The insurance industry has long been pro-Republican and supported both of George W. Bush's bids at the White House. It would thus come as a suprise to many that the industry will fiercely oppose any bid by the President to overhaul the tax code in favor of investments. CQ's Jill Barshay reports [no link available]:

The GOP’s supply-side tax agenda to spur savings and investment will probably have the side effect of killing the core of the life insurance industry. The White House has floated the idea of eliminating taxes on savings in any form. If that were to happen, Americans would have little need for the tax-sheltered savings products that make up two-thirds of the insurance business. Call it collateral damage.

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No business — not housing, not retail, not health care — is more vulnerable or stands to lose more than insurers if President Bush succeeds in overhauling tax law. Even a mere tweak in the tax code instead of a wholesale rewrite might squash the industry, which collects $389 billion a year in premiums and annuity purchases and makes an additional $170 billion a year off its reserves and other investments.

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[Former Oklahoma governor and insurance industry lobbyist Frank] Keating is warning that inchoate ideas swirling about Washington to slash taxes on savings might be “calamitous for the nation.” He vowed to be “very aggressive this year” fighting to preserve the special status that has long benefited insurers.

Companies that own large chunks of the insurance industry, such as General Electric Co. and Massachusetts Mutual Life Insurance Co., are retaining lobbyists for the coming fight. Also joining in are the trade associations for independent insurance agents who sell policies and annuity contracts.

Jonathan Weisman and Jeffrey H. Birnbaum reported in The Washington Post in December that any tax reform effort won't begin in earnest until 2006 due to widespread opposition, and the President's efforts at privatizing Social Security are foundering with limited GOP support and strong opposition from the Democrats and AARP. The War in Iraq isn't going particularly well, and the dollar is as weak as ever. This is not the way George W. Bush wanted to start to his second term.