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The President supports bankruptcy reform that is balanced, would reduce
abuses of the bankruptcy system, and would require debtors and creditors
alike to act responsibly. Last year, the Senate produced such a balanced
bill with overwhelming bipartisan support. The President is disappointed
that, this year, the House failed to produce legislation that he could
support. S. 625 reflects some improvements over H.R. 833 as passed by the
House. The Administration, however, continues to have serious reservations
about S. 625 and strongly opposes some of its provisions. For example, we
are deeply concerned about a provision of the manager's amendment that adds
an important "safe harbor" that protects low-income debtors from motions to
deny them access to Chapter 7 under the means test, but also eliminates an
essential "safe harbor" that would protect low-income debtors from coercive
creditor motions that might be brought under a under a vague "totality of
the circumstances" test more appropriately enforced by bankruptcy trustees
and courts. The latter protection eliminated by the managers' amendment
was included in the reported version of the Senate bill, the House-passed
bill, and last year's conference report. The Administration's other
objections to this bill are explained in detail in the Attachment.
Most of the Administration's concerns would be addressed by relevant
amendments that the Administration understands will be offered on the
Senate floor. The Administration's views on the anticipated amendments are
also contained in the Attachment. The Administration remains hopeful that
bipartisan cooperation will result in responsible bankruptcy legislation
that the President can enthusiastically sign.
Finally, the Administration understands that certain non-relevant
amendments will be offered as well. On November 4, 1999, in a letter to
the Majority Leader, the President made clear that he strongly supports an
increase in the minimum wage of $1 over the next two years; however, if
Congress sends him a bill delaying the increase, repealing overtime
protections for certain workers, adding costly and unnecessary tax cuts
that threaten fiscal discipline and direct benefits away from working
families, and thwarting ongoing efforts to enforce pension law, he will
veto it.
In addition, the Administration strongly opposes the inclusion of an
unrelated education amendment, a version of the Teacher Empowerment Act.
When similar legislation passed the House this summer, the President
indicated that he would veto it. The Administration's position on this
legislation has not changed. The amendment would eviscerate the class size
reduction program passed on a bipartisan basis last year and replace it
with a block grant that fails to guarantee that any funds will be used to
support the crucial work of reducing class sizes in the early grades. In
addition, the block grant does not target funds toward the neediest
students and does not include important provisions to improve teacher
quality. If this amendment is attached to S. 625, the President will veto
the bill.
The Administration opposes the drug-related amendment because it would
reduce the current disparity between crack and powder cocaine sentences
solely by increasing powder cocaine penalties dramatically instead of
addressing both crack and powder cocaine penalties. Decreasing the
threshold amount of powder cocaine necessary to obtain 5- and 10-year
mandatory minimum sentences may be counterproductive because it could
significantly redirect Federal law enforcement resources from the highest
level offenders. In addition, this amendment would actually exacerbate the
disproportionate impact of cocaine sentencing on minorities because,
according to U.S. Sentencing Commission statistics, approximately 31% of
defendants sentenced at the Federal level for powder cocaine offenses in
1998 were African American, 48% were Hispanic, and only 19% were white.
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