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Bates White analysis cited as the FAIR Act is
blocked in Senate procedural vote
WASHINGTON, D.C., February 15, 2006—Bates White’s
analysis was widely cited by Senators in their decision to send
the Fairness in Asbestos Injury Resolution (FAIR) Act back to
the Judiciary committee. The legislation proposes to remove asbestos
claims from the tort system and compensate individuals through
a no-fault national trust. Based on the current eligibility criteria
of the trust fund established by the FAIR Act, Bates White’s
analysis shows that the proposed $140 billion funding is not sufficient
to cover the claims that will be filed against it.
Proponents of the Bill have cited the Congressional Budget Office’s
(CBO) cost estimate as supporting the viability of the trust fund.
Opponents of the Bill say the CBO’s report indicates the
opposite. Over the past few months, Bates White has worked with
the CBO, Senators, and their staff to clarify the ambiguity.
Bates White released a letter in early February that illustrated
two specific problems with the CBO “cost” estimate.
First, Bates White demonstrates that the CBO’s own forecast
indicates that it underestimated costs associated with lung and
other cancer claims (Level VI and Level VII claims) by at least
$90 billion. Second, Bates White highlighted the exclusion of
several key expenditure categories, which the CBO acknowledges
exist but omits from its reported estimate. These excluded categories
increase costs of more than $50 billion.
The day before the Senate voted on the budgetary challenge to
the legislation, the CBO clarified its position. Specifically,
the CBO stated that, “[t]here is a significant likelihood
that the fund’s revenues would fall short of the amount
needed…” which contrasts with its following assertion
that there is only “some likelihood that the fund’s
revenues would be sufficient.” The CBO’s updated stance
reinforces the difficulties with quantifying the potential entitlements
and the importance of analyzing all the potential expenditure
categories.
Click here to download
Bates White’s September report on the entitlement created
by the FAIR Act.
Click here to access Bates
White’s testimony on the FAIR Act.
Click here to read
the February letter.
About Bates White
Bates White is a national economic consulting firm of more than 150 professionals.
Established in 1999, Bates White offers consulting services in economics,
finance,
and business analytics. Bates White has offices in Washington, D.C., and San
Diego, Calif.
www.bateswhite.com
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