Bankruptcy Compromise Fails Again, GOP Passes New Version

A congressional compromise intended to make it harder for people to erase their debts in bankruptcy court died in the House Thursday, scuttled by a dispute over how the law would apply to fines against abortion protesters.

But the GOP-controlled House revived the issue early Friday morning before going home for the year by cutting out the language that the anti-abortion Republicans disliked so much that they defied the House leadership, President Bush and their business and banking contributors by blocking it.

The House by a vote of 244-116 passed the new bill, which is exactly the same as the compromise a coalition of anti-abortion House Republicans and House Democrats voted down earlier in the day. The only changes were the removal of some new bankruptcy judgeships and the deletion of the "odious language that caused such a bitter debate earlier in the day," Rep. George Gekas, R-Pa., said.

No Republicans voted against the new late-night bill, although more than 80 had voted against the original legislation. The new bill now goes to the Senate.

Democrats accused Republicans of trying to shift the blame to the Democratic-controlled Senate if bankruptcy legislation fails in Congress by passing a bill they know the Senate won't take.

"This is a legislative stunt for no purpose except say to the lobbyists that we passed it, even though we passed it in a form we know the Senate will not glance at," Rep. Jerrold Nadler, D-N.Y., said.

Senate Democrats have said repeatedly that they would not take the bankruptcy bill without the abortion provision but Republicans now have extra bargaining power with their imminent takeover of Congress in January.

Conservative Republicans rejected the original compromise legislation because they feared it would curtail abortion protesting. Many Democrats also opposed the bill on grounds that it would hurt poor working people.

Anti-abortion Republicans blamed Senate Democrats for forcing them to vote against the bankruptcy legislation that came out of the House-Senate conference committee. Senate Democrats had inserted language into the compromise that would ban abortion protesters from using bankruptcy to avoid paying court fines for blocking clinics if they knowingly violated the law.

The anti-abortion Republicans blocked the bill in July because of that provision, and did so again on Thursday, saying that the law would be used against even legal abortion protests.

"This is the financial death sentence for peaceful protesters," said Rep. Todd Akin, R-Mo.

Banking and credit card companies have been pushing the legislation for five years, but it has stalled each year in Congress. The House-Senate compromise reached this year represented the closest the measure has ever come to passage.

The House refused to consider the compromise by a vote of 243-172. Eighty-seven Republicans and 155 Democrats voted against the measure.

Without House approval before the end of the session, the compromise dies and lawmakers will have to start from scratch next year.

Under current law, Chapter 7 of the U.S. Bankruptcy Code allows people to escape paying any of their credit-card and other debts. Filings under Chapter 13 force people to repay debts over time in accordance with a court-approved plan.

Right now, a bankruptcy judge or a private attorney appointed by the Justice Department usually decides whether someone qualifies for dissolution of debts or should be forced to repay under a reorganization plan.

The legislation that died Thursday would have applied a new standard in which, if a debtor had sufficient income to repay at least 25 percent of the debt over five years or earned at least the median income for his state, he or she would be forced into a Chapter 13 repayment plan.

Personal bankruptcy accounted for about 97 percent of the 1.5 million bankruptcy filings between March 2001 and March 2002.

Democratic foes of the bill said it would hurt working Americans who are teetering on the edge of poverty in the middle of a slumping economy. "This is like pouring gasoline on a fire of economic uncertainty and layoffs," said Rep. John Conyers, D-Mich., ranking Democrat on the House Judiciary Committee.

Added Nadler: "It is supported and being pressed forward by a coalition of banks and credit card companies and other business interests who want to profit exorbitantly at the expense of families and small businesses at a time of crisis."

House leaders, including retiring Majority Leader Dick Armey, R-Texas, insisted to their conservative allies that the bill would not affect abortion protests and unsuccessfully begged them to get behind the legislation and fight abortion battles later.

"Let's not fight this mock battle," Armey said.

The leaders showed a letter from former independent counsel Kenneth Starr that said his legal analysis indicated the bill would not affect lawful abortion protesting. But anti-abortion Republicans were not persuaded.

"We're condemning peaceful innocent people who have a conscience to protest just to try to save the life of an unborn to a life of financial ruin," said Rep. Joseph Pitts, R-Pa.

GOP aides said House leaders were warned before the vote that the anti-abortion Republicans would line up against the bill, but the leaders went ahead anyway.

"It was a vote of conscience," said Pitts afterward.