Workers' compensation benefits and costs grew faster than wages in 2001, in large part because of the economic recession that began in March 2001. The recession brought the slowest growth in wages in more than a decade and a decline in the number of covered workers.

In 2001, wages grew by just 2.4 percent, while total workers' compensation benefits grew by 3.5 percent – for a total of $49.4 billion. Benefits per $100 of wages grew by one cent, from $1.06 in 2000 to $1.07 in 2001. Benefits were about 36 percent lower than their peak in 1992 when benefits were $1.68 per $100 of wages (see Figure 1).

Employer costs, which reflect premiums charged by insurers, rose by 8.0 percent in 2001 to $63.9 billion. Employer costs per $100 of wages rose by seven cents, from $1.32 in 2000 to $1.39 in 2001, but still remain below their 1993 level of $2.16 per $100 of wages.

Workers' compensation premiums are affected by many factors, including the performance of financial markets. Reduced investment returns in 2001 contributed to higher premiums. "The long-term decline in benefits and costs relative to wages since 1992-93 is due, in large part, to fewer reported accidents and fewer claims for workers' compensation," John Burton, Jr., of Rutgers University and chair of the NASI Panel that oversees the study, explained. Workplace accidents that result in lost work days declined from 3.0 to 1.7 per 100 full-time workers between 1992 and 2001, according to the U.S. Department of Labor. Industry sources report similar declines in workers' compensation claims. "Other reasons for the decline include more active management of medical care and more efficient return-to-work programs and other efforts to reduce costs," Burton added. "At the same time, some are concerned that initiatives to control costs, discourage fraud, and tighten eligibility requirements cause injured workers to be denied benefits or discouraged from claiming them," Burton concluded.

During the first day of a testy state Senate hearing, Bob White, the president of First Professional Insurance Co. [the state's largest insurer for physicians], said his company won't falter if a cap on malpractice victims' pain and suffering fails to become law this year. In fact, White said, Florida is the most profitable state for FPIC Insurance Group, First Professional's parent company. "I'm telling you that if we can't make money at these rates, then we ought to quit," White said.

. . . After the hearing, Sen. Alex Villalobos,chairman of the committee, said the testimony had done little to convince him that caps are the answer to soaring premiums. Nothing in the testimony proved that a slew of frivolous lawsuits have been filed in Florida in recent years, he said. And testimony by regulators disproved complaints by doctors' groups that physicians are fleeing the state in record numbers, he said. Diane Orcutt, a deputy director at the state Department of Health, testified that the number of applications for new medical licenses actually rose to 2,658 in fiscal 2003 from 2,261 in fiscal 2000. "So when people testify that [doctors] don't want to come to Florida, that wouldn't be true," said Villalobos, R-Miami.

War, tax cuts and a third year of a flailing economy may push this year's budget deficit past $450 billion, according to congressional sources familiar with new White House budget forecasts. That would be 50 percent higher than the Bush administration forecast five months ago. The deficit projection due out today is nearly $50 billion more than economists anticipated just last week, and it underscores the continuing deterioration of the government's fortunes since 2000, when the Treasury posted a $236 billion surplus. That represents a fiscal reversal exceeding $680 billion. The 2003 forecast -- part of the White House's annual midterm budget update -- easily tops the previous record $290 billion deficit of 1992, even when adjusted for inflation. The red ink now exceeds the entire military budget. Measured against the size of the economy, however, the deficit still has not reached the levels of the Reagan era. It also may prove slightly inflated, because it includes some White House policy proposals that may not be enacted this year.

. . . The rising tide of red ink has put Republicans on the defensive. Asked yesterday about growing war costs and budget deficits, White House spokesman Ari Fleischer cited the terrorist attacks on New York and the Pentagon in 2001, saying: "What was the cost of September 11th? What is the cost of a country that is attacked? What is the price that the American people would have to pay if something like that were ever to happen again?"

Rich Meade, the House Budget Committee's chief of staff, sent out talking points yesterday to gird GOP lawmakers, staff and the press for the deficit figures. They suggested that the deficits are being fueled by excess government spending, not tax cuts, and will be reversed only by the economic growth that three successive years of tax cuts are supposed to fuel.

The absence of a national health system in the United States means that the Big Three take on social responsibilities that the governments in Japan and Germany bear. Gary Lapidus, a Goldman, Sachs analyst, referred in his recent report to the Big Three as "H.M.O.'s with wheels" that only happen to make cars. G.M. alone provides medical coverage to nearly half a percent of the United States population, when dependents are included. . . . Uwe Reinhardt, a Princeton University health care economist, calls the Big Three "a social insurance system that sells cars to finance itself." "It's insane to think that a company embedded in a fierce global competition can function as a social insurance system," he said. "It is a crazy, anachronistic idea. It's an idea that worked in the 60's, but lost its validity beginning in the 70's when the car market became global." . . . G.M.'s medical cost is equivalent to about $1,200 a car in this country.

Mr. Fleischer insisted that the new reference [in the State of the Union speech] "was different" from the one removed in Cincinnati [that Iraq was seeking 550 metric tons of uranium from Niger, rejected by the CIA] — it was a general claim that Mr. Hussein had "sought" uranium in Africa, not that he had obtained any. But clearly someone in the White House wanted more details to come out of the president's mouth. A mid-level N.S.C. official called the C.I.A. for more details. . . . According to the accounts provided by the White House, the C.I.A. official, Alan Foley, pushed back, saying the specifics could not be verified. That is when the White House reached for the unclassified British report, and attributed the statement to Prime Minister Tony Blair's intelligence services.

In late 2001, a rumor circulated that the government of Iraq was trying to buy yellow cake. In the shadowy world of espionage, it is still unclear who started the rumor. What is known is that some individuals or an organization forged documents to cast blame on Iraq. The documents were appallingly crude. The letterhead on one document was obviously transplanted from some other, presumably genuine, paper; the signature of the president of Niger was copied; and, most telling of all, one signature was supposedly written by a minister who had been out of office for over a decade.

. . . [I]n early 2002, the CIA asked a retired American ambassador with 23 years of experience on African affairs (and who had been stationed in Niger in the 1970s) to investigate. . . . When Wilson [the former ambassador] arrived in Niamey, the Nigerien capital, . . . the current U.S. ambassador, Barbra Owens-Kirkpatrick, and the embassy staff . . .told him that the story was well known and that they had already "debunked" it in reports to Washington. Then, as Wilson writes, "I spent the next eight days drinking sweet mint tea and meeting with dozens of people: current government officials, former government officials, people associated with the country's uranium business." They uniformly and formally "denied the charges." The Embassy concurred.

In his State of the Union address on Jan. 28, Mr. Bush contended that Saddam Hussein was trying to develop a nuclear bomb. Among elements he cited to make his case was a statement that "the British government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa." Ms. Rice, in an appearance on "Fox News Sunday," said that "the statement that he made was indeed accurate. The British government did say that." And Mr. Rumsfeld said on the NBC News program "Meet the Press" that "it turns out that it's technically correct what the president said, that the U.K. does — did say that — and still says that. They haven't changed their mind, the United Kingdom intelligence people." On the ABC News program "This Week," Mr. Rumsfeld added that "it didn't rise to the standard of a presidential speech, but it's not known, for example, that it was inaccurate. In fact, people think it was technically accurate."

Experts reckon the federal deficit will be at least $400 billion in the current fiscal year. Over the next 10 years, the deficit will mount to a cumulative $4.1 trillion, figures the Center on Budget and Policy Priorities (CBPP) in Washington. That calculation assumes the tax cuts in this year's tax legislation are extended and the extra costs of the Iraqi occupation and of a Medicare prescription-drug program are included. The deficit in 2013 will be $530 billion, this projection maintains. After the baby boomers retire and collect their Social Security and Medicare payments, the budget picture looks even worse. The Social Security trust funds will be exhausted in 2042. Thereafter, payroll taxes will not be sufficient to cover quite fully the benefits promised retirees and the disabled. The funds would need another $3.5 billion in today's dollars, earning interest at Treasury rates, to pay all scheduled benefits over the next 75 years, the Social Security Board of Trustees reports. The long-term financial problems are "very serious," states Jo Anne Barnhart, commissioner of Social Security. Medicare is in worse shape, with unfunded benefits equaling $5.9 trillion.

As the tax cuts of the past three years demonstrate, the tax code is malleable. Congress can raise or cut taxes. And Americans may not accept a tax burden greater than 19 percent of GDP for long. . . . Boskin [the economist mentioned above] assumes the average marginal tax on income from 401(k) and other such plans will be 28 percent. But it could be closer to 20 percent. And how much of the money in these accounts will be withdrawn earlier than retirement and thus not be so large, with fewer taxes due? . . . [Furthermore, Boskin] suspects Americans in the future will live longer on average than Social Security actuaries reckon, thereby making the system's deficit worse.

The problem is simple: Medicare doesn't fully repay doctors for treating its patients, as the program's reimbursement fees haven't kept up with doctors' soaring costs. Medicare's physician reimbursements have been cut in recent years and are due another 4.2 percent cut next year to help control government outlays for the cash-strapped program. Doctors say the low reimbursement rates are artificial price controls that threaten to drive them out of business. Rather than be underpaid, more family doctors are just saying no to new Medicare patients such as Senal. The trend has created a nationwide access-to-care problem for thousands and thousands of seniors who have relocated or seek new doctors.

. . . For routine office visits in which he treats several different ailments, Sattenspiel charges $85. Medicare pays $38.25 for such visits. For more complicated office treatments, Sattenspiel charges $124. Medicare pays him $59.50. The shortfall, he said, has forced him to spurn new Medicare patients. . . . Sattenspiel's payment shortfalls with Medicare help explain why more than 1 in 5 family doctors - 21.7 percent - don't take new Medicare patients, according to a 2002 survey by the American Association of Family Physicians. That's up from 17 percent, or 1 in 6 doctors, in 2001.

The cost of the war and occupation of Iraq could reach $100 billion through next year, substantially higher than anticipated at the war's outset, according to defense and congressional aides. This is raising worries that other military needs will go unmet while the government is swamped in red ink. The cost of the war so far, about $50 billion, already represents a 14 percent increase to military spending planned for this year. Even before the United States invaded Iraq in March, President Bush had proposed defense budgets through 2008 that would rise to $460 billion a year, up 74 percent from the $265 billion spent on defense in 1996, when the current buildup began. At the same time, the federal budget deficit is exploding. This week, officials expect to announce that it will exceed $400 billion for the fiscal year that ends Sept. 30, the largest in U.S. history by a wide margin. Former White House budget director Mitchell E. Daniels Jr. said last month the deficit should be smaller next year, but economists at Goldman Sachs Group Inc. -- factoring rising war costs -- said Friday the deficit may climb even higher than their previous $475 billion estimate.

. . . Defense experts worry that the cost of actual operations in Iraq understates the impact of those operations on military and federal spending. Indirect costs of a protracted conflict could include new funding for military recruiting and the retention of exhausted troops ready to leave the services, Kosiak said. . . . During the 2000 presidential campaign, Republicans contended that President Clinton had stretched the military too thin with the deployment of 10,000 troops in the Balkans, Kosiak noted. Now, there are 16 times that many soldiers in Iraq and Afghanistan alone, and the grumbling is beginning again.

. . . Two antiwar activists, Elias Vlanton of Takoma Park, and Niko Matsakis of Boston, are keeping a running tally of the war costs on their www.costofwar.com Web site. Among the site's assertions: the $67 billion spent this year on the war and Iraqi reconstruction could have put 9.5 million more children in Head Start, financed the hiring of 1.3 million schoolteachers, or covered the health insurance costs of 29 million children.

CIA Director George J. Tenet successfully intervened with White House officials to have a reference to Iraq seeking uranium from Niger removed from a presidential speech last October, three months before a less specific reference to the same intelligence appeared in the State of the Union address, according to senior administration officials. Tenet argued personally to White House officials, including deputy national security adviser Stephen Hadley, that the allegation should not be used because it came from only a single source, according to one senior official. Another senior official with knowledge of the intelligence said the CIA had doubts about the accuracy of the documents underlying the allegation, which months later turned out to be forged. The new disclosure suggests how eager the White House was in January to make Iraq's nuclear program a part of its case against Saddam Hussein even in the face of earlier objections by its own CIA director. It also appears to raise questions about the administration's explanation of how the faulty allegations were included in the State of the Union speech.

. . .Administration sources said White House officials, particularly those in the office of Vice President Cheney, insisted on including Hussein's quest for a nuclear weapon as a prominent part of their public case for war in Iraq. Cheney had made the potential threat of Hussein having a nuclear weapon a central theme of his August 2002 speeches that began the public buildup toward war with Baghdad.

What a coincidence. The Bush administration skipped normal bidding processes in awarding Cheney's Halliburton company a huge contract to manage Iraq's oil situation.

President Bush has billed the Department of Health and Human Services to help finance trips tied to political events far more than his predecessor, Bill Clinton, according to a General Accounting Office report. The GAO, acting at the request of Rep. Charles B. Rangel (N.Y.), the ranking Democrat on the Ways and Means Committee, found that the White House and HHS have agreements calling on the HHS to pay $523,000 toward the cost of 15 events between January 2001 and January 2003. Fourteen of the trips were before the 2002 congressional election, and Bush attended campaign events on at least nine of the trips.

. . . HHS and White House officials have sought to justify the billings by pointing out that President Clinton did the same thing. The GAO report said information supplied by HHS for the period from April 21, 1997, to September 29, 2000, showed that the Clinton White House billed HHS for a total of $101,000 in connection with 37 trips.

In his State of the Union address, Mr. Bush cited an Iraqi attempt to purchase uranium from Africa as part of evidence of Mr. Hussein's unconventional weapons and Iraq's desire to reconstitute its nuclear program. "The British government," the president said, "has learned that Saddam Hussein recently sought significant quantities of uranium from Africa."

Other senior administration officials had been more cautious about the information. In a recent interview, Secretary of State Colin L. Powell said that by the time he got to a meeting that Mr. Tenet attended at the C.I.A. three nights after the president's Jan. 28 speech, Mr. Powell's staff had already dismissed any thought of using the Africa claim to bolster the case the secretary was to make a few days later at the United Nations. The intelligence agencies, Mr. Powell said, were "at that point not carrying it as a credible item." In a briefing with reporters on Thursday night in South Africa, Mr. Powell suggested that he had looked into the assertion more closely and decided it was not based on sufficiently reliable information to repeat to the United Nations. "When I made my presentation to the United Nations and we really went through every single thing we knew about all of the various issues with respect to weapons of mass destruction, we did not believe that it was appropriate to use that example anymore," he said. "It was not standing the test of time. And so I didn't use it, and we haven't used it since."

Yesterday, Ms. Rice said Mr. Powell's decision had not been driven by any new information but by longstanding concerns in the State Department's own intelligence branch about whether the data was reliable. . . . In the classified version of a National Intelligence Estimate prepared by intelligence agencies last fall, the allegation about Iraq's activities in the African nation of Niger was included along with a footnote that said the State Department had its doubts about whether it was justified by the evidence.

In recent days, the C.I.A.'s spokesman said Mr. Tenet had never personally approved Mr. Bush's use of the African uranium example in the speech. But Dan Bartlett, one of Mr. Bush's closest aides, who drafted parts of the address, said in an interview that the wording had been "cleared at the highest levels of the C.I.A." which would seem to mean Mr. Tenet or his deputy, John McLaughlin. Inside the National Security Council, some senior staff members gave a slightly different account, saying the paper trail suggests the claim about Africa may have been approved at the agency's midlevels, by a senior expert on nuclear proliferation and arms control. A senior administration official said Ms. Rice had telephoned Mr. Tenet before she spoke to reporters yesterday. Asked whether the White House continued to have confidence in Mr. Tenet, Ms. Rice replied, "Absolutely."

. . . There are still major questions about whether there was a failure to communicate the doubts of some intelligence analysts to the White House or whether, as some senior intelligence officials maintain, in the prelude to the war, the White House stripped much of the nuance and balance from intelligence reports to make the threat from Mr. Hussein seem more urgent and the need for action more immediate. There is evidence that there was concern in the C.I.A. about the credibility of the uranium information and that those doubts reached at least some White House officials months before the State of the Union address. Administration officials involved in drafting another speech Mr. Bush gave about Iraq, in Cincinnati on Oct. 7, said that at the C.I.A.'s behest, they had removed any mention of the central piece of intelligence about African uranium — a report about an effort by Iraq to obtain "yellowcake," which contains uranium ore, in Niger. No one has fully explained how, given that early October warning to the White House, a version of the same charge resurfaced in the early drafts of the State of the Union address just three months later, and stayed there, draft after draft.

. . . To Mr. Bush's critics, both in Congress and in the intelligence sector, the case of the African uranium is just one example of what happened to the evidence about Iraq's weapons and links to terrorism as it moved from individual scraps of intelligence, to the murky world of classified assessments, to the boiled-down language of executive summaries, to the crisp, declarative language of a president who knew, in the words of one of his top aides, that he "needed to rally the country for war." Caveats and cautions often fell away, senior government officials and intelligence analysts in Washington and London said in recent interviews. Even when cautionary language survived, it was often drowned out in the echo chamber of talk shows and the shorthand of newspaper headlines.

. . . Greg Thielmann, a proliferation expert who worked for the State Department's Bureau of Intelligence and Research, added this week: "This administration has had a faith-based intelligence attitude: `We know the answers, give us the intelligence to support those answers.' When you sense this kind of attitude, you quash the spirit of intellectual inquiry and integrity."

. . . The White House would not say what the C.I.A. officers had been asked, or whether the issue had been raised with Mr. Tenet, who sees the president daily and speaks often with Ms. Rice and Stephen J. Hadley, the deputy national security adviser.

In the case of the uranium, Mr. Bush actually cited British intelligence because it had published the allegation about Africa in an unclassified report in September. "It cited a public document, which probably helped," Ms. Rice explained yesterday. "It was also Britain, which probably helped."

. . . Before the speech, the crucial conversations between the C.I.A and White House over whether to include the African reference in the State of the Union address were held between Robert G. Joseph, a nuclear proliferation expert at the National Security Council, and Alan Foley, a proliferation expert at the C.I.A., according to government officials. There is still a dispute over what exactly was said in their conversations. Mr. Foley was said to recall that before the speech, Mr. Joseph called him to ask about putting into the speech a reference to reports that Iraq was trying to buy hundreds of tons of yellowcake from Niger. Mr. Foley replied that the C.I.A. was not sure that the information was right. Mr. Joseph then came back to Mr. Foley and pointed out that the British had already included the information in a report. Mr. Foley said yes, but noted that the C.I.A. had told the British that they were not sure that the information was correct. Mr. Joseph then asked whether it was accurate that the British reported the information. Mr. Foley said yes. Other government officials said, however, that Mr. Joseph did not recall Mr. Foley's raising any concerns about the reliability of the information. If he had, they said, Mr. Joseph would have made sure that the reference was not included in the speech.

The Bush administration doled out $1.44 million in bonuses to 470 political appointees last year, according to an Office of Personnel Management report. . . . The cash awards went to about 19 percent of the 2,478 political appointees who ranked below those confirmed by the Senate and therefore were eligible for the bonuses. The average award of $3,064 represented a little more than 3 percent of the average salary of $99,583 earned by eligible appointees. House Minority Whip Steny H. Hoyer (D-Md.) obtained the bonus report from OPM Director Kay Coles James after an eight-month wait . . .. Hoyer, whose district includes many government workers, said he found it "disturbing" that the administration had rewarded political appointees with bonuses while initially fighting a 4.1 percent pay increase that Congress approved for civilian federal employees. . . . The 2002 bonuses have come at a time when the government's 2 million civilian employees have been reeling from administration moves to limit pay increases, open up more government jobs to bidding from private contractors and rewrite personnel rules at the Defense and Homeland Security departments.

In 2002, to great fanfare, McDonald's announced that it would switch from partly hydrogenated oil to one that contained no trans fats for cooking its french fries, but the company has never made the switch. Asked about the delay, a company spokeswoman said yesterday that "we will test until we're convinced it is right."

Baker [a Louisiana representative who chairs the subcommittee and who proposed this change] has previously objected to Spitzer's action in the global settlement with Citigroup Inc., Morgan Stanley and eight rival securities firms. In an April 2002 letter to then-SEC Chairman Harvey Pitt, Baker wrote that Spitzer sought "to achieve blanket rulemaking and policy changes that would impact the entire national securities markets.'' Baker wrote that "public policy is best achieved through an open and deliberative process that welcomes diverse perspectives and the free exchange of ideas, not through dictates arrived at by the few and outside the public's view.''

Defense Secretary Donald H. Rumsfeld nearly doubled the estimated military costs there to $3.9 billion a month. . . . A Pentagon official said the $3.9 billion figure "is the estimated cost to maintain the current force level in Iraq," which includes expenses for military operations, including fuel, transportation, food, ordnance and personnel, but not reconstruction costs. The $3.9 billion figure is almost double the $2 billion per month estimate issued by administration officials in April.

[H]alf of President Bush's five-day African trip will be spent in South Africa and Botswana - the continent's biggest and fastest-growing economies, respectively - speaks volumes of his vision for Africa. It is here that Mr. Bush will push trade and development, not handouts, as Africa's quickest path out of poverty. It is here that he will call for the first free-trade agreement between Africa and the US. And it is here that he will find African leaders who share his vision.

To be sure, the trip is also about US interests. Open trade with Africa means greater access to its oil reserves, which experts say will become increasingly important as the US looks for energy sources outside the Middle East. And a more stable and prosperous Africa is seen as reducing potential breeding grounds for terrorists.

The negative effects of US subsidies on commodities like cotton, says Mr. Houghton [of Oxfam], far outweigh the benefit of any free-trade agreement. Oxfam says the US spends $4 billion a year subsidizing its cotton production, which depresses the price of the commodity worldwide, hurting African farmers who would otherwise be able to produce and sell it much more cheaply than US farmers. West African countries have already taken the issue before World Trade Organization, alleging that the subsidies constitute unfair trade barriers.

Nor is America's interest in growing African economies entirely selfless. Although AGOA does not require African countries to drop their trade barriers to US products, the free-trade agreement with SACU would require a lowering barriers on both sides. "South Africa is a market with huge potential," says Gus Selassie, senior African analyst for the World Markets Research Center in Boston. "You have 40-odd million people with spending power equivalent to some Eastern European countries." . . . Southern African unions are worried about the effect an agreement might have on employment and argue that as long as the US protects its own markets with subsidies, African countries must retain the right to protect their industries with import tariffs. "We are concerned that trade agreements tend to favor the more advanced capitalist countries, particularly America," says Patrick Craven, a spokesman for the Congress of South African Trade Unions. "America and the European Union talk about free trade, but they don't actually practice it."

For years the trial lawyers had state courts wrapped around their fingers. Now big business is striking back. It is waging a secret election-campaign war on judges who favor plaintiffs in tort cases.

. . . Dickinson [a pro-business judge] was swept into office on a down-and-dirty, name-calling campaign bankrolled by $1.2 million he raised from doctors and small-business owners--an unheard of sum for a judicial election. But he also had a hidden helper: Unbeknownst to some Mississippi voters, the U.S. Chamber of Commerce pumped $1 million more into anti-McRae [a populist judge backed by trial lawyers] ads, funneling it through local groups such as Mississippians for Economic Progress. McRae's ouster is part of a secret war on judges now being waged by the chamber. It has spent $100 million since 2000 and will spend $50 million or more this year. The prime objective: to vote out judges supported by trial lawyers, labor unions and the Democratic Party and install new judges sympathetic to insurance companies, multinational corporations and the Republican Party. The chamber also is taking aim at state attorneys general, trial lawyers and state legislators.

. . . Insurance giant American International Group, Home Depot and DaimlerChrysler are chipping in. The influx of money has raised the stakes: In 2000 candidates spent $46 million in state judicial elections--or $430,000 per race, up 60% from the previous election, says a study by the Brennan Center for Justice at New York University Law School and the National Institute on Money in State Politics. The chamber thus has reshaped the once sedate, lawyer-friendly game of electing judges, roiling it with vituperative politics replete with attack ads, whisper campaigns and allegations of election-law violations.

This is a dirty business. The Brennan Center says ads have "grown increasingly negative and controversial, and in some cases [have] fallen far beneath the level of dignity most Americans associate with their judicial system." Adding to the intrigue, the chamber cloaks its efforts by sidestepping disclosure laws that require revealing contributions. Instead of donating cash to candidates, it provides ad money and couches the effort as "informational" and policy-based. "We're seeing that politics is rearing its ugly head," says professor Lester Brickman of the Cardozo Law School in New York. "But politics has always been present, if shrouded in black robes. Now it's out in the open."

Lawsuits brought by Mississippi and an Ohio group charge the chamber with illegal tactics in election advertising. The American Bar Association last month issued a blistering report entitled "Justice in Jeopardy," attacking "the corrosive effects of excessive money in judicial campaigns." It was striking back at the chamber's $10 million TV ad campaign in five states last year, which asserted that judges and lawyers impose a "lawsuit abuse tax" of almost $2,000 a year on every family of four in the U.S. One spot shows a needy mother and child waiting in a long line at the courthouse, while a smarmy trial lawyer saunters up to the front. "It's a cheap trick," says ABA President Alfred P. Carlton Jr., "offensive imagery, non sequiturs and factual inaccuracies."

. . . But chamber-backers such as Maurice (Hank) Greenberg, the 78-year-old chairman of AIG, the nation's largest insurer, say there isn't any choice but to wage allout war. In February AIG took a jolting $1.8 billion charge for the 2002 fourth quarter, blaming "egregious jury awards and settlements for litigation related to asbestos, medical malpractice and other damages." AIG's stock fell from $55 to $47 in a week, wiping out $23.5 billion in market value. Though the stock recovered, Greenberg remains riled. "A bubble economy translated into a bubble on awards," he huffs. "It's coming out of our companies, out of the insurance industry, and it is being divided among the lawyers and some of the plaintiffs." The costs of litigation and liability claims exploded from 0.6% of GDP in 1950 to 2% of GDP by 2001--$200 billion a year. The annual toll could hit $300 billion by 2005. Lawyers typically pocket a third of the loot.

. . . But even some chamber backers are uncomfortable with this crusade. DaimlerChrysler says it supports "voter education," not a war on judges. But this ugly battle will go on for a while; judges ordinarily sit for 6 to 12 years before they face reelection. Says Tom Donohue: "We want to play a full-court press--challenge [the trial lawyers] in the courts, in the voting booth, in the court of public opinion and in the state legislatures and Congress. Then they have to play everywhere at the same time. They become more visible and have to defend themselves."

[T]he judge said that "to kill the company" would "unfairly penalize its 50,000 innocent employees, remove a major competitor from a market that involves significant barriers to entry," and negate the measures the company has taken to guarantee corporate responsibility and oversight.

For starters, there's no explosion of cases that might drive up legal costs. The number filed each year has remained fairly steady during the past decade, according to the National Center for State Courts. Further, most malpractice plaintiffs never even see a jury--two thirds of their cases are dropped or dismissed--and when they do, it often isn't a sympathetic one. Only a tiny sliver of cases filed--just 0.9 percent of some 5,500 cases surveyed for 2002--produce jury verdicts for patients claiming injury. And even the size of that small wedge is down by half since 2000, according to the Physicians Insurers Association of America, the trade group for malpractice insurers owned or operated by doctors, which account for about 60 percent of the market.

Within that wedge, the number of payments that doctors' insurers make following jury verdicts has held steady in recent years, at around 400 annually, according to a U.S. News review of hundreds of thousands of payments of all kinds reported to the federal National Practitioner Data Bank. These payments total about $143 million each year. Malpractice insurers are required by law to report their payouts to the system.

Doctors and insurers say that frequency of claims aside, the prime issue is the size of awards. Indeed, the size of insurer payments stemming from jury verdicts has been increasing in recent years, U.S. News has found; in 2002 it reached a median of $295,000. But, that's far below the median jury award of $1 million the AMA and others often cite. Even assuming two defendants per case--a number insurers say is typical--plus other adjustments, the median payment remains hundreds of thousands of dollars short of the $1 million figure.

In fact, settlements, not jury verdicts, make up the real action in the relatively few malpractice cases that eventually produce awards. Overall, about 3 in 10 cases filed end with settlements. While these deals are agreements among the parties, doctors and insurers say juries still figure prominently, because fear of a big jury verdict drives many settlements.

But it's not clear that verdicts are really the whip behind settlements. Over time, the size of a typical settlement payment has grown somewhat faster than a typical jury verdict payment. And while the sum from jury awards has remained stable over the past decade, the total of payouts from settlements has soared, especially recently, when doctors say the crisis has emerged. Thus, it's harder to argue that wildly growing payouts from jury verdicts are propelling settlements.