Budget Panel: An Asbestos Fund Could Crush Taxpayers

However, the Committee added, "it is concerned that creation of a new, uncapped government entitlement, during a period requiring austere budget discipline, would be imprudent and inconsistent with fiscal responsibility."

The Senate is currently considering legislation that would create a trust fund, created by contributions from insurance companies and manufacturers, to resolve asbestos-related claims. The size of the trust fund is still being negotiated, as is the contribution formula that will be applied to the insurance industry.

Under the legislation, S. 1125, if the fund runs out of money, all remaining claims would revert to the tort system.

But the Buget Committee said that the proposed use of mandatory contributions from defendant companies and insurers does not alleviate budget concerns if the private contributions are capped at a finite level and the fund is not expected to meet the total liability of anticipated asbestos claims.

Moreover, the Committee said, it is not prudent to rely upon a sunset provision that would be triggered upon fund insolvency and return large numbers of claims to the tort system.

"Past experience with government administered trust funds designed to mandate a no-fault solution for liability claimants demonstrate that, even with specific legislative language to the contrary, there is a low probability of an actual return to the tort system," the Committee said.

Political resistance to implementing such a reversion, the Committee said, will likely be insurmountable.

"In essence, the Committee is concerned that under such a scenario, there is a possibility that a massive taxpayer bail-out could occur if Congress is forced to step in and sustain the fund," the Committee said.