to $100,000, to help veterans start new small businesses.

But in this time of war, we have another obligation to meet the needs of those suffering with the experience of war.

The Pentagon believes that as many as 100,000 new combat veterans across the country will need some level of mental health care. The New England Journal of Medicine has reported as many as 1 in 6 soldiers returning from Iraq show symptoms of post-traumatic stress disorder. Fewer than 40 percent of those sought help. Military officials and mental health providers predict that up to 30 percent of returning soldiers will require psychiatric services associated with their experience in war. Through July of last year, 31,000 veterans of Operation Iraqi Freedom had applied for disability benefits for injuries--and 20 percent of those claims were for psychological conditions. These are levels not seen since the Vietnam War.

Our VA medical facilities are not ready for increased demands for the treatment of Post Traumatic Stress Disorder. In fact only 86 of 163 VA Medical Centers have PTSD treatment centers. We must do better. The wounds of war are not always visible, and we cannot sit back and wait for people to ask for help. We have to be proactive.

Soldiers and Marines returning from war want to go home. They don't want to do anything that could jeopardize

their homecoming. That's what happened to Jeffrey Lucey, a Marine Reservist from Belchertown, MA. When he was leaving Iraq, his first instinct was to report traumatic memories of things he had seen in the war. But someone told him it might delay his return home, so Jeff kept quiet. But the safety, security, and joy of homecoming eluded Jeff. Haunted by the war and what he had seen, he began to drink heavily. He was plagued by recurring nightmares, and began talking about suicide. Last summer, Jeff took his own life. Jeff's story is a preventable tragedy, and a call to action. As part of the legislation I plan, keeping faith with Jeff's family who have become committed advocates in his memory, we will expand PTSD programs within the VA and require outreach efforts to find the veterans who need the care.

Our obligation is to keep faith with the men and women of the American military and their families--whether they are on active duty, in the National Guard or Reserves, or veterans.

Those who have stood for us should know that we stand with them, today and always. Each of us can do something to ease their burden--but truly supporting our troops requires that we act not just as individuals, but as a nation. We owe our troops the opportunity to serve in the best-planned, best-equipped, and best-led military force in the world, and we owe them the peace of mind that comes from knowing that they and their families will be taken care of if they sacrifice life, limb or the ability to sleep without war's nightmares. We owe them not just thanks and best wishes, but action here in Congress. In today's ever-changing and perilous world, there is not a moment to lose.

Mr. President, I rise today to introduce ``The Pathways to Self-Sufficiency Act of 2003.'' I am pleased to be joined in introducing this important legislation by my colleagues Senators Baucus, Bingaman, Jeffords and Rockefeller.

This legislation is based upon the highly esteemed Maine program called ``Parents as Scholars''. This program, which uses State Maintenance of Effort, MOE, dollars to pay TANF-like benefits to those participating in post-secondary education, is a proven success in my State and is a wonderful foundation for a national effort.

We all agree that the 1996 welfare reform effort changed the face of this Nation's welfare system to focus it on work. To that end, I believe that this legislation bolsters the emphasis on ``work first''. Like many of my colleagues, I agree that the shift in the focus from welfare to work was the right decision, and that work should be the top priority. However, for those TANF recipients who cannot find a good job that will put them on the road toward financial independence, education might well be the key to a successful future of self-sufficiency.

As we have seen in Maine, education has played a significant role in breaking the cycle of welfare and has given parents the skills necessary to find better paying jobs. And we all know that higher wages are the light at the end of the tunnel of public assistance.

``The Pathways to Self-Sufficiency Act of 2005'' provides States with the option to allow individuals receiving Federal TANF assistance to obtain post-secondary or vocational education. This legislation would give States the ability to use Federal TANF dollars to give those who are participating in vocational or post-secondary education the same assistance as they would receive if they were working.

We all know that supports like income supplements, child care subsidies, and transportation assistance among others, are essential to a TANF recipient's ability to make a successful transition to work. The same is true for those engaged in longer term educational endeavors. This assistance is especially necessary for those who are undertaking the challenge and the financial responsibility of post-secondary education, in the hopes of increasing their earning potential and employability. The goal of this program is to give participants the tools necessary to succeed into the future so that they can become, and remain, self-sufficient.

Choosing to go to college requires motivation, and graduating from college requires a great deal of commitment and work--even for someone who isn't raising children and sustaining a family. These are significant challenges, and that's even before taking into consideration the cost associated with obtaining a Bachelor's degree. This legislation would provide those TANF recipients who have the ability and the will to go to college the assistance they need to sustain their families while they get a degree.

The value of promoting access to education in this manner to get people off public assistance is proven by the success of Maine's ``Parents as Scholars'', PaS, program. Maine's PaS graduates earn a median wage of $11.71 per hour after graduation up from a median of $8.00 per hour prior to entering college. When compared to the $7.50 median hourly wage of welfare leavers in Maine who have not received a post-secondary degree, PaS graduates are earning, on average, $160 more per week. That translates into more than $8,000 per year--a significant difference.

Furthermore, the median grade point average for PaS participants while in college was 3.4 percent, and a full 90 percent of PaS participants' GPA was over 3.0. These parents are giving their all to pull their families out of the cycle of welfare.

Recognizing that work is a priority under TANF, and building upon the successful Maine model, the ``Pathways to Self-Sufficiency Act'' requires that participants in post-secondary and vocational education also participate in work. During the first 2 years of their participation in these education programs, students must participate in a combination of study time, employment or work experience for at least 24 hours per week--the same hourly requirement that the President proposes in his welfare reauthorization proposal.

During the second 2 years--for those enrolled in a four year program--the participant must work at least 15 hours in addition to class and study time, or engage in a combination activities, including study time work or work experience, and training, for an average of 30 hours per week. And all the while, participants must maintain satisfactory academic progress as defined by their academic institution.

The bottom line is that if we expect parents to move from welfare to work and stay in the work force, we must give them the tools to find good jobs. For some people that means job training, for others that could mean dealing with a barrier like substance abuse or domestic violence, and for others, that might mean access to education that will secure them a good job and that will get them off and, importantly, keep them off of welfare.

The experience of several ``Parents as Scholar'' graduates were captured in a publication published by the Maine Equal Justice Partners, and their experiences are testament to the fact that this program is a critically important step in moving towards self- sufficiency. In this report one graduate said of her experience, ``If it weren't for `Parents as Scholars' I would never have been able to attend college, afford child care, or put food on the table. Today, I would most likely be stuck in a low-wage job I hated barely getting by . . . I can now give my children the future they deserve.''

Another said, ``By earning my Bachelor's degree, I have become self- sufficient. I was a waitress previously and would never have been able to support my daughter. I would encourage anyone to better their education if possible.''

These are but a few comments from those who have benefited from access to post-secondary education. Giving States the option use Federal dollars to support these participants will make a tremendous difference in their ability

to sustain these programs which have proven results. In Maine, nearly 90 percent of working graduates have left TANF permanently and isn't that our ultimate goal?

I look forward to working with my colleagues to include this legislation in the upcoming welfare reauthorization. It is a critical piece of the effort to move people from welfare to work permanently and it has been missing from the federal program for too long.

I rise today to reintroduce five different bills important to my State of Maine that were included in the Water Resources Development Act, WRDA, last year. Unfortunately, that larger Corps of Engineers reauthorization legislation did not see action before the Senate adjourned the 108th Congress, but I am pleased that the Chairman of the Senate Environment and Public Works Committee recently stated that WRDA is on the committee's agenda for consideration soon. My hope is that all five bills will once again be included in the WRDA legislation in the 109th Congress.

All of my bills are non-controversial, and, importantly, are supported by the various townspeople and their officials, and State officials, who view these harbor deauthorizations and river improvements as engines for economic development. The bills also have the support of the New England District of the Corps of Engineers.

The first bill, S. 462, pertains to Tenants Harbor, St. George, Maine. Deauthorizing the Federal Navigation Channel, FNC, would be of great help to the town in appropriately managing the Harbor to maximize mooring areas. Over the years there have been mounting problems with the Army Corps of Engineers' mooring permit process as people seeking permits for moorings that have existed for 30 years continue to be notified that the mooring locations are prohibited because they fall within the federal navigational channel.

My second bill, S. 463, concerns Northeast Harbor in Mt. Desert, Maine. The language will not only allow for more recreational moorages and commercial activities, it will also be an economic boost to Northeast Harbor, which is surrounded by Acadia National Park, one of the nation's most visited parks--both by land and by water. The removal of the harbor from the FNC will allow the town to adapt to the high demand for moorings and will allow residents to obtain moorings in a more timely manner. The Harbor has now reached capacity for both moorings and shoreside facilities and has a waiting list of over sixty people, along with commercial operators who have been waiting for years to obtain a mooring for their commercial vessels.

My third bill, S. 464, addresses the Union River in Ellsworth, Maine. The bill supports the City of Ellsworth's efforts to revitalize the Union River navigation channel, harbor, and shoreline. The modification called for in my legislation will redesignate a portion of the Union River as an anchorage area. This redesignation will allow for a greater number of moorings in the harbor without interfering with navigation and will further improve the City's revitalization efforts for the harbor area.

My fourth bill, S. 465, will carry out a project for the mitigation of shore damage at Camp Ellis, Maine, attributable to the Saco River navigation project. The bill authorizes the Secretary of the Army to carry out the project, under the River and Harbor Act of 1968, to mitigate shore damage attributable to the Saco River project, waiving the funding cap requirement for congressional authorization set forth in that Act. The legislation is needed to complete the project as it will cost more than authorized under current law, and is the preferred project by non-Federal interests.

My fifth bill, S. 466, will make the mooring of an historic windjammer fleet in Rockland Harbor a reality. Originally a strong fishing port, Rockland retains its rich marine heritage, and it is one of the fastest growing cities in the Midcoast area. Like many of the port cities on the eastern seaboard, Rockland has been forced to confront an assortment of financial and environmental changes, but happily, the city has been able to respond to these challenges in positive and productive ways.

The City of Rockland has hosted the Windjammer fleet since 1955, earning a well deserved reputation as the Windjammer Capital of the World. Rockland's Windjammers are now National Historic Landmarks, and as such, are vitally important to both the City and the State. The image of The Victory Chimes, one of five vessels slated to be berthed at the new wharf and a vessel whose historical designation I supported, graces the Maine quarter. This beautiful fleet of windjammers symbolizes the great seagoing history of Maine as well as the sense of adventure that we have come to associate so closely with the American experience.

Lermond Cove is perfectly situated in the Rockland Harbor to be the new and permanent home for these cherished vessels. The proposed Windjammer Wharf will also provide a safe harbor from storms, as it is tucked nicely near the Maine State Ferry and Department of Marine Resources piers.

The State of Maine capitalizes on the visual impact of the Windjammers to promote tourism, working waterfronts and the natural beauty that distinguishes our landscape. Over $300,000 is spent yearly by the Maine Windjammer Association to advertise and promote these businesses. Deauthorizing that part of the federal navigational channel will clearly trigger significant and unrealized economic benefits for the region, providing many beneficial dollars to the local area and the State of Maine. According to the Longwood study, which uses a multiplier of 1.5, the economic impact of this spending is $3.8 million a year. Conservatively, the Windjammers spend over If $2.5 million a year in the state.

I want to thank the New England Corps of Engineers for their help in drafting the language and working with the Maine Department of Transportation, which runs the ferry line, and also the Rockland city officials, the Rockland Port District, and the Captains of the Windjammer vessels--Mainers and businesspeople with the vision and commitment we need to complete Windjammer Wharf and create a permanent home for this historic fleet of windjammers in Rockland Harbor.

Mr. Speaker, I move to suspend the rules and pass the Senate bill (S. 467) to extend the applicability of the Terrorism Risk Insurance Act of 2002, as amended.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to

revise and extend their remarks and include extraneous material on S. 467.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, in the aftermath of the brutal terrorist attacks on our Nation on September 11, 2001, America's economic and financial security was put at risk. Thousands of innocent people were victimized and our insurance industry was brought to its knees.

Insurers could not predict when or where or how damaging the next attack would be. As a result, the insurance markets pulled back and businesses were unable to obtain terrorism insurance at any price. Business development plans stalled and our economy was put at risk.

President Bush immediately called on Congress to pass legislation that would prevent severe economic disruptions caused by a lack of available terrorism insurance. The Financial Services Committee worked closely with the administration and the Senate to draft the Terrorism Risk Insurance Act of 2002, or TRIA. TRIA provided a temporary Federal backstop to protect against future catastrophic terrorist attacks. This program, by any measure, has been a resounding success.

On June 30, 2005, the Treasury Department submitted a report to Congress on the effectiveness of the TRIA program, the availability and affordability of terrorism insurance for various policyholders, and the likely capacity of the property and causality insurance industry to offer insurance for terrorism risk after TRIA expires on December 31 of this year. According to the report, the removal of TRIA would result in ``less terrorism insurance written by insurers, higher prices, and lower policyholder take-up.''

The administration stated that it wanted to reform the TRIA program and foster the development of a private market for terrorism insurance.

The legislation before us today would temporarily extend the terrorism risk backstop for policyholders, but would also add a number of critical reforms. Perhaps most importantly, this bill is the only proposal providing significant taxpayer protections.

Unlike the current TRIA program which sets a limit on the amount of Federal assistance taxpayers may recoup, this legislation may have full 100 percent taxpayer payback. Every dollar the Federal Government pays out gets repaid over time. This bill also significantly increases industry co-shares, providing further taxpayer relief in the short run.

The bill raises the program trigger from $5 million to $50 million in the first year of the extension and then to $100 million for the second year. It also eliminates commercial automobile insurance from the terrorism insurance program, for a reduction of over $30 billion dollars in covered line premiums. The bill raises the deductibles on all lines of insurance from the current level of 15 percent to an average of over 20 percent, the biggest increase among all of the proposals.

The legislation encourages insurers to make coverage available for nuclear, biological, chemical and radioactive risk attacks, which are currently excluded from most insurance policies. Without these provisions, policyholders will continue to be unprotected for the most catastrophic of events.

Any Federal terrorism insurance program must be temporary. Because terrorism risk will not go away, one of our major goals must be to decrease the role of the Federal Government over time and provide real, lasting market reforms that will increase industry responsibility for terrorism insurance.

It is important that industry have more ``skin in the game'' to ease the transition to the private market for terrorism insurance. In addition to a raised trigger and deductibles, this bill is the only legislation that requires that development of a long-term solution shifting the backstop to the private sector and phasing out the Federal role.

A public-private entity is created and is required to issue specific proposals within a short period of time, and the bill sets up various risk-pooling mechanisms and dedicated terrorism capital accounts to immediately begin the transition. Without these provisions, we will be back here in 12 months arguing over another extension with no improved reforms.

This legislation is identical to the bill that passed our Financial Services Committee overwhelmingly by a vote of 64-3, with the exception of striking certain provisions that are within the jurisdiction of the Judiciary Committee by agreement, a slight change in the definition of exempt commercial purchasers, and other technical and conforming changes.

I applaud my friend and colleague, the gentleman from Louisiana (Mr. Baker), chairman of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, for introducing this legislation.

I would also like to thank the gentlewoman from New York (Mrs. Kelly), the gentleman from Texas (Mr. Sessions), the gentlewoman from Ohio (Ms. Price), the gentleman from Kentucky (Mr. Davis), the gentleman from New York (Mr. Fossella), the gentleman from Arizona (Mr. Renzi), the gentleman from New Jersey (Mr. Ferguson), the ranking member from Massachusetts (Mr. Frank), the gentleman from Pennsylvania (Mr. Kanjorski), and the gentleman from Massachusetts (Mr. Capuano) for their leadership and commitment to this important matter.

I urge my colleagues to vote in favor of this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I am pleased to yield 2 minutes to the gentlewoman from New York (Mrs. Kelly), the chairman of the Oversight Subcommittee.

Mr. Speaker, I yield 2 minutes to the gentleman from Georgia (Mr. Price).

If the gentleman would yield, the gentleman has my assurances. I know we had some discussions in the committee, in the markup. Going forward, we have not been able to close that circle yet, but I see the

gentlewoman from Florida there nodding, and the gentleman has my assurances, as do all the other members of the committee, that we will address that issue. I think there were some drafting issues and the like that we will certainly take care of before the conference is concluded.

I thank the gentleman for his support.

Mr. Speaker, I am pleased to yield whatever time he may consume to the gentleman from Louisiana (Mr. Baker), the chairman of the subcommittee.

Mr. Speaker, I am pleased now to yield 2 minutes to the

gentleman from New York (Mr. Reynolds).

(Mr. REYNOLDS asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I yield such time as she may consume to the gentlewoman from New York (Mrs. Kelly).

Mr. Speaker, I thank the gentlewoman for her inquiry, and clearly the committee on the point that she mentioned did not have hearings on the amendment offered, but I think it may be ripe for further exploration by the committee because the gentlewoman raises some interesting issues regarding foreign travel, particularly as it relates to life insurance policies.

I thank the gentlewoman for her interest and expertise.

Mr. Speaker, just in conclusion, I thank the gentleman from Pennsylvania for his kind words, and all the members on the committee who worked so hard on this, particularly Mr. Kanjorski and Mr. Frank on that side, and many, many others.

Mr. Speaker, when we had the hearing on this legislation with the Treasury Secretary after the Treasury report came out, I made the comment it would be irresponsible on the part of this Congress if we did not address the issue of terrorism risk insurance. It was far too important to ignore; it had too many implications for our economy going forward.

And Mr. Frank was right when he said this is not about the insurers. It is about the insured, the people out there creating jobs and making our economy work. And it is also a recognition that an act of terrorism is almost impossible to try to get actuarial information on to be able to set rates. It is virtually impossible. Anybody that knows anything about insurance knows that it is virtually impossible to work that in to any kind of an insurance scheme in which they would charge premiums. So that is why we needed this bottom-up, and that is why we need to continue this bottom-up.

And the idea is to transition during that period to a market-based solution, creating the incentive for insurance companies to create a pool, not unlike what the Brits have, the pool-rate concept, so you have this pool that could guard against losses. It is something that hopefully over the next year, as we finish this Congress, we can set the stage for that transition that will enable our economy to continue to grow and provide a robust insurance protection for those activities at the same time.

This is, in my estimate, as the gentleman from Pennsylvania pointed out, the legislative process at its best and I am very proud of the committee and the job that we have done. I ask for support of the legislation.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, 4 years ago, when the Congress considered the bill creating the terrorism insurance program, I urged my colleagues to reject it. One of the reasons I opposed the bill was my concern that, contrary to the claims of the bill's supporters, terrorism insurance would not be allowed to sunset after 3 years. As I said then:

The drafters of H.R. 3210 claim that this creates a

``temporary'' government program. However, Mr. Speaker, what

happens in 3 years if industry lobbyists come to Capitol Hill

to explain that there is still a need for this program

because of the continuing threat of terrorist attacks. Does

anyone seriously believe that Congress will refuse to

reauthorize this ``temporary'' insurance program or provide

some other form of taxpayer help to the insurance industry? I

would like to remind my colleagues that the Federal budget is

full of expenditures for long-lasting programs that were

originally intended to be ``temporary.''

I am disappointed to be proven correct. I am also skeptical that, having renewed the program once, Congress will ever allow it to expire, regardless of the recommendations made by the commission created by this bill.

As Congress considers extending this program, I renew my opposition to it for substantially the same reasons I stated 4 years ago. However, I do have a suggestion on how to improve the program. Since one claimed problem with allowing the private market to provide terrorism insurance is the difficulty of quantifying the risk of an attack, the taxpayers' liability under the terrorism reinsurance program should be reduced for an attack occurring when the country is under orange or red alert. After all, because the point of the alert system is to let Americans know when there is an increased likelihood of an attack it is reasonable to expect insurance companies to demand that their clients take extra precautionary measures during periods of high alert. Reducing taxpayer subsidies will provide an incentive to ensure private parties take every possible precaution to minimize the potential damage from possible terrorists attack.

While this bill does contain some provisions making it more favorable to taxpayers than the original program, my fundamental objections to the program remain the same as 4 years ago. Therefore, I am attaching my statement regarding H.R. 3210, which created the terrorist insurance program in the 107th Congress:

Mr. Speaker, no one doubts that the government has a role to play in compensating American citizens who are victimized by terrorist attacks. However, Congress should not lose sight of fundamental economic and constitutional principles when considering how best to provide the victims of terrorist attacks just compensation. I am afraid that H.R. 3210, the Terrorism Risk Protection Act, violates several of those principles and therefore passage of this bill is not in the best interests of the American people.

Under H.R. 3210, taxpayers are responsible for paying 90 percent of the costs of a terrorist incident when the total cost of that incident exceeds a certain threshold. While insurance companies technically are responsible under the bill for paying back monies received from the Treasury, the administrator of this program may defer repayment of the majority of the subsidy in order to ``avoid the likely insolvency of the commercial insurer,'' or avoid ``unreasonable economic disruption and market instability.'' This language may cause administrators to defer indefinitely the repayment of the loans, thus causing taxpayers to permanently bear the loss. This scenario is especially likely when one considers that ``avoid . . . likely insolvency, unreasonable economic disruption, and market instability'' are highly subjective standards, and that any administrator who attempts to enforce a strict repayment schedule likely will come under heavy political pressure to be more ``flexible'' in collecting debts owed to the taxpayers.

The drafters of H.R. 3210 claim that this creates a ``temporary'' government program. However, Mr. Speaker, what happens in 3 years if industry lobbyists come to Capitol Hill to explain that there is still a need for this program because of the continuing threat of terrorist attacks. Does anyone seriously believe that Congress will refuse to reauthorize this ``temporary'' insurance program or provide some other form of taxpayer help to the insurance industry? I would like to remind my colleagues that the Federal budget is full of expenditures for long- lasting programs that were originally intended to be ``temporary.''

H.R. 3210 compounds the danger to taxpayers because of what economists call the ``moral hazard'' problem. A moral hazard is created when individuals have the costs incurred from a risky action subsidized by a third party. In such a case individuals may engage in unnecessary risks or fail to take steps to minimize their risks. After all, if a third party will bear the costs of negative consequences of risky behavior, why should individuals invest their resources in avoiding or minimizing risk?

While no one can plan for terrorist attacks, individuals and businesses can take steps to enhance security. For example, I think we would all agree that industrial plants in the United States enjoy reasonably good security. They are protected not by the local police, but by owners putting up barbed wire fences, hiring guards with guns, and requiring identification cards to enter. One reason private firms put these security measures in place is because insurance companies provide them with incentives, in the form of lower premiums, to adopt security measures. H.R. 3210 contains no incentives for this private activity. The bill does not even recognize the important role insurance plays in providing incentives to minimize risks. By removing an incentive for private parties to avoid or at least mitigate the damage from a future terrorist attack, the government inadvertently increases the damage that will be inflicted by future attacks.

Instead of forcing taxpayers to subsidize the costs of terrorism insurance, Congress should consider creating a tax credit or deduction for premiums paid for terrorism insurance, as well as a deduction for claims and other costs borne by the insurance industry connected with offering terrorism insurance. A tax credit approach reduces government's control over the insurance market. Furthermore, since a tax credit approach encourages people to devote more of their own resources to terrorism insurance, the moral hazard problems associated with federally funded insurance is avoided.

The version of H.R. 3210 passed by the Financial Services committee took a good first step in this direction by repealing the tax penalty which prevents insurance companies from properly reserving funds for human-created catastrophes. I am disappointed that this sensible provision was removed from the final bill. Instead, H.R. 3210 instructs the Treasury Department to study the benefits of allowing insurers to establish tax-free reserves to cover losses from terrorist events. The perceived need to study the wisdom of cutting taxes while expanding the federal government without hesitation demonstrates much that is wrong with Washington.

In conclusion, Mr. Speaker, H.R. 3210 may reduce the risk to insurance companies from future losses, but it increases the costs incurred by American taxpayer. More significantly, by ignoring the moral hazard problem this bill may have the unintended consequence of increasing the losses suffered in any future terrorist attacks. Therefore, passage of this bill is not in the long-term interests of the American people.

Mr. President, I ask unanimous consent that Mr. Reid from Nevada be added as a cosponsor of S. 467, the Terrorism Risk Insurance Extension Act of 2005, introduced by my friend, Senator Dodd of Connecticut.

Mr. President, we still live in America, and particularly in my city of New York, in the shadow of 9/11, of the terrorism that occurred. Obviously, the thousands of families who have had a loved one taken from their midst live with it every moment of their remaining lives, but the rest of us live with it, too, not only in empathy for them but also in terms of the economic consequences of terrorism.

The bottom line is very simple, and that is, because of terrorism, the insurance industry, in terms of insuring risk of large structures in America--whether it be large buildings that make us so proud of the Manhattan skyline, or large arenas such as the football stadiums that dot America, or larger facilities such as Disneyland, Disney World, and amusement parks--all have difficulty getting insurance.

Insurers are worried that if, God forbid, another terrorist act occurs it will be so devastating that it will put them out of business. So they either provide no insurance or provide it at such a high rate because of the downside risk. Small as it may be--and we hope it is--it is still possible that an act so enormous that if, God forbid, it occurs, they do not want to be involved.

So 2 years ago, the Senate, House, and the President got together at sort of the end of the day and passed terrorism risk insurance. It has been a large success. Insurance rates have come down, terrorism insurance is available, and insurance companies know if, God forbid, the worst happens there will be a backstop, and they are willing to issue policies. In turn, that means developers, builders who want to build new large structures in America, will do so, employing thousands and thousands of people, creating profits and new businesses as well.

We now come to the fact that this legislation expires--it was passed as an experiment; those who were dubious of it said, Let's see how it works--in December. But the urgency to act is much sooner than December because policies are not written for 6 months. If right now you are a business and you want to renew your insurance against risk for 1 year or 2 years or 3 years, that policy would go beyond December.

What the insurers say to many is, ``I will raise your rate dramatically'', which will raise costs and shut down construction, or ``I will not insure you at all'', which certainly shuts down construction. It means nothing will get built. So we should move this legislation quickly.

I stress we do not need to repeat last year by delaying and delaying. Last year, we began to witness, when we delayed a great deal, a loss in economic activity in the larger cities of this country in particular, even though we were well aware that ultimately this had to be done.

There are really only two alternatives. One is going to be no terrorism insurance. The private market will not fill the gap. That will prevent tens of billions in projects from going forward this summer and this fall, not next year but right now.

The second is that the market will fill the gap but only at such extraordinary prices and only in unique situations that the same thing would happen.

Why are we sitting in the Senate and in the House twiddling our thumbs? Our economy is squishy, oil prices are up, other economies outside of Asia are down, including Japan's actually, and, therefore, we are worried about the economy, and here we are putting another log on the tracks in the way of economic recovery.

There can be no dispute that terrorism insurance works, and there can be no dispute that if we do not renew it, there will be trouble. The ratings agencies have said in no uncertain terms that come December 31, if there is no terrorism insurance, they are not going to be able to give any kind of decent rating to any insurance offer.

These guys are insurers. They look for risk. They live with risk. They wake up in the morning thinking a risk, they go to sleep at night thinking a risk. We can say, oh, well, and have an ideological debate about how much should the Government be involved, or we can say, actually, people are not as worried about terrorism. It does not matter what you think, Mr. President, or what I think, it is what these insurers think. If the rating agencies say they are not going to give a decent rate to insurers, it is over, and we will not have it.

Moody's noted in an insurance brokers report that up to 75 percent of the policies written since January 1 have adopted a conditional endorsement that voids terrorism coverage if TRIA is not renewed. As we go through the year, the number of endorsements, they said, is expected to increase.

The report specifically stated these conditional endorsements appear to be an indication that unless terrorism insurance is renewed, premium spikes or a sharp reduction in the availability of coverage may result.

The report warns--this is very important--that Moody's is unaware of any viable private market initiative that would take the place of TRIA.

There are some who say: Let it expire and let's see what the market does. That is taking a huge risk because if the market does not come in, then we have hurt construction workers, laborers, and all those who would work in these buildings.

Alan Greenspan, the Chairman of the Federal Reserve, is a very well- respected voice around here, as he should be, in my opinion. He is a free-market guy. He does not like Government involvement. Right now, I am going toe to toe with him about Fannie Mae and Freddie Mac. He would like to curb their role because he does not like the Government involved. I think they are needed in the housing market. But on

terrorism insurance, even Alan Greenspan admits it is needed. Here is what he said:

This is a very difficult issue, because remember that the

private markets work exceptionally efficiently in a civilized

society in which domestic violence or violence coming from

abroad is not a central factor.

You cannot have a voluntary market system and the creation

of markets, especially insurance markets, in a society

subject to unanticipated violence. And as a consequence,

there are certain types of costs, which is what we have the

Defense Department protecting us from, which we essentially

choose to socialize.

The less of that we have, the better off society is.

Of course, this is his view, and he wants to make sure you know he does not want us to do this everywhere.

There are, nonetheless, regrettable instances in which

markets do not work, cannot work. And while I think you can

get some semblance of terrorism insurance, I have not been

persuaded that this market works terribly well.

It is pretty clear, we need to renew this legislation, and it is likely we will renew it. What is so incredible is we are waiting and waiting, and every day we wait causes damage to jobs and the economy.

The bottom line is that financial dislocation caused by another possible terrorist attack--God forbid--is too much for our country to risk. I urge the entire Senate to pass this legislation quickly. It is cosponsored by 25 of my colleagues, and we should move it without delay and let the markets, let the insurance world, and, most of all, let jobs and construction go forth.

I yield the floor, Mr. President, and suggest the absence of a quorum.