US Asbestos Fund could Fall Short - Budget Office

US Asbestos Fund could Fall Short - Budget Office

August 29, 2005

Reuters

Washington - A $140 billion asbestos compensation fund being considered by Congress might be too small to cover all the claims of asbestos victims over the next 50 years, according to the Congressional Budget Office (CBO).

The proposed fund would have to pay out between $120 billion and $150 billion in claims to people who were exposed to the mineral, said the CBO report dated Aug. 25.

It was impossible to know for sure whether the fund would be adequate over the long term because of the uncertainty about the number of future claims and how many would be approved, the budget office said.

The legislation would take asbestos injury claims out of court and pay them from the fund financed by asbestos defendant companies and their insurers.

The CBO estimated that, in the first 10 years, the fund would have to borrow almost $8 billion to meet injury claims because more than half of all anticipated claims would come in that initial period, outstripping industry contributions.

"The interest cost of this borrowing would add significantly to the long-term costs faced by the fund and contributes to the possibility that the fund might become insolvent," said the CBO.

Asbestos fibers have been used in building materials, auto parts and other products for decades, but are linked to cancer and other diseases. Hundreds of thousands of injury claims have forced many companies into bankruptcy.

Senate Judiciary Chairman Arlen Specter, a Pennsylvania Republican, and Sen. Patrick Leahy of Vermont, the panel's ranking Democrat, are the chief co-sponsors of the asbestos bill.

The bill was approved by the Judiciary Committee in May. But with doubts about how much support it has in either party, it has not yet been brought to the Senate floor.

Republican critics are concerned about the fund's solvency and whether it would halt all asbestos lawsuits, while Democrats have questioned whether it treats victims fairly.

Nevertheless, Senate Majority Leader Bill Frist has said he intends to bring the legislation to the Senate floor this autumn.