[Congressional Record (Bound Edition), Volume 152 (2006), Part 9]
[Senate]
[Pages 12661-12662]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            ASBESTOS REFORM

  Mr. SPECTER. Mr. President, I have 5 minutes allotted to me. I spoke 
yesterday extensively on the pending legislation, and I will use my 5 
minutes on another subject.
  The subject relates to an article in the Hill newspaper today, which 
is captioned, ``Holtz-Eakin Delivers Blow on Asbestos.''
  Dr. Holtz-Eakin had been Director of the Congressional Budget Office 
and had testified at an earlier hearing on asbestos reform that the 
cost of the program would be between $120 billion and $150 billion, 
which was within range of the $140 billion allocated to the trust fund. 
But Dr. Holtz-Eakin later went to work for a foundation that was funded 
with $5 million by AIG Insurance Company and other insurers, where they 
had a vested interest in trying to defeat the bill.
  I have today written to the Hill and want to make these comments for 
all of my colleagues to hear. They can be most succinctly handled by my 
reading the letter that I am sending. It goes to the editor of the 
Hill:

       Dear Editor:
       Your June 27 article ``Holtz-Eakin Delivers Blow on 
     Asbestos'' would have been more accurately captioned, 
     ``Holtz-Eakin Tries to Change his Testimony after Being Hired 
     and Paid by the Bill's Opponents.''
       The fact is, as the notes of testimony disclose, Dr. Holtz-
     Eakin did not change his testimony when he said:
       ``The first statement, when I was Director of CBO, remains 
     true today.''
       In an earlier statement, which he submitted when he was 
     Director of CBO, he said:
       ``CBO expects the value of valid claims likely to be 
     submitted to the fund over the next 50 years can be between 
     $120 billion and $150 billion.''
       That conclusion puts the cost within the reasonable 
     parameters of the $140 billion trust fund.
       Dr. Holtz-Eakin made an unsuccessful effort to say that the 
     trust fund would not be terminated, as provided for in the 
     legislation, if the trust fund ran out of money. Dr. Holtz-
     Eakin conceded:
       ``The administrator will have the option to terminate the 
     fund. . . .''
       Then Dr. Holtz-Eakin speculated:
       ``It is my judgment and my judgment alone that in the 
     future Congress would continue this program. . . .'' That 
     would obviously require a changed congressional decision 
     since the bill stipulates the fund would be terminated if it 
     ran out of money. It is only Dr. Holtz-Eakin's speculation 
     that the program would be continued and then spend more 
     money.
       The Hill article correctly noted that Dr. Holtz-Eakin's 
     effort to change his testimony arose because he:
       ``became the head of a think tank funded by a foundation 
     set up by one of the biggest opponents of asbestos reform 
     bill, American International Group, an insurance giant better 
     known by its acronym AIG.''
       The Hill article then noted that Dr. Holtz-Eakin was 
     invited to the Judiciary Committee hearing by the opponents 
     of the bill and that the ``Coalition for Asbestos Reform,'' 
     an organization funded by major insurance companies opposed 
     to the bill, issued a press release on the day of his 
     testimony claiming he was validating the Coalition's 
     criticism. Obviously, it was pre-arranged between Dr. Holtz-
     Eakin and the Coalition since the Coalition had information 
     in advance and was prepared to make the announcement in a 
     press release the day of his testimony.
       Anyone, including the Coalition, can raise any objections 
     they wish, but they ought to disclose the basis for Dr. 
     Holtz-Eakin's effort to defeat the legislation because he, as 
     The Hill pointed out, ``became the head of a think tank 
     funded by the insurance company opponents of the bill.''
       Dr. Holtz-Eakin's bias and conflict of interest renders his 
     later testimony meaningless. It all shows how desperate the 
     ``Coalition for Asbestos Reform'' is and how the Coalition is 
     grasping at straws and buying testimony to try to defeat this 
     important reform legislation.

  And then I signed the letter.
  I ask unanimous consent that the Hill article and the relevant points 
from the transcript be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                     [From the Hill, June 27, 2006]

                 Holtz-Eakin Delivers Blow on Asbestos

                         (By Alexander Bolton)

       Douglas Holtz-Eakin delivered a significant blow against 
     the effort to revive asbestos-reform legislation when he 
     testified earlier this month that a cost assessment of the 
     measure he had provided in November as director of the 
     Congressional Budget Office (CBO) was unrealistic.
       Some say that the testimony was a surprising reversal, but 
     others note that since leaving the CBO Holtz-Eakin has taken 
     a position created by a $5 million grant from a source 
     adamantly opposed to the controversial legislation.
       Holtz-Eakin is highly regarded on Capitol Hill, attracting 
     praise from both sides of the aisle. But the funding of his 
     organization has raised some conflict-of-interest concerns 
     about his views on the pending asbestos-reform bill.
       Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) 
     is pushing to bring the bill to the floor for a vote, but 
     Senate Majority Leader Bill Frist (R-Tenn.) has said he will 
     not do so unless it clearly has enough support to pass. A 
     previous effort by Frist to pass the legislation fell a few 
     votes short this year.
       As CBO director, Holtz-Eakin testified to the Senate 
     Judiciary Committee that a trust fund that would be set up by 
     the bill to pay asbestos-related medical claims would have 
     little effect on the federal budget.
       But when he appeared again before the committee seven 
     months later, Holtz-Eakin compared the trust fund to three of 
     the largest mandatory government programs, Social Security, 
     Medicare and Medicaid, and declared that now is ``a 
     particularly bad time'' to start such a new program.
       Critics of the Specter legislation have criticized it as a 
     costly program that could significantly add to the deficit 
     years down the road.
       At the beginning of this year, Holtz-Eakin became the head 
     of a think tank funded by a foundation set up by one of the 
     biggest opponents of the asbestos-reform bill, American 
     International Group, an insurance giant better known by its 
     acronym AIG.
       AIG is one of several entities that have poured tens if not 
     hundreds of thousands of dollars into an effort to defeat the 
     asbestos reform bill, according to internal industry 
     documents.
       AIG also created the charity organization that endowed a 
     think tank, the Maurice R. Greenberg Center for Geoeconomic 
     Studies, named after AIG's longtime chairman, that Holtz-
     Eakin now heads.
       Holtz-Eakin has become a pivotal player in the behind-the-
     scenes battle to bring asbestos reform back to the Senate 
     floor because of his residual authority as Congress's former 
     chief accountant. Holtz-Eakin's damaging testimony on the 
     asbestos bill was widely reported.
       And the Coalition for Asbestos Reform, an alliance of 
     corporations that oppose Specter's asbestos-reform bill that 
     is lobbying senators on the issue, has pounced on Holtz-
     Eakin's words as support for their position.
       ``The testimony of former Congressional Budget Office 
     Director Douglas Holtz-Eakin validates the criticism that the 
     Coalition for Asbestos Reform has made for many months about 
     a federal trust-fund approach to the asbestos litigation 
     situation,'' the coalition announced in a press release the 
     day of the testimony.
       Specter said at the hearing that there was ``a 180-degree 
     difference'' between what Holtz-Eakin estimated the program 
     would cost as CBO director and his subsequent comment that 
     its cost was highly uncertain. The first time Holtz-Eakin 
     testified it was at Specter's invitation as CBO chief. The 
     second time he was invited by an opponent of the bill, though 
     it is unclear which member sought his testimony.
       The coalition, which is funded in part by AIG, identified 
     Holtz-Eakin as an important figure in a planning document it 
     drafted in December. The document quoted Holtz-

[[Page 12662]]

     Eakin's testimony the previous month on the trust fund and 
     suggested portions that could be used to undermine the bill 
     by questioning the accuracy of CBO's cost estimates and 
     bolstering the credence of much-higher-cost projections.
       The planning document also identified AIG as one of the 
     nine biggest funders of the Coalition for Asbestos Reform, 
     along with other major insurance firms: Allstate, Hartford 
     Insurance, Liberty Mutual and Nationwide Insurance.
       AIG's founder has also provided the bulk of the funding for 
     the geoeconomic-studies center that Holtz-Eakin now heads. 
     The center was endowed with a $5 million grant from the Starr 
     Foundation in 2000, according to the publicly available 990 
     form that the foundation submitted to the Internal Revenue 
     Service.
       The foundation, in turn, was established by AIG's founder, 
     Cornelius Vander Starr. It earned nearly $50 million by 
     selling 470,000 shares of AIG in 2000, according to the tax 
     form.
       Ken Frydman, foundation spokesman, said the group had no 
     role in hiring Holtz-Eakin to head the Greenberg Center.
       Specter asked Holtz-Eakin at this month's hearing if the 
     difference between his earlier and later testimonies was 
     ``attributable to [his] position working for the Greenberg 
     Center.'' But Specter did not discuss the sums of money 
     involved, and news accounts of the hearing did not report 
     Specter's concern.
       ``I receive no funds from AIG, and my views today are my 
     own,'' Holtz-Eakin replied. The former CBO chief said that he 
     is merely director of the Greenberg Center and that he is 
     ``funded by the Council on Foreign Relations.'' ``And my 
     funding is from the Paul Volcker Chair in International 
     Economics,'' he added.
       The council, too, has received substantial funding from the 
     Starr Foundation. The council has received $27 million in 
     grants from the foundation since 1960, said Anya Schmemann, 
     the Council on Foreign Relations' spokeswoman.
       Holtz-Eakin defended his conflicting testimony in a recent 
     interview. He said that as CBO director his job was to put a 
     price tag on legislation, not to give his opinion of bills. 
     He also said that his recent assessment questioning the 
     certainty of the CBO's cost estimates was a personal opinion, 
     something he was not allowed to give as CBO director.
       ``CBO doesn't take positions; it prices bills,'' he said. 
     ``My personal opinion is that you can't take this bill at 
     face value. I think a future Congress will change it.''
       Holtz-Eakin said he was required as head of the CBO to take 
     the asbestos-reform bill at face value and assume that the 
     program would sunset when it ran out of money, thereby 
     sparing taxpayers its cost. But as a private citizen, Holtz-
     Eakin said he is now free to express his opinion that that 
     scenario is unlikely because Congress would rather pay to 
     keep it afloat then let it close.
       ``These are my views,'' he said. ``I didn't know that 
     Maurice Greenberg had an opinion on the bill.''
                                  ____

       The Chairman. We now go to the five-minute rounds by 
     members.
       Let me begin with you, Dr. Holtz-Eakin. I am a little 
     surprised by the difference in your testimony today from the 
     materials submitted by you when you were Director of the 
     Congressional Budget Office.
       The statement which you submitted as head of CBO said, 
     ``CBO expects the value of valid claims likely to be 
     submitted to the fund over the next 50 years can be between 
     $120 billion and $150 billion.''
       In the written statement which you submitted for today's 
     hearing, you say, ``Both the scale of the mandatory spending 
     and the size of the revenues are highly uncertain.''
       There is a 180-degree difference between what you and now 
     attributable to your position working for the Greenberg 
     Center, and in effect, AIG?
       Dr. Holtz-Eakin. Let me do those in reverse order. First, I 
     am the director of that center. I am funded by the Council on 
     Foreign Relations. My funding is from the Paul Volcker Chair 
     in International Economics. I receive no funds from AIG, and 
     my views today are my own.
       The Chairman. Well, let us take up your own views, if you 
     are not influenced by these other factors. How do you account 
     for the statement that you make here that there is mandatory 
     spending, and how do you account for the fact that you say 
     ``a future Congress and administration are guaranteed to turn 
     to the taxpayer. How can you say that?
       Dr. Holtz-Eakin. Let me explain. The first statement, when 
     I was Director of CBO, remains true today. It is the case 
     that this will be mandatory spending in the Federal budget. 
     It will not be subject to appropriation. It will fit every 
     common-sense definition of mandatory spending.
       The Chairman. It is mandatory until it runs out, Dr. Holtz-
     Eakin.
       Dr. Holtz-Eakin. It will be the case that the legislation 
     provides for a sunset--that is what I said, . . . and that 
     remains true today--automatic, or at the discretion of the 
     administrator, depending on the eyes of the----
       The Chairman. Well, is there mandatory spending after the 
     fund runs out?
       Dr. Holtz-Eakin. There is a program in place that requires 
     money to be spent.
       The Chairman. Wait a minute. Does it require----
       Dr. Holtz-Eakin. My judgment----
       The Chairman. Wait a minute. Does it require the money to 
     be spent or does it require Congress to act? Now, you say in 
     your oral testimony here, ``there will be political pressure 
     to spend'' and you challenge the Congress on any fiscal 
     restraint.
       How can you say what a Congress in the future will do? 
     Congress will not be obligated to spend the money once the 
     $140 billion is gone, will it?
       Dr. Holtz-Eakin. The administrator will have the option to 
     terminate the fund, is my reading of it. We can debate 
     whether you think that is correct reading. It is my judgment, 
     and my judgment alone, that in the future Congress would 
     continue this program and an administrator would have an 
     enormous technical difficulty in sunsetting it at the 
     appropriate time. It would be very hard to * * *

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