Friday, February 10, 2006

Another Bad Asbestos Bailout Bill

It's not me who's saying that. It's small and medium-sized asbestos companies. This bill actually cancels their insurance!

Coalition for Asbestos Reform

Myths & Facts

Myth: S.852 will protect businesses by capping payouts for asbestos claims.

Fact: This bill creates a $140 billion trust fund that favors a few large Fortune 100 companies as it shifts the financial burden to ? and threatens the economic viability of ? small and medium-size companies. Large companies which ran out of insurance coverage long ago benefit by provisions capping lawsuit payouts and limiting their financial responsibility to asbestos victims. For smaller companies the story is much different: S.852 actually cancels the insurance coverage they have, which has been bought and fully paid for, leaving them with a new, bank-breaking, multibillion-dollar tab.

Although the bill is ostensibly supposed to prevent bankruptcies, it will inevitably contribute to them. Several companies have testified that they will close their doors on the day S.852 is signed into law. One company, which today has adequate insurance to cover future claims in the court system, would lose its insurance and be required to pay $16.5 million annually into the trust fund. With annual earnings around $1 million, the company would have no choice but to close. As these companies drop out of the pool of contributors, additional financial pressure will be put on the ones that remain, further weakening their ability to meet their increased financial allocations. For these companies, S.852 is a "solution" that is vastly worse than the problem it is meant to fix.

A. W. Chesterton, a small company in Massachusetts, one of the members of the Coalition for Asbestos Reform, outlines its objections to the bill in yesterday's New York Times:

Large and Small Businesses Part Ways on Asbestos Bill

But for A. W. Chesterton, a 122-year-old company based in Stoneham, Mass., that used asbestos fibers in its industrial fluid sealing products, the amount of money it would be responsible for under the bill could destroy it, according to its outside legal counsel, John B. Manning.

"Its assessment under the Fair Act is going to be a minimum of $16.5 million annually for 30 years," Mr. Manning said. "That $16.5 million is more than double a year's profit for this company."

By contrast, large corporations will, at most, be responsible for $27.5 million a year for 30 years.
"You've got large companies making billions and billions a year in profits," Mr. Manning said. "Having to come up with $27.5 million is nothing to them."

These people are serious. They have a major campaign to defeat the bill:

Aiming at Asbestos Bill

Nearly 20 corporations have paid a total of about $3 million to defeat the asbestos trust-fund bill, which Senate Majority Leader Bill Frist (R-Tenn.) has designated his first priority in 2006, according to a coalition planning document obtained by The Hill.

The Washington Post editorial entitled "Forward on Asbestos" today dismisses these companies and Sen. Harry Reid's actions on their behalf, parroting the RNC talking point: It's all about the trial lawyers.

Unfortunately, the bill's critics are not always so reasonable. Sen. Harry M. Reid of Nevada, the Democratic minority leader, has complained, "One would have to search long and hard to find a bill in my opinion as bad as this." He has even described the legislation as the work of lobbyists hired by corporations to limit asbestos exposure. But the truth is that the bill's main opponents are trial lawyers, who profit mightily from asbestos lawsuits and who constitute a powerful lobby in their own right. Mr. Specter and Mr. Leahy are in fact model resisters of special interests who have spent more than two years crafting legislation that serves the public interest. For Mr. Reid to demean this effort in order to fire off campaign sound bites is reprehensible.

Balderdash. This bill has bipartisan opposition. The opponents are not only trial lawyers, it includes many of the asbestos companies. The bill is not fully funded and will ultimately fail, having achieved its only objective: to keep as much money in the hands of the huge asbestos companies as possible.

Let's hope that saner minds prevail and the latest challenge to the bill, that it will bust the federal budget, succeeds.

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