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Press Release


Study: Senate's Asbestos "Reform" Bill Would Burden Taxpayers with Billions, Worsen Litigation Lottery; Lawmakers Should Vote "No"

For Immediate Release December 8, 2005

(Alexandria, VA) - The asbestos issue has had many ill effects on individuals, the legal system, and the economy, but the U.S. Senate's proposed cure is worse than the disease itself, according to a study released today from the 350,000-member National Taxpayers Union (NTU). The non-partisan citizen group's exhaustive analysis predicts that taxpayers could be soaked for tens (or even hundreds) of billions in liabilities for a federal claims fund whose flawed structure virtually guarantees its failure. NTU is urging Senators to reject the bill in its current form, and will include roll-call votes on the legislation in its Rating of Congress.

"Our society and economy desperately need a solution to the asbestos crisis, but giving trial lawyers the equivalent of a taxpayer-backed paid holiday so they can find more clients to clog the system is no remedy," said study author and NTU Policy Analyst Jeff Dircksen.

Supporters of S. 852, the Fairness in Asbestos Injury Resolution (FAIR) Act, believe the bill offers the best approach to the flood of claims for asbestos health problems, by creating a federally-administered trust fund capitalized by insurers and firms that made or utilized asbestos. However, Dircksen contends that the legislation is filled with pitfalls, such as:

  • Victims to see additional delays. Challenges to the constitutionality of the trust fund could delay its initiation, giving the trial bar more time to overwhelm the system with claims and force cases back into the courts (where attorney fees would be more lucrative).
  • Small business protections paltrier than advertised. Firms that have worked to protect themselves from liabilities would be stripped of their insurance assets and forced to "contribute" to the new fund. Many small businesses, already struggling under taxes and regulations, would pay a proportionally larger share of their revenues than major firms.
  • Taxpayers would be left with billions in additional debt. S. 852 assumes (but does not mandate) that participants will contribute $140 billion to the trust fund over its 30-year life. Yet, both the funding and expense scenarios under S. 852 are unrealistic - the trust fund could be broke in five years or less, resulting in the reversion of claims to the legal system or a massive infusion of taxpayer cash (between $45 billion and $450 billion).

Although proponents of S. 852 believe that adequate safeguards have been built into the proposal, Dircksen warned that past fiscal history provides many cautionary tales of federal ventures like these. The Black Lung Trust Fund, for example, proved to be at least three times costlier than initially estimated, while the Savings & Loan bailout and the Medicare drug benefit both illustrate how reluctant policymakers can be to address rising costs once programs are enacted.

The author recommends that instead of S. 852, Congress should consider legislation that tightens criteria for filing claims, extends filing deadlines, and limits punitive damages. "Congress now has a choice to make in avoiding the next S&L crisis or Black Lung debacle," Dircksen concluded. "It may select a medical standards and litigation reform bill that cuts victims, businesses, and taxpayers free of the tangle, or it may choose the FAIR Act, which will only pull those groups deeper into the coils of the asbestos problem."

NTU was founded in 1969 to work for lower taxes, smaller government, and economic freedom at all levels. Note: NTU Policy Paper 118, Gordian Knot: How the Senate's Asbestos "Reform" Bill Entangles Taxpayers, is available online at www.ntu.org.

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