A Federal Asbestos
Trust Fund: Better for Victims, Better for the Economy
by Amy Ridenour
Amid the happiness and perhaps relief
within the White House that the war in Iraq has been so successful
is this unsettling fact: President Bush is reenacting the political
scenario that doomed his father's 1992 reelection bid.
The senior President Bush completed a
successful war in Iraq two years and two months after taking
office. The current President has matched this timetable, completing
his own Gulf War two years and three months into his term.
It took 20 months for a poor economy
and the inability get an economic plan through Congress to change
the first President Bush from "unbeatable" to "beaten."
As Yogi Berra used to say, its déjà
vu all over again. With 19 months to go before the election,
the younger Bush can't seem to get Congress to adopt his economic
But Bush need not pin all his economic
stimulus hopes on a $726 billion tax cut. There's another option:
legal reform. Wall Street analysts say solving the legal liability
crisis could make the President's proposed dividend tax cut seem
like small change.
Says Morgan Stanley's Steven Galbraith:
"We can safely say that tort reform would be one of the
most positive changes we can imagine for markets. Conversely,
lack of progress could be every bit as damaging to market confidence
as last year's corporate perp walkathon."1
Enter the asbestos litigation crisis,
a legal and financial emergency that won't be solved without
federal action, but which, if properly solved, could give a huge
boost to the U.S. economy, provide better compensation to victims
of asbestos-related illnesses, and not cost the taxpayer one
In short, everybody - except perhaps
lawyers - wins.
Asbestos-related litigation already has
bankrupted over 60 companies and thrown 60,000 people out of
work.2 It may cost the economy more than $300 billion
- by most estimates, more than the war in Iraq.
Scandalously, despite the financial damage,
genuine asbestos victims are not being properly compensated.
60 percent of the awards in asbestos lawsuits have gone to lawyers
and court costs, not plaintiffs.3 65 percent of the money that does reach plaintiffs
goes to people who aren't sick.4
The system works well for no one but
lawyers. Victims face jackpot justice or none at all, companies
- including many with only a scant association with asbestos
- are facing bankruptcy, employees are being laid off and retirement
portfolios are suffering. Wall Street and our entire economy
have been hard hit.
The damage now is so bad that congressional
compromise is possible. Republican Senate Judiciary Committee
Chairman Orrin Hatch says an asbestos bill is a top priority.
Democrats, usually shy about legal reform, seem to be concluding
that the asbestos crisis cannot be swept under the rug.
But what's the best route to reform?
Some propose the establishment of medical standards an asbestos
victim must meet in order to sue. But that proposal lacks important
A far better alternative is for Congress
to establish a federal trust fund through which genuinely sick
asbestos victims could receive prompt compensation.
A trust fund, which should be funded
solely by companies facing asbestos lawsuits, would have the
* All funds awarded would go to asbestos
victims, not to lawyers, trial costs or healthy people with good
* Victims would receive compensation
far faster - nearly immediately, in dire cases.
* Victims who become ill from exposure
at a bankrupt company would receive the same compensation as
a person exposed at a thriving firm.
* Asbestos-related corporate bankruptcies
would cease, as firms would know the exact extent of their legal
liability, and could plan for it.
* Victims would be fairly treated based
on their suffering, not on their state of residence or which
lawyer they hire.
* Sick persons could more easily prove
eligibility for compensation, as they would not need to prove
a specific defendant caused their illness.
* The economy would receive a substantial
shot in the arm, benefiting all Americans.
Heavy, unpredictable legal costs related
to asbestos litigation and trial lawyer excesses have undermined
business confidence, left business investment and expansion underfunded
and undercut America's ability to recover economically from September
11. And this damage has been done without fairly serving those
who have been hurt, and who need help.
There's a better way. A privately-funded
federal asbestos trust fund offers prompt and fair compensation
for victims and economic recovery for us all.
# # #
Amy Ridenour is president of
The National Center for Public Policy Research, a Washington,
D.C. think tank. Comments may be sent to [email protected].
1 Rebecca Byrne, "Legal Reform Tempts Wall
Street," The Street.com, February 19, 2003, available at
as of April 21, 2003.
2 Bruce Bartlett, "Toll of Torrential Torts,"
The Washington Times, March 3, 2003, available at http://www.washtimes.com/commentary/20030303-21304835.htm
as of March 15, 2003.
3 "Asbestos Litigation Costs and Compensation,"
Rand Institute for Civil Justice, Santa Monica, California, 2002,
4 "Asbestos Litigation Costs and Compensation,"