FROM THE OFFICE OF PUBLIC AFFAIRS

October 18, 2004
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U.S. Treasury Department General Counsel Arnold I. Havens
Remarks to the Nevada Development Authority President’s Council Luncheon
Las Vegas, Nevada
October 18, 2004

 Thank you so much for inviting me; it's great to be here in Nevada.

I appreciate the opportunity to talk with you today about the most profound threat to our Nation's economy: terror.

We learned, painfully, of the financial impact of a major terrorist attack three years ago this fall. In addition to the horrific loss of life in New York and Pennsylvania and at the Pentagon that day, our economy suffered a loss of about a million jobs in its aftermath.

As you well know, 9/11 hit Nevada particularly hard due to heavy reliance on tourism and travel. However, thanks to the resiliency and entrepreneurial spirit of the people in this room and your fellow Nevadans, you rebounded quickly and your economy is doing very well today.

Employment in the leisure and hospitality sector has recently returned to its pre-attack level and gaming revenues. Visitor volume and hotel occupancy rates began to strengthen notably in mid 2003 and were quite strong through this spring.

And I'm pleased to see that, today, Nevada's unemployment rate is below the national average and falling. You added 2,800 new jobs to your state economy in August and have added 31,100 new jobs so far this year.

I want to congratulate you on this impressive recovery. I hope you found the President's tax cuts provided you with the stimulus you needed at that critical time.

We also worked hard, in those days and months following 9/11, to stabilize insurance markets with the Terrorism Risk Insurance Act--you know it as TRIA. Its purpose was to bring stability to insurance markets and the broader economy so that terrorism risk insurance could be offered after the shock of 9/11. 

The President's economic policies, combined with the resiliency and perseverance of American employers and workers, brought us out of those difficult days following the terrorist attacks. Since then we have also been committed to using every available tool in waging a comprehensive campaign against terrorism, and preventing further attacks.

At the Treasury Department we, along with those of you in the financial community, are fighting on a critical front of the war on terror, and that is the financial war.We have accomplished a lot in the last three years: In close coordination with the financial community, we are tracking and freezing the assets of terrorists and their supporters. This is a fundamentally important front in the war because a terrorist act, no matter how simple, is usually supported by a sophisticated financial and operational network. Terrorist organizations need to pay for recruitment, indoctrination, training, materials, housing, transportation… the list is long, and it requires quite a bit of money. Cutting off their money is therefore essential.

As Secretary Snow often says: "hatred fuels the terrorist agenda, but money makes it possible."

Since September 11, 2001, the United States has designated close to 400 individuals or entities as terrorists or supporters of terrorists. Worldwide, we and our allies have frozen over $142 million in terrorist-related assets. This has made it harder, costlier, and riskier for al Qaida and like-minded terrorist groups to raise and move money around the world.

Our efforts to stop money laundering also are critical, and they are making a difference. The USA PATRIOT Act, among other provisions, expands the anti-money laundering system to make sure there are no gaps for terrorists, or their financiers, to exploit.

Many businesses represented here today, including casinos, are required to develop anti-money-laundering programs and to file Suspicious Activity Reports with the Treasury Department.

All financial institutions, including many of you in today's audience, have done everything that the Treasury Department has asked of you during this fight, and I want to personally thank you for your efforts. Our country is safer because of the high levels of cooperation between the public and private financial sectors.

In spite of our best efforts to stop the terrorists before they can strike, we must also be prepared for potential attacks. As part of a broader, Administration-wide effort to protect our critical infrastructure, the Treasury Department is the lead agency for protecting the financial infrastructure and keeping financial institutions operational in the face of any effort to disrupt them.

The success of our protective efforts requires close cooperation between the government and the private sector.  We saw this cooperative effort put into action in late summer, when we were made aware of a terrorist threat to certain buildings that house financial institutions in the New York metropolitan area and in Washington, some of the symbols of our nation's financial strength.

The response of the financial community was inspiring. More employees came to work at the New York Stock Exchange that Monday in August than any other Monday in August in the history of the Exchange.

Throughout the financial sector, customers were able to continue business as usual. And while there was justifiable concern, there was no crisis.

Our progress in the financial war on terror since 9/11 is in no small measure due to the cooperative spirit and effort of the businesses large and small in Nevada and across the country.

We are mindful of the added burden resulting from the additional regulations in this area and we continue to want to work with you to make them as effective and efficient as possible.

As I noted earlier, I believe that terrorism is the most profound threat to our economy. But of course it is not the only significant challenge our economy has faced over the last few years.

The events of 9/11 were preceded by the bursting of the stock market bubble and by a recession that began in 2000.  Nine-eleven was followed by the corporate scandals that understandably shook confidence in our market-based economy.

Because of the President's pro-growth policies and strong economic leadership--and because of the resiliency and entrepreneurial spirit of our fellow citizens--we have not only made significant progress in the war on terror, but we've turned the corner on the economy.

We've seen a steady increase in jobs for thirteen consecutive months, through September.
Since August of last year, America has added more than 1.9 million workers to the payroll, including 96,000 in September. The national unemployment rate is 5.4 percent, lower than the average of each of the past three decades.

But clearly there is more work to be done to make sure our economy remains strong.

For example, the President believes that we need to reduce our dependence on foreign energy sources. The current price per barrel of oil simply underscores the need to pass the President's comprehensive energy plan.

The President also is committed to ending the frivolous lawsuits that threaten every business, particularly small business. Baseless suits increase the cost of all goods and services, and drive up the costs of health care.

This is why the President continues to urge Congress to pass several important liability proposals before this session adjourns.

Victims should, of course, be compensated fairly when they are injured due to the fault of another person. But important contributors to our economy--including hospitals and businesses, large and small--are put at risk by frivolous suits.

The current tort system costs America well over $200 billion each year. That's a tort tax – paid in the form of lower wages, higher product prices, and reduced investments – of $809 for every individual and more than $3200 for a family of four.

Let me focus on healthcare for a moment, to underscore how disruptive and costly frivolous lawsuits are.

As of 2002, 58 percent of physicians reported that they had been the target of a lawsuit, and their malpractice insurance costs typically rose between 30 and 75 percent over three years, from 2000 to 2002. Many doctors are forced to retire early or cut back their practices.

You've seen the effects right here in Nevada. A major trauma center here in Las Vegas was forced to close briefly in 2002 because it was not able to obtain insurance coverage.

Of course, medical liability reform is critical to helping provide quality, reasonably priced health care. But the Administration also has advanced two other important initiatives--Association Health Plans (AHPs) and Health Savings Accounts (HSAs)--to make health insurance more affordable and give individuals more direct involvement in their health care decisions.

AHPs would allow small businesses to band together, across state lines, to form health-insurance purchasing groups. The Congressional Budget Office estimates that small businesses could save 13-25 percent on premiums with AHPs. These savings will allow more people to be insured.

HSAs are already bringing a revolutionary option to Americans when it comes to purchasing health coverage. They were created as part of the President's Medicare reform legislation.  An HSA is like an IRA: you own it, you control it, and you can leave it to your heirs.

Companies that offer HSAs are reporting to the Treasury Department that among those who sign up for the program, 25-40% of the enrollees were previously uninsured.

I'd like to close with the words of Secretary Snow, who recently remarked, "We know from long experience that our economy responds best to the very thing that created it: freedom. Freedom from excessive taxation. Freedom from abusive, frivolous lawsuits. And of course freedom from terrorist assaults."

This Administration has worked hard to help expand those freedoms in America today, and I feel privileged to be playing a role in those efforts through my position at the Treasury Department.

Thank you so much for having me here today.