FreedomWorks

This piece orignally appeared as an oped in Investor's Business Daily.

The Senate’s $140 billion Asbestos Trust Fund is shaping up to be the 2006 version of the Medicare prescription drug bill: a giant new government program being pushed by Republican leadership and opposed by a broad range of groups from all parts of the political spectrum. If passed, it will be bad news for taxpayers, asbestos victims, small and medium sized businesses, and the politicians who vote for it.

To be sure, runaway asbestos litigation is a crisis Congress must address. More than 730,000 claims have been filed since asbestos litigation began, including an estimated 200,000 pending in courts today, and as many as three million possible before the litigation ends. Companies have already paid an estimated $70 billion in asbestos-related settlements and legal costs since the 1970s, with more than 70 companies filing for bankruptcy, costing 60,000 workers their jobs. Something must be done. But it must not be Tom Daschle’s trust fund.

Daschle’s trust fund, currently being pushed by Sens. Arlen Specter (R- Pa.) and Pat Leahy (D- Vt.), is misleadingly called “The FAIR Act.” This legislation, S. 852, would create a “trust fund” at the Department of Labor to pay compensation to those exposed to asbestos. S. 852 will tax defendant businesses and insurers to fund this new program. Groups on both the left and right argue that the $140 billion trust fund will face problematic shortfalls.

Taxpayer rights groups cite previous government efforts to deal similarly with problems as reasons to be wary. The National Taxpayer’s Union points to the Black Lung Fund as an example of the potential negative consequences to taxpayers. That fund was established with $3 billion in 1969 to satisfy claims through 1976, when it was set to expire. By 2004, it had paid out $41 billion dollars. It is already being predicted that the asbestos trust fund will fall short by between $45 billion and $450 billion.

Victim’s groups are also opposing the bill, citing concern that real victims will not receive the compensation they deserve. The Committee To Protect Mesothelioma Victims argues that the bill will take away the legal rights of victims by removing their claims from the court system and forcing them to apply to the trust fund for compensation. University of Chicago law professor David Strauss has added that the FAIR Act violates the Takings Clause of the Fifth Amendment of the Constitution, as possibly the Due Process Clause.

Small and medium sized businesses, too, oppose the trust fund—a backroom sweetheart deal for a handful of Fortune 100 companies. For example, USG, in a recent bankruptcy court settlement, revealed exactly what it expects to gain from the passage of S. 852: $3.05 billion. Under that settlement, USG would pay $3.95 billion--$900 million cash and a $3.05 billion “contingent note.” But the contingent note would be canceled if Congress passes the trust fund, to which USG’s liability would be just $900 million. Public Citizen finds that several other big players would also save big, including $2 to $3.5 billion dollars each for W.R. Grace, Pittsburg Corning and NARCO/Honeywell. If these corporations get their trust fund, the burden to provide for victims relief will unfairly shift to smaller businesses.

Public Citizen also reveals the heavy lobbying surrounding this corporate bailout bill The Asbestos Study Group, the front group created to get this bill passed, spent a virtually unprecedented $23.1 million to lobby Congress in 2003 and 2004. Public Citizen also estimates that thirteen of the big companies benefiting from this legislation spent an additional $121.4 million lobbying during those years, almost exclusively on this bill. In today’s lobbyist-wary environment, that makes this bill a serious political liability.

These companies certainly have a right to lobby, but that isn’t going to protect supporters of this bill from damaging attacks. Senator Chuck Schumer already launched on those supporting the bill, asking, “Why do you think that asbestos reform is the No. 1 thing they want to bring up?” He concluded, "It's lobby driven."

Senators interested dealing with the asbestos crisis should know there is another option. In the House, Rep. Chris Cannon (R-UT) has offered HR 1957, which already has 60 cosponsors. It limits asbestos lawsuits to those harmed by requiring litigants meet strict medical criteria, as defined by the American Medical Association. With an estimated 90 percent of asbestos lawsuits being baseless, this solves the crisis by removing the frivolous claims, clearing the path for those truly harmed, without creating a giant new government program that will fail both victims and taxpayers.

Former U.S. House Majority Dick Armey, Ph.D., is Chairman at FreedomWorks, a national grassroots nonprofit organization fighting for lower taxes, less government and more freedom.