If a future terrorist attack results in casualties on American soil, what, if any, government compensation should be provided to victims? Despite the enormous attention given to the September 11, 2001, attacks and the near universal sympathy for their casualties, there is no apparent consensual answer to the above question among politicians, academics, or within society at large. While tens of billions of dollars in public funds have been allocated to preventing another attack, and tens of thousands of personnel hours have been devoted to simulations aimed at helping victims in the immediate aftermath, relatively little attention has been given to what support might (or might not) be justified to provide for longer term needs. Victim compensation remains off the radar screen for even the vast majority of people whose daily lives are significantly consumed by contemplating terrorism.
Yet we believe it is a near certainty that victim compensation would move to the top of the American political agenda if and when a new attack on the U.S. resulted in casualties. With almost equal certainty, attention would then turn squarely toward the September 11 Victim Compensation Fund (VCF) as the most relevant model for providing support to victims. Furthermore, both the process used to establish the VCF and decades of political science literature on public policy-making more generally suggest that decisions may be made rapidly, with relatively little attention to a variety of options. Additionally, absent much more vigorous discussion in the political and academic communities, we believe it is likely that members of Congress and others would turn to advice from a relatively small set of people who have been directly involved in overseeing terror victim compensation, such as Kenneth R. Feinberg, the VCF special master.
Accordingly, we believe it is essential to focus attention on the VCF; the ways it might or might not be justified; and extant claims about how such reasoning might apply to any future terrorist attack on the United States. In particular, we think an assessment is needed of the reflections and recommendations from Feinberg and his colleagues contained in the “Final Report of the Special Master for the September 11th Victim Compensation Fund of 2001” (Feinberg et al. 2004). We are convinced there is much wisdom in that report. Yet we will also argue that the report both understates some of the ethical problems of the VCF as a model for future compensation and misses the most important ethical justification for a stand-alone program for terror victims. Furthermore, we contend that there is a large degree of political naiveté in the report's seemingly modest conclusion that the September 11 attack was unique, and therefore the response may have little relevance to future events. Quite the contrary: we believe in the aftermath of an actual attack debate would tend to center around the VCF, regardless of the original intentions of those involved in its implementation. All of us, therefore, have a large stake in making sure the right lessons are drawn from the program established for September 11 victims.
Based on the above analysis, we will offer our own conclusions about the most compelling ethical rationale for compensating any future terror victims. Because we believe that the pressure to offer some sort of compensation would likely be overwhelming, we will also explain what our line of reasoning implies for the type of compensation that might be provided. This approach differs sharply from the one adopted in the fall of 2001.
Context for the VCF
Before turning to an analysis of lessons from establishment of the VCF, some context is needed. Prior to the September 11, 2001, terrorist attacks, the U.S. government's role in compensating terror victims had grown but was still quite limited (Lascher and Powers 2004; Mostaghel 2001). For example, the Hostage Relief Act of 1980, passed in the aftermath of the Iran hostage crisis, provided such victim benefits as reimbursement for medical expense resulting from the hostage ordeal, deferral of taxes and penalties, and reimbursement for education and retraining expenses. Subsequent legislation provided for direct assistance to those in service to the federal government. Additionally, legislation passed after the terrorist-caused explosion of Pan Am Flight 103 over Scotland and the domestic terrorist bombing of the federal building in Oklahoma City provided such assistance as crisis teams and grants to states for emergency relief. All of these measures were reactive in nature (Mostaghel 2001, 103). Furthermore, they did not provide direct cash assistance aimed at compensating individual victims for lost income and/or pain and suffering.
The September 11 Victim Compensation Fund continued the tradition of reactive legislation—it was included in a bill enacted within two weeks of the attacks, without congressional hearing or significant public debate. There was “no unifying theory that can explain why [a victim compensation fund was developed the way it was] in this situation and not done, or done differently, elsewhere” (Morrison 2003, 822). There is also some reason to conclude that the Fund was an afterthought, especially since it was simply one part (and not the most prominent one) of the Air Transportation and Stabilization Act, the aim of which was to protect the crippled airline industry from costly lawsuits (Melber 2003; Sommer 2003). Other features of the legislation included compensation for airlines, aviation insurance, and extension of airline tax provisions. The law included specific provisions retroactively limiting the airline industry's liability and precluding a VCF claimant from subsequently pursuing civil action to recover for September 11 related losses. In other words, government compensation was to substitute for tort recovery from a weakened private industry.
While the VCF enabling legislation was reactive and focused on public policy goals unrelated to helping individual victims, the benefits themselves were much more extensive than anything that had been provided in the past (see especially Dixon and Stern 2004). The Fund called for appointment of a special master who was to consider individual claims for people killed or physically injured in the September 11 attacks. Compensation was to be provided on a no-fault basis to all such victims, and was to cover both economic loss (loss of earnings, medical expenses, burial costs, etc.) and non-economic loss (pain and suffering, physical impairment, mental anguish, etc.). Congress provided little guidance as to the specific awards, leaving a great deal of discretion to the appointed special master, Feinberg. The Fund as implemented provided payments for economic losses that varied in accordance with the victim's age and projected future earnings, and payment for non-economic losses that reflected a flat amount per victim and an additional amount for a victim's spouse and each dependent child. Because most of the eligible September 11 victims perished in the attacks, the vast majority of funds went to victims' estates. Awards to those estates after collateral offsets (i.e., life insurance benefits and the like that Congress required the special master to offset) ranged from $250,000 to $7.1 million, with a mean of $2.08 million. No doubt in part because of the relative generosity of the benefits, as well as the concerted effort of the special master and his staff to encourage victims to apply, death claims were paid on behalf of 2,879 victims, or about 97% of those killed in the attacks. The total cost of the program for compensating civilians and emergency respondents was estimated at about $5.8 billion (Dixon and Stern 2004, 20–6).
A Critique of the Special Master's Views on Justification for Terror Compensation
We begin our analysis of compensation for future terror victims by assessing the reflections and recommendations of Feinberg and his colleagues contained in the “Final Report of the Special Master for the September 11th Victim Compensation Fund of 2001.” There are several reasons to commence with the special master's report. Feinberg was appointed on the basis of his special expertise in mediation and compensation mechanisms. As a result of that appointment, it is unlikely that in recent years anyone else has been more immersed in the details and public policy choices inherent in providing support for terror victims. Furthermore, Feinberg's work is commonly considered a success given that the vast majority (including 97% of the families of those killed in the September 11 terrorist attacks, according to the above report) of victims and victims' families opted to accept the government compensation rather than opt for litigation, as many were expected to do (see, for example, Sebenius 2005). With such experience, Feinberg has been called upon to offer advice to others facing difficult compensation choices, such as the Israeli government upon removing settlers from Gaza (Feinberg 2005). Finally, the report addresses both the rationale for the VCF and the appropriate response to any new terrorist attack while offering comments explicitly framed as “a preliminary blueprint to guide policymakers” (Feinberg et al. 2004, 78). Any such blueprint offered to policy-makers should be subject to significant scrutiny from both the academic and policy-making arenas.
We wish to note that Feinberg was appointed to administer the VCF rather than provide it with a justification. Accordingly, it is possible that the arguments on its behalf in the special master's report might be rationalizations for a program that he was asked to operate, not devise. Nevertheless, it is reasonable to take these arguments quite seriously given Feinberg's reputation and prominence.
In the special master's report and elsewhere, Feinberg specifically rejects many justice based, utilitarian, and governmental liability rationales for compensating the victims of September 11 and victims of any future terrorist attacks. While the report does find justification for the September 11 VCF based on anomalous social and political circumstances, the report finds no justification for a permanent system of terror compensation. Below we assess such conclusions.
Feinberg and his colleagues (2004, 79) overtly reject a justice-based rationale that focuses on the particular suffering of the September 11 terror victims. Feinberg sees no reason to distinguish those harmed on September 11 from others terror victims who were not compensated such as those harmed in the Oklahoma City bombing and the attack on the U.S. embassy in Kenya (on the desires of some Oklahoma City and Kenya bombing victims to be treated the same way as September 11 victims, see Myers 2002; Peterson 2002). Feinberg is on strong ground in this regard, but his argument could reasonably be taken much farther. Not only is it hard to sustain justice claims that would distinguish different types of terror victims (including future terror victims) from one another, but it is hard to sustain claims that would differentiate terror victims from victims of many other types of social ills.
Consider one of the more notable conceptual mechanisms for differentiating among justice based claims for societal support that has been offered in recent years: Ronald Dworkin's distinction between “brute bad luck” and “option bad luck” (2000; for further discussion see Dworkin 2002). Based on the presumption that a just society must treat all its members with equal respect and concern while allowing them freedom to make their own choices, Dworkin suggests that the government has a role in ensuring that people are able to exercise control over their lives despite brute bad luck (for example, being hit by a falling object or suffering from birth defects). The government might be expected to operate social insurance or welfare programs to aid victims of brute bad luck. By contrast, the government has a lesser if any role in addressing the ill consequences of option bad luck, i.e., a bad outcome that results from a deliberate gamble (for example, losing money in the stock market). To the extent that government compensates victims of option bad luck it may even enhance the problem of moral hazard, whereby potential victims are discouraged from taking reasonable risk control or reduction measures (see Lascher and Powers 2004).
To be sure, the government currently provides protection for some victims of option bad luck. For example, people living in flood pains have been provided with subsidized flood insurance. However, many of these practices are highly controversial and often criticized by insurance experts for inefficiency and promoting risky behavior (see, for example, Harrington 2000). The difference between brute and option bad luck may remain relevant for normative evaluation of policy options even if actual policy makers (perhaps inappropriately) may not always recognize it.
Although the distinction between brute and option bad luck might provide philosophical justification for weeding out a great many claims to governmental compensation, it would not allow us to distinguish terror victims from many others who suffer harm from forces they cannot control. Certainly finding oneself in the World Trade Center on September 11, 2001 (or possible future sites of terrorist attacks, especially if such attacks occur in places considered to hold little risk) could be considered a classic case of brute bad luck. But this is no less true if, say, one is born to parents who are child abusers or victimized in a home invasion. Yet common crime and family abuse victims have traditionally much lower and less certain compensation than was provided to September 11 terror victims (Goldscheid 2004). In short, focusing on the extent of victim suffering or brute bad luck to justify compensation of future terror victims would equally obligate the American government to offer support for many others—compensation well beyond what is currently provided.
Feinberg also rejects the utilitarian rationale of encouraging victims to avoid filing lawsuits that would threaten the viability of the airline industry. He does not explicitly refer to this as a utilitarian rationale. However, the reasoning behind such arguments appears to be utilitarian in that the social benefits of protecting a vital industry and speeding benefits to victims quickly are seen to outweigh the social costs of providing information and deterring negligence through pursuit of a tort remedy.
Here as well, Feinberg is on strong ground in rejecting an argument for compensation, but could take the counter-argument much farther. Limiting the liability of corporate actors prior to the actual event would create a significant moral hazard problem, whereby the knowledge of government safeguards against liability would discourage risk preventing and minimizing measures. Given that terrorism is now a well known (and presumably internalized) risk, it may be imprudent to reduce incentives for corporate actors to enact necessary security and other prevention measures. Additionally, it is mistaken to believe that even bankruptcy caused by lawsuits would necessarily lead to industry collapse. Bankruptcy reorganization commonly ensures that a firm can keep operating as means are sought to satisfy creditors, and ceasing operations is often not to the advantage of any party. The airline industry's recent history itself underscores this point. Despite the lawsuit protections offered by the Air Transportation and Stabilization Act of 2002, various airlines soon after suffered major losses in revenue and were forced into bankruptcy reorganization. However, all of these carriers (e.g., United Airlines) continued to operate. Given this possibility, federal efforts to prevent lawsuits may only protect a limited set of shareholder interests rather than serving the larger public good.
While not addressed in the report, Feinberg (2004b) elsewhere appears to reject a third rationale: that compensation is justified based on the failure of the federal government. Here his argument is less well justified, at least with respect to September 11 victims. Much philosophical support could be offered for the proposition that compensation is justified when the government fails to take reasonable risk control and risk reduction measures (see especially Lascher and Powers 2004). The national government's own officially sanctioned commission concluded that a number of different types of governmental mistakes enabled the September 11 attacks to occur, among the most important of which were a “failure of imagination” (National Commission on Terrorist Attacks Upon the United States 2004). The Commission determined that leaders did not appreciate the gravity of the threat from al-Qaeda. It is widely acknowledged that authorities missed information that would have suggested a terrorist attack was imminent. If the U.S. government failed to take reasonable steps to prevent the September 11 assaults there is a strong normative rationale for compensating victims, even if fault was never in fact acknowledged by the government.
Yet even if this is so, compensation based on government negligence is much harder to support for future terrorist attacks given the massive investment in terror prevention over the past few years. Reasonable people can and do disagree sharply about the efficacy of many specific anti-terror actions. But it is difficult to justify compensation for future victims based on the failure of government to appreciate and fight the terrorist threat.
According to Feinberg, what then does justify establishment of the September 11 Victim Compensation Fund? He and his colleagues write (2004, 79–80, emphasis in original):
It must be viewed from the perspective not of the victim but, rather, that of the nation, a unified community response to a unique and unprecedented historical tragedy. The September 11 terrorist attacks, and their impact on the collective psyche of the United States, evoked a national response to the tragedy. One aspect of the response was the creation of a public compensation scheme that not only provided financial aid to the victims, but also expressed a shared national grief, horror, and revulsion in response to the terrorist atrocities … Critics of the Fund are, therefore, off-base when they focus on the restrictive definition of the victims in arguing unfairness. It is not the victims that justify the Fund, but rather the response of the entire nation to the tragedy.
While these words are straightforward, the ethical reasoning is rather opaque. On the one hand this argument might be seen as simply an expression of support for democratic decision making. That is, in a democratic society, if the public expresses a strong, consensus position in support of a particular public policy, elected leaders should try to adopt that policy. Even leaving aside knotty questions about whether a popular consensus can be ethically mistaken that have plagued political philosophers for many years, the democratic decision-making rationale appears hard to apply to the VCF. As mentioned previously, the Fund was established very quickly with almost no public debate or discussion. A January 2002 public opinion poll indicated that a solid majority of Americans were supportive of paying “special benefits” to families of September 11 victims (ABC News/The Washington Post 2002). But ex post facto evidence of public support is not the same as evidence that a policy decision reflected the public's expressed desires at the time.
A more defensible interpretation of Feinberg's argument may be that it is essentially utilitarian in nature, and focused on psychic benefits to the community at large. Providing compensation to terror victims may have made the rest of us feel better for a number of reasons, and the net psychic rewards from helping outweighed the costs of providing victims with financial support. Certainly the unprecedented nature of the September 11, 2001, attacks inspired unparalleled levels of sympathy for victims. The terror attacks affected Americans across all social, economic, and physical barriers; even those who had no personal links to any victims felt unusually personally vulnerable. The perception that a small percentage of Americans took the brunt of an attacks on all of society prevailed in the media, academic, and policy-making arenas. Unequaled public support for government aid for the victims then ensued, which became “an expression of public sympathy and support for innocent victims” (Rabin 2004). This argument is compelling to the degree that it provides a rationale that is based on a distinction between terrorism and other types of disasters.
While we believe there is some merit to the above utilitarian argument as it applies to victims of the September 11 attacks, it is a tenuous basis for supporting compensation for any future terrorist action. The problem of the vacillating nature of public opinion arises. It is unclear whether the public's unusual degree of sympathy for victims of terror (and thus the measure of public benefit accrued through compensating those victims) will endure. Cass Sunstein (2002, 28–52) emphasizes that people are more likely to dread a particular risk if there has been a recent, dramatic incident of its occurrence; concern may fade as risks become “part of life.” The same pattern may hold with respect to sympathy for others who are victimized. Furthermore, concern for victims of a new disaster, such as Hurricane Katrina, may “crowd out” desires to help victims of a less familiar disaster, just as seemingly new risks crowd out concerns about old ones not highlighted by a vivid recent event (see Sunstein 2002, 46). Feinberg and his colleagues seem to anticipate this concern by concluding (Feinberg et al. 2004, 83): “The September 11 Victim Compensation Fund was a unique response to an unprecedented historical event. It is unlikely—and perhaps unwise—to establish a similar program for future implementation absent the profound conditions which existed immediately after the September 11 attacks.”
In summary, Feinberg rebuffs most arguments that have been advanced on behalf of compensating future terror victims, and is well justified for doing so. Indeed, his rejection of compensation based on the identity of victims could be carried much farther: ethical distinctions should not be drawn based on the type of brute bad luck (i.e., terror versus child abuse versus birth defects, etc.) someone encounters. Yet as we will show in our next section, there are two major problems with Feinberg's suggestion that we should treat September 11, 2001, as a singular event and not a precedent for establishing a future program. First, it ignores the most compelling argument for compensating terror victims, and one that would apply to future as well as past victims. Second, it ignores the political realities of how decision-making is likely to be made in the aftermath of any future terrorist event, and the manner in which the VCF has changed likely policy decisions. We turn now to explicating these arguments.
A More Compelling Ethical Rationale for a Terror Victim Compensation System
We find that one of the most compelling arguments justifying a permanent compensation system is the degree to which compensating victims of terrorist attacks can undermine the social and economic impact terrorists seek to achieve. To the degree that compensation for terror victims can challenge the objectives of terrorists whose aim is the destruction of American society, such compensation may be justified on a utilitarian basis. As part of a larger security and defensive system, compensation for victims may prove an efficacious method to facilitate a return to “normalcy” contrary to terrorist intentions.
As evidenced by literature produced both before (see for example Stern 1999) and after (see for example Nacos 2003) the September 11 attacks, terrorist organizations that commit violence do so based a variety of motives and with several different objectives. The devastating attacks of September 11 focused attention on those terror groups whose goal is to instigate fear and chaos throughout society, thereby destroying the social order. The ultimate goal of such groups (e.g., al-Qaeda) is to undermine the public faith in and legitimacy of government, resulting in “a climate of fear amenable to terrorist exploitation” (Hoffman 2003; see also Hoffman 2002). As the Israeli experience demonstrates (see Hoffman 2003), such suicide terrorist attacks have societal consequences extending far beyond the casualties of the event.
Assuming that such groups pose the greatest threat to American security, it may be advantageous in the “war” against terrorism to employ domestic compensation programs that facilitate a return to “normalcy” for the American people in the period following a terrorist attack. Compensation of terror victims is one method of assuring that the financial and psychic harms of an attack are eased, thus mitigating the resulting social insecurity. As part of a comprehensive defensive response, compensation for terror victims may thus alleviate the far-reaching and most damaging societal consequences. As a result, the terrorist objective to generate such chaos and continuous instability can be undermined. Furthermore, demonstration of capacity to aid victims may counter terrorists' common claim that they can push Western governments toward fiscal ruin (see Hoffman 2002). A compensation program whereby individuals harmed by a terrorist attack are ensured a minimal level of government compensation may not only reassure the victims and society that they will be taken care of, but may prove disheartening to those whose goals are the destabilization and destruction of that social order.
Political Pragmatism Argument
Feinberg's contention that the VCF should be viewed as singular response to an unprecedented event ignores the realities of political decision-making. While the September 11 attacks were unique, they fit within a broader class of disasters and untoward events that unsettle policy agendas in advanced democracies. A terrorist attack is a prototypical “focusing event,” understood simultaneously by the policy-makers and the general public to have inflicted significant harm (Birkland 1997, 21–7). An extensive academic literature indicates that such events commonly drastically change the public policy agenda, moving previously dormant concerns to the top, including means of relieving the suffering of victims (see especially Birkland 1997; Kingdon 1995; Zahariadis 2003).
Furthermore, the literature generally suggests that policy-makers do not develop new policy proposals in the aftermath of a focusing event, but look toward policy alternatives that have been previously developed within policy communities. Only a small subset of potential proposals is likely to be visible to policy-makers. Proposals included in that subset are those that meet a number of criteria, including feasibility based on prior experience (Kingdon 1995, 116–44). In that sense, the VCF model clearly has an advantage over other possible approaches to compensating terror victims in that it was successfully implemented
We contend that in the event of a future terrorist attack, the political agenda will once again focus on victim compensation, and will be strongly influenced by the precedent set by the fund. Additionally, given the compensation offered to casualties of the September 11 attacks, future victims will have a strong claim based on equity considerations. Here, it is important to consider the circumstances leading to compensation of victim of the Oklahoma City bombings. This event, while appalling and widely publicized, did not create the public turmoil and anxiety that we experienced following September 11, nor did it appear to threaten the health of a key industry. Nevertheless, in the aftermath of the VCF policy-makers were compelled to provide some belated tax benefits to the Oklahoma City bombing victims when issues of equity were raised (Sommer 2003). Thus, the political salience of equity considerations may compel some type of compensation even in the absence of the broad, psychic benefit rationale stressed by Feinberg.
Implications
If we are correct that it is highly likely the U.S. government will provide some type of support for any future terror victims, the key question the policy community might influence is the type of assistance to be provided. A major implication of our own ethical analysis is to strengthen the case for providing equal payments to terror victims, rather than the differentiated payments provided on behalf of casualties of the September 11 attacks. We have argued that the most compelling ethical rationale for a stand-alone program of assistance to terror victims (as opposed to an argument for a much more comprehensive system of assistance for those who suffer from brute bad luck, which is beyond the scope of this paper) is a utilitarian argument about undermining the goals of the terrorists themselves. The next most compelling argument is also utilitarian, revolving around the psychic harm all of us experience from the suffering of terror victims. Neither of these arguments is based on a governmental obligation to restore victims to the economic status they enjoyed prior to the terrorist event, as might be implied by a restorative justice rationale. Nor do these arguments center on the desirability of avoiding litigation, which may only be possible if the government provides graduated payments since high income victims might otherwise have a strong incentive to seek a tort remedy. Interestingly, Feinberg also appeared to conclude that flat payments would be preferable under any future compensation program, based on the difficulty of justifying different specific amounts for different victims (Feinberg 2004b).
We would add that these payments also should not be as generous as those offered by the VCF. The VCF awards were designed to replicate the tort system, with awards calculated based on a calculation of economic loss. Earlier we rejected the notion of governmental liability as a normative basis for terror victim compensation. As such the compensation levels should not be calibrated to replace legal recourse or suggest governmental responsibility.
If our payment recommendations were to be followed in the aftermath of another terrorist attack, it is probable that some victims or families of victims would opt for pursuing a tort remedy for their suffering. Is this necessarily a bad thing for society at large? We think not. The legal system has some distinct advantages in terms of sorting out and apportioning responsibility (if any) for damages among a complicated set of governmental actors.
A second implication of our analysis is that it would be highly desirable for one or both houses of Congress to hold a hearing on terror compensation. This forum would provide the opportunity to consider different approaches in the absence of the extraordinary pressure that would inevitably follow an actual attack, and better ensure that the VCF was not the only visible policy alternative. Consideration might then be given to the approaches used by other countries with significant experience in dealing with terrorism. In that respect, Israel's permanent system of compensating terror victims is especially notable (for an overview see Sommer 2003). Israel has prolonged experience with terrorism and one of the most well-developed and formalized programs for providing benefits to those harmed in attacks (under the Victims of Hostile Actions (Pensions) Law). Yet the program for terror victims does not stand apart from other social programs, but is one component of a system administered by the National Insurance Institute that also provides benefits to orphans, disabled workers, the elderly, low-income families, and others. The stated purpose of all such programs is to “ensure financial security for each resident during times of temporary or long-term hardship and crisis” (National Insurance Institute 2003).
While there may be some public policy advantages to avoiding creation of a permanent compensation system similar to Israel's (e.g., not establishing a new bureaucracy), there are also potential costs. Thus in comparing the approach used in the United States and Israel, Hillel Sommer (2003) highlights a number of potential advantages of an ongoing program such as the ability to avoid ad hoc judgments about compensation that may create controversy among victims and others, and the psychological comfort provided by a system in place before an attack occurs. Such arguments for a permanent system ought to at least be seriously considered.
Above all, we wish to encourage debate on a major public policy topic before it moves to the top of the agenda. There appears to be widespread consensus that vigorous discussion of different strategies to prevent terrorism is healthy. We believe the same logic applies to consideration of what we should do for any casualties, in the unfortunate but realistic circumstance that prevention efforts are not entirely successful. Reasonable people may disagree with our conclusions. But if so, we should have that debate now, rather than in the aftermath of a national crisis.
Author Bios
Edward L. Lascher, Jr., is professor, department of public policy and administration, and interim director of The Serna Center at California State University, Sacramento. He is the author of The Politics of Automobile Insurance Reform, and his work on public policy, direct democracy, legislative politics, elections and political parties, and other topics has appeared in various academic journals.
Ellen E. Martin is a graduate of the California State University, Sacramento master's program in public policy and administration. She is currently a senior associate consultant with Economic & Planning Systems, Inc., an urban economics and land use planning consulting firm.