Sunday, March 13, 2005

Bankruptcy in the Nation's Capital: Still Outraged After All These Years

Washington Post colunist and frequent television pundit David Broder has been around Washington D.C. a long time and seen a lot shenanigans. Sometimes I find him a bit too complacent about the goings-on here, but it's nice to see that with all his years in Washington, he's still sometimes still able to muster a health portion of outrage at the abuse and hubris of those who hold the levers of power.

The latest case that's gotten Broder's pants in a twist is the corrupt bankruptcy bill, passed last week in the Senate (with an obscene amount of Democratic support) and soon to be passed by the House and signed by the President:
When it comes to blatant hypocrisy, nothing beats the Senate record on the just-passed bankruptcy bill.

This "reform," which parades as an effort to stop folks from spending lavishly and then stiffing creditors by filing for bankruptcy protection, is a perfect illustration of how the political money system tilts the law against average Americans.


The recent decade's rise in the number of bankruptcy cases has been dramatic, and it is not difficult to find cases of abuse. But most bankruptcy petitions are filed by people with real financial problems, often the result of family illness, divorce or loss of jobs. This bill will make it harder for everyone -- chiselers and innocent victims alike -- to get a clean start without the overhang of mounting interest payments on unpaid credit cards and other debt.

For two weeks the Senate sponsors shot down virtually every attempt to separate the sheep from the goats and carve out protections for the average family trapped by circumstances. The dry language of the Congressional Record recites a series of one-sided votes rejecting amendments "to protect service members and veterans . . . to exempt debtors whose financial problems were caused by serious medical problems . . . to preserve existing bankruptcy protections for individuals experiencing economic distress as caregivers to ill or disabled family members . . . to exempt debtors if their problems were caused by identity theft." Nothing would be allowed to stand in the way of the creditors' pursuit of those folks.
Broder is particularly outraged that not only were all of the "liberal" amendments rejected (for example that would have exempted families who had to declare bankuptcy due to medical costs), but two Republican-sponsored amendments were also rejected by the leadership. One was introduced by Republican Charles Grassly (IA) that would have kept corporations from shielding their assets in huge "asset protection trusts used by wealthy individuals to shelter their portfolios from creditors." The other was from Texas Senator John Cornyn that would have prevented corrupt companies like Enron from filing bankruptcy claims in states that go softer on corporations, rather than states where most of their business and employees reside. (This is particularly galling after the recent passage of "tort reform" that put similar restrictions on citizens filing class action suits.)

It's interesting to read an earler column by Broder (sign-in and password: "bugmenot"), written almost exactly four years ago about the same topic, as well as the first outrage of this administration -- repeal of the ergonomics standard:
Bankruptcy and ergonomics were not topics George W. Bush talked about when he was running for president, so it is not surprising that few if any voters gave much thought to those matters when deciding how to mark their ballots last November.

But elections have consequences, even for issues that go undiscussed in the campaign. And it turns out that millions of Americans will find their lives changed because Bush's views on bankruptcy and ergonomics are radically different from those of his predecessor, Bill Clinton, and his opponent, Al Gore.

In his final month in the White House, Clinton vetoed a bill that would have made it harder for many Americans to clear up their debts by filing for bankruptcy. And just four days before his tenure came to a close, he allowed sweeping Labor Department regulations to go into effect, requiring employers to deal more promptly and fully with workplace conditions that contribute to strained backs, stiff wrists, cramped hands and all the other symptoms of repetitive motion distress. Gore supported both policies and would have continued them, had he succeeded Clinton.

But last week, the Republican Congress, acting with the approval and encouragement of the Bush White House, moved to reverse directions in both areas. Invoking a procedure never used before, the House and the Senate sent Bush a resolution that simply wipes out the ergonomics regulations that went into effect Jan. 16. And the Senate moved toward final approval of the same bankruptcy bill that Clinton had vetoed but Bush is eager to sign.
So how did they get away with these travesties?
The simple fact that for eight straight years it has gained a place on a crowded congressional calendar is testimony to the impact of the millions of dollars that banks and credit card companies have spent on lobbyists and campaign contributions.

What happened -- and didn't happen -- during two weeks of Senate debate demonstrates just how the powerful exert their influence. It's all too typical of what takes place now in Washington with most issues.

Few policy battles, Social Security being a current example, draw enough public and press interest for the legislators to feel real scrutiny. Most are in a netherworld where media coverage is cursory and interest groups' pressure determines the outcome. That's how bankruptcy reform made it through the Senate and why it will soon pass the House and be signed into law by President Bush.

Which is why on the eighth day God created bloggers.

UPDATE: And speaking of bloggers, Revere at Effect Measure writes about why the bankruptcy bill, in addition to being a moral outrage, is a public health issue (because for average people the main cause of bankruptcy is overwhelming medical bills) and points us to Paul Krugman's recent NY Times op-ed, Josh Marshall's new Bankruptcy Page and a new blog, Politology, dedicated to rallying the blogosphere (along with the rest of America) against the bankruptcy bill.

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