Capital Commerce: An unlikely alliance on asbestos
Consumer advocate Ralph Nader and right-wing lawmaker turned lobbyist Dick Armey are fighting on the same side in Washington, D.C., these days. What's the pixie dust that brought them together? Asbestos. Or more specifically: the $140 billion trust-fund solution to the asbestos problem that Senate Judiciary Committee Chairman Arlen Specter, a Pennsylvania Republican, is trying to shepherd through Congress this summer.
Neither Nader's Public Citizen nor the group headed by former House Majority Leader Armey, Freedomworks, likes the idea of moving asbestos lawsuits out of the courts and into a no-fault system similar to workers' compensation, funded by manufacturers and insurance companies. Of course, the two differ dramatically in their reasoning. Public Citizen says the bill would let big manufacturers like Dow Chemical, Ford, General Electric, and Honeywell off the hook for billions of dollars of liability. Meanwhile, Armey's organization (motto: "Lower Taxes, Less Government, More Freedom") blasts the proposal as an unfair tax on business.
Freedomworks doesn't say which businesses it represents on asbestos. But in the past, Armey has lobbied for Equitas, the reinsurer created to handle Lloyd's of London's old asbestos claims. Many insurers oppose the Specter plan. That's not surprising since the $46 billion they'd be asked to contribute is more than double their asbestos reserves and, in fact, exceeds their estimated liability under the current system by $13.5 billion, according to insurance rater A.M. Best.
The National Association of Manufacturers backs the trust fund proposal, although small businesses grumble they'd be asked to contribute too much compared with the big guys. And several bankruptcy trusts already established to handle asbestos claims don't like the idea that they'd be forced to kick in. They've hired former Solicitor General Theodore Olson, who has warned senators that if the plan is enacted, he will challenge it as unconstitutional.
With all the intrabusiness bickering, is it any wonder Congress has failed to pass all 21 incarnations of asbestos legislation introduced since 1970?
Some fast asbestos facts:
- Companies have paid out $70 billion for asbestos claims since the 1970s, with 74 companies driven into bankruptcy, the most expensive litigation in U.S. history, according to the Rand Corp.
- More than 300,000 U.S. workers have died from exposure to asbestos, and 10,000 more are expected to die each year for the foreseeable future, says the American Trial Lawyers Association.
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