BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Friday, 28 September, 2001, 19:37 GMT 20:37 UK
US firms line-up for federal handouts
US Capitol building in Washington, DC
Industry leaders are heading to Capitol seeking relief
David Schepp

The US government's $15bn (10.2bn) bailout of ailing airlines has resulted in other industries stepping forward, hands outstretched, seeking relief after the 11 September terror attacks on the Twin Towers and the Pentagon.

Industries as wide-ranging as insurance and tourism are seeking assistance from the federal government, especially in light of its largesse in recent days.

Ronald Reagan Washington National Airport
A casualty of the attacks: Washington National airport remains shut
Analysts say a stimulus package of $100bn (68bn) to $300bn (204bn) is needed to get the American economy moving again.

Congress, in a measured response to the pleas, is heeding the guidance of top economic officials, including Federal Reserve chairman Alan Greenspan, to act deliberately.

So far the government has pledged just $40bn to rebuilding efforts in New York and other areas and other stimulus measures.

Railway woes

Amtrak, the nation's passenger rail line, is seeking additional funding from the federal government to offset increased costs resulting from larger numbers of travellers, who have forsaken air travel for trains.

Amtrak says it needs $3bn to make infrastructure improvements, such as rail replacement, and to increase capacity.

The railway says it would spend half the sum on increased security measures, especially along its Northeast Corridor line, which services New York, Boston and Washington and points between.

Within other industries, travel agents, already reeling from competition from the internet travel web sites, are said to be seeking $4bn to offset future travel-related losses.

Americans in the days following the attacks have substantially reduced travel, especially on the nation's airlines, who were experiencing weak sales amid slowing business travel.

Other tourism related industries, including restaurants, want assurances from the federal government that the economic impacts of the attacks, which left over 6,000 dead or missing, will be offset through government largesse.

Not so fast

America's large corporations are stepping forward too, asking for additional tax cuts as a way to stave off declining profits amid an already sluggish economy.

Fiscal conservatives in Congress, however, are balking at the idea of further industry bailouts, fearing a stampede that could cause a run on the treasury.

Indeed, it is the insurance industry that now has its hand outstretched following the bailout of the nation's airlines.

Insurance executives want help in covering the billions of dollars they are expected to pay out as a result of the attacks.

That despite reports from bond-rating service Moody's, which believes the insurance industry will be able to handle a "severe" number of claims.

Moody's has put the estimates of losses to the insurance industry at around $20bn (13.6bn). Other analysts expect greater losses, with expectations as great as $35bn (23.8bn).

Earlier in the week, Lloyd's of London, the world's largest insurance market, said it expects losses of $1.9bn (1.3bn).

The nation's unions, too, are seeking assurances by the federal government as unionised workers face layoffs. The airline industry alone has announced 100,000 job cuts.

In recent days, more job cuts have been announced by US auto makers, seeking to reduce the number of motor vehicles being produced.

Terror's impact

Signs of a slowdown

Rate cuts


Key players

See also:

28 Sep 01 | Business
US stock markets rally
26 Sep 01 | Business
Attacks to cost Lloyd's 1.3bn
24 Sep 01 | Business
Airlines rush for government help
Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories