Ted Kennedy

Mr. KENNEDY

Mr. KENNEDY. The Senator is absolutely correct. He gives an enormously persuasive argument. These are hard-working people, as the Senator has pointed out, affected by an illness. They are getting caught up in the system. This bill was supposed to be about spendthrifts. This bill does not take care of the sheltered income, as the Senator from Illinois points out. It does nothing about the corporate irresponsibility where the corporations go into bankruptcy and leave their workers high and dry and they walk off with the golden parachutes. We see health care coverage lost for these families who have paid in for 20 or 30 years. WorldCom closed down, Polaroid closed down, Enron closed down, their health benefits are cut off, they get cancer, the bills run up, and what does this bill do? It puts them into indentured servitude to the credit card companies. We call that fairness? That may be the priority of some in this body, but it is not mine. Who do we in this body represent? The credit card companies who make record profits? They are the principal beneficiary of this legislation: $30 billion in profits last year, and they want $35 billion. The best estimate is the credit card companies are going to get $5 billion more out of this bill. Who are they going to get it out of? They are going to get it out of that family the Senator from Illinois just discussed. That is what we are about in the Senate? We have the problems of unemployment, the escalating costs of prescription drugs, 8 million of our fellow citizens unemployed, school tuition going through the roof, and we are talking about an additional $5 billion for the most profitable industry in America. Hello. Hello. That is what we are debating here. It is extraordinary. I heard this morning that some of our friends on the other side went up to the press to announce their poverty program. Imagine that. This will drive more and more people into poverty, and our friends on the other side announce how they will address poverty in this Nation. And what are we seeing happening with the increase of poverty for children? For the first time, again, infant mortality is going up for minorities in the inner cities. We have an explosion of asthma in the inner cities of this country, twice the deaths we had 5 years ago as a result of deterioration of conditions. My gosh, and we are debating the credit card company profits. This is what we will do to our fellow citizens? Let me mention who else is affected. Christopher Heinrichs was diagnosed with melanoma in 2002 after visiting a dermatologist for a routine consultation after discovering a small discoloration. He was given a prognosis of 5 years to live. He was director of operations for a truck parts company. His wife Deborah was a $14-an-hour office worker. They had a joint income of $140,000. Listen, middle America, listen to what happened to this family. Christopher had good health insurance that covered 90 percent of his hospital costs. He also had disability benefits and life insurance through his employer. The 10 percent cost sharing on Christopher's prescription drugs cost $100 a week. Copayments for three surgeries, seven rounds of chemotherapy added up. Christopher continued to work but was laid off from his job a year after his diagnosis. He had to pay $969 per month to keep his health coverage after he lost his job. Christopher's health insurance had a $100,000 maximum benefits cap which they reached at the same time they learned the cancer had spread to his colon. They had to give up the family car and were ultimately forced to file for bankruptcy in the summer of 2003 and discharge their debt. Christopher died in April 2004 at the age of 47, leaving his widow and two sons, Joshua, 17, and Travis, 14, and left an additional $90,000 in hospital bills for costs after bankruptcy. They also have had a bill for $3,100 for Christopher's cremation. And we are going after this family with a means test, an additional kind of burden to squeeze out whatever this family is going to be able to try and put together for the next 5 years? That is what the means test does. Where do you think you get the next $5 billion for the credit card companies? They get it by squeezing these families for $35, $50 a month, $75 a month for the next 5 years. Kelly Donnelly was diagnosed with skin cancer, September 2003. Her family lived in Oswego, NY, with a joint income of $32,000. They owned a three-bedroom house with a daughter and a second on the way. When Kelly, 26, became too weak to work, she had to quit her drugstore job, leaving the family with only $20,000 in income. Even though Andrew received health insurance from his job, copayments from Kelly's treatment and medication for the new baby who was delivered prematurely so Kelly could undergo cancer surgery, totaled $330 a month. The couple lost their house, filed for bankruptcy in August 2004, were forced to move to an apartment, had to give up the family dog because pets were not allowed there. Because they had defaulted on electric bills they had to put down a $500 deposit to turn on the power in their new apartment. Their medical bills totaled $20,000. This is what is happening. We are going to put additional burdens, besides the existing bankruptcy law, on those people? This bill does. I am going to speak about two individuals whom I will call ``TT'' and ``ST'' from Minneapolis, MN. They do not want their names mentioned. They had good medical insurance from ``T'' 's job with the State of Minnesota, but when ``T'' retired, he could not afford the $941 per month for his health insurance. He paid for a few months, and then he couldn't anymore. ``S'' was diagnosed with breast cancer in February 2004, after being misdiagnosed in September 2003. ``S'' was misdiagnosed, as I mentioned, in September 2003, when she had health coverage. The first 3 months of her cancer treatment cost $26,000, and they have no health insurance. They were forced into chapter 13 bankruptcy to try to save their home. Unfortunately, they were unable to make enough to pay the chapter 13 payments to save their home, and they ultimately had to sell it for less than it was worth before it was foreclosed and convert their chapter 13 filing to a chapter 7 case. We have constant examples. We know one out of four people die from cancer, and we know about one out of four die from heart disease. We know that today. We can look around at any kind of group. These are the statistics. If you have good health insurance, with the exception, perhaps, of the health insurance we have in the Congress of the United States, which we do not extend to the American people--we are pretty well protected, but not those people out there. I am tired, when one person tries to extend the same kind of health care we have to people out there, of people on the other side who say: Well, we are not going to support you. The problem is the health care problem, and we ought to deal with that. This is a bankruptcy issue. Come on. Come on. They oppose us when we try to pass health care legislation, and then they oppose us when we try to deal with the health care problems that are going to be impacted by the bankruptcy bill. It does not work that way. At the same time, we have all the circumstances that take place in the corporations. I want to mention the various groups, once again, that are supporting us. We have the American Bar Association. We have about 80 percent of the representatives of the trade union movement, the Alliance for Retired Americans. We have the Consumer Federation of America. We have the Leadership Conference on Civil Rights, which understands that this, as well, affects many minorities in this country. We have the National Women's Law Center because of the impact of this legislation on women. We have Physicians For A National Health Program, some 2,000 doctors-- 2,000 doctors from across this country--who understand and say: Do not pass this bill because of the health implications. Don't do it, Senate, if you care about what is happening to your fellow citizens out there across this country. They are facing enough challenges with the explosion of health care costs, the explosion of prescription drug costs, and the dramatic decline in health care coverage. Don't do this to them. It is too unfair. It is unwise. But no, no, we are going ahead. We have support from group after group after group. I think it is time we give consideration and priority to the workers in this country. I will mention, quickly, a final couple of points to give a bit of an overview about where we are in these medical bankruptcies. Annually, half result from illness; nonmedical causes, 54 percent; medical causes, 46 percent. This is from the Health Affairs study that was done this year. We know there is a dramatic increase in the number of uninsured. So it makes a good deal of sense we are going to have an increased number of medical bankruptcies because we are seeing the total number of individuals who are not being covered dramatically increase. Now it is up to 45 million. With all respect, the reason it did not go up higher, is because we had the CHIP program that enrolled several million children. If we had not done that, these figures would be right up through the roof. Here is the cost. We have not only the coverage issue, but you see the cost of single coverage in 2000 at $2,400; in 2004, $3,600. For families, it has gone from $6,300 to $9,950. There has been an explosion in the costs, an explosion in the number of companies that do not provide coverage, and an explosion in the number of companies switching to part-time employees who do not get benefits like insurance. We see the difference in the cost for Medicare premiums and Social Security. You wonder why this is a particular burden on seniors? Listen to this. Basically, seniors paid for their Part B premiums with their COLA increases in Social Security. But what we are finding out now is they are falling farther and farther behind in that ability to pay. What you are finding out now is the increase in premiums is 72 percent over the period of the last 4 to 5 years. For Social Security, it is 12 percent. So increasing numbers of seniors on Social Security are unable to keep up with part B premiums. And this does not even include the new prescription drug bill, where you are going to find out it is even more costly. There are 3.9 million Americans who are affected by bankruptcy. You have 700,000 dependents, 1.3 million children, and the bankruptcy filers, 1.9 million--effectively 4 million of our fellow citizens who are affected by this provision. As my friend from Illinois pointed out, when you take a look at the failure to deal with, on the homestead issue, the high rollers in States that have high homestead protections versus working families in 90 percent of the other States, that is unfairness. In my State of Massachusetts, if you talk about the problems of bankruptcy, on the lips of most of the workers would be Polaroid, that great company that started with Ed Land, who was an absolute genius, who developed instant film. And finally, after he left, the company ran into difficult times, and they went bankrupt. I will mention what happened to those individuals. Polaroid filed for bankruptcy in 2001. In the months leading up to the company's filing, the corporation made $1.7 million in incentive payments to a chief executive, Gary DiCamillo, on top of his $840,000 base salary. The company also received bankruptcy court approval to make $1.5 million in payments to senior managers to keep them on board. These managers, collectively, received an additional $3 million when the company assets were sold off. By contrast, just before Polaroid filed for bankruptcy, it canceled the health and life insurance for 6,000 retirees, coverage for workers on long-term disability. Do you understand what we are saying here? Here you have these individuals who lost their coverage. Can you imagine the number of those individuals who do not have health insurance and then run into serious health problems, cancer or heart disease? What happens to them? This is a typical example. We have other examples of corporate abuse which I will come back to. I hope the Senate--we might not be accepting a lot of amendments--but I would hope the managers could find a way to accept these two amendments. It would make an enormous difference in terms of the legislation and the fairness and its implications for middle America. Madam President, I yield the floor.

Mr. KENNEDY. Mr. President, will the Senator yield on that point?

Mr. KENNEDY. As I understand it, these workers had health insurance that would have protected them as a result of illness and sickness. They had it probably for themselves and their families. What the Senator is saying is obviously in most of these circumstances when they had health insurance, they sacrificed wage increases and other kinds of benefits in order to get that health insurance. As I listened to the Senator, I heard that many of these workers have worked for lifetimes for this company. Now, as a result of the company going into bankruptcy, these workers effectively lost their health care coverage. I imagine a number of them may have some illness, perhaps some health care needs, probably an older population, and the cost to them to replace that kind of family coverage would be rather dramatic.

Mr. KENNEDY. Particularly if they are out of work. What we are talking about here is, if they run into illness and sickness under the existing bankruptcy laws, they have a chance to be able to measure their assets and their creditors to be able to at least go on to another day. They may pay a fearsome price in terms of their own lives, but under the circumstances of the bill as proposed, they would be treated even more harshly. As I listened to the Senator, he was talking about a rough sense of equity in terms of legislation that we ought to be considering here in the Senate.

Mr. KENNEDY. Will the Senator yield for one more question?

Mr. KENNEDY. As I listened carefully to the excellent presentation of the Senator from Illinois on this legislation, this legislation has been presented as though it is for going after spendthrifts, individuals who abuse the credit system, who go out and live life high on the hog, go to the malls, buy the expensive clothes and charge it up. These individuals should not be let off scot-free. I gather from remarks of the Senator from Illinois he agrees with me, that we want accountability for those individuals. Legislation that ought to be targeted toward those individuals and corrected with a hammer is addressed with a cannon, picking on the working families in its path who face bankrupcy through no fault of their own, as a result of the explosion of health care costs, the explosion of housing costs, explosion of tuition cost, the outsourcing of jobs, the increase in part-time jobs, and the issue of a growing older population which has a greater proclivity toward serious illness and disease such as cancer and stroke, and increasing numbers of individuals who are virtually cast adrift by major companies such as Enron, WorldCom, and Polaroid, and the company from Illinois the Senator has mentioned. The sweep of this legislation is going to be unduly harsh on a lot of hard-working, middle-income families playing by the rules, struggling for their families. They will be treated unjustly.

Mr. KENNEDY. If the Senator will yield further, the Senator mentions the number of bankruptcies for our senior citizens has tripled in the last 10 years. The average income for those over 65 is $24,000. These are not great populations of free-spending people ringing up large expenses at the mall. Shouldn't we take a look at the impact of the legislation before the Senate and the impact it will have on our population? I commend the Senator for bringing this very important fact to the attention of the Senate. We have three times the number of bankruptcies now for our senior citizens. These are not the spendthrifts. Are those the people we are trying to catch with punitive measures in this bankruptcy legislation? I don't think so. The Senator made a strong point. I thank him.

Mr. KENNEDY. Will the Senator yield for a question?

Mr. KENNEDY. Because this is a dramatic family circumstance--I think any of us who have listened have found this is too often not the exception but too often is the rule. But aren't there other provisions in this legislation to preserve those homes that are not just the homes of someone who has sacrificed, as she has, to try to preserve the home for her son, but that this legislation, as it exists now, has protections for homes that are worth many, many, many, many, many more times that will escape any kind of threat from bankruptcy because of the homestead exemption? And could the Senator explain to me how we can possibly pass a piece of legislation that is so unfair to some families and gives such extraordinary benefits to others? Where is, possibly, the equity and the fairness? As a member of the Judiciary Committee, does the Senator not wonder why in the world those who have been the principal sponsors of this legislation have not tried to address that during all the time we have been considering it, whether it was when we considered it 4 years ago or when we considered it in the committee markup? There was absolutely no attempt to do that. There was a strong effort by our friend and colleague Senator Kohl, who did an outstanding job with our last legislation that was before us. I am very hopeful he will offer a similar amendment this time. But how could we possibly allow a system that is going to take that home from that family the Senator has outlined, and at the same time permit half a dozen different States to be able to have individuals shelter hundreds of thousands of dollars worth of real estate?

Mr. KENNEDY. I see my colleagues, and I want to hear from them. But I welcome the fact that the Senator has brought up the issue of the National Guard and Reserve. There are some in this body who think that with the acceptance of the Sessions amendment we have protected the Guard and Reserves. That is absolutely wrong. The Sessions amendment only refers to the expenditures of health care after the individual has already been submitted to the means test, and it only applies to future expenditures of health care by the Guard or the Reserve. It is my understanding that the trustee already has that flexibility and that authority. I welcome the opportunity to submit with the Senator from Illinois a legal technical analysis of that amendment that will reflect clearly the fact that those guardsmen and reservists who are activated--and I believe the figure is up to 20,000; I know we used the figure 16,000 yesterday, but I believe the figure is closer to 20,000-- do not have the protections that the Senator from Illinois wanted to provide for them. We have to be serious about this. Hopefully, we will not be caught up in cliches and slogans. The Senator from Illinois had an amendment that would have had a direct impact on protecting the Guard and Reserve. The Sessions amendment does not do that because the Sessions amendment only applies to provisions that would apply to future health outlays. Those expenditures could already be considered by the trustee in bankruptcy. I don't see how those who voted for the Sessions amendment and against the Durbin amendment could believe they have met the responsibilities to our National Guard and Reserves. I appreciate, again, the Senator reminding us about the importance of protecting our troops. We are down in terms of recruitment on the Guard and Reserve to critical numbers. We are not meeting our amount for Reserves and the National Guard at the present time. If we pass this legislation in this form it will be a powerful message to those guardsmen and reservists who are self-employed, out there trying to serve our country under difficult and trying circumstances, and who are in many instances the sole proprietor of a small business, that they get into the Guard and the Reserve at their risk because this legislation will put them at greater risk.

Mr. KENNEDY. Mr. President, a recent study by Professor Elizabeth Warren and her associates at Harvard exposes the flawed rationale for this legislation. According to Professor Warren, about 2 million Americans experienced medical bankruptcy, with half of all bankruptcy filings citing medical causes as a major factor. Among those who cited illness as a cause of bankruptcy, their average reimbursed medical costs since the start of their illness was nearly $12,000, even though more than three-quarters had health insurance at the onset of their illness. Professor Warren's study found that those who filed for medical bankruptcy did everything they could to keep from filing. In the 2 years before they actually declared bankruptcy, those who filed after suffering a serious illness or injury went through extensive sacrifices as they struggled to pay for their health care and make ends meet. One in five went without food. One-third had their electricity shut off. Half lost their phone service. One in five were forced to move. And many more went without needed health care or couldn't fill a needed prescription. And 7 percent actually had to move an elderly relative to a less expensive home. According to Professor Warren, families were bankrupted both directly by medical costs and indirectly from lost income when they were physically incapable of working. Diagnoses commonly named by those filing medical bankruptcy include heart disease, trauma or orthopedic problems, cancer, diabetes, pulmonary disease, childbirth related or congenital disorders, ongoing chronic illness, or mental disorders. Interestingly, most medical bankruptcy filers had health coverage at the onset of their illness. More than three-quarters had coverage, and less than 3 percent voluntarily chose to go without insurance. The majority of those without insurance could not afford to maintain it, while almost 1 in 10 could not obtain coverage because of pre-existing health conditions. A significant loss of income or years of piling up medical debt because of ongoing medical needs frequently makes bankruptcy unavoidable. The average out-of-pocket cost since the beginning of the filer's illness was significantly higher, averaging $11,854, although many had much higher costs. The average out-of-pocket costs for those with cancer was $35,000, while those families dealing with neurological disorders averaged more than $15,500. The Harvard study looks at the reality of people who file bankruptcy and what forces them into bankruptcy, and it shows that 50 percent of those debtors had significant medical debt. The proponents of this bill want to ignore this reality because it doesn't fit in with their rhetoric about the bill. My amendment focuses on those people for whom medical debts and lost income due to illness were the primary factors in their bankruptcies. Their medical debts would have to equal 25 percent or more of their annual income or they have to have lost one month's income due to their illness. This is what it means to be a medically distressed debtor under my amendment. Those families clearly deserve laws that will protect them. As currently written, this bill does not protect those who were forced into bankruptcy by a serious family illness.

Mr. KENNEDY. If the Senator will yield, those who have been proponents say: Look, we have these spendthrifts who use these credit cards and go to the malls and exceed their credit, and there has to be accountability and responsibility to make sure they are going to effectively be dealt with. So we have, allegedly, this legislation. It has been pointed out during the course of the debate that even the credit card companies say it is less than 10 percent of all filers that fall in to this spendthrift category. Most of the commissions that have studied bankruptcy over a period of time have actually put it at 4 or 5 percent. Nonetheless, we are passing this legislation that is going to have the impact that the Senator has mentioned in terms of those who are involved in long-term care or those who are elderly and have three times the bankruptcies today then they did in the past, with the average income for seniors being $25,000--large spendthrifts, seniors, large spendthrifts. But the tragedy is that they run into the health care challenges, cancer or stroke, and they run up these medical bills, and they will end up losing their homes and with their lives virtually being destroyed. Does the Senator not agree that we ought to be able to fashion pretty easily legislation to deal with those who are involved in the excesses of spending in relationship to credit, and we ought to have accountability for those people? But that isn't what this bill is, is it? That isn't what this legislation is really all about, is it? Doesn't the Senator agree with me that we could fashion a bill to address the needs that are out there? But this bill isn't it. I would be interested in the Senator's view, as somebody who has had great experience and a background in understanding both credit and the financial world. I believe his views on this would be enormously valuable.

Mr. KENNEDY. Mr. President, I yield myself 4 minutes. Mr. President, in America, we believe that if you work hard, meet your family responsibilities, then you should be able to provide for your family. You should be able to afford a decent home for your family in a safe neighborhood. You should be able to send your children to college so they can enjoy lives of opportunity and happiness. You should be able to save for a comfortable retirement after years of disciplined saving and careful planning. That is the American dream. It is a dream of opportunity, of fairness, of infinite hope for the future. But in recent times, average Americans have had to work harder and harder to fulfill their hopes and dreams. In just the past 4 years, housing prices are up 33 percent, college tuition is up 35 percent, and health care costs are up 59 percent. Families are counting their pennies. And now this Republican Congress wants to make it even harder with this bankruptcy bill. Corporate CEOs can force their companies into bankruptcy and enrich themselves, but they are not held accountable. This bill ignores their irresponsible actions. But an average American facing cancer can lose everything under this bill: their home, their savings, their hopes, their dreams. They get no second chance. One day, you are doing well. You have done all the right things. Your family is healthy and happy. And the next day, you discover that you have cancer, and even though you have health insurance, you are left with $35,000 in medical bills. You cash in your savings. You sell your second car. You sell your mother's wedding ring. You take out a second mortgage on your home. But it still is not enough. Half the Americans in bankruptcy face this exact situation. Their illness was bad enough, but now their medical bills are destroying their lives, and this bill adds further injury to their pain. CEOs can get away with it. They are not held responsible for their companies' bankruptcies. Look at Enron, WorldCom, and Polaroid. But this bill requires average citizens to pay and pay and pay and pay, even when you do not have a dime to your name. And who is first in line to get your money? The credit card companies. They do not care if you are sick. They demand your money--with interest. My amendments would give those facing illness a real second chance. One amendment says, if you are sick, you do not have to lose your home. It says that if illness forces you into bankruptcy, at least $150,000 of equity that you have built up in your home is yours--no matter what. Fat cats who go into bankruptcy do not lose their mansions. They can build palaces in Florida and Texas, and the bankruptcy courts cannot touch them. So my amendment says, if you get sick, you should at least get some protection for your home, too. My other amendment says that if your medical bills force you into bankruptcy and they exceed 25 percent of your income, you are not subject to this bill's harsh provisions. You are not penalized under its so-called means test, which would require you to keep paying down on your bills even when you cannot afford it. Let's give our fellow Americans a chance. They will do their part to rebuild their lives. We should help them, not hurt them. I urge my colleagues to support these amendments. I withhold the remainder of my time. Mr. President, I suggest the absence of a quorum.

Mr. KENNEDY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. KENNEDY. Mr. President, how much time do I have?

Mr. KENNEDY. How much time is there for the other side?

Mr. KENNEDY. Mr. President, I ask unanimous consent that the time of the quorum call be charged to the other side.

Mr. KENNEDY. I suggest the absence of a quorum.

Mr. KENNEDY. Mr. President, I yield my remaining time to the Senator from New Jersey.

Mr. KENNEDY. Mr. President, in this bankruptcy bill, in several States there are the protections for homesteads of multimillion dollar homes. All this amendment says is that if one has severe medical problems that are going to drive one into bankruptcy, they will be able to have a protection for up to $150,000 in home equity. We know that approximately 50 percent of the total bankruptcies are medically related, and what we are saying is that in those cases where we have the high costs of health care, because of cancer or the sickness of a child, we will carve out a homestead for $150,000 and protect that homestead. That is what this amendment does. We have the protections for much larger homesteads in a number of States. Let us protect our families.

Mr. KENNEDY. Mr. President, I ask for the yeas and nays.

Mr. KENNEDY

Mr. KENNEDY. Mr. President, I compliment my friend and colleague from West Virginia for his excellent comments about the responsibilities of the Senate under the Constitution and the implications of a parliamentary maneuver that would effectively undermine the constitutional rights of our Members to speak in accordance with the ways our Founding Fathers intended. Once again, the Senator from West Virginia has spoken eloquently and passionately about this institution and about this Constitution. He is in this body the true student of the American Constitution. There is in this body no one who works to preserve the rights and responsibilities of this institution the way those rights of individuals in this institution, within the framework of the Constitution, were so intended. We, once again, thank him and urge our colleagues in the Senate to pay close attention to his well thought out, reasoned, compelling, legitimate, and persuasive arguments. They are enormously important because they reach the heart and soul of this institution and the heart and soul of the whole constitutional framework that our Founding Fathers drafted when they wrote the Constitution. It was an extraordinary contribution to the whole debate that takes place in this body from time to time about the authority and the powers of the institution and the individuals who are elected to serve. We all will benefit from reading his comments closely.

Mr. KENNEDY

Mr. KENNEDY. Mr. President, we have a lot of urgent problems pressing the Nation and this Congress. We have urgent problems with joblessness. We have urgent problems with the coverage of health care and the costs of health care. We have urgent problems with education. We have urgent problems dealing with poverty. We have problems that go to the heart of fairness and opportunity in this Nation. These are real problems of real people, and they test whether our commitment to America's core values is as important to us as we say it is. But we are not spending this month on any of those issues. We are spending most of the time between now and the March recess on a bill that does nothing about any of these problems, that does nothing for Americans facing job problems, health problems, and education challenges. We are spending our time on a bill that was written by the credit card industry for the benefit of the credit card industry. We are spending our time on changes in the bankruptcy law which were opposed by the two distinguished national commissions which studied those laws during the 1970s and 1990s. This is a bill which is opposed by a long list of organizations representing many millions of real people, organizations representing workers, retired Americans, consumers, women's organizations, civil rights organizations, a large group of distinguished law professors and bankruptcy judges, 1,700 prominent doctors around the country, and even some financial service organizations that are truly responsible lenders and care about their customers. I am talking about people such as the CEO of ING Direct, the sixth largest thrift institution in the Nation; people like the CEO of the second largest credit union in the U.S., the North Carolina State Employees' Credit Union. This is what the CEO of ING Direct told the committee about the bill: The one-sided provisions of this bankruptcy legislation are bad news for consumers, but they are also bad news for the financial service industry. Consumers are our customers. By creating a form of debt imprisonment, this bill will hobble the most important player in the world economy, the American consumer. Jim Blaine, the CEO of the North Carolina State Employees' Credit Union, had this to say about the bill: This bird is a turkey. So why are we here? Why are we spending our time on this supposed resolution to a nonexistent problem rather than addressing the real problems the Nation faces? It cannot be because the credit card industry needs help. The credit card industry is doing just fine, thank you. The profits of the credit card industry rose from $6.4 billion in 1990 to $20 billion in 2000. By last year, those profits had increased another 50 percent to over $30 billion. Let me say that again. Credit card company profits have gone from $6.4 billion in 1990 to $30.2 billion last year. Why are we spending our time on legislation designed to further enrich what is already one of the most profitable industries in America at the expense of middle-income Americans in financial distress, in most cases through no fault of their own? This is supposed to be a bill about spendthrifts, about people who abuse the credit system and abuse the bankruptcy system. If that were really what this bill was about, maybe there would be some reason for us to be here. If this were a bill that dealt with the truly incredible abuses of the bankruptcy system that we have seen in the Enron case, in the WorldCom case, in the Adelphia case, and the Polaroid case in my own State, then maybe there would be reason to be spending our time working on this bill. Look at the Polaroid case in my home State of Massachusetts. Polaroid filed for bankruptcy in 2001. In the months leading up to the company's filing, the corporation made $1.7 million in incentive payments to its chief executive Gary DiCamillo on top of his $840,000 base salary. The company also received bankruptcy court approval to make $1.5 million in payments to senior managers to keep them on board. These managers collectively received an additional $3 million when the company's assets were sold off. By contrast, just days before Polaroid filed for bankruptcy, it canceled health and life insurance for more than 6,000 retirees and canceled health insurance coverage for workers on long-term disability. It also stopped certain benefits for thousands of workers who were recently laid off. Polaroid workers had been required to pay 8 percent of their pay in the company's employee stock ownership plan, the ESOP programs. When the company declined, their retirement savings were virtually wiped out. Now, that is a real abuse of the bankruptcy system. But this bill is not about consumers who abuse the system. It is not about corporate executives who have exploited the system to line their own pockets. This is a bill for which the credit card industry hopes to squeeze a few extra dollars a month out of Americans who are out on their luck, people who have been hit hard by medical disasters, guardsmen and reservists who have suddenly been called to duty to serve their Nation, forcing them to leave their families and their businesses behind, people who were fired after years of hard work because their employer sent their jobs abroad. This is not what the Senate should be doing. This legislation is not worthy of the Senate. Our time should be spent helping, not hurting, the working families most in need. This bill does nothing to protect those hard-working Americans who did everything they could to stave off bankruptcy but were left with no other choice after exhausting their own resources. Yet this Republican bill actually makes it more difficult for good citizens such as these to get the fresh start that the bankruptcy laws are intended to offer. The idea of a fresh start lies at the heart of our bankruptcy law. In 1833, Supreme Court Justice Joseph Storey, one of the great legal scholars in our history, explained why. He said that bankruptcy laws were intended to divide debtors' remaining assets among their creditors when they could not pay all of their debts, but the purpose was also to relieve unfortunate and honest debtors from perpetual bondage to their creditors. He said that bankruptcy legislation should relieve the debtor from a slavery of mind and body which robs his family of the fruits of his labor. One hundred years later, the Supreme Court emphasized Justice Story's views. The Bankruptcy Act, it said, is intended to: relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes. The power to earn a living, the Court said, is a ``personal liberty,'' and: from the viewpoint of the wage-earner there is little difference between not earning at all and earning wholly for a creditor. In short, the same fundamental values which led this Nation to abolish debtors' prisons, also led us to offer debtors a fresh start. They would be required to use their available assets to pay as much of their debt as they could, but no more. They would have full rights to their own future earnings, so that they would not have to live in perpetual bondage to their past debtors. That is the essence of our free enterprise system. We encourage entrepreneurs. People can borrow money for a car to go to work, for equipment to start a small business, for a tractor to run a farm, for a boat to start a fishing business. When decent people run into financial trouble, we don't write them off forever. We help them get back on their feet so they can provide for their families and contribute to our economy once again. Otherwise, few in America take the risks that our free enterprise depends on. There is a safety net to stop a free fall. Yet this legislation turns its back on that spirit of American entrepreneurship. It tells our citizens that they cannot get that fresh start unless they can maneuver through a maze of procedural obstacles created by the credit card companies and debt collection agencies. It imposes paperwork burdens that bankrupt Americans can not afford. It forces them to pay for credit counselors, who may be predatory themselves. It forces them to miss work to go to audits of their meager assets. It requires them to hire a lawyer to mitigate this maze, but then tells the lawyer that any error will make the lawyer personally liable. In short, this bill does everything the mind of the purveyors of predatory plastic could think up to make their cardholders pay in full, and prevent them from getting the ``fresh start'' that bankruptcy offers them. Its purpose is to keep the credit card payments rolling in, and prevent that money from being used to feed their children or pay their hospital bills or make their mortgage payments. It labels them as abusers of the system. Just listen to the words in the summary of the key standard for the ``means test'' that lies at the heart of this bill. According to this summary, prepared by the Congressional Research Service, you are presumed to be an abuser of the system: if current monthly income, excluding allowed deductions, secured debt payments, and priority unsecured debt payments, multiplied by 60, would permit a debtor to pay not less than the lesser of (a) 25 percent of nonpriority unsecured debt or $6000 (or $100 a month), whichever is greater, or (b) $10,000. Maybe some people can figure that out--most cannot. But that convoluted paragraph determines whether your debts can be discharged in bankruptcy, or not. This bill is flawed from top to bottom. That is why, since it was first presented to Congress by the credit card industry, it has been opposed by bankruptcy judges, legal scholars, consumer advocates, labor unions, and civil rights groups. They all recognize that its harsh and excessive provisions will have a devastating effect on working families. It allows credit card companies to put their profits ahead of the well-being of our troops serving in Iraq and Afghanistan. Since 9-11 about half a million reservists arid members of the National Guard have been called to active duty, half a world away from their homes and businesses. Many of their families are suddenly facing economic hardship, and their creditors keep calling. They are serving far away, and the small businesses they ran are running into trouble. This bill does nothing to protect the men and women who are fighting for us. When one reservist left home, his wife had to start leading his construction company, and the company ran into trouble. Their family income plummeted by 80 percent. They lost their savings, lost their credit, and the business is on the rocks--all because a soldier served his country. The troubles of families like that will be even more serious under this bill. Instead of helping to ease the burden, it treats that family like tax evaders or defrauders. This Republican bill also penalizes innocent victims of today's economy. We are stil1 recovering from the 2001 recession. Nearly 8 million Americans are still unemployed. One in five of those workers has been out of work for more than 6 months. The unemployment insurance safety net they rely on has not been updated to meet today's demands. Jobs in health care, financial services, and information technology are being shipped overseas. Workers who lose their jobs today have great difficulty finding a new job with comparable wages, benefits, hours, and overall quality. Part- time jobs don't begin to provide the same financial stability--yet today's companies are relying more and more on part-time workers to cut costs. The average part-time worker earns $4 an hour less than a regular full-time worker. Few part-time workers have a health insurance plan or a pension plan. Huge numbers of working families are being squeezed hard by the current economy. Their ability to live the American dream is increasingly out of reach with each passing year. They find it harder and harder to earn a living--to pay the mortgage, pay the rent, pay their medical bill, pay their food bill, pay their gasoline bill, pay the college bill. Yet the cost of getting by continues to rise faster than family income. Healthcare costs are out of reach. Health insurance premiums have soared 59 percent in the past 4 years. Drug costs have soared 65 percent. Housing costs rose 33 percent in the last 4 years. Child care can often cost up to $10,000 a year for one child--more than the cost of tuition at a public college. College costs are rising at double-digit rates. Tuition at public colleges has risen 35 percent in the last 4 years. Today, hardworking families are balancing on a precarious tower of bills that keep piling. Inevitably, many topple over. They go into debt just to get by. The average family now spends 13 percent of its income to pay debts--the highest percentage since 1986. The average household now has more than $8,000 in credit card debt. More than half of all Americans acknowledge they have too much debt. Three-quarters of that debt is a major reason it's harder to achieve the American dream today. It is no wonder so many families face bankruptcy. This year, more people will end up in bankruptcy than suffer a heart attack. More people will file for bankruptcy than graduate from college. More children will grow up in families facing bankruptcy than in families facing divorce. Many of us feel the Bush administration is bankrupt in more ways than one. Its reckless policies are bankrupting the economy and literally bankrupting millions of families. Bankruptcy is up 33 percent since President Bush took office. An American now goes bankrupt every 19 seconds. In Massachusetts, there is a bankruptcy every half hour. One of the greatest weaknesses of this bill is its failure to address the issue of bankruptcies caused by serious illness or injury. Illness is bankrupting millions of Americans who have done everything right. They have worked hard, played by the rules, earned a good salary, saved their money, even purchased health insurance--only to find all that is not enough. More than half of all families facing bankruptcy today are facing it because of overwhelming medical costs. They are not irresponsible spendthrifts who bought too much at the mall, or were enticed to go in over their heads in debt by a credit card solicitation they couldn't say no to. They are facing bankruptcy because of a sudden serious illness or a severe injury that caused a mountain of debt they couldn't afford. The average American facing a serious illness is burdened with more than $13,000 of out-of-pocket expenses, even though they have health insurance. If you have cancer, it is $35,000. That is money you have to pay out of your own pocket for expenses not covered by your health insurance. If the bill before us passes, those fellow citizens will be penalized twice--once by the failure of the health care system and a second time by the failure of the bankruptcy laws. This bill will only make the second failure even worse. We need to make sure that bankruptcy continues to be available as a safety net for those Americans--men and women who have spent down their savings on a serious injury or illness, who face huge doctor and hospital bills their insurance didn't cover, who are unable to go back to work after suffering serious medical problems. They are people such as April Wetherell, a 50-year-old woman from Toms River, NJ, who went back to school after raising her children and received her master's degree in social work. She was serving as a visiting nurse 2 years ago, when she suffered a stroke while recovering from knee surgery. The stroke left her unable to speak, work, or care for her own needs. At the time, April still owed $25,000 in student loans. She had been making payments faithfully on her student loans until her illness left her unable to return to her job. Her health insurance did not cover all her medical costs, and she was left with more than $20,000 in unpaid medical bills. At the time of her stroke, she had about $7,000 in credit card debt, which she had been paying off on time. Even though she had done all the right things, she was forced into bankruptcy because of her serious, incapacitating illness. Walton Pinkney of Frederick, MD, has been an electrician for more than 10 years. He changed jobs in 2000, and his new employer did not provide health benefits for the first 90 days of employment. Sadly, Walton suffered heart failure during his first month on his new job. His new health plan had not yet taken effect, and he was responsible for more than $45,000 in medical expenses for his heart condition. He tried to return to work, but his employer said his health was too uncertain for him to return. Faced with large medical bills he could not pay after he lost his job, he had to file for bankruptcy in 2003. Zoraya Marrero is a single mother with three children from Woodbridge, VA. Her oldest child suffers from spina bifida. She received State disability benefits and medical coverage for her child due to the illness. After moving to another State 5 years ago, she no longer qualified for new benefits, and she also had to pay back $60,000 for benefits she had already received. She has been fighting the $60,000 claim and paying her own medical expenses while working in a doctor's office. She cannot afford private insurance, and cannot afford to pay for her son's costly medical care. Overwhelmed by debt, she filed for bankruptcy. These people had no intention of seeking relief in bankruptcy. They were not ``gaming'' the system to avoid their responsibilities. They and millions of other Americans in similar circumstances filed for bankruptcy, but only after they had exhausted all the other options--not because they wanted to but because they had to. In fact, before declaring bankruptcy, they had spent at least 2 years, on average, making very real sacrifices in a futile effort to pay for their health care and make ends meet. One in five went without food. Almost one-third had their electricity shut off. I am talking about individuals who went into bankruptcy as a result of medical expenses, even though about 65 percent of them had health insurance before they actually went into bankruptcy. That is what they did, according to the Elizabeth Warren report from the Harvard Law School. One in five went without food, almost a third had their electricity shut off, almost half lost their phone service, many went without needed medical care, and some even moved their elderly parents to less comfortable nursing homes. As this chart indicates, here is what has happened to the lavish lifestyle of our fellow citizens. These are half of all the bankruptcies at the present time. How did they live, and what did they do for 2 years before filing for bankruptcy? They went without needed medical care, 61 percent; without doctors, 50 percent; utilities turned off, 30 percent; without food, 22 percent; and 70 percent moved their elderly parents to cheaper care facilities. These are our fellow Americans whom we want to punish with this bankruptcy bill? If you want to go after the spendthrifts, let us do that. But do you think we are going after corporate America in this bankruptcy bill? Read today's newspaper. Here it is: Former WorldCom chief executive, once hailed as one of the most brilliant telecommunications executives, told the packed courtroom, ``I don't know about technology; I don't know about finance; also, I don't know about accounting.'' There it is. The corporate CEOs will be able to escape. But do you think these hard-working Americans are going to be able to escape anything with this bill at all to deal with WorldCom, Enron, Polaroid? There is absolutely nothing in here. Yet there is the result of what this legislation does. Generally around here, we have legislation that is reasonably balanced. Not this piece of legislation. The most profitable industry in the country, 100-percent profits in the last 5 years, and they are out there trying to squeeze some additional money ought of these hard- working Americans. I would have thought at least a majority who were going to write this legislation here in the Senate would have tried to do something about corporate bankruptcies. But, no, no. They are letting those individuals alone, and most of those--we come back a little later to discuss how they profited--a number of them even profited after they went into bankruptcy. There is even one individual who profited after he was convicted of larceny. But we are not dealing with those particular issues. We often talk in America about safety nets. Social Security is a safety net to guarantee financial security for senior citizens. Poverty programs are safety nets for children and families. Our bankruptcy laws are a safety net for millions of families, too. Americans who live responsibly, do everything right, and still suddenly fall on hard times deserve a second chance, and the bankruptcy laws give them that chance. They can make a fresh start and pull themselves back up. They have renewed hope for the future. Unexpected financial setbacks for families should not mean the end of their American dream. They should not lose all hope for themselves and their children. It's the old ``cowboy up'' philosophy--when you fall off your horse, you pick yourself up, dust yourself off, and start all over again. When disaster strikes, when storms buffet a community, Americans respond. We see the images on television and immediately we send a donation to help out. That's the American spirit. But when financial disaster strikes a family--when a business collapses, when medical bills pile up, when a reservist is called up for extended active duty, when workers lose their jobs because of a plant closing or outsourcing--the economic catastrophes can be hidden from view. That is where our bankruptcy laws come in. We got rid of debtors' prisons almost two centuries ago for a reason. It is the American spirit to help these families through financial disasters. But this bill will destroy that financial safety net for many, many citizens who deserve help. This legislation is a bonanza for banks and credit card companies, and a nightmare for millions of average Americans. It rewrites the bankruptcy laws in a way that kicks average families while they're down, in order to pad the already high profits of the credit card industry and other lenders. It is greed, pure and simple. Predatory credit card companies are doing all they can to urge unsuspecting citizens to pile up huge debts on their credit cards. They especially target the elderly, college students, and the working poor. They advertise nationwide. They send out billions of solicitations every year to entice more people to sign up for their cards. The bold type talks about the minimum monthly payments--but you have to read the fine print to see the exorbitant interest payments that inevitably result. You cannot go to any college campus, any sporting event, or your mailbox without being solicited for another credit card, no matter how many you already have. Young students, still in their teens, are greeted with a deluge of offers from credit card companies. Before they buy books and find the cafeteria, they see credit card offers with credit lin1its in the thousands of dollars. So, in many cases, the very same companies that have been trying to get a bill like this passed for decades and had their lobbyists write this bill for them in 1997, are the ones who caused the indebtedness that they now complain about. Does this bill do anything abut that? Absolutely not. A lot has changed since the Senate last looked at this bill 4 years ago. Health costs are way up, health insurance protection is less obtainable and less affordable, hundreds of thousands of families have suffered economically from military callups, unemployment insurance has not been updated. The economy is still working its way out of a serious downturn. Corporate mismanagement and fraud have become a way of life in the highest echelons of corporate America. So I say to each of our colleagues, please consider who wrote this bill and why. Please think about your hard-working constituents who will be dealt a double whammy by this bill if they fall on hard times. Please think about what has happened since we last considered the bill. Please keep an open mind as we discuss the serious problems with this bill and the need for many substantial revisions and additions before it is ready to even be considered for adoption by this body. We do not work for the credit card companies; we work for our constituents. We can do better than this bill for our constituents, and we must do better than this bill for those we represent. Mr. President, I will unanimous consent to have printed in the Record some of the letters opposing the bill. I will not include all of the letters, but I am going to quote from some of them at this time. First of all, I refer to a letter from ING Direct to the American Bankers Association urging them to reconsider their support for the bill: As a member of the American Bankers Association, ING Direct urges you to reconsider your wholesale support for the Bankruptcy Reform Bill currently before the United States Senate. . . . Yet this legislation has not received a thorough review in the last 4 years. It has simply been reproposed without careful thought. . . . It actually encourages further bad lending decisions by removing an important market discipline--the possibility of a clean bankruptcy. Without important changes, millions of consumers, who might otherwise be encouraged into debt by aggressive credit card companies and other lending. They will be unable to clear their names, even if they fall into debt because of an illness or an economic downturn that costs them their employment. We at ING Direct believe this country is still willing to give working Americans--the engine of our economy, a second chance when debt overwhelms them. This bill seriously limits that second chance. The one-sided provisions of this bankruptcy legislation are bad news for most Americans. But they are also bad news for the financial services industry. By creating a form of debt imprisonment, this bill will hobble the most important player in the world economy--the American working family. For all these reasons, we ask you to reconsider the ABA's support of this bill in its current incarnation. This is written by Arkadi Kuhlmann who is the president of the company. It is the sixth largest thrift savings company in the country. The second letter is from the Consumers Union: Much evidence suggests that rising consumer bankruptcies are tied to abusive lending practices by creditors. Yet this bill does nothing to address this fundamental problem. Instead, the bill protects predatory lenders who offer credit, with abusive repayment terms, to high-risk consumers. It also provides creditors with additional opportunities to employ strong-arm collection tactics, threatening debtors with new, costly litigation. Furthermore, the bill protects credit card companies who fail to disclose the true cost of credit they provide to college students and others, who may quickly find themselves trapped in serious debt, ruining their credit ratings for years to come. This is what they are pointing out. Furthermore, the bill protects credit card companies who fail to disclose the true cost of credit they provide to college students and others who may quickly find themselves trapped in serious debt, ruining their credit rating for years to come. I will include those sections. The list goes on. I have a number of letters and communications from consumer groups, from women's groups, children's groups, and from the doctors association that has been formed to bring focus and attention to the impact of this legislation and medical bills on families. I will also include in the Record a letter from one of the largest credit unions in the country from North Carolina. I ask unanimous consent that several of these letters be printed in the Record.

Mr. KENNEDY. Mr. President, I want to speak for a few more moments about the excellent amendment that has been offered by my friend and colleague from Illinois, Senator Durbin, which I strongly support. Yesterday, in Massachusetts, I had an opportunity to have a meeting with a number of veterans. They actually were disabled veterans. We have 34 Massachusetts young men who have been killed primarily in Iraq. I think we had two killed in Afghanistan, but primarily Iraq. And we have had a number of wounded veterans. We had a very good meeting about their reentry into the community and what we can do to help them in terms of education, training, and employment. A number of the large companies in Massachusetts have made important commitments to employ veterans, and particularly the disabled veterans. I will mention one: Home Depot, a national company, employed 10,000 veterans last year. They expect to exceed that number this year. It is a very impressive record. These young people are looking for how they are going to be able to live and have useful, productive, constructive, valuable lives. There is a lot that has to be done, obviously, by the VA and by the various organizations in the State and in the private sector, as well as at the national level, to help them in these ways. We can all be extremely involved and helpful in that endeavor. One of the central concerns they mentioned during the course of the discussion had to do with the times they heard from a number of their friends and colleagues who were in the Guard and Reserve serving in Iraq. We have 1,000 at the present time serving from Massachusetts and many more in the regular services. They are in the Guard and Reserve. But they told me of the concern their families have in terms of the dangers of bankruptcy and what would happen to these families. I do not think it is enough to say, well, we'll defer this to another day, or the existing laws are going to take care of it. We have a good opportunity to address that. And if we are serious about addressing it, we ought to accept the Durbin amendment. We are either going to be serious about doing this or we are not. The Durbin amendment is a serious effort to address this issue, and it deserves all of our support. Military families struggle financially for a number of reasons. Often, the low pay for newly enlisted men and women is not enough to support a family. Service men and women are also prey to predatory lending schemes that leave their families high and dry. Military retirees have been victims of pension schemes that destroy their savings. National Guard and reservists often face a loss of income when they are activated and deployed, and their families are left in serious financial distress. Veterans are not getting the federally promised health care benefits they need to stay healthy. The most recent data available show that in 2003, 20,000 active-duty members filed for bankruptcy. They would be considered active duty, even though they are in the Reserve or Guard because they are on active duty. That is 20,000 members of the Armed Forces whose service to their country resulted in financial ruin. Military service should be the source of pride, growth, and opportunity, not a financial crisis. That is why Senator Durbin's amendment is so important. It will ensure fair and strong bankruptcy protections for military families and veterans. The typical family who files for bankruptcy is at or near poverty at the time they file. It is appalling that America's service men and women, or any veteran, can be plunged into poverty in connection with their service to the Nation. The base pay for newly enlisted men and women is often between $15,000 and $20,000 a year. That is far from enough to support a family back home. Yet nearly half of all members of the military have dependents who rely on their income. The most recent data shows that more than 6,000 military families are forced to rely on food stamps. Do we hear that? We have 6,000 military families who are forced to rely on food stamps because of low pay. I pay tribute to our friend from Arizona, Senator McCain, who did so much to reduce that number. I am hopeful we can eliminate it during this session of Congress. In addition, predatory lenders often prey on service men and women. Payday lenders offer high-interest, short-term loans of usually $500 or less, and focus on the military, with their financial inexperience and regular paychecks. These loans result in huge interest rates and often leave the borrower in significant debt that can lead to bankruptcy. The Durbin amendment will protect military members against this shameful practice. National Guard members and reservists have other types of financial burdens. Since 9/11, 469,000 National Guard members and reservists from the Army, Navy, Marines, and Air Force have been called up for combat tours in Iraq or Afghanistan. That is virtually half a million. Their tours of duty can last for up to 2 years, and the Pentagon is currently considering broadening even that time limit. These deployments can cause extraordinary financial stress for their families. For example, an Army reservist medic with four teenage kids in Hot Springs, AR left for Iraq, leaving his family's gas station convenience store with no one to operate it. One month later, the family fell into serious financial trouble. They had no choice but to file for bankruptcy. After the bankruptcy, they couldn't pay their mortgage and had to give up their house. They moved in with the soldier's parents. But because the parents had cosigned on the loan for the store, they were forced to file for bankruptcy, too, or risk losing their own home. The grandfather is disabled, so the grandmother had to go back to work to keep the family financially afloat. Too many National Guard reservist families face this type of economic distress. Thirty percent of spouses of active reservists report a loss of household income after the reservists' mobilization. Forty percent of all reservists report loss of income. For those who are self- employed, it's even worse. Half of self-employed reservists lose income when they are deployed. Of spouses who reported lost income, half had monthly decreases from $500 and $2,000 per month, and nearly a quarter lost over $2,000 a month. That's $24,000 a year in lost income that puts a heavy financial squeeze on these families. With other key expenses rising every year in the Bush administration, it's even harder for military families to make ends meet. Since 2001, health insurance premiums have soared by 59 percent. Prescription drug costs have risen 65 percent. Housing costs are up 33 percent in the last 4 years. The last thing Congress should do is make it harder for these families when they face bankruptcy. I urge my colleagues to support the Durbin amendment to protect military families.

Mr. KENNEDY. Mr. President, we are having a difficult time enough now in meeting our goals for the Reserve and the Guard. Unless we pass the Durbin amendment, we are going to have a much more difficult time. If you support the Guard and the Reserve and support our troops, you will support the Durbin amendment.