Groaning Under Gridlock

“Politics used to be the art of the possible. Now it’s the art of the impossible. Meaning, let’s put forward proposals that can’t possibly pass so we can say to our respective bases—look how I’m fighting for you." — Soon-to-be-former Sen. Mitt Romney

The tumultuous elections of 2024 have not changed the reality that both parties in Congress are more responsive (and vulnerable) to their ideological extremes than they are to the common ground that could conceivably be found in the middle. This has implications for everyone, including the commercial insurance world.

It wasn’t always this way. I came to Washington in January 1983, working for a freshly minted Reaganite elected to the House of Representatives. We considered ourselves about as conservative as you could get.

Still, my first roommates on Capitol Hill included a staffer to the most liberal Republican in the Senate and a staffer to one of the most liberal Democrats in the House.

We did everything together. We took our politics seriously, but who we hung out with, who we dated, and who we lived with had little to do with our partisan affiliations.

The friendships we formed across the aisle as staffers made a difference in how we worked together. These weren’t enemies to be defeated at all costs, these were real people whose opinions I valued and who valued mine, and make no mistake about it, that translates. Any member of Congress who remembers how it was before partisanship really took hold will tell you the same thing.

Flash forward to today, where I live my life vicariously through my 24-year-old daughter, who is following in her mom and dad’s political footsteps as a congressional staffer for the (wonderful) senior GOP senator from Mississippi. I love the crowd of Hill staffers that she runs with, all of them are great. But they’re also mostly the same—southern Republicans.

This, you might say, reflects what’s wrong with Washington today. It’s sorted and divided ideologically. Nobody hangs out together.

I’d argue, too, that D.C. reflects the country, which has geographically and politically sorted itself. It’s true, too, that in the Washington of my young adulthood Republicans more or less were the elites (the country club set) and Democrats came from the working class. Now, in many respects, that has flipped. Maybe it’s just that transitions are tough, but both the folks out in the country and the cultural elites seem to disdain one another far more than they used to.

What does all this mean for our industry?

For one, you can’t find a Democrat in Congress (or virtually any in the statehouses) who is willing to defy the trial bar. Lawsuit abuse—nuclear verdicts, runaway litigation, third-party litigation funding—has enormously negative societal consequences and is a principal cause of pain for insurance purchasers. It used to be that moderate Blue Dog Democrats would be willing to step out of the party orthodoxy and support business-friendly efforts to keep the legal system from careening out of control. It’s virtually impossible to find any of these today. It’s not exclusively a Democrat thing, as the plaintiffs’ bar has its share of Republicans in the statehouses. But historically these attorneys affix themselves to (and lavishly fund) Democrats on the “justice” mantle that is also anti-big business.

In today’s gridlocked, hyper-partisan atmosphere, try to find any profiles in courage in either party as we approach an exploding federal debt, now at over $35 trillion and growing. Without intervention, Medicare Part A, the Medicare Hospital Insurance Fund, will be depleted in 2036, and Social Security may make it to 2033 at best.

President Ronald Reagan and House Speaker Tip O’Neill worked together to save Social Security in 1983. You have to squint pretty hard to imagine such a bipartisan outcome today.

The consequences of these issues for employer-provided group health insurance and retirement benefits are manifest.

It’s not just the big-picture issues. Take financial services for the cannabis industry. Weed is legal just about everywhere, but banking for the industry is a dysfunctional patchwork. Because cannabis is illegal under the federal Controlled Substances Act, institutions that provide banking services to cannabis-related businesses are subject to criminal prosecution. This effectively cuts cannabis businesses out of the banking system, creating various risks and challenges for these companies.

The SAFER Banking Act seeks to establish a safe harbor for banks and other institutions that provide financial services to legitimate and licensed cannabis-related businesses. Even while the overwhelming majority of members of both parties publicly support a resolution, the issue so far has been held captive by both the right and the left. On the right, by GOP members who don’t want to do anything to encourage marijuana use; on the left, by a handful of liberals aiming to achieve “restorative justice” for those convicted of past pot crimes.

Let’s get even more granular on what this gridlock means for agents and brokers. The Council achieved a (Pyrrhic, it appears) victory in 2015 by persuading Congress to approve a voluntary federal mechanism for interstate agent and broker licensure. The compromise we made to state regulators and other industry players was that the board members of the governing body of this small agency would undergo Senate confirmation. The Obama administration submitted National Association of Registered Agents and Brokers board candidates to the Senate, but the confirmation process fizzled out as Barack Obama’s term ended. The Trump administration never started reviewing the slate of candidates it received for submission, and developments with the Biden administration have been similarly limited.

Meanwhile, weather-related natural disasters continue to dramatically increase, combined with an equally dramatic increase in the value of assets and population movement to high-risk areas. Regardless of one’s views on climate change, it’s essential for Congress to prioritize resilience as a strategic imperative, working with the insurance industry and all other stakeholders. But Congress has kicked the National Flood Insurance Program down the field with 30 reauthorizations since 2017— none of them with major reforms regarding resilience, actuarial soundness, or land use.

The problem is that the trickle of policyholder premiums isn’t nearly enough to make up for the gushers of money going out, so politicians just finger-point.

The list goes on and on.

But to end on a note of (irrational?) optimism, I believe that about two-thirds of all members of Congress in both chambers are really decent people who want to do the right things for the country. But a fever has taken hold on Capitol Hill. We need to move beyond the fevers of the extremes in both parties.