When Randall Terry filed for bankruptcy in 1998, he probably had little idea he was setting in motion a series of events that years later would entangle a congressional push to rewrite bankruptcy laws with a seemingly unrelated issue: abortion.
Terry, the founder of the antiabortion group Operation Rescue who led high-profile protests against abortion clinics in the 1980s and ‘90s, said he was filing for bankruptcy to avoid paying court damages resulting from his confrontational tactics.
“I will never let a cent of my money be seized to support the killing of the unborn,” he was quoted as saying in news reports and court documents.
Six years later, in a legacy of those sometimes violent clashes over abortion clinic access, the fate of a much-debated bankruptcy bill may depend on whether Congress considers it appropriate for antiabortion protesters to file for bankruptcy to avoid paying fines.
Overhauling the bankruptcy code is the top item on the Senate’s agenda as Congress reconvenes Monday after a week’s recess. It is one of the changes to the legal system that Republicans are eager to pass before plunging into thornier debates over Social Security and spending bills.
Senate Majority Leader Bill Frist (R-Tenn.) has set aside this week to debate the bill. “I would like to ... move to bankruptcy if at all possible. We got very, very close last year,” Frist said this month.
The proposed law would make it more difficult for Americans, especially wealthy ones, to have their debts erased by filing for bankruptcy. The bill has been a priority for banks and credit card companies since 1998, when it started to wend its way through Capitol Hill.
“It’s not unusual for bills to get logjammed, but this bill has been the most unlucky,” said Ed Yingling, executive vice president of the American Bankers Assn., the major lobbying group for banks and credit card companies. “It has always seemed to have gotten caught up in some other fight.”
Congress responded to concerns about a surge in the number of people filing for bankruptcy in the 1990s -- and thereby escaping their debts -- by passing a bill in 2000 designed to stem the trend. But President Clinton refused to sign it, agreeing with critics who said the measure would create hardships for lower-income consumers while doing little to slow the proliferation of credit cards that they said enticed people to assume more debt than they should.
The financial sector geared up again, and shortly after President Bush took office in 2001 the House and Senate passed competing versions of the bill.
One difference was that the Senate’s measure included an amendment targeting abortion protesters. That came about partly because of Terry’s outspokenness, but also because of reports that other antiabortion activists were deliberately divesting themselves of assets before taking part in illegal protests.
The reports riled abortion rights supporters, notably Sen. Charles E. Schumer (D-N.Y.). He drafted the amendment to the Senate’s bankruptcy bill that specifically would prevent abortion opponents from using the bankruptcy code to escape paying court fines.
“This is an abuse of bankruptcy law, just as somebody who gambles and wants to go into [bankruptcy] and doesn’t pay his or her debts is an abuse of the bankruptcy law,” Schumer said. “It’s not pro-choice or pro-life or anti-choice or anti-life. It’s very simply pro-rule of law.”
In the summer and early fall of 2002, senators and House members spent weeks in tense negotiations and produced a compromise version of the bill that did not specifically mention antiabortion protesters, but would have blocked those facing fines for obstructing access to “lawful goods or services” from using a bankruptcy filing to duck such penalties.
Much to the delight of a bevy of high-powered lobbyists, the bankruptcy measure seemed destined to pass as Congress wrapped up its session in mid-November 2002.
But the compromise didn’t hold. Some labor unions and civil rights groups that traditionally supported Democrats complained that the language was too broad. More significantly, a core of House Republicans balked, arguing that the protest provision was aimed at abortion opponents.
The impasse killed the bill, and efforts to revive it in 2003 got nowhere, stymied again by the abortion issue.
Under the proposed law, anyone making more than the median annual income in his or her state would automatically have to file under Chapter 13 of the bankruptcy code, which requires debtors to come up with a repayment plan. Only those with fewer assets could file under the more lenient Chapter 7, which permits debtors to escape all debts and start over with a clean slate.
In California, the median household income is about $50,000.
To qualify for Chapter 7, debtors would have to pass a “means test” to determine whether they had enough assets to pay back at least some of what they owed.
Some Democrats argue that the test would put an undue burden on lower-income consumers, especially those who are overwhelmed with medical bills and other misfortunes.
“If it’s enacted, millions of hard-working, hard-pressed Americans will face even greater hardships so that credit card companies and banks can record even greater profits,” Sen. Edward M. Kennedy (D-Mass.) said.
Much of the debate on the bill will focus on such arguments. Also likely to come under scrutiny are laws in some states -- notably Florida -- that allow debtors to keep their homes instead of selling them to pay creditors.
Such laws were spotlighted when O.J. Simpson bought a house in Florida and avoided paying $33 million in civil damages to the family of Ron Goldman, for whose death he was found liable along with that of Simpson’s former wife.
But looming as the most formidable obstacle to the bill is the abortion-related dispute.
Schumer has said he intends to offer a version of his amendment again. Republicans in both houses of Congress call it a “poison pill” for a piece of legislation that otherwise would pass easily.
“There’s been one hurdle, and it’s been called the Schumer amendment,” Rep. F. James Sensenbrenner Jr. (R-Wis.), chairman of the House Judiciary Committee, told reporters recently. “If the Senate passes a bankruptcy bill without the Schumer amendment, I am certain that a bankruptcy bill can be law fairly quickly.”
Schumer has hinted that if necessary, he would filibuster the bill.
“I will do my best to hold this bill up in every way until this amendment is supported,” Schumer told Judiciary Committee colleagues this month.
In recent days, Schumer earned a small nod from one crucial Republican, Senate Judiciary Committee Chairman Arlen Specter (R-Pa.). Specter said he supported the principle of the amendment, but was not convinced a special provision was needed.
“I don’t think there ought to be [debt forgiveness] if someone has blocked an abortion clinic and caused damage, injury, perhaps even fatalities as a result of that blocking,” Specter said. “The issue comes down to whether it is necessary, whether a bill without the Schumer amendment accomplishes the same result.”
In 2002, some prominent abortion opponents, such as Rep. Henry J. Hyde (R-Ill.), agreed to the compromise language that did not single out antiabortion protesters. And at least one senior Republican aide said a similar compromise was not out of the question now.
“We’re open to that, but we’re not locked into it,” said the aide, who requested anonymity.
The bill’s sponsor, Sen. Charles E. Grassley (R-Iowa), remains worried about the fate of a measure in the works for nearly a decade.
“When I started working on this issue, it was considered a scandal that bankruptcies might reach 1.4 million,” Grassley said. “Guess what? In 2004, there were 1.6 million. Congress has wasted time and we still have a bankruptcy crisis on our hands.”
Yingling of the American Bankers Assn. said “we’ve always had plenty of votes” to pass the bill’s main provisions. “It’s always been a matter of whether there’s an amendment that kills it.”