A proposed $140 billion government-run trust fund to pay claims from people injured by asbestos would have to borrow money in its early years of operation, and it might or might not have sufficient funds to pay all the claims submitted to it during its expected 50-year life span, according to a study by the Congressional Budget Office.
The CBO estimated that the total value of the claims submitted to the fund over the 50 years could be $120 billion to $150 billion, not including debt service and administrative costs. Defendant companies, their insurers and others are expected to pay up to $140 billion into the fund. But the CBO said payments "could be significantly less."
"Consequently, the fund may have sufficient resources to pay all asbestos claims over the next 50 years, but depending on claim rates, borrowing, and other factors, its resources may be insufficient to pay all such claims," the budget office concluded.
Chairman Arlen Specter (R-Pa.) of the Senate Judiciary Committee and Sen. Patrick J. Leahy (D-Vt.), the ranking minority member of the panel, which approved legislation in June to set up the fund, said they welcomed the CBO's analysis, which they said in a statement showed their bill "will raise sufficient funds to fairly compensate asbestos victims."
The two senators called it "reassuring to see CBO project $132 billion as adequate to pay the claims," which shows that "our legislation with $140 billion is reasonable and realistically calculated to cover the claims."
However, there remains much dissent about the measure, and its future is uncertain.
Michael E. Baroody, speaking for the Asbestos Alliance, a group of companies and trade groups in favor of the bill, saw "plenty of good news" in the CBO report and said, "It is important to remember that borrowing and related costs would be borne by contributors to the fund, not the federal government."
However, opponents called the report evidence that the trust fund wouldn't work.
"This proposal would place all the burden on asbestos victims, denying thousands the help they need to cope with the devastating health and financial consequences of asbestos-related cancer," said Kenneth M. Suggs, president of the Association of Trial Lawyers of America.
As approved by the committee, the bill would pay victims of asbestos amounts ranging from $25,000 to $1.1 million, depending on the seriousness of their disease. Future claims and pending suits against companies would be halted and the cases shifted to the trust fund.
The CBO said it expects that in the first 10 years the fund would collect about $63 billion for insurers and companies with asbestos claims and would pay out nearly $70 billion in claims and other costs. CBO estimated that the fund would have to borrow the rest.
Claims would taper off in later years, however, making it possible for the fund to meet all its obligations, the agency said.
Asbestos-related ailments have sickened tens of thousands of Americans, mostly workers but sometimes their families as well, with a variety of lung ailments, including a fast-moving and usually fatal form of cancer known as mesothelioma.
These ailments have sparked thousands of lawsuits, resulting in billions of dollars in damages awarded. Some 77 companies have been forced into bankruptcy.
Congress has been struggling for years to resolve the asbestos liability problem. All previous efforts have foundered over costs, allocation of damages and other issues.