The Senate has apparently defeated the bill that would create a $140 billion trust fund to pay asbestos claims (Charles Hunt, “The Senate Defeats Asbestos Trust-fund Legislation” The Washington Times, Feb 15).
Liberals and conservatives in the Senate joined together last night to stop legislation that would have created a massive trust fund for victims of exposure to asbestos.
Years in the drafting, the bill is disliked by conservatives who fear that the costs will be passed on to taxpayers and by liberals who worry that victims will lose their rights to sue companies that, however unwittingly, exposed workers to a substance now known to cause cancer.
Whether this represents a final defeat of the measure is unclear, since there seem to be a number of procedural questions surrounding the bill. The Wall Street Journal ($) had an interesting editorial yesterday (2/14), which described the bill basically as deeply-flawed legislation to try to correct a deeply-flawed litigation situation.
The trust fund concept would take most of these cases out of the courts by guaranteeing a payment from the fund. This would prevent dozens of already, or soon-to-be, bankrupt companies from becoming wholly owned subsidiaries of the tort bar under the current bankruptcy code. As long as the money holds out, the trust fund would also offer companies some certainty about payouts, avoiding jackpot judgments.
And yet what Congress would create here is a gigantic new federal entity, with all of the moral hazard that such things always involve. Since no Congress can bind a future Congress, the medical criteria that pass this year can change faster than you can say “Chairman Pat Leahy” if the Senate changes hands this November. The companies that support the trust fund would receive an immediate benefit, while taxpayers would be assuming a lifetime of political risk.
You can see the vote count here, but, in a fairly unique outcome in these hyper-partisan times, both Democrats and Republicans were split on this one.
Update: Made a few changes to the links to try to better match Ted and Walter’s style
Ted has more on the bills prospects at Point of Law, as well as a whole archive of following the asbestos mess.
