The threat of a terrorist attack is more than a threat against buildings or individuals. It is a threat to our way of life. Helping to protect that way of life is a federal program to insure against such threats, known as the Terrorism Risk Insurance Act or TRIA.
Born out of bipartisan collaboration after the 9/11 attacks, TRIA ensures businesses can keep investing, creating jobs and spurring economic growth without being bankrupted by the costs of a terrorist event.
But as we approach the sunset of the program in Congress, the far right wing of the Republican Party is threatening to let it expire or make dramatic changes that will endanger its future and render the program unworkable.
The results would be disastrous for our state, our communities and our nation.
Take the Los Angeles International Airport, which in 2011 generated 294,400 jobs in Los Angeles County alone. In addition, LAX’s capital and visitor spending spurred more than $39.7 billion in economic output and $2.5 billion local and state tax revenue. As the member of Congress representing LAX, I am keenly aware of the threats faced by the airport. In fact, it ranks among the top terrorism targets in the country.
Or consider the ports of Los Angeles and Long Beach, which handle more than 40 percent of all containerized imports entering the United States. In 2011, the ports handled approximately $311 billion worth of cargo, supporting roughly 900,000 regional jobs and nearly $40 billion in annual wages and tax revenues. Nationally, these ports sustain more than 3.5 million jobs and reach every congressional district.
These and many other venues across our state rely on TRIA. Ending the program would dramatically impact how these job creators operate, invest and expand their businesses. Stability is needed for them to continue propelling the economy forward.
Expensive premiums
TRIA was signed into law by President George W. Bush during a time of uncertainty. It ensured that our largest venues, attractions and businesses could get back to work quickly and affordably. Following 9/11, the mere threat of terrorism caused the few insurers and reinsurers that were offering coverage to back out of the market or raise premiums to a level that was prohibitively expensive. TRIA keeps this coverage affordable and available by creating a limited federal backstop should we experience another tragic attack.
Contrary to the beliefs of some, the bipartisan program is not a giveaway to insurers. Under TRIA’s structure, the private insurance industry would pay most of the losses, with the federal government stepping in only to protect the most extraordinary of attacks – an event exceeding insured losses of $100 million. In that instance, the private sector pays the first $100 million as well as a 20 percent insurance deductible. Even then, the federal government covers only a portion of the losses.
Although TRIA has been renewed twice with overwhelming bipartisan support, Republican opposition to a clean renewal has made its future unclear. This uncertainty has already led private insurers to write policies with clauses excluding terrorism coverage should TRIA not be renewed. Such doubt stalls economic development, construction and the ability of major venues like airports, ports and amusement parks to operate properly.
TRIA is strongly supported by a wide array of industries, including construction, manufacturing, hospitality, sports and entertainment. Policyholders such as the National Football League and entities from the U.S. Chamber of Commerce to the National Association of Realtors have lauded the program’s importance. They know that billions of investment dollars and millions of jobs would be at stake without a federal backstop.
TRIA protects a multitude of high-value commercial properties in Southern California, such as the U.S. Bank Tower in downtown Los Angeles, movie studios, and even the Queen Mary. But also, it protects the average shopping mall. And it provides important economic security for a California travel industry that directly supports 917,000 jobs and generates $6.6 billion in taxes.
On both sides of the aisle, you’ll find Democrats and Republicans who support a clean extension of this important program. They too have thriving job creators like LAX and the ports of Los Angeles and Long Beach in their communities. And they know if TRIA is allowed to expire, the repercussions to our economy are incalculable. In the Financial Services Committee, on which I serve as the ranking member, a clean renewal of TRIA is supported by a majority of its members.
Tea party Republicans must stop wasting the few legislative days we have left and move on legislation that will give our businesses the support to continue investing, creating jobs, and growing the economy by cleanly renewing this program today.
Maxine Waters is the representative of the 43rd Congressional District. She is the ranking member of the House Committee on Financial Services.
