Christopher Dodd

Mr. DODD

Mr. DODD. Mr. President, we have had repeated letters from the President, Secretary O'Neill, and others in the administration which certainly point out the difficulty. I will quote the President's comments during the White House gathering back in April. He said: If people can't get terrorism insurance on a construction project, they are not going to build the project. If they are not going to build the project, then someone is not working. We in Washington must deal with it, and deal with it in a hurry. Secretary O'Neill commented: There is a real and immediate need for Congress to act on terrorism insurance legislation. The terrorist attacks on September 11th have caused many insurance companies to limit or drop terrorists risk coverage from their property and casualty coverage, a move that leaves the majority of American businesses extremely vulnerable. The dynamic, in turn, threatens America's jobs, and will wreak havoc on America's economy. Just this week, Secretary of Treasury O'Neill, Larry Lindsey, Director of the National Economic Council, Mitch Daniels, Director of the Office of Management and Budget, and R. Glenn Hubbard, Director of the Council of Economic Advisors, wrote Senate leadership outlining again the significance of moving forward with this bill. The labor unions as well have called for action here--a rare occurrence when you get this kind of symmetry between both labor and management. I quote from Ed Sullivan, president of the Building Construction Trades Department of the AFL-CIO. He says: President Bush, like all of us, realize that as long as terrorism is a threat, new job-creating projects are being delayed or canceled because we do not have adequate insurance coverage, or workman's compensation coverage available. The Union Building Trades: Our members join in urging the U.S. Senate to pass terrorism risk insurance legislation without delay. The National Association of Insurance Commissioners from across the country, which is made up of State insurance regulators, which continues to strongly urge the creation of a Federal backstop for terrorism insurance, has to its displeasure begun the process of excluding terrorism insurance from standard casualty property policies. On behalf of the national insurance regulators, I strongly urge the Senate to quickly pass legislation that will make insurance affordable and available to all American consumers and businesses. Only the Federal Government has sufficient resources at this time to help restore adequate levels of risk measurement and financial certainty to our markets. Finally, a broad coalition of small and large businesses and consumers of terrorism insurance have called for Senate action as well. There are some who believe there is no reason for the Federal Government to act. They cite a few press articles which suggest terrorism insurance is available in some areas and wonder why the Congress should step in with legislation such as we are proposing. Terrorism insurance is available, it is true, in limited areas. However, it is not available in many buildings, powerplants, shopping centers, and transportation systems that are perceived as high risk for terrorism acts--hence, the article this morning in the Washington Post about our Nation's Capital. In those cases where terrorism insurance is available, it is often unaffordable and very limited in its scope and amount of coverage. There are plenty of examples. Also, again, the Washington Post story this morning is the one that comes to mind immediately. I mentioned the National Geographic headquarters in town dropped its workman's compensation because it received threats to large concentrations of employees and joined with the District of Columbia government's insurer as a last resort. The Washington Post is trying with inability to secure its own workman's compensation insurance. Workplaces around the Nation's Capital have either been denied coverage or have offered reduced coverage. Why is this going on? When you have a $50 billion event, you can understand. If I could wave a magic wand and say, whether you like it or not, you have to be there, you have to have premiums--the law requires them to collect premiums so they can provide the kind of resources they need to pay out if an event occurs. The law requires it. The question is how do you know how big an event is going to be. We had a $50 billion one. That is at least a floor of what we know it costs. That is without including workman's compensation, life insurance and others. Just in property and casualty, that is the number. If you are going to have the industry be out and the private sector do this, they have to cost it out. I wish it could be for nothing. I wish it wouldn't cost anything at all. That is a mythical world. The reality is that banks don't lend money unless they can have some coverage to protect their exposure. If you are not going to give the coverage to protect the exposure, they don't lend the money. It is not complicated. If you look at the commercial mortgage-backed security business, which covers all but about $1 billion of all commercial lending that goes on, already in the first quarter it is down $7 billion--10 percent. You are already finding a stall going on in that area. Most of my colleagues understand that it is like residential mortgage-backed securities. Security in the commercial area is where they go out and bundle them together and have a secondary market to cover it. Right now, 10 percent in the first quarter is already down in that area. I am not making the numbers up to highlight the significance of what we are talking about. George Washington University's downtown campus three blocks west of the White House has cut the school's former $1 billion property and casualty policy in half, and its premiums have been raised 160 percent, and advise that renewing terrorism coverage would cost 15 times more. That is what we are up against here. I can rail against it. Obviously, there is no great wisdom here to attack the insurance industry. That is a pretty safe bet out there politically. But the fact is, when you end up with institutions like George Washington University, the National Geographic, private sector people here in the Nation's Capital, it would be difficult to say we are going to go out and cover this after we had a $50 billion loss, to just jump back in somehow; and for people to say, by the way, don't raise your premiums to do it, and you better have the resources to pay for it. I do not know where people acquired their math knowledge, but this does not work out, unfortunately. So what we are trying to do is get this industry back in because we cannot require them to do it. So we have come up with a backstop idea that says: Look, the first $10 billion of losses you are on the hook for. When it gets beyond that, we are going to work out a system that allows us to help in that kind of cost, for 2 years, by the way, with a sunset provision. Some would like it longer. I think we could make a good case for it being longer because it is awfully difficult, with some major real estate development going on that has more than a 2-year lifespan. But I am not sure how much this institution will tolerate in terms of time, so it has to be abbreviated to some extent. Then, hopefully, as the market develops, the costing out can be calculated, and we can get the Federal Government out of this altogether. I know of no one who wants to turn the Secretary of the Treasury into an insurance regulator. I am afraid that is what some of my colleagues are suggesting. That is not what this is about. That is a separate debate. Maybe someday we are going to have a debate around here that says the Federal Government ought to become an insurance company. That is a debate, but I don't think that is the debate we want to have here today. The debate here today is whether or not we are going to set up a program that is going to cause the flow of commerce to get reignited in areas where we have a significant stall. Let me stay to my colleagues--and my colleague from Florida raises the issue--our bill does require that there be an accounting here separating out the premiums collected for terrorism insurance from the normal course of business. We do not go as far as my colleague from Florida would like, but in our bill that we have proposed there is an accounting requirement that says you must at least have a separate accounting for the premiums collected for terrorism insurance. So there is a long list here of projects that I could talk about that go all across the country that highlight everything from the Golden Gate Bridge to the Dolphin Stadium in Florida that are having problems--the United Jewish Appeal, the Hyatt Corporation, the Steve Wynn's operation in Las Vegas our colleague from Nevada has already talked about, Amtrak, the Cleveland Municipal School District, Baylor University. The list goes on and on and on. Again, we are not making these stories up. This is the evidence we are receiving from across the country, that there is a problem, and it is a growing one. We probably should have acted earlier, but I don't think it is too late for us to be moving forward. So that is the background of it. Every perspective homeowner, of course, needs insurance to obtain a mortgage from a bank. Similarly, industry as diverse as commercial real estate, shipping, construction, manufacturing, and retailers require insurance to obtain credit loans and investments necessary for their business operations. Additionally, the creation of new construction projects require business loans. I think most people understand that. If you ever bought a home, you know you don't get the mortgage unless you have insurance. That is what the law requires. That is just as true in the commercial areas. So if there isn't insurance available, the banks are not going to lend you money to buy a house. Maybe some people can buy a house by just writing out a check. Most Americans need a mortgage. And most Americans understand that the banks want to have some insurance on that property to cover their potential loss. So that is why you have to be able to get that. That is true in commercial areas as well. If you can't get the insurance, then the banks don't lend you the money to build the projects, and people lose jobs. Those are the dots you connect, and that is what is going on all across the country as one of the effects of 9-11. It is a more complicated subject matter, but it is a serious one that the President, the Secretary of the Treasury, organized labor, and others have highlighted. Some critics will argue, Why should we do anything to help the insurance industry? Quickly, let me add, this is not about the financial health of the insurance industry at all. It is about the financial well-being of nearly every individual and company in America that requires this industry to be healthy enough to be in business. If you end up being put out of business because you don't have the resources, your solvency gets wiped out, as it would be today with a 9- 11-like event. As I mentioned earlier, there are only about 20 percent of the resources to cover a similar kind of event that occurred 9 months ago on the 11th of September. So this is not so much about their health and well-being as it is those who rely on this industry for their own health and well-being. As I said, the industry is paying off losses from the September 11 attacks estimated to be roughly $50 billion. The industry has made clear that despite this unprecedented loss, it remains very strong and solvent. The question that many will ask is why we need to help an industry that is financially sound? And I think I have laid that out. The answer is we are not protecting insurance companies, we are protecting policy owners and businesses and workers. This legislation makes sense because it is based on three principles that must be included in any bill that reaches the President's desk. First, it makes the American taxpayer the insurer of last resort. We could do what we did in World War II. In World War II, the Federal Government insured everything. We just paid all the claims. I don't need to tell you what could happen if that happened today. But that is a point of view: Just let the Federal Government pick up the claims of this stuff, and don't worry about having a private sector insurance industry being involved at all. But I don't think most Americans think that is a wise solution necessarily given the potential exposure we have. So I think it makes sense to have the industry be the ones that are going to be on the front lines responsible to do what is best, to calculate the risk, to assess premiums, to pay claims. I don't necessarily believe we want to set up another agency of Government, maybe under homeland security. Now that we are reorganizing Government, maybe someone would like to add a branch to become an insurance company. I don't think so. Secondly, the legislation should promote competition in the current insurance marketplace. Competition is the best way to ensure that the private marketplace assumes the entire responsibility for insuring against the risk of terrorism without any direct Government role as soon as possible. That is why this bill has the very short lifespan we are talking about. This is not setting up something in perpetuity. It is setting up a very short lifespan. Right now it is 24 months in the bill. And I think there will be suggestions to extend that, which may have some merit, by the way, I suggest, to those who may be offering them. But it is going to be limited, in any case. Thirdly, the legislation ensures that all consumers and businesses can continue to purchase affordable coverage for terrorist acts. Without action, consumers would be unable to get insurance, or insurance that is available would be totally unaffordable for them. Very simply, and lastly, I will just explain briefly--Senator Sarbanes has done this already--but let me just take another minute or so for those who may not have heard his comments to briefly describe how S. 2600 actually works. It will provide Federal terrorism insurance in the event of another significant terrorist attack. This legislation is designed to maximize private sector involvement and minimize the Federal role. The bill does not create a new Federal insurance regulator; rather, it promotes the authority of existing private sector mechanisms. The Federal backstop is temporary, lasting only 1 year unless extended for an additional year by the Secretary of the Treasury. The bill envisions that the private sector alone would respond to small-scale attacks, such as car bombs, arson fires, and the like. The Government intervention only occurs in insured losses in excess of a specific trigger. The amount each insurance company must pay before the Federal participation begins is determined by a statutory formula based on each company's market share. Larger companies pay more through the resulting individual company retentions. Individual company retentions are calculated based on each company's market share of $10 billion in the first year, and $15 billion in the second year if the program is extended, meaning that large companies would sustain hundreds of millions of dollars in losses before the backstop is triggered. In addition, once the backstop is triggered, each insurance company remains responsible for 10 to 20 percent of every claim dollar paid. Lastly, I would say as well, regarding the States, we require that these actions be brought in Federal court, that there be a venue that is closer to where the action may have occurred. But let me quickly point out, we have tried very strongly to retain the role of the State insurance commissions. There are 40 States right now that allow for rates to go into effect, and then the State commissioners can determine whether or not those rates are excessive or not. And 10 States require that rates be approved before they go into effect. That is in commercial property. In this bill, we say the rates could go into effect, but we do not deny, as exists in 40 States, the State insurance commissioners to then rule on those rate increases. So we are not setting a Federal regulator in that regard. We are still keeping that in the States, and the State insurance commissioners do not lose that power. The State insurance commissioners have the responsibility, obviously, to keep an eye on the rates, but they also have an obligation to see that the insurers are solvent so they can pay claims, if, God forbid, some event occurs. So the responsibility is dual, both to the insurer to make sure they have the assets and, of course, to the policyholder to make sure their rates are not too high and coverage will be there, if needed. We make it very clear in this bill that we want to keep the role of the State insurance commissioner viable. We don't want to get in the business of setting up some massive new government program with a new regulator with a whole bunch of new rules established at the Federal level to start regulating this industry. That is a debate that will occur to some degree down the road, but today is not the day. This is not the place or time for that debate. This is an emergency. It should have been dealt with a long time ago. My hope is that my colleagues will offer their amendments, we will get through this, and vote it up or down. Maybe our colleagues will decide this bill is not necessary; they don't want to be a part of it. Then we ought to say so. Then end the debate entirely and go about our business. I suspect that a majority of our colleagues think this has value and is important. My hope is we can get it done sooner rather than later. I turn to my colleague from Kentucky who, I know, has a very important amendment. We will try to deal with that and move the process along.

Mr. DODD. Mr. President, they lay out their concerns about what is going on in their own States. We have letters from 30 of our Senate colleagues representing a broad array of the political spectrum. I ask unanimous consent that those letters be printed in the Record.

Mr. DODD. I thank the leadership for their efforts on this bill. This is a complicated area of law. This is a thankless task. When you get involved in something such as terrorism insurance, there are other matters that may attract and galvanize the attention of the American public, but this is a subject matter that can glaze over the eyes of even the most determined listener, when you get into the arcane world of insurance, particularly of terrorism insurance, the reinsurance industry dealing with commercial loans and lending practices, and how it affects the market at large. I beg the indulgence of our colleagues when we go through this, to understand what we have tried to do here in as much a bipartisan fashion as possible, with the advice and consultation of organizations, from the AFL/CIO to major banks and lending institutions, insurance companies, the Department of the Treasury, and others in crafting something that will get us out of this particular situation. Let me just preface my remarks by saying this is a problem. I know there may be some who will argue this is not an issue. It is a massive issue and a growing one. I wish it were otherwise. I wish this were not the case. But the data that is coming in indicates that we have a major blockage, if you will, in the normal flow of commerce, and that is the inability to acquire terrorism insurance, which has a very negative impact when it comes to lending institutions putting their resources on the table, where the exposure could be significant. Just to put it in some perspective for people, the calculation of the casualty and property loss--I am obviously not going to talk about the loss that goes beyond that we can put a dollar sign on. But for the loss to which you can put a dollar sign in the property and casualty area on September 11, the estimates run no less than $50 billion, just in property and casualty. If you start adding others, obviously the numbers go up. To give you some idea, if you had a September 11-like event somewhere in the United States and an accumulation of events like September 11, the availability of resources today to pay the property and casualty losses is about 20 percent of that number. That is the situation we are in. You can understand, while people may wish that it somehow were done by just the Federal Government writing a check and the people providing this kind of coverage, that in a free market you have to encourage or induce people to stay involved. There is no requirement under law that they provide this kind of coverage. The idea of how we can keep commerce moving, and major construction programs underway--by the way, based on the accumulated evidence we have, most every State can demonstrate some serious problem they have in a major commercial or real estate development. This morning's newspaper headlines in the Washington Post that my colleague from Florida has raised, I think, point out the problem we are facing. I will talk about properties in the District of Columbia. Obviously, the attack on the Pentagon on September 11, and the news the other day about so-called ``dirty'' bombs that might have been used-- and I gather this was somewhat shaky information, but put that aside for a second--the Nation's Capital certainly is a target of opportunity. We see rates already going up for properties located in the District of Columbia. That is the subject matter of the Washington Post article this morning. In fact, the Washington Post itself is having a difficult time getting coverage for workman's compensation, and the National Geographic building has a similar problem, and there are similar problems around the city. I will not go into all of the details in the article, suffice it to say that this is a significant story and my colleagues ought to take a look at it. It highlights some of the difficulties we are facing. This is not a perfect piece of legislation. Obviously, many of us might have written this somewhat differently than proposed. But, obviously, in a body like this with 100 Members, with a lot of different ideas and thoughts, you try to come together with what you can to make some sense and move the product forward. There are differences of opinion on the substance of this legislation. We are going to hear some of them raised with the amendments that will be brought up and debated. My hope is that the substance of this legislation will prevail. The provisions that deal with the creation of a temporary Federal backstop for terrorism insurance represent a very hardcore compromise negotiated with Senator Gramm of Texas, Senator Sarbanes, Senator Schumer, myself, Senator Enzi, as well as the State insurance regulators, White House, and the Treasury Department. This is a modified version of what we agreed to last fall. Senator Gramm is not a sponsor of the bill which I introduced for the reason I am sure he will explain himself when he comes to the floor. There is a lot in this bill that is very similar to what we worked out last fall, but it would not move along at that time for reasons I will not bother to go into again. Who is supporting what we are trying to do? I am troubled by our delay in enacting this legislation because of the tremendous demand that we act and act precipitously. There is a bipartisan letter from 18 Governors from across the country representing every region of the country, which I ask unanimous consent to be printed in the Record.

Mr. DODD. I am happy to yield.

Mr. DODD. I see my friend from Kentucky. I will take a few minutes to make an opening statement. I see he is here. I do not want to delay him any longer. I will truncate my remarks and then my anticipation is we will turn to the Senator from Kentucky to offer an amendment to get the process going. Let me take a few minutes, if I may. We have now heard from a number of my colleagues. I appreciate the comments of my colleagues, particularly those of Senators Sarbanes, Corzine, and Schumer. I ask unanimous consent the junior Senator from New York, Mrs. Clinton, be added as a cosponsor of this bill as well.

Mr. DODD. That is fine.

Mr. DODD. Let me say to my colleague from New Jersey, I thank him for cosponsoring the bill. He has been an invaluable asset in putting this proposal together. Senator Corzine is a new Member of this body but, as all of us in this Chamber know, and his constituents know, he spent a very distinguished career in the area of finance and was the leader of one of our great leading investment banks in the world and brings a wealth of experience and knowledge into any subject matter but particularly ones involving a subject matter as complicated as the issue of this bill, terrorism insurance. So I wanted to express publicly to him my sincere sense of gratitude for his tireless efforts, going back many months now, in dealing with this issue. He has very valuable suggestions and input that has contributed to this product. We would not have put together, I think, as good a bill as I think we have without his input and his involvement. So I wanted to express my gratitude to him and I look forward to working with him.

Mr. DODD. I am always glad to do it. I will be happy to hear the questions. I do not know how well I can respond to them. I suggest the absence of a quorum.

Mr. DODD. That is fine.

Mr. DODD. I must say to my colleague, I am going to be heard on the bill itself after he gets finished. Then I presume someone may show up on the other side. We have not heard from anybody on the other side. We have been dominating the debate, so I caution my colleague that he may find himself waiting a little bit.

Mr. DODD. Fine. Any Senator can speak for as long as they want. There are no limits under this bill. If the Senator wants to talk, go ahead and talk. I am trying to move the process along. I know the Senator has an amendment he wants to offer on the subject matter itself, so I will be glad to yield to him a few more minutes now if he would like to finish up rather than break the flow of his remarks. I am trying to see to it that we do not delay the process any longer than we have to, so we can get to amendments and vote on them and then go on to other business.

Mr. DODD. We do not want you to stop. We do not want you on too long a roll. We want a 10-minute roll.

Mr. DODD. Why don't I say 10 minutes? The Senator from New Jersey wants to be heard. I need to be heard. We have other Members who want to be heard. This will keep the process moving. If the Senator gets to 10 minutes and there is something that has to be said, I will add a few more minutes.

Mr. DODD. Mr. President, I thank the Senator from New York. How much time does the Senator from Florida request for general comment on the bill?

Mr. DODD. Mr. President, I thank my colleague from Maryland very much. As I said a few moments ago, but for his involvement as chairman of the Banking Committee, we would not have been able to produce this product. He is an original sponsor, along with Senator Schumer and Senator Corzine, of S. 2600. I would like to do this. Bill Nelson, my colleague from Florida, wants to be heard on the bill. Senator Schumer is here as well. I gather some others are ready to come over to offer the lead amendment. That will be the manner in which we will probably proceed. I know Senator Schumer has an ongoing Judiciary Committee meeting. I want to accommodate Members. I will yield to my colleague from New York, with the indulgence of my colleague from Florida, to allow him to make opening comments, and then I will turn to Senator Nelson. I will make comments myself later so other Members can go back to the hearings, and then we will deal with the amendment process.

Mr. DODD. It is a formula, a debate. Senator Gramm may offer an amendment on how you prefer to do it. On most cases, you have a consolidation. You do not have one insurance company covering one building. Let me finish. You asked a question and I will respond. Under the bill, you cannot have all of a sudden some fictitious insurance company getting set up. It is only the companies in existence as of September 11. The rate structures have to be what they were at the time. You cannot have someone taking advantage of this bill to create the phony entities allowing them to take advantage of the situation. In the State of Florida, talking about something such as Disney World, start talking about the stadiums in Miami, for instance, there is not one insurer that covers those events. There is usually a collection that do. The idea of maintaining solvency which laws require in each State--you could have a smaller company, obviously as part of that. If you get levels where their percentage of the overall amounts are exceeded and the solvency of the company goes under, we have defeated the purpose of the legislation. There is that distinction between industry-wide and company caps. That is why we drew that distinction.

Mr. DODD. That is R-O-L-L, not R-O-L-E. I yield 10 minutes to the Senator from Florida.

Mr. DODD. Mr. President, I want to shortly yield to my colleague, the chairman of the Banking Committee, for an opening statement he may wish to make on this bill. Mr. President, just for the order of business, we will probably take a few minutes with some opening statements this morning on the bill, although I think over the months there has been a lot of knowledge about what is involved. I know the Presiding Officer has an amendment and is interested in the subject matter. I think Senator Kyl may have an amendment he wants to offer fairly soon. Senator Gramm from Texas, obviously, is very familiar with the bill. My hope is that colleagues who have amendments would, first of all, let us know what their amendments are. That would be helpful. I do know what many of them are already. There may be others. So I would ask staffs of Members of both parties if they would get to the ranking member or the manager of the bill the amendments from both sides so everyone has an idea what we are looking at over today and possibly tomorrow and/or however long it takes to get this done. My hope is they would be relevant amendments, that we would stick with the subject matter at hand rather than using this vehicle to bring up extraneous matters. With that said, let me turn to the chairman of the full committee. I thank him. I will make a longer statement in a few minutes myself. But I certainly thank the majority leader, Senator Daschle. I want to thank the minority leader. Senator Gramm has been deeply involved. Certainly the chairman of the committee, Senator Sarbanes, has been involved in this issue from the very beginning. Going back to last fall, when we tried to sort this out, he made a Herculean effort to bring it together. When we do these things, it becomes difficult because we get 97 other people, as I mentioned yesterday, who all have something they want to add to the discussion and debate. As a result of that, a good effort did not work out as well as we wanted initially, but I think a better effort may prevail as a result of more people being involved. So while we have lost some time, I think the product we are putting before the Senate today is actually a stronger proposal. With that, I will turn to my colleague from Maryland.

Mr. DODD. I defer in some ways because my distinguished friend and colleague from Florida served as an insurance commissioner for the State of Florida. We asked the National Association of Insurance Commissioners to respond to the proposal. All I can tell you is that in this letter from the NAIC, the last line of their letter to me says: At this time-- Again, they are working on the issue. My colleague has conceded that point-- the State regulators already have the ability to address this issue, making additional Federal oversight unnecessary. I don't know what else you do. I do not always agree with them on every point. But it seems to me if the State insurance commissioners are satisfied that they are in a strong enough position to deal with this, whether or not they do in each State, I don't know what else you do. I know my colleague knows there may be some who are less strong than others on this point. But the choice is either relying on the existing structure to set rates or set up a new operation of the Department of the Treasury, for maybe 12 months--and we all know how long that could take--even if you wanted to defer to the Department of the Treasury. We could spend months with them putting together an apparatus to do so. Again, if the intention here is perfection, I am not the guy. This is not the right bill. If you are asking those of us who sat down to try to work and fashion something that we think would be the right step forward, then I think we have done it here. If we have not, we are going to have to come back to this issue. All I can say to my colleagues in good faith is we think we have done the right job. It is not all inclusive. We don't deal with workers' compensation in this bill. That is a huge issue. My colleague from Nebraska, the other Senator Nelson, has an amendment requiring some studies on life and other issues we do not cover in this bill that, frankly, are major gaps. But we just did not believe we could take on all of that under these circumstances. We tried to keep as focused as we could, knowing that the cost was, on September 11, a minimum of $50 billion. We know today that reserves could only accommodate about 20 percent of that event. That is a fact. And we know there are projects and jobs being lost every day in the absence of some kind of a backup, which is what we tried to craft. I hope my colleagues will understand we have put together what we think is the best proposal. We urge them to be supportive of it. I have great respect for my colleague from Florida and his passionate concern. He rightly points out the sense of people's anger, frustration, and anxiety over rate increases that go on all the time. It is terribly frustrating. Certainly for people in Washington, DC, already we know the costs are going up. I wish I could wave a magic wand and make it go away. I think the best we can do, as I said, is to pass this bill, and then the justification for those cost increases, at least of the magnitude we may be seeing, is certainly going to be minimized by providing some backup to this issue. For those reasons, I urge the rejection of this amendment at the time the vote occurs. I see my colleagues from Nebraska and New Jersey. I do not know if they have any comments they want to make on this bill. If not, I can note the absence of a quorum. But if they want to be heard, I will be happy to yield the floor.

Mr. DODD. Madam President, I move to reconsider the vote.

Mr. DODD

Mr. DODD. I agree with that. Obviously, it helps the work of the Senate if we can complete it this evening, but tomorrow morning would make more sense. We still have a lot of work to do in conference to get this done. I know the administration is interested, as well as the Secretary of the Treasury, the President, and many others. My colleague from Nevada mentioned the various business groups that are interested. I should also note that the building trades, the AFL-CIO, have sent a strong letter in support of this legislation. It is one of those rare occasions when groups that sometimes are antagonistic to each other on a legislative effort have come together and have, for months now, asked that we respond to this. So we are hopeful to get this done. Again, I will stay here as late as anyone wants. I will make time tomorrow. I will make time next week. We are going to get the bill done one way or the other. It serves everyone's interest to try to complete this work sooner rather than later. I merely wanted to make those points to our colleagues who are wondering what the schedule will be. Obviously, the leadership will make up its own mind about how to proceed, but it certainly would be in our interest--we have been here a couple of hours with really no amendments. I know there are some. If people have them, come over and offer them. We will happily consider them. I do not include in that group the Presiding Officer, who offered a very strong amendment, who is now working with us and is working on another amendment trying to work things out, but it is relevant to the subject matter of the bill. I hope those who have amendments will offer them, withdraw them, or offer some alternative we can consider as we go into the conference, if the bill is passed. I suggest the absence of a quorum.

Mr. DODD

Mr. DODD. Mr. President, I thank the distinguished majority whip, Senator Reid, for propounding the unanimous consent request. I thank the distinguished Republican leader for agreeing to allow this to go forward, and my colleague from Texas, and colleague from Kentucky, who have had a longstanding interest in the subject matter, as many Members have, including the Presiding Officer. And other Members have come to me over time with various ideas and proposals to be included as part of the terrorism insurance package. Let me say my good friend from Mississippi, the Republican leader, raised the issue about where we were. He is right. There was a time not so long ago--about 8 or 9 months ago--when we sat down and innocently thought that three or four Members sitting together could write something and then come to the floor, and people would say, You have done a lot of work, go ahead. As oftentimes happens, it is not unique. We thought we had put something together. We came to the floor and discovered that there were 97 other Members who had some ideas--not all 97 but a good many had other thoughts about which they felt strongly. I don't regret the effort that my colleague from Texas and I made with Senator Sarbanes of Maryland. Senator Schumer was involved I think to some degree in all of that, and others as well. We made a good faith effort. We thought it would work. It didn't. December 20, I think, was the date when there was a unanimous consent request to bring the matter up. There was an objection expressed at that time. From then on, we have tried all sorts of ideas and variations that would get us to a unanimous consent where we would have a limited number of amendments to be brought up to try to focus on this bill. None of that worked. We are now in a situation where we had a rule XIV on the bill on June 7, and this evening we avoided a cloture motion, for which I am grateful. That would have delayed consideration of this bill. I am not going to debate the merits or demerits of the bill tonight. I see my colleague from Maryland, the chairman of the committee, is here. He may want to be heard on this as well. But this is an important bill. It isn't because I think it is. It is important because you hear from almost every major metropolitan area in the country now that is feeling the real pinch of a slowdown as a result of the inability and an unwillingness, for obvious reasons, of banks to lend money to major real estate and construction projects without those projects having insurance on terrorism. In the absence of getting that, which the industry is unwilling to write because they cannot figure out how to cost all of this--that is understandable as well from the business standpoint--a lot of these projects are not moving. Jobs are being lost, and the economy is feeling the effects of it. That is a shorthand version of what is going on. It hasn't reached such proportion yet that it would stop any kind of economic growth. But it certainly, by every estimation, is having a negative impact on our economic recovery. Now we have put together the proposal. I know there will be amendments offered. My hope is they will be relevant amendments so they don't use this vehicle to bring up all sorts of extraneous matters. We will try to limit the debate to some degree on the bill we are proposing and the one which I suspect will finally be adopted. Even if some amendments are accepted, it will be substantially different from what the other body proposed. Even if we complete our work here, there is a monumental amount of work to be done to reach agreement with the other body. If we hope to get that completed at some point between now and over the August break--I hope earlier--we are going to have to finish this bill fairly quickly. I urge Members who have an interest to come over and be heard. If you can limit your time so we can have a good debate--I hope no one intends to filibuster on this bill. That would certainly be unwise, in my view. We will try to produce a product that will get us to conference and further refinement, and resolve the issues so we can send it to the President of the United States for his signature; and, sort of cut this Gordian knot that sits out there as a real choke point, if you will, in the economic flow of our country. That is what this is at this point. I thank again my colleagues for not objecting to the unanimous consent request that we go to this bill. That is a good sign. I know there is still a lot of difference. But I take that as an omen that we at least can bring up this matter and try to resolve these differences. I look forward to the debate tomorrow. I believe we will be here at 10 o'clock tomorrow to start debate on bill, and make opening statements, if they need to be made, and then engage in, hopefully, a healthy but brief debate and discussion on this important matter. I see my colleague from Maryland here who may want to express some thoughts.

Mr. DODD

Mr. DODD. Mr. President, I rise in opposition to the Gramm amendment, total repeal of the estate tax. Just yesterday, the Senate responded to the President's request to increase the debt ceiling by $450 billion dollars. We are no longer retiring debt and reducing our indebtedness, we are increasing it. The surplus is gone. The President's own budget advisors project deficits for the foreseeable future. And yet, the President is calling on the Congress to permanently repeal a particular tax. The cost of repealing the estate tax is not inconsiderable. The cost is $99 billion over the next 10 years. In the decade after, the repeal would cost $740 billion. How are we going to pay for this? How is this massive new cost going to be paid for? Are we going to run deeper deficits? Are we going to take it out of the Social Security trust fund? And if so is it wise to drain this fund at the precise time that the baby boom generation is expected to reach retirement age? There is a war in case anyone has not noticed. It is going to cost money to wage it. And yet we are told that we must repeal the estate tax for the good of the country. Every day we are getting reports that there will be cut backs on essential services. In places like DC, South Dakota, and many other States children's school days have been shortened. Summer school classes are being cancelled and after school programs are being cancelled. And yet there are those that think that the most important thing we can do as a country, an absolute priority that should prevail over all other priorities, is permanently repealing a tax that is payed by billionaires and multimillionaires. At a time when we are tying to combat terrorism and we are struggling to educate our children and provide senior citizens with security in their retirement, when we are trying to maintain budget discipline that is so vitally important to our countries long term economic growth. People want to give, they do not want to take from their country at a time like this. Rarely do Members of the Senate find themselves so short of anything to say. I find myself dumbfound by this suggestion that we totally repeal the estate tax. At other times I might have understood the motivation. Just a year ago, we were talking about close to $6 trillion in surplus over the next 10 years, and if this proposal were brought before the Senate I might have disagreed or objected to it, but perhaps a case could be made with $6 trillion of surplus, the days of a national debt behind us, annual deficits no longer a debate, no longer an issue. With $6 trillion of accumulated surplus, there might be room within that surplus for $740 billion of tax expenditures. In light of everything that has occurred in the last year, I am truly dumbfounded that we would suggest today that this would even be a close vote. That we would be talking about removing from the wealth of our Nation over the next 20 years close to $800 billion to satisfy a tiny fraction--I mean a tiny fraction--of the American public in light of everything else that has occurred, is truly dumbfounding. My State, the State that Senator Lieberman and I represent, is often referred to as one of the most affluent States in America on a per capita income basis. One might think in this particular case that I was probably the recipient of a large volume of mail or e-mails, conversations, asking me to vote for the total repeal of an estate tax. In light of the fact that the people who will benefit the most, the largest number of people as a percentage of the people, would come from the State I represent--I represent 3.5 million people in the State of Connecticut. Out of 3.5 million people whom I represent in the State of Connecticut, 980 people would actually have gross estates that would subject them to the estate tax as it is presently written. My colleagues are certainly aware, I hope the American public is, that we have essentially reformed the estate tax in this country to the point that it only now touches a very tiny percentage of the American public. So here in one of the most affluent States in the United States on a per capita basis--the State I represent--with a population of 3.5 million people--there are only 980 estates that have gross incomes that would subject them to this tax. When you factor in the exemptions--for spouses, who do not pay estate tax, for family-owned farms and businesses--the number in Connecticut comes down to 73--73. You start out with 980, but if you take in the exemptions that we have written in we are talking about 73 estates, in the wealthiest State in the Union. And the pricetag, over 20 years, is almost $800 billion. Maybe people find the word ``dumbfounding'' to be a little harsh, but I do not know what other word you could use than that one, when you consider how much wealth they are going to remove when we need so much. Here we are, a year after the accumulation of great surpluses, already talking about a deficit this year in the neighborhood of $100 to $120 billion, maybe more before we are done. Right now no one argues with those numbers. That is this year. The President has already announced there will be deficits in every year of his Presidency over the next 3. In fact, many suggest that deficits will now continue for at least 10 years. So here we are back where we were at the beginning of the 1990s, building up that national debt with annual deficits. In the midst of all of that, 9-11, where we must now respond, as has been said so often by every Member of this Chamber, by the President and others, the world has changed for us fundamentally. It will never be the same again because of what happened on that date. We are taking steps now, investing resources to make our country stronger, to see to it that we have better protections here at home and abroad. It is an expensive undertaking to do so. In the midst of this expensive undertaking--while simultaneously we also want to invest in the educational needs of our Nation, provide for prescription drug benefits, do what we can to make sure Social Security and Medicare will be there when people need them, invest in the transportation infrastructure which is critically important, a farm bill which we were told was absolutely essential, you go down the list of the things we know we need to invest in to make this country strong and viable--along comes a proposal that will take 3,500 estates in this country and allow them to get a tax break at the expense of everyone else in America. And the cost is roughly $99 billion in the first 10 years or so, and after that, according to the estimates I have seen, $740 billion. Add the two and the price tag is in the $800 billion range. I find it interesting that moments ago we had an opportunity to pass an amendment that would have provided relief to small family farms and businesses for a price tag that is substantially less than a full repeal, and yet many of the Senators who argue that they would like to provide estate tax relief to families and businesses voted no on the amendment. I do not know how we can go home to our constituencies at a time like this, when we are worried about whether or not we are going to have an intelligence agency, a domestic policing operation, and a reorganization of Government. We are debating in these very hours how we are going to do that, knowing full well it will cost us dearly to do that right--seeing that we have defense structures, seeing that first responders have what they need, God forbid we have another tragedy like we did on September 11. And in the face of all that, I have to explain why it is we are going to provide a total repeal of a proposal--offered by Teddy Roosevelt, by the way. This was not an idea that came out of Franklin Roosevelt, it came out of his cousin, Theodore Roosevelt, the great Republican Progressive President, who argued an estate tax was not only a viable and intelligent revenue source but also had some social benefits. I don't think it ought to go without mention that some of the wealthiest people in this country are arguing strongly against the Gramm amendment, strongly against the total repeal. People such as Warren Buffett, one of the brightest financial minds in this country, argued strongly against this. John Kluge, who built one of the great fortunes in this country, who was a wonderful genius, argued against this particular proposal. You go down the list. The Gates family argued against this proposal. I have received five letters--five, out of 3.5 million people in my state, some of the most affluent constituents who are represented in this body at all--saying we ought to totally repeal the estate tax. Even the wealthiest people in this country, who would be the beneficiaries of this, are asking us not to do this. This is fiscally unwise. It is going to cost us dearly. I was elected to this body 21 years ago. I remember what it was like in the early 1980s. I remember what David Stockman said after he left office. David Stockman, for those who have forgotten who he was, was the Director of the Office of Management and Budget under Ronald Reagan. He argued for significant tax cuts in the early 1980s. They passed, of course. We all know what economic havoc was caused during the 1980s when we had mounting deficits and a national debt that almost quadrupled in the space of 10 years. David Stockman, to his credit, wrote a book called ``The Triumph Of Politics.'' I don't have it with me today, but I urge the younger generation to read it. Remember the admonition, if you want to avoid repeating mistakes, read a little bit about previous mistakes, study history. David Stockman recites chapter and verse about the mistakes made with a proposal we couldn't afford. Pat Moynihan, then-chairman of the Finance Committee, argued for years that what was done was basically to manufacture a deficit. I suspect this is more about doing that than it is about providing tax relief; more about manufacturing a deficit, regardless of the consequences of that. Then, when people pay higher interest rates on their home mortgage rates, student loan rates, car payment rates, and everything else you can think of where an interest rate is involved, then that is considered irrelevant. If we can build up enough of a deficit, then we will not be able to invest in education, in health care. Forget about arguing whether or not we ought to do it, we will not be able to afford to do it. I suspect that may be the motivation here and not providing a tax break for 980 of my constituents under the best of circumstances. I am told there are actually 73 estates, when you get through with all the exemptions, 73 estates that would actually be affected by this proposal. I join with those who urge our colleagues today that, if we are reorganizing our Government differently to respond to what has happened here in the last year, if we have seen our surplus evaporate because of events that have occurred, investments we have had to make, if we must think differently about everything else we are doing, should we not pause and think differently about this? We should take steps to protect the family farms and small businesses from an estate tax that overreached, but just a few moments ago an amendment that would have done that was defeated. But what we are talking about now are just a handful of estates that would be asked to make contributions to our estate tax revenues. I urge Members to pause and think carefully here before committing our country to this kind of financial obligation, which we will spend years trying to recover from, in my view. In the 1990s, of course, when we came up with a balanced budget proposal, there were those who predicted dire consequences. We saw a nation eliminate the national debt, eliminate the deficits. A lot of people can claim responsibility for participating in that result: certainly the private sector, the technology sector particularly; certainly Alan Greenspan, the Federal Reserve Chairman who managed the Federal Reserve Bank with such brilliance; certainly President Clinton for being the Chief Executive Officer of the country and promoting a balanced budget approach that carried the thinnest of margins in both this Chamber and the other. Nonetheless, we found ourselves with a financial footing that people only dreamed about a decade earlier. What a great gift was given to this new administration. In fact, the President himself talked about it when he gave his State of the Union Message. In his first State of the Union Message, he spoke about why we are going to be doing the things we can do, it was because we had accumulated a sufficient surplus in this country. What a wonderful legacy it was going to be to invest in the things we needed to do. Now, because the recession lasted longer, because of 9-11, obviously, because of an unwise tax cut last year that went into place, we now find ourselves in a situation where we are going to have deficits every year of this administration's duration, and we are going to compound that by taking $840 billion off the table over the next 20 years at a time when we could be investing that money to make this a stronger and better country--just to take care of a small handful of people. What I would like to know is why are we not here talking about a tax cut that would say to working families, if you are sending your kid to college you ought to get some breaks on doing that, to make it easier for you to invest in your son's or daughter's educational future? Why aren't we talking about some relief there? Why aren't we talking about some relief from the FICA taxes for people? Here we are down here spending 6 hours debating whether or not 3,500 estates nationally, are going to get total repeal of an estate tax. I think it is unwise. I don't think it is warranted at all. I will end where I started. I am dumbfounded that this Chamber would even consider this proposal in light of the challenges, the risk, and the dangers we face as a nation--that we would make this kind of a judgment at a time when we are going to need all the resources we can provide for the well-being of our own people.

Mr. DODD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. DODD. I suggest the absence of a quorum.