- The Washington Times - Sunday, September 25, 2005

Could the Senate’s asbestos-trust-fund proposal eventually cost taxpayers tens or even hundreds of billions of dollars? That’s the question that should be on lawmakers’ minds if and when the Senate votes on it this fall. Evidence keeps mounting that the trust fund will go bust in a few years and leave taxpayers on the hook for huge sums of money.

It’s unclear in dollar terms exactly how large the sums will be, but just about everyone agrees that the fund will run a deficit. The Congressional Budget Office reported last month that it will bleed $6.5 billion by 2015, not counting debt-service costs. This is because the fund will take in less money than it receives. As currently designed, companies liable for asbestos damages will contribute about $63 billion over that period in exchange for an end to liability in court. But the expected asbestos-injury payouts will be about $70 billion. With a fund designed to last 50 years, then, things could quickly get out of hand.

Or the fund will simply go bust quickly. A new study commissioned by the American Legislative Exchange Council predicted that the fund “would sunset within three years of its inception with a debt of more than $45 billion.” That’s a polite way of saying it will run out of money by 2008, and, under its “sunset” provision, push asbestos-injury claimants back to courts, where they would begin filing lawsuits all over again. The ALEC report also faults the CBO for underestimating the number of claimants. Its estimate for the fund’s total liability is jaw-dropping: anywhere from $300 billion to $695 billion, much larger than the $140 billion the fund is expected to collect from companies over a 30-year period.

Just about every precedent to the asbestos fund is discouraging. Claims against the Johns Manville bankruptcy fund, an infamous effort to solve asbestos-injury claims, outstripped resources by a factor of 20. Only one trust has been able to meet its obligations, according to Francine Rabinovitz, a trust-fund expert at the University of Southern California, who told Sens. Jon Kyl, Arizona Republican, and Tom Coburn, Oklahoma Republican, that “none of the bankruptcy trust created prior to 2002 have been able to pay over the life anywhere close to 50% of the liquidated value of qualifying claims.” For this reason and others, the senators qualified their votes in the Judiciary Committee to send the bill to the floor with serious reservations, saying they were “deeply concerned that this fund will run out of money and prove unable to pay all qualifying claimants.”

None of this is news in the Senate, where Sen. Arlen Specter, Pennsylvania Republican and chairman of the Judiciary Committee, has leaned hard on his colleagues to favor the bill. In the House, lawmakers are waiting to see how the bill fares in the Senate before attempting to bring a trust-fund bill to the floor. A faction of congressmen is in open revolt against the trust fund. The “Asbestos Compensation Fairness Act of 2005,” sponsored by Rep. Chris Cannon, Utah Republican, utterly rejects the trust-fund approach in favor of changing claimants’ requirements in court, specifically by making them demonstrate that their ailments meet criteria set forth by the American Medical Association. Sixty others in the House have signed onto the Cannon proposal in a rebuke to the Senate’s approach.

With a massive budget deficit, ongoing expensivecommitmentsinIraq, Afghanistan and elsewhere and now a huge commitment to finance Hurricane Katrina relief, the last thing the country needs is an exhaustively expensive solution to the asbestos mess. A few bold Republicans in the Senate must tell Mr. Specter they will not vote for the trust fund unless its problems are fixed.

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