NPR does Bush

Last week STEVE INSKEEP criticized virtually everything Bush said in his State of the Union Address. One thing that struck me was how he portrayed tort reform, about 2:20 into the report:

Mr. JOHN COCHRAN (Congressional Quarterly): I think the important thing to remember is that you have to take any claims about lawsuits or the economic costs of lawsuits either way with a big grain of salt. I mean, what's most striking about the whole tort debate actually is how little either side really knows about what's really going on out there. There's just a real lack of any kind of objective data. It's...

INSKEEP: This seems like an obvious statement: lawsuits cost money, therefore, they're a drag on the economy.

Mr. COCHRAN: Yeah, and it's just not, economists say. First of all, nobody knows how much money flowing through this system is really excessive which is part of Bush's argument, and how much is actually covering real injuries and real loss. And economists say, 'If I injure you and I pay you $150, what's lost? I don't buy a new suit, but you do.'

John Cochran covers legal issues, but presumes to tell us what the economists think. According to The war on tort, from the Jan 26th 2005 Economist,

Most Americans agree that matters have got out of hand. According to figures from Tillinghast-Towers Perrin, an insurance consultancy, tort-system costs amounted to $246 billion in 2003—excluding vast settlements agreed by tobacco companies....

The article points out that American lawyers disagree, but still:

Haggling over the sums aside, the big pots of money that companies and their insurers pay out to settle litigation cause both direct and indirect losses. Companies that owe vast sums may seek bankruptcy protection or go out of business altogether. In some cases, most notably involving asbestos, companies have been hounded despite having only a tenuous link to the product in question. Not only shareholders will feel the pain if large numbers of workers also find themselves without employment.

Businesses suffer indirect costs too. The threat of lawsuits often causes financial markets to overreact. Credit-rating agencies are likely to downgrade firms that face litigation, increasing the cost of financing. Moreover, corporations are also paying far more for general-liability insurance these days...

Any attempts at reforming the tort system will meet stiff opposition from America’s trial lawyers. Democrats, who get huge sums from such lawyers, are also likely to oppose reform with vigour. Some will argue that, by restricting public access to the legal process, Mr Bush would be curbing the freedom of American citizens in the name of redeploying cash away from Democratic-leaning lawyers. But wealthy trial lawyers do not rank highly in the public’s perception of embattled minorities worthy of sympathy and, as such, make for an inviting target.