Christopher Dodd

Mr. DODD

Mr. DODD. Mr. President, I just have one minute in response. As my friend from Utah knows, shortly, we have an amendment that we are going to offer together on this bill. I am sorry we don't agree on this. As I mentioned earlier, we do set some restrictions. We can send men and women to war at age 18, but we don't allow them to drink; we set a standard of 21. We did so because of the dangers that we decided alcohol posed to young people. The Tax Code says there is a rebuttable presumption that at 23-year-old college student has an obligation that shifts to parents. All I am requiring here is that the credit card companies, when they solicit an 18 or 19 year old, require that they show they have the independent means of paying for it or that they have a guardian or a qualified person who will cosign. The same thing would be required of someone else. One out of five students has $10,000 worth of financial debt and obligation. We are being told now one of the single largest reasons for disenrollment in higher education is because of this mounting--and it has doubled in the last two years--amount of credit card debt among 18-, 19-, and 20-year-olds. It ought not to be a great deal to ask they meet these basic, simple requirements. They can solicit; they can collect. If they can sign them up, God bless them, go to it. However, for a student ID and a signature to get $10,000 worth of debt for one out of five college students--and the average student has $2,000 worth of debt and was not paying the monthly payments--is too much for the families to be burdened with. I ask unanimous consent a letter from the Consumer Federation of America, the Consumers Union, the National Consumer Law Center, the U.S. Public Interest Research Group, and the U.S. Student Association, all of which support this amendment, be printed in the Record.

Mr. DODD. It says parents, guardians, or any other qualified person can cosign. It is not limited to parents. If the parents were deceased or the guardians were deceased, a qualified person could cosign. So we allow for a broader range of options here.

Mr. DODD. Will my colleague yield for another correction?

Mr. DODD. I hope we can get a strong vote on this amendment. This shouldn't take much time. It is very little to ask. The credit card companies are the ones who have asked for this bill on bankruptcy reform. I am sympathetic to the bill because I do think there are far too many bankruptcies in the country. If we are to try to reduce the number of bankruptcies, we have to reduce the rationale or the reason why people are going to the bankruptcy courts in the first place. These are not all evil people. These are not all scam artists who are trying to game the system. The overwhelming majority of people who go to a bankruptcy court have gotten in way over their heads. You can say they have been irresponsible. That may be the case. But I will tell you, for an awful lot of families, they have kids in college and those adolescent kids became irresponsible. I know of very few who don't get irresponsible in their adolescent years. The danger today is that they can get deeply in trouble. It isn't just a college prank that may get them in trouble. Now you have major credit card companies dumping 50 solicitations into their mailboxes in their dormitories in the first semester in college. With a student I.D. and a signature, they get themselves $10,000 into trouble. Requiring these companies to at least get some basic information may slow down this process. It will do a lot to reduce the volume of bankruptcies in this country, to reduce the ability of an 18- or 19-year-old, with no independent means of paying back their debts, from getting these cards in the first place, and saving these families the anguish and heartache and the dashed dreams that a young college student has when they go off for the first time. Many of them, by the way, are the first people in their families ever to go to college. Think how the families feel--the excitement, the thrill of a young person going off to college, from a blue collar working family in this country who never had that opportunity. All of a sudden they get a deluge of platinum credit cards flooding their mailboxes, the kids sign up, and the dreams of a family go down the drain in a matter of weeks. This ought not to be a Democrat or Republican issue, conservative or liberal issue. This is a commonsense issue. This is basic common sense, which says to these companies that, with 18- to 21-year-olds, there has to be some cosigner, or some demonstration of an independent means to pay back. If you turn down this amendment and you turn around and say we ought to stop these bankruptcies, then you make it harder for these families to get out of these obligations and straighten out their lives. I know an awful lot of good people who have gotten themselves behind the eight ball financially; they are not evil, bad people. Because they get into a little trouble, particularly at 18 or 19 --and one out of five of them are $10,000 in debt--doesn't mean they ought not to have an opportunity to straighten things out. The best way is not to get into trouble in the first place. The way not to get into trouble in the first place is to put some governor--you know how we do with automobiles with young people, where the car can't go more than 60 miles an hour, because we know there is a danger of a young person going too fast. Why not put a governor here on the credit card companies and slow them down. They can make their solicitations, send the solicitations in there, but require that these young people have a cosigner or a demonstration of an independent means to pay. If they can't do that, then you move on to someone else who can. But don't sign up a young person and put them and their family into harm's way and pass a bankruptcy bill that doesn't allow them to take the bankruptcy act when those debts mount up. So I hope that our colleagues will support this amendment. This will be a good way for us to build strong bipartisan support for this bill. With that, I yield the floor.

Mr. DODD. Mr. President, I say to my good friend from Iowa, I know he is concerned with the number of amendments and time. We have debated this amendment in the past. It will not be a new debate for our colleagues. I am more than happy to enter into an agreement, if he wants, to move the process along. I have three other amendments I have offered and laid aside which also can be dealt with quickly. I am more than prepared to enter into a time agreement when the manager wants to discuss that with me. I will be brief and explain what this amendment does and why it is an important one. I hope our colleagues will be willing to support it. This amendment is very straightforward and just plain common sense and something most Americans have become familiar with already. The amendment requires that when a credit card company issues a credit card to persons under the age of 21, the issuers of those credit cards obtain an application from that individual that does one of two things: One, either they have the signature of a parent, guardian, or other qualified individual willing to take financial responsibility for any debts that may be incurred; or, two, that the applicant provides information indicating the individual has independent means of repaying any credit card debt. One of those two things: Either have a guardian or some qualified person cosign to say they will assume the responsibility, or demonstrate the borrower has independent means of paying back their debts. Why do I suggest this amendment is important and one we ought to do? It is becoming an alarming problem in the country. One of the most troubling developments in the hotly contested battle between the credit card issuers to sign up new customers has been the aggressive way in which these companies have targeted people under the age of 21, particularly college students. Solicitations to this age group have become more intense for a variety of reasons. First of all, it is one of the few market segments in which there are always some new faces to go after. That certainly is understandable. Second, it is an age group in which brand loyalty can be established early on. Again, I understand that. In the words of one major credit card issuer, ``We are in the relationship business. We want to build relationships early on.'' Recent press reports have reported that people hold on to their first credit cards for up to 15 years. That makes sense to me. I do not argue with that. That is good business judgment. It is a new crowd coming along, and a company knows they can develop loyalties early on, and they want to establish that relationship as early as they can for those individuals. I do not fault the credit card companies for those arguments or those ideas from a business perspective. What does worry me is that this solicitation and signing people up without having some information which indicates these credit cards are going to be paid for is creating a very serious problem, including significant dropouts from colleges because of the huge debts these individuals are accumulating. In fact, people under the age of 21 are such a hot target for credit card marketers that the upcoming Card Marketing Conference 98 is calling one of its key sessions ``Targeting teens: You never forget your first card.'' Providing fair access to credit is something for which I have fought throughout my tenure in the Senate, and credit cards play a valuable role in pursuing the American dream. Some credit card issuers, however, have, in my view, gone too far in their aggressive solicitations. They irresponsibly target the most vulnerable in our society and extend them large amounts of credit with absolutely no regard to whether or not there is a reasonable expectation of repayment. On my first chart, I bring to my colleagues' attention a recent story reported in the Rochester Democrat and Chronicle in the State of New York. The article relates to the story of a 3-year-old child who recently received a platinum credit card with a credit card limit of $5,000. The credit card issuers are also enticing college students. In the Rochester News, a 3-year-old Rochester toddler was issued a platinum credit card after the mother jokingly returned an application sent to the child. The child's mother told the bank that the child's occupation was ``preschooler'' and left the income portion of the application a total blank. A few weeks later, the tot received a $5,000 credit card limit. This is how insane the process has become--filling out the application, listing your application as a preschooler, and showing no source of income, and you get $5,000 worth of credit. We know in this day and age of high technology that these companies certainly have the capacity of distinguishing--I hope--between a preschooler with no source of income and providing them with $5,000 worth of credit. Credit card issuers are also enticing colleges and universities to promote their products. Professor Robert Manning of Georgetown University told my staff recently that some colleges receive tens of thousands of dollars per year for exclusive marketing agreements. Other colleges receive as much as 1 percent of all student charges from the credit card issuer in return for marketing or affinity agreements. Even those colleges that do not enter such agreements are making money. Robert Bugai, president of the College Marketing Intelligence, told the American Banker recently that colleges charge up to $400 per day for each credit card company that sets up a table on their campuses. That can run into tens of thousands of dollars by the end of just one semester. Last February, I went to the main campus of the University of Connecticut in my home State to meet with student leaders about this issue. Quite honestly, I was surprised at the amount of solicitations going on in the student union. Frankly, I also was surprised at the degree to which the students themselves were concerned about the constant barrage of offers they were receiving for credit cards. The offers seemed very attractive. One student who was an intern in my office this summer received four solicitations in 2 weeks from credit card companies. One promised ``eight cheap flights while you still have 18 weeks of vacation.'' Another promised a platinum card with what appeared to be a low-interest rate until you read the fine print that it applied only to balance transfers, not to the account overall. Only one of the four, Discover card, offered a brochure about credit terms--and I commend them for it--but, in doing so, also offered a spring break sweepstakes to 18-year-olds. In fact, the Chicago Tribune recently reported the average college freshman receives 50 solicitations during the first few months at college. The Tribune further reported college students get green- lighted--a green light, no yellow light, a green light--for a line of credit that can reach more than $10,000 just on the strength of a signature and a student ID; $10,000 worth of credit at the age of 18 with just your student ID and a signature. Who do you think is going to pay those bills? The parents do. They get socked with it in the end. We have to have some restraint, some controls on this. We have a huge problem with the amount of debt that is being accumulated by children or being passed on to their parents without any requirements at all that they meet some basic minimum standards, either independent sources of income or a cosignature by someone who can demonstrate the ability to pay. It is a serious public policy question about whether people in this age bracket can be presumed--and that is what they are doing--presumed to be able to make the sensible financial choices that are being forced upon them from this barrage of marketing. While it is very difficult to get reliable information from the credit card issuers about their marketing practices to people under the age of 21, the statistics that are available are deeply troubling. Let me share some of them with you. Let me put up chart No. 2, if I may. ``Collegiate credit cards increasing.'' This article appeared just a few days ago in the Washington Post here in the Nation's Capital. Let me share what the Post talked about. I quote them: Alarmed by the trend, hundreds of colleges in recent years have forbidden credit card companies to solicit on their campuses, and Virginia lawmakers are thinking of imposing such a ban at all the State's colleges. Nine other States are considering similar measures. The Post goes on to report that: An estimated 430 colleges have banned the marketing of credit cards on their campuses. The statistics on college credit card debt are truly frightening. Nellie Mae, a major student loan provider in the New England States, conducted a recent survey of students who had applied for student loans. It termed the results ``alarming.'' The survey found that 27 percent of their undergraduate student applicants had four or more credit cards. It found that 14 percent had credit card balances between $3,000 and $7,000, while another 10 percent had balances in excess of $10,000. Let me repeat those statistics because they are truly alarming. Twenty-seven percent of college students already had four credit cards; 14 percent had credit card balances between $3,000 and $7,000; and 10 percent had credit card balances that were greater than $7,000. That is 24 percent; that is one out of every four who have debt somewhere between $3,000 and above $7,000--one out of every four college students with that kind of debt while they are trying to pay off student loans and other matters. This is incredible in terms of the amount of obligations, while still virtually children in many cases. This figure of 24 percent with credit card balances in excess of $3,000 is more than double the number from last year when I stood on this floor and offered a similar amendment. The trend lines are alarming. My hope with this amendment, which does not ban at all the solicitation among college students--if colleges want to allow them to go and solicit, they can--but the amendment merely says two things: Either have a guardian or a qualified person cosign, or show you have the independent means of paying the credit card debt you incur. That is something you would think the credit card companies would want to do themselves. Why do they not want this information? Why are they willing to extend up to $10,000 worth of debt merely on a student signature and an ID? It seems to me that is the height of irresponsibility. Then they come around and complain that there is too much debt in the country and they want to tighten up the bankruptcy laws. Why not tighten up your own process? Why not ask for some basic information of these young people before watching them build up the kind of debt they may spend years trying to pay back? It seems to me that if they are unwilling to impose some restraints on who can incur this kind of debt, we have an obligation to set some minimum standards. Again, it does not ban them from going out to solicit young people to become credit card holders. If the young person can have their parents or a guardian cosign, or if they can demonstrate independent means of payment, no problem, they get their credit card. But just on a student ID, and just on their signature, I think this body ought to be on record as saying that is what is creating some of the real debt problems in the country. We ought to put a stop to it. I mentioned the numbers. Moreover, while there is still evidence that student debt is skyrocketing, some surveys by credit card issuers themselves show that this same group of consumers is woefully uninformed about basic credit card terms and issues. A 1993 American Express/Consumer Federation of America study--done only about 5 or 6 years ago--found that only 22 percent of the more than 2,000 college students surveyed knew that the annual percentage rate is the best indicator of the true cost of a loan. Only 30 percent of those surveyed knew that each bank sets the interest rate on their credit cards, so it is possible to shop around for the best rate. Only 30 percent knew that the interest rate was charged on new purchases if you carried a balance over from the previous month. Some college administrators, bucking the trend to use credit card issuers as a source of income, have become so concerned that they have banned credit card companies from their campuses, as I mentioned, and even have gone so far as to ban credit card advertisements from the campus bookstores. Roger Witherspoon, the vice president of student development at John Jay College of Criminal Justice in New York, banned credit card solicitors, saying indebtedness was causing students to drop out. I quote him: Middle class parents can bail out their kids when this happens, but lower income parents can't. In fact, I argue with the statement. I do not think middle-income parents can either. Only the most affluent parents would be able to bail out their children from the kind of debts many of them are incurring. But he goes on to say: Kids only find out later how much it messes up their lives [when this debt occurs]. If I may, this is chart No. 3, which is from the Consumer Federation of America. This came out last June. The Consumer Federation of America says: The average college student who does not pay off his or her balance every month now has an average debt of over $2,000. The average college student who does not pay off their balance every month has a credit card debt of over $2,000. One-fifth-- One out of every five-- of these students have debts of more than $10,000. A number of colleges are now citing credit card debt as the most significant cause of college disenrollment. Here we stand, day after day, week after week, talking about how important it is to get young people into higher education and to keep them there. This ought to be a matter of bipartisan concern. I know the credit card companies are working overtime on this. But if one of the major causes of disenrollment in higher education is credit card debt--where one out of every five students in this country has debt in excess of $10,000, and the average student who does not pay their monthly balance has a $2,000 debt--then something is drastically wrong that cries out for some solution. Again, I think banning credit card companies from college campuses, that ought not to be our decision; leave that up to the college campuses. Not allowing them to put their advertisements in bookstores, that ought to be the college's decision, not the Congress'. But I do not think it is too much to say that we ought to require, as part of a bankruptcy bill, when we are trying to reduce the amount of bankruptcy filings in this country, that you either have to have someone who will cosign with you, if you are under the age of 18, or that you have an independent demonstration of the ability to pay. I see my good friend from Utah has arrived. We now know that one of the most significant reasons of disenrollment in colleges is credit card debt. My colleague from Utah, who cares so much about higher education, ought to be deeply alarmed. The trend lines are dreadful. It is just dreadful what is occurring. Unless we do something to try to put some restraints on this, we are going to have this problem continue to mount. As I said earlier, this amendment does one of two things: If you are under 21, have a guardian, a parent, a qualified person cosign, or demonstrate you can pay, and then you get your credit card. But to say you get a credit card with a student ID and your signature alone, and to be able to mount up this kind of debt, crippling these people from ever being able to get out from underneath their obligations, I think is outrageous. The amendment I am proposing does not take any draconian action against the credit card industry. I agree with those who argue that there are many millions of people under the age of 21, who hold full- time jobs, who are as deserving of credit cards as anyone over the age of 21. I also agree that students should continue to have access to credit. They should not try to prohibit the marketing for making credit cards available to these people. I also recognize that the period of time from 18 to 21 is an age of transition from adolescence to adulthood. As we do in so many other places in the Federal law, some extra care is needed to make sure that mistakes made from youthful inexperience do not haunt these people for the rest of their lives. All my amendment does is require that a credit card issuer, prior to granting credit, obtain one of two things from the applicant under the age of 21: Either they get a signature from a parent, a guardian, a qualified individual, or obtain information that demonstrates that that person between the ages of 18 and 21 has the capability of paying it back. This is a vulnerable period. This is an exciting time in their lives. For many, it is the first time they are away from home. They are living on their own, independent. All of a sudden, as we know, you get 50 credit card solicitations in the space of one semester; in the case of the intern in my office, offering college sweepstakes, springs breaks, all sorts of enticements. You sign up. Before you know it, you have incurred $2,000, $3,000, $4,000, $6,000 worth of debt. You are 18 or 19 years of age. Then they come after you to pay. They don't give you a break and say: We will wait until you get through college. We will wait until you are 25 or 30 to pay it back. They want their money right away. They want to get it, immediately, if they can. What happens, as we now find out, is one of the reasons for disenrollment in college--for one out of five students, $10,000 worth of debt by the time they are 19 or 20 years of age. By the way, on $10,000, the way the annual rates go and so forth, that probably means something like $30,000 or $40,000 because they can't pay it off all at once. By the time they get out from underneath this rock, it could end up being a fortune for them as they start out their lives with dreams and aspirations and hopes. Again, I don't object to the credit card companies soliciting, advertising, if that is what they want to do and want to have them on board. But why do you allow an 18-year-old to get this kind of a debt with a student ID and a signature? You don't let that happen with older people. You demand some sort of information about their ability to pay. Why do you say to an 18-year-old that you can be treated so differently than someone who is 25 or 30, where they need demonstrations of ability to pay? Why shouldn't we say that if you are going to solicit an 18- year-old, at least show that they can pay it back. They may not be able to, but at least require that or have a guardian or an adult sign on. Federal law already says people under the age of 21 shouldn't drink alcohol. We made that statement. I know my colleague from Utah was a strong supporter of that. We don't allow you to drink anymore on college campuses unless you are 21 or older because we were worried about them. We were worried what would happen to them. Isn't this a problem as well, this kind of debt they can incur? The Tax Code makes the presumption that if someone is a full-time student under the age of 23, they are financially dependent on their parents or guardians. The Tax Code makes that presumption. Is it so much to ask that credit card issuers find out if someone under the age of 21 is financially capable of paying back the debt or that their parents are willing to assume the financial responsibility or someone else? Again, I know there are a lot of young people who are out working full-time jobs and going to school simultaneously. This isn't a big burden --they need to have that credit card--to say to them, look, just demonstrate, through a W-2 form or something, that you can pay back or you have the ability to pay back. That is not a lot to ask. Believe me, the credit card companies can do it on the Internet. They can do it in a matter of a nanosecond if they want to. Why don't they want to? What is the hesitation? Don't tell me it is the bureaucracy. It is not the bureaucracy. They require it of adults who are older than that. They don't give platinum credit cards out to people who are not in college without getting some information about their ability to pay. Why is it in this age group that they are willing to give it to you on a signature and a student ID? I think we all know the answer why. It is outrageous. It is getting worse all the time. I mentioned to you the numbers have almost doubled in a year in terms of the amount of debt being held. Last year, when I offered the amendment, it was $3,000. Now it is at almost $7,000 worth of debt they are incurring. I hope our colleagues will be willing to support this modest amendment. It is not a great deal to ask. As I mentioned, 430 colleges have banned credit cards from soliciting on their campuses. They know what the problem is. When we have the president of one of the major criminal justice schools in the country talk about what a drastic problem this is having on enrollment, these are serious people. They are not anticredit card. They are not antibusiness. They are not against young people having credit cards. They see what is happening on their campuses. We ought to pay attention to them and listen to them. To ignore them or to say it doesn't make any difference would be an outrage. How can we pass a bankruptcy bill, as we try and cut down on the number of bankruptcies, and allow this situation to persist where one out of every five college students has $10,000 of credit card debt? How can we allow that to persist without setting some minimum standards that these people have to meet before they can incur that kind of debt? I suspect the credit card companies will be probably lax in what minimum standards they might even permit, but at least it might put the brakes on a little bit, just a little bit. We have also received some strong endorsements of this amendment: the American Federation of State County Municipal Employees; the Communication Workers of America, International Brotherhood of Boilermakers, Blacksmiths; International Brotherhood of Teamsters; the Union of Needletrades, Industrial & Textile Employees; the United Automobile, Aerospace and Agricultural Implement Workers; United Food & Commercial Workers International, representing millions of working families. Why do the unions care about a credit card bill? Because these are the parents of these kids. That is why they care about it. This isn't a union issue. These are the hard-working parents who are working two and three and four jobs to send their kids to college. They turn around and some credit card company mounts up a $10,000 debt on their back. Their kids have to drop out, after they have worked 20 or 30 years, saving to put their families through school, understanding the value of a higher education. Now the credit card companies say, no, that is too much to ask of us. You are asking way too much, that we require an 18-year-old to have a cosigner of the credit card application or to show that they have the means of paying back the debt. That is why the millions who are represented by these unions have offered such strong support of this legislation. Mr. President, I ask unanimous consent that this letter be printed in the Record at this juncture.

Mr. DODD. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with.

Mr. DODD. Mr. President, I call up amendment No. 2754 and ask for its immediate consideration.

Mr. DODD. Mr. President, I ask unanimous consent that these three amendments be laid aside.

Mr. DODD. Mr. President, I call up amendments Nos. 2531, 2532, and 2753.

Mr. DODD. Mr. President, if I can get the attention of the floor manager of this bill, I think what I am about to do is all right. I will call up three amendments and immediately ask for them to be laid aside, and then I will call up an amendment which I want to debate. Amendments Nos. 2531, 2532, and 2753

Mr. DODD. Mr. President, to make a couple of quick points, I was terribly saddened to see as part of another bill that we have a further reduction in child care provisions, which is a major blow again to working families out there. We all know that quality child care makes a difference for these children. In the midst of all of this, we are obviously told you have to come up with some offsets to pay for the provisions in this bill, which we do. Offsets always attract opposition from one quarter or another. But these are modest offsets to pay for the provisions in the bill. What is going to happen later today we are going to vote on $75 billion in tax cuts and 56 percent of them go to the top 20 percent of income earners, and there are no offsets--none. One of the great contradictions is, we are being accused of not liking the offsets, the pays, from some of the provisions and simultaneously we ask our Members to vote for a provision in the bill or vote for the whole bill, including a $75 billion tax cut over 10 years with no offsets. Let me underscore, as this millennium date of 50 days away approaches, those at the bottom of the economic rung--working people, the majority who receive the minimum wage and are working full time; they are women, they are Hispanic, they are black--deserve to get a fair shake out of this Senate. In a few minutes, we will have an opportunity to give them that fair shake by providing an increase in the minimum wage, allowing them to enjoy the prosperity of the booming economy. I yield the floor.

Mr. DODD

Mr. DODD. Mr. President, I ask unanimous consent further reading of the amendment be dispensed with.

Mr. DODD. Mr. President, for those who are interested in following the amendment process, the modification is purely technical in nature to what I earlier offered. So it is just technical corrections. Mr. President, I am going to use some charts on this. I call up this amendment, as modified, and ask for its immediate consideration.

Mr. DODD. Mr. President, I send a modification to the desk to that amendment.

Mr. DODD. Mr. President, I call up amendment No. 2532 and ask unanimous consent for its consideration.

Mr. DODD. Mr. President, I offer this amendment on behalf of myself and Senator Landrieu, Senator Kennedy, and others who may be interested in joining in this particular effort. Mr. President, this is an amendment which I would hope would be adopted. I am sorry in a sense it is not being accepted because it goes to the very heart of what many of us have talked about and tried to accomplish over the years, since bankruptcy laws were first modernized and adopted almost a century ago in 1903. This amendment deals with families, with spouses, with child support issues, and where they come in the context of priorities when it comes to discharging responsibilities under the bankruptcy act. It is no great secret that in 1998, we learned that as much as $43 billion in child support payments remained uncollected in the United States. It is a staggering sum of money and makes a huge difference to children growing up under adverse circumstances as they are. When you exclude the ability to receive the financial support necessary to make ends meet, the problem becomes even more pronounced. I raise that because last year this body voted on important legislation that would provide needed reform to our bankruptcy laws, while at the same time ensuring that children and families would remain unhindered in their efforts to collect domestic support from bankrupt debtors. Since 1903, our Nation's bankruptcy code has been guided by the firm principle that women and children must be first in the distribution line of available assets during bankruptcy proceedings. For almost a century, debt owed to children and families has been nondischargeable. Thus, if a head of household fails financially, whatever remaining assets he has could be used to spare his spouse or ex-spouse and his children from impoverishment. We do this because those who are most vulnerable in our society deserve the most protection. With this principle in mind, this body recently added another protection for domestic support obligations in bankruptcy. The Bankruptcy Reform Act of 1994 made children and families a priority unsecured creditors. This enabled women and children to receive payments on their claims before other creditors. Today's bill, the Bankruptcy Reform Act of 1999, would fundamentally alter this delicate balance achieved after almost a century of jurisprudence. We are altering the bankruptcy landscape for the benefit of the credit card industry without understanding what the consequences for families will be. Women and children will be disproportionately affected by this legislation, unless it is amended. Whether as debtors filing for bankruptcy themselves or as creditors, three quarters of a million women will be affected this year by the bankruptcy system, and it is estimated that as many as 1 million women will be affected in the coming year. I recognize the precipitous rise in bankruptcies in the last few years. It is a problem that needs to be dealt with. I agree with those of my colleagues who think the law needs to be reformed and tightened up. I also agree with Henry Hyde, Chairman of the House Judiciary Committee, that it is possible to enact legislation that is highly favorable to the credit card companies and tightens the laws without depriving debtors and their families of reasonably necessary living expenses. As the legislation is currently drafted, the credit card industry is protected. Unfortunately, families are not, in my view. Maybe that is why all the major family and children advocacy groups presently oppose this bill. Yet with the adoption of the amendment that Senator Landrieu and I have offered, we think we can bring substantial support to this bill. I have serious concerns about the bill, as it is presently drafted, because of its potential harm to children and to families. This bill presents obstacles to families both before, during, and after bankruptcy that leave the alarming potential for family support income to be dissipated and misdirected to credit card companies rather than to the families who need that help. First, I am greatly concerned about the means test, which requires the trustee in bankruptcy to review all individual Chapter 7 cases for ability to pay debts under a rigid IRS formula devised originally for delinquent taxpayers, now to be applied in bankruptcy proceedings. These standards neither take into account differences in the cost of living from region to region nor do they ascribe rational expenses to individual families. As such, the use of these standards will deprive children and families of reasonably necessary living expenses. Additionally, because the means test increases the potential for dismissing chapter 7 cases, this bill channels many debtors into 5-year chapter 13 repayment plans, even though we know for a fact two-thirds of such plans fail today. What will families live on during this time? I am also concerned about the provisions of the legislation that make certain credit card debt nondischargeable. While the recent family support provisions added to the legislation are positive improvements, they have not cured the problems caused by other provisions of the bill which give greater collection rights to credit card lenders and fewer, in my view, to families and children. This bill elevates credit card debt to a presumed nondischargeable status. If a debtor purchases items or services on credit from a single creditor within 90 days of bankruptcy and such items exceed $250 in value, these items would be presumed luxuries. This chart to my right explains it. Under current law, food, medicine, and clothing equal necessities. Under present law, if the amount is less than $1,075 per creditor and incurred within 60 days of the bankruptcy petition, then they are protected. Under the law as presently drafted, without amendment, food, medicine, and clothing are considered luxuries, if the amount is greater than $250 and incurred within 90 days of the bankruptcy petition. So if you have $251 of food, medicine, and clothing expense and it is incurred within the last 90 days, then you have to go to court and spend the money to prove these are not luxuries: food, medicine, and clothing. This point is one I find stunning in its potential implications. Let me emphasize, under current law, food, medicine, and clothing are considered necessities. If the amount is in excess or less than $1,075 and incurred within 60 days, there is a presumption those are necessities. That is considered, by today's dollars, enough to accommodate a family. Here we are now saying food, medicine, and clothing, if it is in excess of $250 within 90 days, that is a luxury. So $251, you have to go to court. If you are a debtor and you are a woman with a family you are raising on your own, you go to bankruptcy court. You have to come up with the money now to prove because it is a rebuttable presumption that you have to overcome if it is $251. By the very factor that you are in bankruptcy court, how many resources are you going to have to hire a lawyer to go in and prove that $251 were necessities and not luxuries. If you are a creditor in this situation, a family, then obviously the problem is also difficult. If you go to a Kmart and buy clothes for your children, necessities they may need, that is considered a luxury if it is $251. A judgment could be entered by default, and then the debt survives. If you are a single woman as a creditor, then you must wait until your ex-husband tries or does not try to defend a similar purchase. And if he is unsuccessful, there will be less money for him to pay child support. So on either side of the equation, if you are a woman raising children on your own, either as a debtor or a creditor, this places tremendous burdens on the family. If this stays in the bill as is, this is a huge blow to average families. There is no consideration of region of the country. I don't care where you live in the United States. Imagine some parts of the country where $251 in 90 days, that is 3 months, if you have three children, $251 is a luxury? You have to go to court and hire a lawyer to prove it wasn't a luxury. We are reforming the bankruptcy laws to try to protect people and families from hardships they can incur? I don't understand this. If this is sustained in the bill, I urge the President to veto this legislation regardless of what else is here. This would be a huge blow to families to allow this to persist in the legislation. The bill's proponents will tell us that this is really not the case. Child support is still the No. 1 priority. The reality is that this change will place kids and families first in line for nothing, since such assets are available to support families in less than 1 percent of the cases. In addition, this change may not place families above lenders if the lenders say their claims are secured by the debtor's property. For the first time, we have allowed these heretofore unsecured creditors to get into the bankruptcy courthouse. Currently, children and family support recipients, taxes, student loans were nondischargeable debts. For the first time in a century the proposed legislation would bring into this unique category these other creditors, i.e. credit card companies, who will make the competition for scarce assets that much fiercer. These creditors have historically been unsecured because they have received the benefit of high interest. Now they are becoming effectively secured creditors. Most household finance groups secure items of property with agreements. So if you have a television set, the household finance company will have a security interest in the TV obligation, and the company is a secured creditor. The same thing occurs with reaffirmation agreements, and indeed the bill increases the potential for these agreements. Creditors can ask debtors to reaffirm debts of have their property--often of little value--repossessed. These items may be of little value to creditors, but of tremendous value to families, enabling them to continue to survive with the bare necessities. And they too will be elevated into the same sort of status that we have had for children and families, which I think, again, goes beyond anything I think we intended. With those concerns in mind, the amendment Senator Landrieu and I and Senator Kennedy have offered tries to address these concerns in the bill. Let me address each of the provisions very quickly and turn to my colleague from Louisiana for any further comment she would like to make on this amendment. First of all, this amendment would modify the means test to provide greater flexibility and reasonableness when calculating the ability to pay. Allowable expenses would include family support, expenses associated with adoption of a child, child care, medical expenses, caring for elderly members of the family, education expenses, and other such critical areas that have been identified as those most families must make. Such expenses should be considered not ignored by the bankruptcy courts. Second, my amendment will ensure that support payments and other funds intended for the current needs of children do not become the property of the bankruptcy estate with the corollary potential of being distributed to creditors. Money for kids should go to kids, not to creditors. This amendment will also adopt the House definition of household goods, which enables debtors to keep, during bankruptcy, personal property normally found in and around the home, excluding automobiles. This will ensure that in a bankruptcy children and families are able to keep, without fear of repossession, certain household goods that typically have no resale value, such as toys, swing sets, VCRs, and other items used by parents to help raise their children. Finally, this amendment will ensure that debtors are not forced into bankruptcy court to seek to prove that food, diapers, school uniforms, toys, and the like are not luxury goods. It would do this by providing that items purchased with a credit card would be nondischargeable only if they were purchased within 70 days, not 90 days, of bankruptcy, have a value of $400 or more per item, and require the creditor to prove at a hearing that the items were not reasonably necessary for the maintenance and support of the debtor and her dependents--shifting the burden, if you will. Mr. President, I hope that these efforts will win broad support here as we try to again go back to what we have sustained for almost a century, recognizing the modern world we live in and the needs of families trying to see their way through the difficult period of a bankruptcy, which we are going to make far more difficult now for people to take under this law. I am not opposed at all to the idea of trying to restrain the proliferation of bankruptcy in the country. But as we are doing that, let's not do so in such a way that it places an undue hardship and burden on families trying to make ends meet and trying to keep themselves together. Let's go back to the notion that, since 1903, the bankruptcy code has protected families. When it comes to families, and women in particular, who could be so adversely affected by changing the means test here, placing the legal burdens on a family to go out and hire a lawyer to prove that $251 in goods over 90 days for a family is not a luxury item--nobody needs to be educated here about who has greater power. Credit card companies have teams of lawyers; they hire them on a permanent basis. But if you are some family out there who has gone through the agony of a bankruptcy, how many lawyers will take on the cases for $251 and try to prove that some items weren't luxury items? How many lawyers want to take on those cases? How long can you stay in court? How many motions can you argue back and forth? Such families are truly at a disadvantage. I am not talking about the poorest families in America; I am talking about middle income, hard-working families that find themselves in the dreadful position of all of a sudden having to readjust their lives because they have been hit by a financial disaster. I also know there are people out there who abuse the system, who are scam artists, who game the system and use the bankruptcy laws to take advantage of a situation. I know they exist. I am as angry as anybody else that there are people like that out there. But I also happen to believe that the overwhelming majority of people are not scam artists; they are good people, honest people, and they are trying to keep their families together. I noted last night that during this wonderful economic time we have been having, the top 20 percent of income earners have enjoyed a 115 percent increase in earning power. The middle 20 percent has had a 9 percent increase. The bottom 20 percent has had an 8 percent decline in earning power. While we all rave about the great economy, for middle income families and less than middle income families the times have still been tough. These are not evil people. The fact that they end up in a financial mess doesn't mean that their children ought to pay a price for it. If you want to be angry at the parent, don't take it out on a child who was born into a family that may face these kinds of financial crises. To say to them you are not going to be able to have access to basic household goods, things like toys, a VCR, and other basic necessities of raising a family, I think that goes too far. It is overreaching and it is unnecessary and it is harmful, and it hurts people. I don't know of anybody in this Chamber who wants to be a party to that. For those reasons, Mr. President, the Senator from Louisiana and I, and others have offered this amendment. Hopefully, we can get broad and wide support for it to restore what, for 100 years, was basic policy. Families and children come first. Those who are the most vulnerable deserve the most protection. We ought to see to it in this bill that that fundamental principle is not changed. Whatever else we are doing with this law, children and families still come first in our minds, and we are not going to allow them to be hurt, intentionally or unintentionally, by provisions of this bill, as presently written, which would do just that. For those reasons, we offer this amendment for the consideration of the Senate and hope our colleagues will support it.

Mr. DODD. Will my colleague yield?

Mr. DODD. This is a question for my colleague. The relevance of this is that under the bill as presently written, this is the schedule. This is not interesting subject matter because it is an IRS schedule for tax purposes. This is what has been adopted as part of the bankruptcy bill. So this is your schedule, this is what you know you are going to be limited to; is that correct?

Mr. DODD. The Senator from Louisiana may want to do this. It is worthwhile. I ask unanimous consent that the IRS schedule be printed in the Record so our colleagues have the benefit of looking at the rigidity of this schedule and the paucity of information and items one would normally, reasonably conclude a family might need in order to sustain itself during a period of bankruptcy, such as we suggested.

Mr. DODD

Mr. DODD. If the Senator from Tennessee and the Senator from Louisiana want to proceed, that is fine.

Mr. DODD. Reserving the right to object, is that with the understanding that at the conclusion of the 10 minutes I have the opportunity to offer my amendment?

Mr. DODD. Thank you, Mr. President. There is an alarming increase in the number of young people who are being swamped with credit card applications where with merely their signature and the showing of a student ID they can receive credit of up to $10,000. In fact, today, the average college student, who does not pay their monthly balance, has a credit card obligation of $2,000. And one-fifth of those have credit card obligations of $10,000 or more. We are being told now that one of the largest reasons for disenrollment in higher education is because of credit card debt. My amendment merely says that between the ages of 18 and 21, you must either prove you have the ability to repay or you must have a cosignature by a parent, guardian, or other qualified individual with the means to repay. It is not outrageous to ask credit card companies to require this kind of information. Students are receiving, on the average, 50 credit card applications in their first semester of college. We set the age of 21 for legal consumption of alcohol in this country. The IRS has a presumption of age 23, if you are in college, in terms of student obligations in loans. By merely requesting that the credit card companies ask for this basic information, we can slow down this alarming increase in the number of young people who are incurring tremendous debts. Many of these kids are dropping out of school as a result of these debts. Mr. President, I urge adoption of this amendment to stop this alarming trend of too many young people, while at too young an age, incurring unreasonable credit card debts.

Mr. DODD. Mr. President, very briefly, the amendment that I have offered, along with Senator Kennedy, does the following: It says for persons between the ages of 18 and 21, you must either prove you have the ability to pay or to have a parent, guardian or some qualified person cosign your credit card application. The reason for this provision is because there is an alarming increase.

Mr. DODD

Mr. DODD. Mr. President, I thank my colleague for yielding this time. I commend him for his leadership on the minimum wage issue. There is so much to talk about concerning the proposal of the Senator from Massachusetts and the distinguishing features between that and what is being offered on the other side. We are talking about a 50-cent increase over the next 2 years, as opposed to a 35-cent increase in year one and year two and a 30-cent increase in year three. But there is an added feature to the Republican proposal on which some may not have focused. While they are suggesting approximately 33 cents a year for minimum-wage workers, there is also roughly a $75 billion tax cut, the bulk of which goes to the top income earners of the country. That is part of their minimum wage package. It is somewhat ironic that we are talking about a 30-cent to 35-cent increase for the lowest paid workers in the country instead of 50 cents, and we are going to have a $75 billion tax cut, the bulk of which goes to the top income earners in the country. By the way, there is no offset for the $75 billion tax cut. We do not know where the money comes from to pay for that. We heard a lot of speeches in the last couple of weeks about not dipping into the Social Security trust funds. One basic question is, From where does the $75 billion come? How are we paying for that? I have yet to hear anybody explain from where it is going to come. I put that out for consideration as we talk about these amendments this evening. It is extremely important for a lot of people that we increase the minimum wage; 11.4 million people will actually get a pay raise if the minimum wage increase goes into effect. Some may say the economy has been so great, everyone is doing so well, why do people at the minimum- wage level need to have any increase at all? While the economy has been fabulous and unprecedented historically, not everybody in America has been the beneficiary of this great prosperity. For a lot of Americans in the bottom 20 percent of income earners, things have been rather stagnant. This income group has not seen the kind of tremendous increase in their earning power as have the top 1 percent of households. The top 1 percent of households is expected to gain 115 percent in after-tax income as compared to an only 8-percent gain for the middle fifth of households in America. In contrast, the lowest fifth of households experienced a 9-percent decline during the same period, from 1977 through 1999. If you were doing well in America in 1977, then you are doing even better today. If you are in the middle in America, you have had a slight increase of about 8 percent. If you are in the bottom 20 percent, you have actually seen a decline in your earning power in the last 20 years. While we herald the great success of the economy with the lowest unemployment rates in years, we need to remind ourselves that for a lot of our citizens from Maine to California who work every day at the bottom levels of the economic ladder in this country, it has not been a great period for them. We talk about 50 cents, $1 over 2 years. What better way to welcome the new millennium, than to say to 11.4 million workers in this country: We recognize your contributions to the success of this country by giving you a $1 increase over the next 2 years. What does that amount to? How about 7 months of groceries; 5 months of rent for the average minimum-wage worker; 10 months of utility bills; about 1\1/2\ years of tuition and fees at a community college. Mr. President, $1 over 2 years may not seem like a lot, but if you multiply that at a 40-hour workweek, 52 weeks a year, that dollar makes a huge difference to some of the lowest paid workers in America. Again I mention, there are 11.4 million workers who will directly benefit from the Kennedy proposal to increase the minimum wage.

Mr. DODD

Mr. DODD. Mr. President, today I am introducing the FERS Buyback Act of 1999, legislation that offers retirement security to many federal employees. Companion legislation has already been introduced in the House. Specifically, this legislation would help employees throughout the country hired as temporary workers in the 1980s that continued to work for the federal government into the 1990s. Hundreds of current and former term employees in federal service find themselves ineligible to receive retirement benefits because of their inability to receive credit for post-1988 service as temporary federal workers. This legislation would close a loophole in the federal pension system that has adversely impacted many federal workers through no fault of their own. It would change current law to allow individuals who have become eligible for the Federal Employee Retirement System (FERS) the option to receive credit for their past service as temporary employees and pay into the retirement fund for the prior years they worked as temporary employees. Because the legislation would merely allow qualified workers to buy into the retirement system, the government would not incur costs that it would not have incurred had the law treated them as permanent employees. During the 1980s, the Federal Deposit Insurance Corporation (FDIC) hired thousands of employees under temporary status in response to the savings and loan crisis. Despite their temporary designation, many served in excess of five years with the federal government because of the FDIC's annual renewal of their one-year contracts. Unfortunately, these loyal employees did not enjoy the retirement benefits accorded their colleagues serving the same length of service under permanent status. To their credit, the FDIC did try to rectify the problem several years ago by granting many of their former temporary employees term appointments. Such appointments are for more than one year and allowed employees to be eligible for FERS. The original FERS Act allowed for employees to make payments or buy back certain years of service prior to 1989 for which deductions were not taken. Therefore, the bill unintentionally denied many federal employees credit for time served after January 1, 1989. I invite you to join me in correcting this inequity and ask that you cosponsor this fair and straightforward legislation.