USA TODAY International Edition
9/ 11 LAWSUITS THREATEN ECONOMY
Congress knew it was hurting taxpayers and costing the United States jobs
Whether one agrees with Donald Trump’s view of Washington or not, we Washingtonians should have enough introspection to recognize that sometimes things go terribly wrong here. Usually, they do so because we get sloppy and ignore what is often called “regular order.” We usually do so out of political expediency in a panic to deal with an “emergency,” often not a real one, but one that is the result of a sudden excess of media and political attention.
During the week of the 15th anniversary of the 9/ 11 attacks, Congress passed a bill allowing the families of victims to sue the government of Saudi Arabia for damages. It would unravel the principle of sovereign immunity in international law. Lawmakers obviously viewed the 9/ 11 attacks as an egregious example and recognized that the Saudis have deep pockets. But, whatever standards the United States uses to justify private legal action against Saudi Arabia will likely be used against us. And lots of countries in the world have what they view as legitimate grievances against the United States and its military. America has the deepest pockets in the world and is a natural target in global courts that are far less governed by the rule of law than America’s. BIPARTISAN FAILURE The bill never went through the usual procedure of committee markup or floor debate. The Senate had passed the bill in May and sent it to the House in the expectation that leaders would never bring it to the floor. But they did. And although President Obama vetoed the bill, Congress overrode an Obama veto for the first time in his eight years in office. The vote in the Senate was 97- 1 and the vote in the House was 348- 77. Then Congress went home to campaign for re- election. This is the kind of behavior putting political self- interest above the national interest that was so effectively attacked during the campaign.
Substantive objections to the law are bipartisan. Senate Foreign Relations Chairman Bob Corker said, “I don’t think the Senate nor House has functioned in an appropriate manner as it relates to a very important piece of legislation. ... I have tremendous concerns about the sovereign immunity procedures that would be set in place by other countries as a result of this vote.” White House Press Secretary Josh Earnest pointed the finger directly at congressional irresponsibil- ity: “They voted for a bill that they knew had negative consequences for America’s national security.” There is a real danger from the bill to American servicemembers who served abroad as well as to the Treasury. AMERICA IS TARGET # 1 But an even broader problem with the law is its potential effect on the global economy. With the public and the courts in every country on the planet hungry for vengeance, and trial lawyers hungry for revenge, the danger for any country to leave assets vulnerable to seizure is real. This is not a hypothetical possibility, and it will have significant impacts on our markets as well as drive up Treasury borrowing costs.
Again, America is the biggest target and has the deepest pockets of anyone. Already the Iraqis are talking about the events at Abu Ghraib as a possible war crime and suing for damages. What might the Pakistanis say about our attack on their soil and the deaths that resulted from the raid on Osama bin Laden? What about Libya or Syria? Central African governments could sue France for their various interventions. Argentina could sue Britain over the Falklands. The list goes on and on.
The end game of this is that no sensible government or business would want to leave assets in another country, where a new flood of lawsuits might leave them vulnerable to seizure. Cross- border investments in the world today are in the trillions of dollars. An end of the free movement of capital would be, in today’s world, at least as important to the health of the global economy as an end to the free movement of goods.
It was not Congress’ intention, but bipartisan majorities have given us the equivalent of the Smoot- Hawley Tariff, often blamed for helping cause the Great Depression. Should the economy begin to falter next year as a result, President- elect Trump would be justified in pointing to the Washington swamp and taking his case to the country. If you think anti- Washington sentiment is big now, just wait. Official Washington would be wise to act now.
Lawrence B. Lindsey, a former governor of the Federal Reserve, was director of the National Economic Council under President George W. Bush.