Friday, March 04, 2005

The Rich Get Richer, the Poor Get Shafted

Senators Portray Bankruptcy Bill as Unfair
By Marcy Gordon
The Associated Press

Thursday 03 March 2005

Washington - Stung by two days of defeat for their bids to revise a bill overhauling the bankruptcy laws, Senate Democrats are portraying the measure as making it harder for low-income, elderly and sick people to dissolve their debts while allowing the wealthy to shelter assets.

Through a day of debate Wednesday, the Democrats maintained a rhetorical accent on what they see as the inequity of the bankruptcy legislation. The Republicans, who hold the majority, maintained tight discipline. Sen. Orrin Hatch, R-Utah, warned against "killer amendments" that could jeopardize the bill's acceptance by the House.

Sen. Edward M. Kennedy, D-Mass., a leading opponent of the legislation as written, will try to get an increase in the minimum wage - a top priority of the Democrats - attached to it, aides said. Kennedy's proposal would lift the hourly minimum from $5.15 to $7.25 over two years.

Mostly along party lines, the Senate voted 59-40 Wednesday to reject a Democratic amendment that would have allowed older people to get special homestead exemptions to keep their homes when they file for bankruptcy. Currently, such exemptions are determined by the states.

Also rebuffed, 58-39, were two proposals focused on people whose significant medical expenses for illness force them to file for bankruptcy.

The first would have allowed people to keep at least $150,000 of the equity in their primary residence. If, in addition, medical bills exceed 25 percent of the person's income, the second proposal would have exempted them from a new test in the legislation measuring income and assets of bankruptcy applicants to determine if debts can be discharged.

Under unlimited homestead exemptions in a half-dozen states, "fat cats who go into bankruptcy don't lose their mansions," said Kennedy, author of the twin amendments. "Where is fairness in this bill?"

By another 59-40 tally, the Senate defeated a Democratic proposal to require that credit card statements show how long it would take the consumer to pay off his or her debt by making only the minimum monthly payment, and what the total interest charges would be.

The bankruptcy overhaul bill would raise the threshold for dissolving credit card and other consumer debts in bankruptcy court. Supporters are predicting a swift victory after nearly eight years of congressional gridlock and feverish lobbying by banks and other credit-card issuers.

The new "means" test in the legislation is intended to determine whether those seeking bankruptcy protection must repay their debts or are allowed to have them canceled. Under the current system, bankruptcy judges have the discretion to decide that.

Supporters of the bill hope for passage before lawmakers adjourn in mid-March for the spring recess.

Banks, credit card companies and retailers have pushed since 1997 for a bill overhauling the bankruptcy laws. Consumer and civil rights groups and unions say the legislation would shred a safety net for those who have lost their jobs or face mounting medical bills.

© Copyright 2005 by

The Ever-Eloquent Robert Byrd

Stopping a Strike at the Heart of the Senate
By Senator Robert Byrd

Tuesday 01 March 2005

Senator Byrd delivered the remarks below warning the Senate and the American people about a procedural effort being considered by some Senators to shut off debate and shut down minority voices and opinions. Byrd believes that such an effort strikes at the very heart of the Senate -- the freedom of speech and debate.
In 1939, one of the most famous American movies of all time, "Mr. Smith Goes to Washington," hit the box office. Initially received with a combination of lavish praise and angry blasts, the film went on to win numerous awards, and to inspire millions around the globe. The director, the legendary Frank Capra, in his autobiography "Frank Capra: The Name Above the Title," cites this moving review of the film, appearing in "The Hollywood Reporter," November 4, 1942:

Frank Capra's "Mr. Smith Goes to Washington," chosen by French Theaters as the final English language film to be shown before the recent Nazi-ordered countrywide ban on American and British films went into effect, was roundly cheered … .

Storms of spontaneous applause broke out at the sequence when, under the Abraham Lincoln monument in the Capital, the word, "Liberty," appeared on the screen and the Stars and Stripes began fluttering over the head of the great Emancipator in the cause of liberty.

Similarly cheers and acclamation punctuated the famous speech of the young senator on man's rights and dignity. 'It was … as though the joys, suffering, love and hatred, the hopes and wishes of an entire people who value freedom above everything, found expression for the last time … .

For those who may not have seen it, "Mr. Smith" is the fictional story of one young Senator's crusade against forces of corruption, and his lengthy filibuster for the values he holds dear.

My, how times have changed. These days Smith would be called "an obstructionist." Rumor has it that there is a plot afoot in the Senate to curtail the right of extended debate in this hallowed chamber, not in accordance with its rules, mind you, but by fiat from the Chair.

The so-called "nuclear option" purports to be directed solely at the Senate's advice and consent prerogatives regarding federal judges. But, the claim that no right exists to filibuster judges aims an arrow straight at the heart of the Senate's long tradition of unlimited debate.

The Framers of the Constitution envisioned the Senate as a kind of executive council; a small body of legislators, featuring longer terms, designed to insulate members from the passions of the day.

The Senate was to serve as a "check" on the Executive Branch, particularly in the areas of appointments and treaties, where, under the Constitution, the Senate passes judgement absent the House of Representatives. James Madison wanted to grant the Senate the power to select judicial appointees with the Executive relegated to the sidelines. But a compromise brought the present arrangement; appointees selected by the Executive, with the advice and consent of the Senate. Note that nowhere in the Constitution is a vote on appointments mandated.

When it comes to the Senate, numbers can deceive. The Senate was never intended to be a majoritarian body. That was the role of the House of Representatives, with its membership based on the populations of states. The Great Compromise of July 16, 1787, satisfied the need for smaller states to have equal status in one House of Congress: the Senate.

The Senate, with its two members per state, regardless of population is, then, the forum of the states. Indeed, in the last Congress, 52 members, a majority, representing the 26 smallest states accounted for just 17.06% of the U.S. population. In other words, a majority in the Senate does not necessarily represent a majority of the population. The Senate is intended for deliberation not point scoring. It is a place designed from its inception, as expressive of minority views. Even 60 Senators, the number required for cloture, would represent just 24% of the population, if they happened to all hail from the 30 smallest states. Unfettered debate, the right to be heard at length, is the means by which we perpetuate the equality of the states.

In fact, it was 1917, before any curtailing of debate was attempted, which means that from 1806 to 1917, some 111 years, the Senate rejected any limits to debate. Democracy flourished along with the filibuster. The first actual cloture rule in 1917, was enacted in response to a filibuster by those who opposed U.S. intervention in World War I.

But, even after its enactment, the Senate was slow to embrace cloture, understanding the pitfalls of muzzling debate. In 1949, the 1917 cloture rule was modified to make cloture more difficult to invoke, not less, mandating that the number needed to stop debate would be not two-thirds of those present and voting, but two-thirds of all Senators.

Indeed, from 1919 to 1962, the Senate voted on cloture petitions only 27 times and invoked cloture just four times over those 43 years.

On January 4, 1957, Senator William Ezra Jenner of Indiana spoke in opposition to invoking cloture by majority vote. He stated with conviction:

We may have a duty to legislate, but we also have a duty to inform and deliberate. In the past quarter century we have seen a phenomenal growth in the power of the executive branch. If this continues at such a fast pace, our system of checks and balances will be destroyed. One of the main bulwarks against this growing power is free debate in the Senate … So long as there is free debate, men of courage and understanding will rise to defend against potential dictators … The Senate today is one place where, no matter what else may exist, there is still a chance to be heard, an opportunity to speak, the duty to examine, and the obligation to protect. It is one of the few refuges of democracy. Minorities have an illustrious past, full of suffering, torture, smear, and even death. Jesus Christ was killed by a majority; Columbus was smeared; and Christians have been tortured. Had the United States Senate existed during those trying times, I am sure these people would have found an advocate. Nowhere else can any political, social, or religious group, finding itself under sustained attack, receive a better refuge.

Senator Jenner was right. The Senate was deliberately conceived to be what he called a "better refuge," meaning one styled as guardian of the rights of the minority.

The Senate is the "watchdog" because majorities can be wrong, and filibusters can highlight injustices. History is full of examples.

In March 1911, Senator Robert Owen of Oklahoma filibustered the New Mexico statehood bill, arguing that Arizona should also be allowed to become a state. President Taft opposed the inclusion of Arizona's statehood in the bill because Arizona's state constitution allowed the recall of judges. Arizona attained statehood a year later, at least in part because Senator Owen and the minority took time to make their point the year before.

In 1914, a Republican minority led a 10-day filibuster of a bill that would have appropriated more than $50,000,000 for rivers and harbors. On an issue near and dear to the hearts of our current majority, Republican opponents spoke until members of the Commerce Committee agreed to cut the appropriations by more than half.

Perhaps more directly relevant to our discussion of the "nuclear option" are the seven days in 1937, from July 6 to 13 of that year, when the Senate blocked Franklin Roosevelt's Supreme Court-packing plan.

Earlier that year, in February 1937, FDR sent the Congress a bill drastically reorganizing the judiciary. The Senate Judiciary Committee rejected the bill, calling it " an invasion … of judicial power such as has never before been attempted in this country" and finding it "essential to the continuance of our constitutional democracy that the judiciary be completely independent of both the executive and legislative branches of the Government." The committee recommended the rejection of the court-packing bill, calling it "a needless, futile, and utterly dangerous abandonment of constitutional principle … without precedent and without justification."

What followed was an extended debate on the Senate Floor lasting for seven days until the Majority Leader, Joseph T. Robinson of Arkansas, a supporter of the plan, suffered a heart attack and died on July 14. Eight days later, by a vote of 70 to 20, the Senate sent the judicial reform bill back to committee, where FDR's controversial, court-packing language was finally stripped. A determined, vocal group of Senators properly prevented a powerful President from corrupting our nation's judiciary.

Free and open debate on the Senate floor ensures citizens a say in their government. The American people are heard, through their Senator, before their money is spent, before their civil liberties are curtailed, or before a judicial nominee is confirmed for a lifetime appointment. We are the guardians, the stewards, the protectors of our people. Our voices are their voices.

If we restrain debate on judges today, what will be next: the rights of the elderly to receive social security; the rights of the handicapped to be treated fairly; the rights of the poor to obtain a decent education? Will all debate soon fall before majority rule?

Will the majority someday trample on the rights of lumber companies to harvest timber, or the rights of mining companies to mine silver, coal, or iron ore? What about the rights of energy companies to drill for new sources of oil and gas? How will the insurance, banking, and securities industries fare when a majority can move against their interests and prevail by a simple majority vote? What about farmers who can be forced to lose their subsidies, or Western Senators who will no longer be able to stop a majority determined to wrest control of ranchers' precious water or grazing rights? With no right of debate, what will forestall plain muscle and mob rule?

Many times in our history we have taken up arms to protect a minority against the tyrannical majority in other lands. We, unlike Nazi Germany or Mussolini's Italy, have never stopped being a nation of laws, not of men.

But witness how men with motives and a majority can manipulate law to cruel and unjust ends. Historian Alan Bullock writes that Hitler's dictatorship rested on the constitutional foundation of a single law, the Enabling Law. Hitler needed a two-thirds vote to pass that law, and he cajoled his opposition in the Reichstag to support it. Bullock writes that "Hitler was prepared to promise anything to get his bill through, with the appearances of legality preserved intact." And he succeeded.

Hitler's originality lay in his realization that effective revolutions, in modern conditions, are carried out with, and not against, the power of the State: the correct order of events was first to secure access to that power and then begin his revolution. Hitler never abandoned the cloak of legality; he recognized the enormous psychological value of having the law on his side. Instead, he turned the law inside out and made illegality legal.

And that is what the nuclear option seeks to do to Rule XXII of the Standing Rules of the Senate.

It seeks to alter the rules by sidestepping the rules, thus making the impermissible the rule. Employing the "nuclear option", engaging a pernicious, procedural maneuver to serve immediate partisan goals, risks violating our nation's core democratic values and poisoning the Senate's deliberative process.

For the temporary gain of a hand-full of "out of the mainstream" judges, some in the Senate are ready to callously incinerate each Senator's right of extended debate. Note that I said each Senator. For the damage will devastate not just the minority party. It will cripple the ability of each member to do what each was sent here to do -- represent the people of his or her state. Without the filibuster or the threat of extended debate, there exists no leverage with which to bargain for the offering of an amendment. All force to effect compromise between the two political parties is lost. Demands for hearings can languish. The President can simply rule, almost by Executive Order if his party controls both houses of Congress, and Majority Rule reins supreme. In such a world, the Minority is crushed; the power of dissenting views diminished; and freedom of speech attenuated. The uniquely American concept of the independent individual, asserting his or her own views, proclaiming personal dignity through the courage of free speech will, forever, have been blighted. And the American spirit, that stubborn, feisty, contrarian, and glorious urge to loudly disagree, and proclaim, despite all opposition, what is honest and true, will be sorely manacled.

Yes, we believe in Majority rule, but we thrive because the minority can challenge, agitate, and question. We must never become a nation cowed by fear, sheeplike in our submission to the power of any majority demanding absolute control.

Generations of men and women have lived, fought and died for the right to map their own destiny, think their own thoughts, and speak their minds. If we start, here, in this Senate, to chip away at that essential mark of freedom -- here of all places, in a body designed to guarantee the power of even a single individual through the device of extended debate -- we are on the road to refuting the Preamble to our own Constitution and the very principles upon which it rests.

In the eloquent, homespun words of that illustrious, obstructionist, Senator Smith, " Liberty is too precious to get buried in books. Men ought to hold it up in front of them every day of their lives, and say, 'I am free -- to think -- to speak. My ancestors couldn't. I can. My children will."

© Copyright 2005 by

The Democrats Are Correct on Social Security

42 Senators Address Bush on Social Security
t r u t h o u t | Report

Friday 04 March 2005

Washington, D.C. - U. S. Senate Democratic Leader Harry Reid released the following letter sent to President Bush and signed by 42 Democratic Senators.


March 3, 2005

The President

The White House
1600 Pennsylvania Avenue, NW
Washington, DC

Dear Mr. President:

We write in the hope that we can achieve a bipartisan agreement to strengthen Social Security for the long term and enhance the retirement security of all Americans.

Soon after your reelection, you made clear that your Administration's top priority is to move toward the privatization of Social Security. Your proposal would cut Social Security's funding by diverting payroll taxes into privatized accounts, which would weaken the program and force deep cuts in benefits. Your Administration also acknowledged that the proposal would require borrowing trillions of dollars, much of which we know would come from foreign countries like China and Japan.

Democrats in the Congress believe this approach is unacceptable, and it appears that most Americans agree with us. Funding privatized accounts with Social Security dollars would not only make the program's long term problems worse, but many believe it represents a first step toward undermining the program's fundamental goals. Therefore, so long as this proposal is on the table, we believe it will be impossible to establish the kind of cooperative, bipartisan process we need to truly address the challenges facing the program many decades in the future.

We were encouraged that Treasury Secretary John Snow suggested that you might be willing to abandon your privatization proposal and move instead to an alternative approach in which investment accounts would be established entirely separate and apart from Social Security. As you know, many Democrats, including President Bill Clinton, have advocated just such an approach, with benefits targeted to working and middle class families who need help the most. So long as such accounts remain entirely independent from Social Security and do not put the program's guaranteed benefits at risk in any way, we believe they deserve serious consideration as part of a broader effort to promote retirement security.

While Secretary Snow's suggestion was initially encouraging, subsequent reports indicate that you remain committed to your privatization plan and his public comments were little more than a tactical maneuver. According to a story in today's Washington Post, "White House officials are privately telling Republicans that Bush is opposed to the idea [of accounts outside of Social Security], but does not want to say so because it would appear he is not willing to compromise."

Given the conflicting and ambiguous reports on such a critical issue, we urge you to publicly and unambiguously announce that you reject privatized accounts funded with

Social Security dollars or otherwise linked to the provision of guaranteed Social Security benefits. Such a statement would eliminate a serious obstacle to the kind of bipartisan process that Democrats are seeking to deal with Social Security's long-term challenges and to improve the retirement security of all Americans.

Thank you for your consideration of our views.



Akaka, Baucus, Bayh, Biden, Bingaman, Boxer, Byrd, Cantwell, Carper, Clinton, Corzine, Dayton, Dodd, Dorgan, Durbin, Feinstein, Harkin, Inouye, Jeffords, Johnson, Kennedy, Kerry, Kohl, Landrieu, Lautenberg, Leahy, Levin, Lieberman, Lincoln, Mikulski, Murray, Bill Nelson, Obama, Pryor, Reed, Reid, Rockefeller, Salazar, Sarbanes, Schumer, Stabenow, Wyden.


Jump to today's TO Features:

Save The Rich, Destroy the Poor.

March 3, 2005
Bankrupt Bankruptcy Bill

With their strengthened majority, Senate Republicans have high hopes of finally legislating more stringent demands on harried credit-card consumers who seek relief through personal bankruptcy. Proponents focus on tales of materialistic families of mall rats who max out their charge cards and fecklessly file for bankruptcy to start anew. The truth is far more complicated - particularly for low- and middle-income families driven to bankruptcy by catastrophic medical expenses. But the overhaul bill under debate, long sought by banks and credit card companies, would ratchet up the collection powers of an industry that blankets the nation daily with aggressive offers of consumer credit.

The bill would create a means test that compares a consumer's income and expenses, thereby changing the current law, which allows consumers to protect selected assets and escape the full repayment of their debts. Bankruptcy courts could require bigger repayment plans. While this might deal with outright schemers, it would only worsen a raft of real-life problems suffered by single mothers, the elderly and working families who suffer financial disasters because of emergency medical costs.

The Democrats' attempts to protect them were defeated yesterday. The same G.O.P.-led majority doomed another worthy amendment that would have exempted from the means test military personnel who fell into bankruptcy in their civilian lives after being called to fight in Iraq and Afghanistan.

Contrast that with the bill's gaping "millionaire's loophole," detailed by Gretchen Morgenson of The Times. The bill spares this popular gimmick, which lets wealthy people file for bankruptcy yet still protect major resources in five states that cater to sheltering assets from creditors in special trusts.

Unamended, the bill is a gift to the credit industry and deserves defeat. It needs a fairer balance, including clearer credit information for consumers, who are barraged by credit card offers from companies that make little attempt to ensure that their targets can handle such debt. Consumers are voters, too. They can see the double standard of a crackdown on ordinary people by lawmakers who tolerate corporate bankruptcies that cost workers their jobs, pensions and health benefits.

Copyright 2005 The New York Times Company

Krugman on Deceit in Taxation

March 4, 2005
Deficits and Deceit

Four years ago, Alan Greenspan urged Congress to cut taxes, asserting that the federal government was in imminent danger of paying off too much debt.

On Wednesday the Fed chairman warned Congress of the opposite fiscal danger: he asserted that there would be large budget deficits for the foreseeable future, leading to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts, calling instead for cuts in Social Security, Medicare and Medicaid.

Does anyone still take Mr. Greenspan's pose as a nonpartisan font of wisdom seriously?

When Mr. Greenspan made his contorted argument for tax cuts back in 2001, his reputation made it hard for many observers to admit the obvious: he was mainly looking for some way to do the Bush administration a political favor. But there's no reason to be taken in by his equally weak, contorted argument against reversing those cuts today.

To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast."

Until the 1970's conservatives tended to be open about their disdain for Social Security and Medicare. But honesty was bad politics, because voters value those programs.

So conservative intellectuals proposed a bait-and-switch strategy: First, advocate tax cuts, using whatever tactics you think may work - supply-side economics, inflated budget projections, whatever. Then use the resulting deficits to argue for slashing government spending.

And that's the story of the last four years. In 2001, President Bush and Mr. Greenspan justified tax cuts with sunny predictions that the budget would remain comfortably in surplus. But Mr. Bush's advisers knew that the tax cuts would probably cause budget problems, and welcomed the prospect.

In fact, Mr. Bush celebrated the budget's initial slide into deficit. In the summer of 2001 he called plunging federal revenue "incredibly positive news" because it would "put a straitjacket" on federal spending.

To keep that straitjacket on, however, those who sold tax cuts with the assurance that they were easily affordable must convince the public that the cuts can't be reversed now that those assurances have proved false. And Mr. Greenspan has once again tried to come to the president's aid, insisting this week that we should deal with deficits "primarily, if not wholly," by slashing Social Security and Medicare because tax increases would "pose significant risks to economic growth."

Really? America prospered for half a century under a level of federal taxes higher than the one we face today. According to the administration's own estimates, Mr. Bush's second term will see the lowest tax take as a percentage of G.D.P. since the Truman administration. And don't forget that President Clinton's 1993 tax increase ushered in an economic boom. Why, exactly, are tax increases out of the question?

O.K., enough about Mr. Greenspan. The real news is the growing evidence that the political theory behind the Bush tax cuts was as wrong as the economic theory.

According to starve-the-beast doctrine, right-wing politicians can use the big deficits generated by tax cuts as an excuse to slash social insurance programs. Mr. Bush's advisers thought that it would prove especially easy to sell benefit cuts in the context of Social Security privatization because the president could pretend that a plan that sharply cut benefits would actually be good for workers.

But the theory isn't working. As soon as voters heard that privatization would involve benefit cuts, support for Social Security "reform" plunged. Another sign of the theory's falsity: across the nation, Republican governors, finding that voters really want adequate public services, are talking about tax increases.

The best bet now is that Mr. Bush will manage to make the poor suffer, but fail to make a dent in the great middle-class entitlement programs.

And the consequence of the failure of the starve-the-beast theory is a looming fiscal crisis - Mr. Greenspan isn't wrong about that. The middle class won't give up programs that are essential to its financial security; the right won't give up tax cuts that it sold on false pretenses. The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug.


Bob Herbert is on vacation.

Copyright 2005 The New York Times Company

Rich? Don't You Worry About Your ASSETS!!! Loopholes for You Abound!

March 4, 2005
Senate Rejects Efforts to Alter Bankruptcy Legislation

WASHINGTON, March 3 - The Senate rejected several Democratic amendments to the bankruptcy legislation on Thursday, including one that would have closed a loophole that lets wealthy people protect millions of dollars in assets from creditors even after filing for bankruptcy.

The votes, victories for the bill's sponsors and setbacks for its critics, illustrated the broad support for the legislation, which has long been sought by credit card companies, banks and retailers.

Supporters said that if the legislation was relatively unaltered, it was likely to move swiftly through the House.

Still, supporters and opponents were preparing for a fight as early as next week over an amendment that would prohibit protesters of abortion clinics from using the bankruptcy law to shield themselves from judgments for violations of the Freedom of Access to Clinic Entrances Act.

In previous Congressional sessions, that provision has doomed the legislation, although it is not clear that supporters of the clinic access provision have enough votes for that amendment, or to sustain a filibuster in the Senate if it is rejected. Sixty votes are needed to break such an effort and limit debate.

The centerpiece of the legislation is a provision that would limit access by individuals to Chapter 7 of the bankruptcy code. It enables individuals to sharply limit payments on their obligations and get a "fresh start."

The bill would instead impose a means test that would prompt many people to instead file for bankruptcy protection under Chapter 13, which requires a repayment plan.

The means test would not be applied to debtors who earn less than the median income in their state. Those who earn more than that and can pay at least $6,000 over five years would have to seek protection under Chapter 13.

Supporters say the measure is necessary to curb the abusive overuse of bankruptcy. But critics say it would impose heavy new costs on bankruptcy filers and it would be particularly hard on women and families devastated by high health care costs. They also say that, while the legislation hits poor and moderate income families, it ignores bankruptcy abuses by companies and wealthy people.

Senator Charles E. Schumer, Democrat of New York, proposed the amendment to limit the use of so-called asset protection trusts. His amendment would have limited the use of the trusts to shield assets only up to $125,000.

Since 1997, five states have adopted laws that exempt from the bankruptcy code assets held domestically in asset protection trusts.

People who want to establish such trusts can reside anywhere in the nation - they only have to set up the trust through an institution in one of the five states.

"Deadbeats exist in all tax brackets," Mr. Schumer said. "I hope my friends on the other side of the aisle aren't going to protect wealthy deadbeats from the same punishment they are doling out to those who are not so financially fortunate."

The amendment failed 56 to 39, and Mr. Schumer managed to get the support of only one Republican, Senator Lincoln D. Chafee of Rhode Island. Mr. Schumer said after the vote that based on his discussions with other members, he believed that at least 10 other Republicans would have voted for the measure but were instructed by the leadership to oppose all amendments.

"They said, 'you're right, but we're voting against all amendments,' " Mr. Schumer said. "So now we have a bill that says a family won't be protected if it has $50,000, but it will if it has $5 million."

After the vote on the Schumer amendment, the Senate by a vote of 54 to 40 rejected a proposal by Senator John D. Rockefeller IV, Democrat of West Virginia, to protect employees of companies that go into Chapter 11 by permitting them to get up to $15,000 in back pay or other compensation. It then rejected an amendment by Senator Richard Durbin, Democrat of Illinois, to curtail what he called the abusive practices of executives at companies like Enron and WorldCom who received millions of dollars in compensation shortly before the companies filed for bankruptcy protection.

The chamber also defeated an amendment proposed by Senator Mark Dayton, Democrat of Minnesota, that would have imposed a 30 percent annual limit on credit card interest rate charges. And it rejected an amendment by Senator Bill Nelson, Democrat of Florida, to exempt debtors from the means test if their problems were caused by identity theft.

Copyright 2005 The New York Times Company |

Bloggers Be Aware!

The coming crackdown on blogging

By Declan McCullagh

Story last modified Thu Mar 03 04:00:00 PST 2005

Bradley Smith says that the freewheeling days of political blogging and online punditry are over.
In just a few months, he warns, bloggers and news organizations could risk the wrath of the federal government if they improperly link to a campaign's Web site. Even forwarding a political candidate's press release to a mailing list, depending on the details, could be punished by fines.

Smith should know. He's one of the six commissioners at the Federal Election Commission, which is beginning the perilous process of extending a controversial 2002 campaign finance law to the Internet.

In 2002, the FEC exempted the Internet by a 4-2 vote, but U.S. District Judge Colleen Kollar-Kotelly last fall overturned that decision. "The commission's exclusion of Internet communications from the coordinated communications regulation severely undermines" the campaign finance law's purposes, Kollar-Kotelly wrote.

Smith and the other two Republican commissioners wanted to appeal the Internet-related sections. But because they couldn't get the three Democrats to go along with them, what Smith describes as a "bizarre" regulatory process now is under way.

CNET spoke with Smith about the Bipartisan Campaign Reform Act of 2002, better known as the McCain-Feingold law, and its forthcoming extrusion onto the Internet.

Q: What rules will apply to the Internet that did not before?
A: The commission has generally been hands-off on the Internet. We've said, "If you advertise on the Internet, that's an expenditure of money--much like if you were advertising on television or the newspaper."

Do we give bloggers the press exemption? The real question is: Would a link to a candidate's page be a problem? If someone sets up a home page and links to their favorite politician, is that a contribution? This is a big deal, if someone has already contributed the legal maximum, or if they're at the disclosure threshold and additional expenditures have to be disclosed under federal law.

Certainly a lot of bloggers are very much out front. Do we give bloggers the press exemption? If we don't give bloggers the press exemption, we have the question of, do we extend this to online-only journals like CNET?

How can the government place a value on a blog that praises some politician?
How do we measure that? Design fees, that sort of thing? The FEC did an advisory opinion in the late 1990s (in the Leo Smith case) that I don't think we'd hold to today, saying that if you owned a computer, you'd have to calculate what percentage of the computer cost and electricity went to political advocacy.

It seems absurd, but that's what the commission did. And that's the direction Judge Kollar-Kotelly would have us move in. Line drawing is going to be an inherently very difficult task. And then we'll be pushed to go further. Why can this person do it, but not that person?

How about a hyperlink? Is it worth a penny, or a dollar, to a campaign?
I don't know. But I'll tell you this. One thing the commission has argued over, debated, wrestled with, is how to value assistance to a campaign.

Corporations aren't allowed to donate to campaigns. Suppose a corporation devotes 20 minutes of a secretary's time and $30 in postage to sending out letters for an executive. As a result, the campaign raises $35,000. Do we value the violation on the amount of corporate resources actually spent, maybe $40, or the $35,000 actually raised? The commission has usually taken the view that we value it by the amount raised. It's still going to be difficult to value the link, but the value of the link will go up very quickly.

Then what's the real impact of the judge's decision?
The judge's decision is in no way limited to ads. She says that any coordinated activity over the Internet would need to be regulated, as a minimum. The problem with coordinated activity over the Internet is that it will strike, as a minimum, Internet reporting services.

They're exempt from regulation only because of the press exemption. But people have been arguing that the Internet doesn't fit under the press exemption. It becomes a really complex issue that would strike deep into the heart of the Internet and the bloggers who are writing out there today. (Editor's note: federal law limits the press exemption to a "broadcasting station, newspaper, magazine or other periodical publication." )

How do you see this playing out?
There's sensitivity in the commission on this. But remember the commission's decision to exempt the Internet only passed by a 4-2 vote.

This time, we couldn't muster enough votes to appeal the judge's decision. We appealed parts of her decision, but there were only three votes to appeal the Internet part (and we needed four). There seem to be at least three commissioners who like this.

Then this is a partisan issue?
Yes, it is at this time. But I always point out that partisan splits tend to reflect ideology rather than party. I don't think the Democratic commissioners are sitting around saying that the Internet is working to the advantage of the Republicans.

One of the reasons it's a good time to (fix this) now is you don't know who's benefiting. Both the Democrats and Republicans used the Internet very effectively in the last campaign.

What would you like to see happen?
I'd like someone to say that unpaid activity over the Internet is not an expenditure or contribution, or at least activity done by regular Internet journals, to cover sites like CNET, Slate and Salon. Otherwise, it's very likely that the Internet is going to be regulated, and the FEC and Congress will be inundated with e-mails saying, "How dare you do this!"

What happens next?
It's going to be a battle, and if nobody in Congress is willing to stand up and say, "Keep your hands off of this, and we'll change the statute to make it clear," then I think grassroots Internet activity is in danger. The impact would affect e-mail lists, especially if there's any sense that they're done in coordination with the campaign. If I forward something from the campaign to my personal list of several hundred people, which is a great grassroots activity, that's what we're talking about having to look at.

Senators McCain and Feingold have argued that we have to regulate the Internet, that we have to regulate e-mail. They sued us in court over this and they won.

If Congress doesn't change the law, what kind of activities will the FEC have to target?
We're talking about any decision by an individual to put a link (to a political candidate) on their home page, set up a blog, send out mass e-mails, any kind of activity that can be done on the Internet.

Again, blogging could also get us into issues about online journals and non-online journals. Why should CNET get an exemption but not an informal blog? Why should Salon or Slate get an exemption? Should and get an exemption but not online sites, just because the newspapers have a print edition as well?

Why wouldn't the news exemption cover bloggers and online media?
Because the statute refers to periodicals or broadcast, and it's not clear the Internet is either of those. Second, because there's no standard for being a blogger, anyone can claim to be one, and we're back to the deregulated Internet that the judge objected to. Also I think some of my colleagues on the commission would be uncomfortable with that kind of blanket exemption.

So if you're using text that the campaign sends you, and you're reproducing it on your blog or forwarding it to a mailing list, you could be in trouble?
Yes. In fact, the regulations are very specific that reproducing a campaign's material is a reproduction for purpose of triggering the law. That'll count as an expenditure that counts against campaign finance law.

This is an incredible thicket. If someone else doesn't take action, for instance in Congress, we're running a real possibility of serious Internet regulation. It's going to be bizarre.

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