Rep. Adam Smith and Bankruptcy "Reform"
Let's get one thing straight right from the get-go. I am a big fan of, and supporter of Rep. Adam Smith, even though some of his votes piss me off sometimes.
Adam isn't my Congressman. Jim McDermott is. But my Legislative District, the 34th, of which I am the Chairman, lies partly in Adam's Ninth Congressional District. So both Congressmen's activities are very much our business.
So when some of us saw Adam Smith's name on this, we sprung into action.
First thing we did was to send him this letter, which I wrote and our executive board vetted and tweaked. Then we made plans to hand the hard copy version to Adam last night at his Town Hall meeting in Federal Way, in the 30th Legislative District.
Representative Adam Smith
1717 Pacific Ave #2135
Tacoma WA 09402
March 21, 2005
Dear Adam:
Our Executive Board has asked me to write to you on behalf of our district. We have serious concerns with your position as co-sponsor for many years of the bankruptcy "reform" that recently passed the Senate, and with your signature on a letter to Speaker Hastert requesting "fast-tracking" in the House.
I have seen both the letter to you from the 11th District Democrats, and your response to the concerns raised by the 33rd District Democrats. Please let me assure you that no one in our district questions your credentials as a Democrat. Having watched you in action on the campaign trail in 2004, I appreciate your tireless effort on behalf of Democrats up and down the ticket in Washington state.
I have told Democrats repeatedly that you were the first to turn your campaign staff over to the Coordinated Campaign, to support Democrats from John Kerry on down. You donated your office facilities. You went to many campaign events for down-ticket candidates that no one would have blamed you for skipping.
I saw you twice face your constituents and take responsibility for your ill-advised vote on a provision of the Patriot Act. It's what we expect from our elected officials, but don't get very often. It exemplifies your sense of accountability and your personal integrity.
And no one in the 25th District will forget that you were there, in the cold and in the rain, at the Liberty Theater in Puyallup before the sun came up on Election Day to cheer on our canvass and phone bank volunteers.
Most of all, we appreciate that you have all but obliterated Republican opposition in the 9th Congressional District, which was one of the "swingingest" of "swing" districts before your arrival on the scene. They can't even muster a credible candidate to oppose you.
So when we disagree with you on an issue, even if it is only "one per year," we do so as supporters, not as antagonists, and we hope you will take it in that spirit, because like you, we have to call these policy issues as WE see them.
We consider this bill an abomination, and your support for it inexcusable. We urge you to oppose it, and repudiate your past support for it, just as you did for the "sneak and peek" provision of the Patriot Act, and for the same reason -- it is against the interests of the vast majority of your constituents, and because we think your constituents oppose it.
And we want you to do this BEFORE you vote on this bill, and not after the damage has been done, and even if the votes are there in the House to pass it.
I considered enumerating all the amendments Senate Democrats tried to insert. But why bother? You know them as well as we do. Rather I'd like to discuss "responsibility," which, I am told, is part of your rationale for supporting this bill. We want to know, and we'd like you to answer, what is the responsibility of the lenders here? What crippling problem does the unsecured credit industry face in this country that it needs the legislative remedy of insulation from risk?
The answer to both questions is none, and you know it full well. This "reform" would shift risk from the lender to the low- and middle-income borrower, far out of any balance. Meanwhile, "asset-protection trusts" protect rich people.
We recognize that members of Congress must represent banks and even usurious, predatory "payday lenders." Our question to you is: Who will protect the interests of working people who may face bankruptcy through no fault of their own, and now find one of their protections has been stripped, to favor an industry that needs a lot less help?
Will the Republicans stand up for working people? You know the answer. But if Democrats won't, then why would working people bother voting for us? If, as you say in your e-mail to the 33rd District, you would rather spend time "fighting against the right-wing ideologues currently running this country into the ground," those are the people who have written this bill, and your constituents in the 34th District know it full well. Either your primary responsibility is to working people, or it is to an already bloated, rapacious, predatory industry. Which is it going to be?
We invite you to the 34th District to discuss this issue. We respect your service and your views. But this bill, and what it signifies, clearly marks the difference between what we Democrats stand for and what the right wing would inflict on us. If when the debate has ended and the votes have been counted, you continue to stand with Money Tree and Dollarwise, you might want to consider looking to them for campaign volunteers.
If these corporations are, as they claim, being hurt by Chapter 7 bankruptcies, then how come they continue to hand out credit cards like Daffodil Princesses throwing candy to kids from their float? Where is the "responsibility" there? Better they should not extend credit in the first place to known or suspected bad risks. But no. These companies want it coming and going. They want to rig the market. They want all of the reward and none of the risk, and to them responsibility and risk are only for the "little people." This is hardly capitalism at its finest. This is a return to policies that failed 229 years ago, policies that led to the Declaration of Independence and the Revolution, as that other Adam Smith could have told you.
Put bluntly, your position on this bill is a liability to the Democratic Party. We not only fail to see what basis you have for supporting it, we also do not see what you gain from it politically. But we as Democrats see plenty to lose from it, and yours is a position we can only oppose.
On the other hand, there is political gain -- and plenty of it -- in opposing this bill. It falls as hard on Republican working people as it does Democrats. MBNA and Money Tree don't care if you have a BUSH-CHENEY bumper sticker. They don't care if you wave pictures of dead fetuses at abortion clinics. When you owe them money, they're coming for it, and they don't care about your personal situation, or your party affiliation.
These folks have families to feed, too, and we want their votes. I met plenty of them in your Congressional District, and I see little reason for them to be Republicans. We have an opportunity to drive a big wedge in GOP support because of this bill, and your current position is keeping us from doing that.
We look forward to hearing your position any time you can attend a meeting of the 34th District. We want you and our Party to succeed. We want to keep supporting you, and we want to continue seeking common ground. On bankruptcy "reform," we are not close.
The 34th District Democrats request that you take your name off co-sponsorship of this bill and off the Hastert letter, vote NO on this legislation, and work with us actively to defeat it. I close with a contribution from Tom Tomorrow, who has this issue nailed. Thank you for your consideration.
It was important that we approach Adam as friends and supporters, rather than as screaming lefty loonies. Adam is, and has been, a DLC guy.
But before some of you throw your hands up in horror, as if DLC=KKK, a little context is in order. Before Adam came along, the 9th CD was represented by wingnut Randy Tate, and trust me, folks, any DLC guy in the world is preferable to that.
I sent Adam an e-mail version of my letter. I know him, and he knows me, and I don't think a Legislative District chairman should be blindsiding a Congressman of the same party. His Political Director, who I also know well, sent me back Adam's generic response on bankruptcy "reform."
I'm writing in response to your comments on bankruptcy reform. A lot of
what I have read which criticizes the bill does not square with the facts as
I understand them. I have studied the issue and listened to many different
opinions, but without question I could have missed something. I'll lay out
my understanding of the big issues surrounding the issue and would really
appreciate it if you would then write back and tell me where I am wrong on
the facts or where you disagree with my analysis. I would appreciate it if
you send me your comments directly to my personal email account at
(deleted by request) so I can review all your thoughts personally.
First, is the question of how many people would be impacted by this change
in the law and whether or not some number of people would suddenly be denied
bankruptcy protection? Off the top, the bill would exempt anybody earning
below the median income ($46,000 in Washington State) from the changes in
law. Eighty percent of bankruptcy filings come from people earning less
than this amount so that eighty percent would not be impacted by the bill.
Further, the bill allows people to exempt from their income a number of
standard personal expenses like housing, child care, food, etc.
On one critical point, my understanding is that the bill would provide for
"special circumstances" in the means test. These special circumstances
would provide that the judge has the discretion, as they do currently, to
exempt things such as health care expenses, not just for the person filing
but for any family member that person is paying health care bills for as
well. Therefore this legislation would not change much from current law, in
that the judge has discretion to determine special cases. This has been one
of the loudest criticisms of the bill-that people in a health care crisis
would face even greater costs. With this special circumstance provision, I
do not believe that to be true. If I am wrong on this critical point it
would be enough to get me to oppose the bill.
It is also important that even the people impacted by this bill would still
receive bankruptcy protection, though on a more limited basis than the clean
slate they would get now. They would have to pay back some of their bills
on a more drawn out schedule, but the judge would still have discretion to
wipe some debts clean and to reduce others.
I have also heard that this bill reduces the priority given to child
support, but my reading of the bill contradicts this argument. The bill, as
I read it, clearly maintains the top priority status of child support.
Criticisms of the credit card industry also are made to attack the bill.
First of all, it must be pointed out the people getting a clean slate in a
bankruptcy are avoiding payments to a good many creditors other than credit
card companies. This bill was first recommended to me by a group of small
business people in my district. They cannot as easily pass on the costs of
bad debts as can large companies like the credit card industry. In fact
many of these small businesses are struggling in their efforts to compete
against the evil that is Walmart-another large company who has no problem
passing on the costs of bad debts.
As for credit card companies themselves I have read many of the criticisms
and some of the facts are not as I understand them. Credit card companies
cannot raise rates whenever they want without a customer's consent. Nobody
is forced or required to have a credit card. It is a business deal. Rates
can only be raised when the card holder misses a payment or otherwise fails
to meet some obligation that impacts their credit rating. (Ivan's note: this is bullshit.) Even then the
credit card company has to notify its customer than it intends to raise the
rate. The customer can decline the new rate and give up the right to use
the card anymore. (Ivan's note: BFD. They tell you it's a "fixed rate," then they lie.) If in fact a credit card company gives itself greater
freedom to increase rates then any person would be wise not to do business
with that company. Plenty of other card companies follow these basic rules.
These facts aside, I know people get in over their heads with credit cards.
They get countless offers that sound better than they really are. But the
thing I struggle with is the issue of personal responsibility. Again,
nobody has to get a credit card and everybody ought to know both that if
something sounds too good to be true it is, and if you are given some good
or service you will have to pay for it-even if you can get it in the first
place by just handing over a piece of plastic.
And this gets to the larger issue, when people hit tough times whether
through a series of bad choices, just plain bad luck, or some combination of
the two how quick should we be to forgive them their debts? Never forget
that the money is owed to somebody and that somebody has a right to it. I
grew up in a lower middle class family. My father went on strike twice,
suffered several major health problems and eventually died when I was
nineteen and my younger brother was only thirteen. Through it all, we paid
our bills. We bought clothes at goodwill, kept the same television for
thirteen years, drove the same car, etc. I look around today and I don't
see people making these same kinds of tough choices with the same sense of
responsibility my parents did.
Maybe I'm wrong on this issue, such doubts are always part of my job given
the incredible complexity of the issues I deal with, but I can assure that I
am willing to change my mind if I am wrong, and that I have not made my
decision based of some sort of callous indifference to people facing hard
times.
Thank for reading this and please let me again urge you to put different
facts and arguments in front of me so that I can grow in my understanding of
the issue. As I said above, I would appreciate you sending me your comments
to my personal email account at (deleted by request) so I can review them
personally.
Four of us from the 34th showed up at the Town Hall meeting, at the Knutzen Family Theater, on Dash Point Road. There were about 45 people there.
Adam started out talking about the deficit and the debt. He is against making Bush's tax cuts permanent, and says he is leaning toward moving toward a "single-payer" health care system. He spoke of the crisis in medical benefits for Reserve and National Guard personnel.
On Social Security, Adam, who, sorry to say, had been flirting with privatization, left Josh Marshall's "Fainthearted Faction, but he continues to cling to the 2018 date as a "tipping point," even though that has been discredited pretty thoroughly here. I'll have to send Adam that link.
As usual there were a couple of wingnuts in the audience whose take on Social Security seemed to be based on "God damn it (sputter), privatization is better because it's . . . (harrumph) PRIVATE!" Adam let them spew, then moved on. When one crabby old fart tried to shout Adam down, he was greeted with some audible hisses, after which he subsided.
I suggested Jim McDermott's four-word solution to the social Security "crisis:" "No cap, no problem." Adam gave a perceptible wince, but admitted that this was one possible fix. He talks economic populism, but we need to see him walk it.
Then we got to bankruptcy "reform," and there Adam is on shakier ground. He did clarify the Hastert letter somewhat, telling us he had signed it before the Senate passed its version, and that there were a lot of things in the Senate version he does not like. He said that if the House version includes an unlimited cap on "asset protection trusts," he would vote against the entire bill. That's one we'll be watching closely.
He also said the House GOP leadership doesn't want any amendments, that they are trying to avoid Conference Committee. The Senate bill is a handout to credit card companies, and that's the way DeLay and his sock puppet Hastert want it to stay.
As he did in his letter above, he tried to make bankruptcy "reform" a small-business issue. But by and large, the audience wasn't buying it. Liz, one of our PCOs, told Adam she had worked as a paralegal, representing creditors in foreclosures, for 15 years, and she had seen virtually NO "frivolous" bankruptcies in that time. She told Adam these people were going into credit card bankruptcy over basic necessities like food and medicine and clothing, and that it was her business to know that.
This didn't make Adam real comfortable. But hell, we're his bosses. He does listen. He has changed his positions under pressure from constituents. We can work with him, but he is clearly high-maintenance on some issues.
Either we are up to the challenge, or we are not.
Update: Adam's staff has responded on several of the points I have made here, and I am satisfied that he is taking these comments seriously, and that we have accomplished some "constructive engagement." The proof, of course, will be in the voting.