Asbestos Trust Fund Would Go Broke, New Study Says

S. 852 Another Bailout for Asbestos Companies and Their Investors

WASHINGTON, DC - September 30, 2005 - The $140 billion trust fund proposed by S. 852 would run out of money before it could compensate all asbestos victims, according to a newly released study by Bates White, an economic consulting firm. The report estimates that $300 billion would be needed to satisfy asbestos claims, $160 billion short of the budgeted amount. As a result, the fund would go bankrupt within three years of its creation, leaving a debt of more than $45 billion.

S. 852 establishes an asbestos trust fund that is financed by asbestos-affiliated companies and insurers. Asbestos victims would lose their access to the courts. Instead, claimants would be required to go through a lengthy trust fund procedure to quality for damages.

GAO Report Says Asbestos Fund Is Inadequate

Last month, the Congressional Budget Office issued a report about the financing of the asbestos trust fund (Congressional Budget Office Cost Estimate, August 25, 2005). By its estimate, expenses would exceed revenues during the first decade of the trust fund's existence. The fund would need to pay interest and borrow money, increasing the probability of bankruptcy.

Although the maximum revenue that the trust may collect is $140 billion, the actual amount "could be considerably less," the report added. The projections that have been made in the past of the number of asbestos claims likely to be filed were much too low, suggesting that there is a "significant risk of underestimating the number of future asbestos claims," the report concluded.

Other Flaws in the Asbestos Bill

S. 852 has additional flaws. The bill's criteria for classifying asbestos disease types are unfair, inaccurate, and not in tune with modern medical standards. The asbestos exposure requirements are arbitrary, especially the sections that discount asbestos exposures from 1976-1986 by half and post-1986 exposures by 1/10.

Although it harms asbestos victims and their families, S. 852 is a bail-out for asbestos companies. According to the consumer group, Public Citizen, asbestos companies would see their total payments on behalf of asbestos victims decline by margins ranging from 40% to 100%. See Proposed Legislation Benefits Asbestos Companies.

Working for the Defeat of S. 852

Brayton Purcell has been working hard against the passage of S. 852, because we understand how it harms asbestos victims and their families. We will continue the battle against this bill, but we need your help. We urge you to contact your Senators and tell them that you oppose S. 852.