Washington, DC, June 7, 2006--The Senate proposal for a privately funded trust to pay asbestos injury claims is laden with uncertainty and taxpayers risk footing the bill, the former head of the Congressional Budget Office plans to tell a Senate committee on Wednesday.
The highly critical assessment of the asbestos legislation by Douglas Holtz-Eakin appears in testimony prepared for delivery on Wednesday at a Senate Judiciary Committee hearing. A copy was made available by Senate aides.
Holtz-Eakin did an analysis last year, while still CBO director, that estimated claims at between $120 billion and $150 billion. The bill's sponsors said that showed a $140 billion fund would have enough money.
Holtz-Eakin said he was not retracting his old analysis, but was adding observations now he was no longer director of the non-partisan office that assesses the budget impact of legislation.
"The entire exercise is fraught with uncertainty," he declared in the testimony. Revenues could fall short of $140 billion, while the overall scale of asbestos injury claims for decades to come was difficult to predict.
Asbestos legislation has been stalled since February when it failed by one vote to get past a procedural hurdle in the Senate. Its sponsors, Pennsylvania Republican Arlen Specter and Vermont Democrat Patrick Leahy, are trying to revive it.
They reintroduced it with some changes but the basic proposal remains establishing a $140 billion fund to be financed by U.S. companies that have made or used asbestos, and their insurers. In return, the companies would be shielded from legal liability.
Asbestos, a fire-retardant mineral, was widely used in building insulation and other products until the 1970s. Inhalation of its fibers has been linked to cancer and other diseases. Hundreds of thousands of injury claims have helped push over 70 U.S. companies into bankruptcy.
Holtz-Eakin said the Fairness in Asbestos Injury Resolution (FAIR) Act, purports to insulate the U.S. taxpayer from expense, but it is unlikely to do so.
The proposed asbestos fund was much like the U.S. pension insurance agency--privately financed, but likely to need a taxpayer bailout, he said. "When FAIR Act benefits exceed fund resources, a future Congress and administration are equally likely to turn to the taxpayer for the shortfall," he said.
The fund will have to borrow money to sustain operations, and is unlikely to be allowed to simply fold if it runs out of money, Holtz-Eakin said.
Specter and Leahy hope Senate Majority Leader Bill Frist will bring up the bill again soon on the Senate floor. But Frist's chief of staff, Eric Ueland, said on Tuesday that it was not yet clear if the sponsors had the 60 votes needed to overcome procedural hurdles.
One supporter, Alabama Republican Sen. Jeff Sessions, did not detect a change in the bill's outlook. "I haven't felt a lot of momentum," he said. "I think the need is still there."
