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Letter to the Honorable Arlen Specter [i] (November 2005)

handle is hein.congrec/cbo9520 and id is 1 raw text is: CONGRESSIONAL BUDGT OF FICE Douglas Holtz-Eakin,D U .S. Congress ashington, DC 20515 November 16, 2005 Honorable Arlen Specter Chairman Committee on the Judiciary United States Senate Washington, DC 20510 Dear Mr. Chairman: The additional information you requested regarding CBO's cost estimate for S. 852, the Fairness in Asbestos Injury Resolution Act of 2005, is presented in the enclosed table. (CBO transmitted that estimate to the Judiciary Committee on August 25, 2005.) To assess the ability of the proposed Asbestos Injury Claims Resolution Fund to pay all valid claims, CBO considered a number of possible projections of the fund's cash flows over the next 50 years. We estimate that the fund would be presented with valid claims totaling between $120 billion and $150 billion over that period. The enclosed table presents estimates of the number of claims, by year and by type of claim, that CBO expects would be presented to the compensation fund under one, moderate-cost scenario, in which the value of the claims would be about $130 billion. Those figures include almost 100,000 claims for individuals with malignant conditions and almost 1.5 million claims for nonmalignant conditions. We expect that about 20 percent of those claims would be pending, assuming enactment of the bill in 2005. As noted in CBO's cost estimate, significant uncertainty surrounds the number, timing, and types of claims that the asbestos fund would experience over the next 50 years. Under 5. 852, the fund's administrator would not provide compensation to victims of asbestos exposure unless amounts in the fund were sufficient to make such payments. Depending on the precise numbers of valid claims presented to the fund, the timing of such claims, and future interest and inflation rates, the asbestos fund might not have sufficient resources over the next 50 years to pay claims with a value significantly more than $130 billion.

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