To protect disabled veterans from means testing in bankruptcy under certain circumstances.

BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2005

The PRESIDENT pro tempore. Under the previous order, the Senate will
resume consideration of S. 256, which the clerk will report.
The assistant legislative clerk read as follows:

A bill (S. 256) to amend title 11 of the United States
Code, and for other purposes.

Pending:

Leahy amendment No. 26, to restrict access to certain
personal information in bankruptcy documents.
Feinstein amendment No. 19, to enhance disclosures under an
open end credit plan.
Kennedy amendment No. 44, to amend the Fair Labor Standards
Act of 1938 to provide for an increase in the Federal minimum
wage.
Dorgan/Durbin amendment No. 45, to establish a special
committee of the Senate to investigate the awarding and
carrying out of contracts to conduct activities in
Afghanistan and Iraq and to fight the war on terrorism.
Pryor amendment No. 40, to amend the Fair Credit Reporting
Act to prohibit the use of any information in any consumer
report by any credit card issuer that is unrelated to the
transactions and experience of the card issuer with the
consumer to increase the annual percentage rate applicable to
credit extended to the consumer.
Reid (for Baucus) amendment No. 50, to amend section
524(g)(1) of title 11, United States Code, to predicate the
discharge of debts in bankruptcy by a vermiculite mining
company meeting certain criteria on the establishment of a
health care trust fund for certain individuals suffering from
an asbestos related disease.
Dodd amendment No. 52, to prohibit extensions of credit to
underage consumers.
Dodd amendment No. 53, to require prior notice of rate
increases.

Recognition Of The Majority Leader

The PRESIDENT pro tempore. The majority leader is recognized.

Schedule

Mr. FRIST. Mr. President, today, we are resuming consideration of the
bankruptcy legislation. Under the order from last week, at 2:30, we
will begin 3 hours of debate in relation to the Kennedy and Santorum
amendments regarding minimum wage. That consent agreement provides for
two votes to begin at 5:30 today on the Kennedy and Santorum minimum
wage amendments.
I do remind my colleagues that a cloture motion was filed on Friday,
and that cloture vote will occur at 2:15 on Tuesday. Senators should
also be aware that under the provisions of rule XXII, and pursuant to
our unanimous consent agreement, all first-degree amendments should be
filed by 2:30 today and second-degrees by noon tomorrow. We also have a
unanimous consent agreement that provides for a vote in relation to the
Schumer amendment at 12:15 p.m. tomorrow, on Tuesday.
With that said, we will have busy sessions over the next couple of
days as we try to finish our work on the bankruptcy bill. I do hope we
can invoke cloture tomorrow afternoon and bring this bill to a final
vote. As all Senators know, if cloture is invoked, germane amendments
are still in order, and there could be up to an additional 30 hours of
consideration.

Last week, we had a productive week. We had full days of debate and
votes. Therefore, I expect we will complete action on the bill either
Tuesday or Wednesday of this week.
Mr. President, I would be happy to turn to the Democratic leader.
Mr. President, I would like to make a few comments on another issue
now because at 2:30 today we will be going to the debate on the minimum
wage amendments.

Pilgrimage to Selma And The 40th Anniversary of Bloody Sunday

Mr. President, I rise to spend a few moments reflecting on a
historical event that occurred 40 years ago today. Historians view the
1965 Selma to Montgomery Voting Rights March as one of the emotional
high points of the modern civil rights movement that began in the
1950s.
Yesterday, a number of Members of Congress went on a pilgrimage to
Selma and marched across that Edmund Pettus Bridge. I was part of that
delegation. I had that opportunity to do that same march in remembrance
of the Selma to Montgomery 1965 crossing of that bridge in the past.
From a historical standpoint, as we look back, we recall that 40
years ago today--actually on a Sunday--but 40 years ago today, on that
Sunday, on

[[Page S2112]]

that march, approximately 600 people left historic Brown Chapel and
walked a few blocks and then went around the corner and over that
Edmund Pettus Bridge, going east toward Montgomery. They went on the
other side of that arching bridge, and they encountered local law
enforcement officers. The group of officers and some others drove the
marchers back across the bridge in a violent episode and series of
actions over the next few minutes. They were pushed back the equivalent
of several blocks over the bridge and then back to the church.
The activity was chaotic. They had billy clubs, tear gas. Most of us
are familiar with the tragic story. That Sunday now has become known,
since that time, as Bloody Sunday, and thus today is the 40th
anniversary of Bloody Sunday. That Bloody Sunday earned, appropriately,
national attention. And much of what happened in terms of the evolution
of the civil rights movement, reaching that huge landmark on August 6,
1965, when President Johnson signed the Voting Rights Act, was
realized.
Just a couple of comments about the course of the day. Again, it was
a large bipartisan delegation of House and Senate Members. We arrived
in Selma early yesterday morning and visited two of the museums there.
We then went to the church service at the historic Brown Chapel AME,
African Methodist Episcopal, Church.
I had the opportunity to visit and worship in that church before, but
yesterday it captured me. The church itself was packed. It is a
historic church, and there is a large balcony in the back and balconies
on either side.
As our delegation, which was probably 40 or 50 House and Senate
Members, crowded in with another several hundred people, with the
balconies full, you could not help but to imagine what it must have
been like 40 years ago--41, 42 years ago. In that period, that church
became the real refuge, sense of security for the movement that evolved
and really instigated, in many ways, the ability for all Americans to
vote today, culminating in that signing by President Johnson later in
1965, on August 6, 1965.
Yesterday, in the church service, Rev. James Jackson, the pastor of
that church, opened the service itself. And we had a wonderful sermon
that was delivered in commemoration by the Rev. C.T. Vivian. Reverend
Vivian was an inspirational speaker in his presentation.
But what was fascinating to me was it was his early participation,
really, in Nashville, TN, working alongside others who were there
yesterday, Congressman John Lewis and so many others, that in Nashville
that nonviolent movement, and the discipline involved in that movement,
was developed. It was developed in meetings, in churches all over
Nashville, TN, setting out a defined curriculum based on the great
teachings in the Bible and from Gandhi and so many others.
It was that same discipline that yesterday now-Congressman John Lewis
shared with us, as they marched from Brown Chapel, two by two by two,
where he and Hosea Williams led that march up on that sidewalk, dressed
in their suits, recognizing that once they got over that bridge, or to
the peak of that bridge, at the bottom of the hill down there, there
were law enforcement officers whom they knew in all likelihood would
drive them back.
Yesterday was a gorgeous day. To be able to march arm in arm, linked
across that bridge, with people like Congressman John Lewis and Fred
Shuttlesworth, who played such a prominent role in Birmingham, and
Bernard Lafayette, a close personal friend of mine who now lives in
Connecticut, was a great privilege and a great opportunity.
I share all this with my colleagues to thank those who could be with
us but also in recognition of today being that 40th anniversary that,
yes, was called Bloody Sunday, but did become a turning point and led
to the rights that we all enjoy today, but underscoring the importance
of fighting for, with discipline and nonviolence, those rights of
justice and equality and freedom.
Mr. President, I yield the floor.
The PRESIDENT pro tempore. The Senator from Oregon.

Energy Prices

Mr. WYDEN. Mr. President, with crude oil prices at almost $54 a
barrel, and OPEC meeting in 9 days, I have come to the floor this
afternoon to urge the administration to pursue what they promised; that
is, to stand up for our consumers who are facing high oil and gasoline
prices.
The news just this last weekend was not good on the pricing front as
it relates to the American consumer. The Lundberg survey of American
gasoline retailers came out Sunday and confirmed what a lot of
Americans suspected. The price of gas is rising high, and it is rising
fast.
According to the survey that came out Sunday, the price of gasoline
has risen nearly 7 cents per gallon in the last 2 weeks, across the
board, for all grades. And the Lundberg survey indicates that this is
just the beginning, that higher prices are on the way.
Now, last week, Mr. President and colleagues, I asked the U.S.
Secretary of Energy, Mr. Bodman, whether he was going to do what the
administration promised; that is, to stand up for the consumer and try
to push OPEC as hard as possible to get some pricing relief when they
meet in a few days.
Mr. Bodman said, in response to my questions, that he had not made
that call and, well, he had a whole lot on his plate. I do not think
that is good enough. I think we have to ask this administration, and
the President specifically, about using their political capital now to
stand up for the American consumer who is getting clobbered by these
gasoline and oil prices.
If they are not going to use it now, when are they going to use it?
Why not use it on behalf of American consumers when there is such a
demonstrable cause and effect between the price of crude oil rising and
the price of gasoline rising?
Over the weekend, the Secretary of the Treasury, Secretary Snow, said
rising energy prices have the potential to stifle economic growth in
the near future. Maybe Secretary Snow is willing to get on the phone
with OPEC if Secretary Bodman will not. But I know somebody ought to be
doing it. And that is exactly what the President of the United States
promised in 2000. He said that if the country elected him, he would
push OPEC very hard to try to turn on the spigot and get some pricing
relief.

OPEC is making all the usual noises. They are concerned, they have
said, about rising prices. They think the market has plenty of oil.
As I said before, OPEC is going to look out for OPEC. The question is
whether this administration is going to stand up for the American
consumer as they promised in 2000. If the Secretary of Energy won't
pick up the phone to do that, the American people deserve a better
answer than to say, Well, gosh, I have a whole lot on my plate. If the
average American didn't send their tax return in on April 15 saying,
Gosh, I have a lot on my plate, I don't think that would be acceptable,
not to this administration, not to me, not to anybody. So the excuse
doesn't wash when it comes to the Energy Department's duty to go to bat
against high oil prices.
We need, at home, on a bipartisan basis, as it relates to OPEC
abroad, to stand up for our consumers who are faced with escalating
energy prices that seem to go up by the day. I don't think it is right
to let OPEC run roughshod over the American consumer and we make no
comment other than to say, Gosh, we have a lot on our plate.
Nine days from now OPEC is going to meet. Time is ticking away. But
there is still time for the administration to deliver on what they
promised to the American people; that is, to protect our consumers from
high oil and gasoline prices. I urge they take just that action. If Mr.
Bodman won't do it, as he indicated last Thursday, maybe somebody else
in the Bush administration will.
I yield the floor.
The PRESIDENT pro tempore. As a Senator from the State of Alaska, I
suggest the absence of a quorum.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. McCONNELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Sununu). Without objection, it is so
ordered.
Mr. McCONNELL. Mr. President, what is the pending business?
The PRESIDING OFFICER. The pending business is S. 256 which has been
reported.

[[Page S2113]]

Mr. McCONNELL. Mr. President, I rise today on behalf of every
American who each year is forced unknowingly to pay a hidden tax. We
all know we have to pay an income tax, a sales tax, a payroll tax, but
what about a bankruptcy tax? You may not have heard of this tax, but
you and every other man, woman, and child in America pay it every
single year. It is the accumulated cost of higher interest rates on
credit, higher downpayments on a car or other essential items, and
higher penalty fees and late charges for financial transactions. It is
the result of the abuse of America's bankruptcy system which allows
people who still have the ability to pay back some or all of their debt
to declare bankruptcy and escape responsibility for what they owe.
Somebody has to pay those unpaid bills. And that somebody is you.
Companies have no choice but to pass them on to the consumer.
When I mention this bankruptcy tax, you may think I am talking about
small change, the kind of money you can find under your couch cushions.
You would be wrong. According to a Department of Justice study, the
bankruptcy tax amounts to a staggering $400 for every man, woman, and
child in America once a year every year. Let me repeat that so I can be
sure it soaks in. That is $400 for every man, woman, and child in
America once a year every year.
That amount of money would mean a lot to a family in my home State of
Kentucky where the median income is $36,936 a year. That means the
average Kentuckian has to work 4 days a year to pay the bankruptcy tax.
In fact, it is the lower income families who feel the sting of the
bankruptcy tax the most. Higher interest rates can stop them from
getting access to credit for a home, transportation to a necessary job,
or even higher education.
Our bankruptcy system was originally created to give those who were
hopelessly mired in debt a way out and a second chance. As long as it
was used sparingly and applied only to those who most needed its mercy,
it was the compassionate way for America to make sure that none of her
neediest became trapped in a lifetime of deficit and despair. But in
recent years, too many are abusing the bankruptcy system. Last year
nearly 1.6 million individuals filed for bankruptcy, a record high.
This number is five times greater than the number of individual
bankruptcy filings 20 years ago.
It seems odd so many more Americans would choose bankruptcy over that
20-year period, especially when you recognize that the last 20 years
have set new records for economic growth, low unemployment, and low
interest rates. The answer to this mystery is fraud and abuse of the
bankruptcy system. In fact, the FBI has estimated over 10 percent of
all bankruptcy filings involve at least some fraud.
Bankruptcy was created as a ladder to greater economic opportunity.
It should not be an escape hatch to avoid responsibility. A few weeks
ago this Senate, on a bipartisan basis, passed the moderate,
commonsense Class Action Fairness Act to curb some of the abuses of our
legal system. It was the first substantive bill passed by this new
Congress. It was supported by Democrats and Republicans and has been
signed into law by President Bush. I am very pleased that this 109th
Congress has started off in a tone of bipartisan agreement and
cordiality. I think passing the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005 can be the next step in furthering that
sense of cooperation. Like the Class Action Fairness Act, this bill is
a moderate, commonsense bill with bipartisan support. It passed out of
the Judiciary Committee with bipartisan support. It has passed this
Senate with bipartisan majorities before. It should be entirely within
our power to pass it now and send it on to the President for his
signature.

Right now individuals have two options for declaring bankruptcy. They
may file under chapter 7, surrender their assets to be sold, and then
be released from all debt. They start again with a fresh slate, leaving
their creditors unpaid.
The second option is to file under chapter 13. In that case an
individual must work with a bankruptcy court and draft a payment plan
to satisfy as much outstanding debt as possible, given the debtor's
income. The problem is too many people are filing under the more
lenient chapter 7, leaving their debts unpaid even when they have
sizable income and sizable assets. Some are choosing it as an avenue to
commit fraud.
The bill currently before the Senate will institute a means test to
sort out those who file chapter 7 but actually have the ability to live
up to their obligations. This is not a draconian measure, by any means.
Only about 7 to 10 percent of chapter 7 filers will be screened out by
the means test which will be administered by a bankruptcy court.
Any debtor who earns less than their State's median income--and that
includes about 80 percent of the debtors in question--will remain in
chapter 7. Those earning more than the State median income will be
allowed to deduct certain obligations and expenses from their net
worth, thus allowing some of them to also remain in chapter 7. And
anyone left will be able to show special circumstances for why they
should be allowed to still file under chapter 7. So there will be
plenty of opportunities for the neediest among us to file chapter 7 and
use the safe haven of bankruptcy as it was originally intended.
Those remaining will be required to file under chapter 13. It is not
too much to ask people to pay back what they owe when they clearly have
the means to do so. And those who are abusing the system will be
exposed. Catching the individuals who are defrauding the system to
avoid responsibility will save America $3 billion a year--a good start
for reforming our system. That $3 billion rightfully belongs to the
American people who are forced to pay the egregious bankruptcy tax.
They are being robbed by an unscrupulous few.
It is our responsibility to end the fraud and abuse in the bankruptcy
system by passing this bill. It will strengthen our economy, and it is
also the right thing to do.
I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. KENNEDY. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Under the previous order, the hour of 2:30 having arrived, there will
now be 3 hours of debate, equally divided, on the Santorum and Kennedy
amendments.
The Senator from Massachusetts is recognized.
Mr. KENNEDY. Mr. President, as I understand it, we have an hour and a
half on our side.
The PRESIDING OFFICER. The Senator is correct.

Amendment No. 44

Mr. KENNEDY. Mr. President, I ask unanimous consent that the pending
amendment be temporarily set aside.
The PRESIDING OFFICER. Without objection, it is so ordered. The
pending amendment is laid aside.
Mr. KENNEDY. Mr. President, at 5:30, the Senate will have an
opportunity to vote on an increase in the minimum wage, and we have not
had an opportunity to increase the minimum wage for some 8 years. The
purchasing power of the minimum wage is now probably at its second
lowest purchasing level in the history of the minimum wage and is
deteriorating every single day, in terms of purchasing power.
These individuals that work at the minimum wage are hard-working
individuals, men and women of great pride--primarily women, and women
with children, and in many instances men and women of color.
Historically, this issue has not been a partisan issue. Republicans and
Democrats have joined together to raise the minimum wage because we
have believed as a country and as a society that work is important,
work should be rewarded, and that men and women who work hard, 40 hours
a week, should not have to live in poverty, particularly those who have
children. Nonetheless, we have seen that those millions of workers who
work hard and work at the minimum wage have been falling farther and
farther behind.
People can ask, why is this relevant to the bankruptcy bill? In fact,
a third of all bankruptcies take place from people who have income
below the poverty level.

[[Page S2114]]

What we see on this chart is the fact that the real minimum wage has
fallen now to just about $10,000 a year for a family of three. It is
about $5,000 below the poverty line. If you are able to get individuals
up so they have more purchasing power, particularly against the
background which has seen an explosion of health care premiums, housing
costs--in my own State of Massachusetts, we have the second highest
housing costs of any State in the country. The cost of the general
standard of living has put enormous pressure on these individuals that
are hard-working and are at the lower end of the economic ladder. So
this has a direct relevancy to the bankruptcy bill--trying to raise
individuals to a point where they are going to be able to meet their
financial obligations; that is extremely important. We have seen, as I
just mentioned, over the period of these past 5 years what has happened
with health insurance, college tuition, housing, and gasoline.
Most of these minimum wage workers have no such thing as health
insurance, few are able to save for college tuition, housing has gone
up dramatically, and many of them are dependent upon driving in order
to get to available jobs. So they have been enormously impacted by the
increase in costs. We have seen that four million more Americans have
gone into poverty over the last 4 years. As a result of the census,
more than 1 million more children have gone into poverty over the last
4 years.
These statistics tell the story. What also tells the story is this
chart, which shows that Americans' work hours have increased more than
any other industrialized country in the world. This chart indicates,
using a baseline, what has happened from 1970, the last 30 years, in
terms of people working. We found out that Americans are working longer
and harder than in most other industrial nations in the world. What we
find is that they are working longer and harder and, look at the
results of working long and hard. They are producing more but making
less. The increase in terms of productivity has been anywhere from 25
to 30 percent American workers. Do you think that has been reflected in
any increase in the minimum wage? Absolutely not. That is because
Congress has been unwilling to increase the minimum wage. As a matter
of fact, when I offered this legislation even on the welfare bill,
which my friend and colleague from Pennsylvania says is where it
belongs, the legislation was pulled last year, rather than having a
debate and vote on an increase in the minimum wage.
I offered it on State Department reauthorization because the other
side--the Republican leadership--would not give us an opportunity or a
vehicle on which to consider this legislation, or by itself, so it was
necessary to try to amend existing legislation. They said, oh, no, and
they pulled that legislation. When I offered it last year on the class
action bill, they pulled the class action bill because they did not
want to vote on an increase in the minimum wage.
So we find that Americans are working harder; we find a dramatic
increase in productivity; we see explosions in cost; we see the
purchasing power of the minimum wage going down to its second lowest
level; and we see that so many of these individuals who are below the
line of poverty end up in bankruptcy.
This is just the background. There will be those who will say we
cannot really afford to have an increase in the minimum wage because it
is going to add a great deal to the problems of inflation. Right?
Wrong.
First of all, this chart indicates exactly what the impact of the
increase in the minimum wage is in our budget. All Americans combined
earn $5.4 trillion a year. A minimum wage increase to $7.25 would be
less than one-fifth of 1 percent of national payroll. Do we understand
that? The payroll is $5.4 trillion a year and we are talking about less
than one-fifth of 1 percent. This doesn't have an adverse impact on
inflation in terms of this country. We have seen from the various
studies, which we will refer to later, that neither does it have in
terms of employment.
This is an issue, ultimately, about fairness. That is why this is so
important. It is interesting that this Congress has not hesitated to
vote itself a pay increase during this period of time, but not for the
minimum wage earners. The height of hypocrisy will be this afternoon.
The height of hypocrisy will be this afternoon when those individuals
in the U.S. Senate say no to $7.25 an hour for hard-working Americans
after they have accepted a $28,500 pay increase for themselves over the
last 8 years.
Do you understand that? They have been willing to vote on a pay
increase for themselves, and we will find out whether they are going to
vote for hard-working Americans who are trying to make ends meet and
provide for their families and their children.
It is as stark as that. That is what happened. This is where the
minimum wage has been since the last increase in 1997. It has been flat
over all these years--but not for the Members of Congress. You can
understand why Members don't want to vote on increasing the minimum
wage; it is because of that.
It is not very surprising to me because we had an increase under the
first President Bush. We had an increase in the minimum wage under
President Ford and one under President Eisenhower. We have had it in a
bipartisan way throughout history. But absolutely not now. The
Republican leadership in the House of Representatives and the Senate of
the United States says, no way. This is the record of where we have
seen it: Dwight Eisenhower, Jerry Ford, the first President Bush,
Franklin Roosevelt, John Kennedy, Lyndon Johnson, Jimmy Carter, and
Bill Clinton. It has been bipartisan over the period of history.

It is baffling to me why in the world we cannot get an increase now.
What is the reason? What is the reason we hear so much about values?
Don't we figure that working hard is a value in our society? Don't we
think that rewarding work is a value in our society? We will find out
this afternoon. We will find out this afternoon, at 5:30, whether our
colleagues think that rewarding the men and women who work hard, not
just on one minimum wage job but often two or three minimum wage jobs,
is a value.
A principal, in surveys of children of these minimum wage workers,
asked the children what their biggest complaints are. It is not that
they are not able to get Christmas presents at Christmastime. It is not
that they cannot afford to buy a birthday present for a fellow
student's birthday. It is not that they cannot afford any skates to be
able to join the other children skating. It is that they say they don't
see their parents enough. They don't see their parents enough. There is
not enough time with their parents. That is repeated time in and time
out, again and again, as one of the primary concern of the children of
minimum wage workers.
Here we are debating the bankruptcy bill that has been written by the
credit card companies, which have $30 billion in profits this year and
are looking to collect billions of dollars more as a result of this
legislation. That is going to turn our bankruptcy courts into
collecting agencies for the credit card industry. And we are going to
say, oh, no, no, we cannot afford $7.25 for working men and women.
We can afford billions of dollars for the credit card companies--and
I mean billions of dollars, probably the most profitable industry in
this country--but we cannot afford to have an increase in the minimum
wage. No, it adds to the payrolls of companies. It is going to be
inflationary. Why are we setting a minimum wage? Let these people work
harder.
At 5:30 p.m., we are going to have two votes. One is going to be to
increase the minimum wage to $7.25 an hour in three steps: 70 cents 60
days after enactment, 70 cents a year later, and 70 cents a year after
that. My friend from Pennsylvania has offered an alternative amendment,
the Santorum amendment. For those who are giving some thought to the
fact that maybe going to $7.25 is a little bit too much, maybe the
Santorum amendment makes more sense. I hope they will listen to me now.
The Santorum amendment gives half of the increase to minimum wage
workers with one hand and then--listen to me--takes away minimum wage,
overtime, and equal pay rights from over 10 million workers with the
other hand. It takes just one page of the

[[Page S2115]]

Santorum amendment--here is my amendment, Mr. President. It is three
pages to raise the minimum wage to $7.25. Here is the Santorum
amendment--85 pages. If he was only raising the minimum wage half of
what I propose, he would be able to do it in three pages, too. That
ought to say something to our colleagues.
What else is in the amendment? It is extraordinary. It takes one
page, as I mentioned, to raise the minimum wage, and 84 pages are
special interest giveaways that take rights away from workers.
The Senator from Pennsylvania has a record of opposing the increase
in the minimum wage, and I understand that. That is his record. He has
voted against it at least 17 times in the last 10 years, so today is
really no different.
The Santorum amendment will increase the minimum wage by $1.10 cents
an hour. It will benefit 1.8 million workers. Do we understand that--
1.8 million workers. He goes up to $6.25. Ours goes to $7.25 and
benefits 7.3 million directly and an additional 8 million more
Americans; 3.4 million of those are parents with children. But Santorum
benefits only 1.8 million. He is not just saying we will take $6.25 in
place of $7.25; we only want that. Oh, no, he is only covering 1.8
million. That is enormously important.
So what does he do? The Santorum amendment makes more than 10 million
workers no longer eligible for the minimum wage, no longer eligible for
overtime pay, no longer eligible for equal pay rights by repealing the
individual coverage under the Fair Labor Standards Act and raising the
threshold to $1 million a year from $500,000. Those workers who work in
the small stores that are involved in interstate commerce who are
covered under minimum wage, not under Santorum, are excluded. If there
is a State minimum wage, they are covered. We have a number of States
that do not have any minimum wage whatsoever. Then he raises the level
from $500,000 to $1 million as a threshold for the coverage.
This is what he does: By eliminating the individual Fair Labor
Standards Act coverage and raising the business exemption to $1
million, the Republican proposal jeopardizes worker protections for
over 10 million workers. Those workers will lose minimum wage,
overtime, and equal pay protections.
What do I mean by they lose overtime? This is what the Santorum
amendment does. Under current law, if the employer wants to work out
flexible time with their employees, they can do it as long as it is
done within the 40-hour workweek. That is all legitimate and fair. But
under the current law, if an employer wants to work a worker 50 hours
this week and 30 hours the next, they have 10 hours of overtime. Under
the Santorum amendment, they can work 50 hours one week and 30 hours
the next and no overtime. This affects millions of workers who are
going to find out they are going to get a real pay cut. That is what is
in the Santorum amendment.

The Santorum amendment also prohibits States from providing stronger
wage protections than the Federal Government for waiters, waitresses,
and other employees who rely heavily on their tips for earnings. Do we
understand that, Mr. President? The Santorum amendment puts the long
Federal arm right at the throats of the States and tells them there is
no way they can provide the extra reimbursement to these workers.
In the State of Pennsylvania, employers are required to pay their
tipped employees $2.83 an hour. Yet this amendment would deny the hard-
working waiters and waitresses the 70 cents an hour employee-provided
wages. That is not true in every State, but Pennsylvania made that
decision. And here on the floor of the Senate is an amendment to deny
the people of Pennsylvania from carrying forward their judgment.
Mr. President, 22-year-old Julie Phillips in Johnstown, PA, is
working two part-time jobs--one at minimum wage making $5.15 an hour
and another as a waitress at a Chinese restaurant. This amendment would
deny Julie 70 cents an hour in wages from her minimum wage job. She
would have to rely on unpredictable tips from her second job instead.
The amendment also gives a free pass to violators of a broad range of
consumer, environmental, and labor protections by prohibiting the
Federal agencies from assessing civil fines for first-time reported
violations. It also preempts the ability of States to enforce these
laws. The States are enforcing these laws, but under the Santorum
amendment, they will be denied the opportunity to enforce those laws.
Those laws are there to protect the workers, but he preempts the
ability of States to enforce these laws.
Once again, we are on the Senate floor with legislation written by
special interests which will help them the most. The bankruptcy bill
was written by the credit card companies, the class action bill was
written by corporations, deceiving and overcharging their customers,
and now we have the minimum wage bill written by the restaurant
industry and retailers looking for a way to fatten their bottom lines.
If the Republicans were truly interested in raising the minimum wage,
they would not have loaded their proposal with these antiworker poison
pills that are special interest giveaways. It is hard to believe our
Republican colleagues are serious about this thinly veiled attack on
low-income workers.
There are many ways to help small businesses without denying rights
to millions of minimum wage workers. We worked together in the past to
provide reasonable small business tax relief, along with the minimum
wage. I would be willing to do that again. Three times in the last
Congress, the Republican leadership brought down a bill rather than let
us vote on it. So their actions speak louder than words.
A week ago, our Republican friends were touting their so-called
antipoverty agenda. But as we see with their agenda, what they really
are doing is creating a deeper poverty agenda. If they are truly
serious about helping hard-working families rise above the poverty
line, they will support our amendment to give a fair raise to America's
low-income workers.
It is shameful that in America today, the richest, most powerful
Nation on Earth, nearly one-fifth of all children go to bed hungry
because their parents are working full time at the minimum wage and
still cannot make ends meet. That is a key part of any real antipoverty
agenda: ending childhood poverty. But the Republican proposal will
actually plunge even more children into poverty.
Mr. President, 3.4 million children have parents who would get an
immediate raise under our proposal. Hundreds of thousands of those
children will be left behind by the Santorum amendment. The poison
pills in the Santorum amendment will be particularly harsh for
children. Think about the single mother with two children working as a
waitress in Minnesota. Under the Santorum amendment, she will lose her
guaranteed right to the minimum wage, leaving her paycheck smaller and
her children less secure. Think about a garment worker working 80 hours
a week to provide for her family. Her husband, a janitor, relies on
overtime as well to pay for food, rent, and clothes for their children.
They will lose their overtime coverage under this amendment, and both
parents will take a pay cut. Some antipoverty agenda.
According to the Families and Work Institute, among the most
important aspects children would most like to change about their
working parents are these: They wish their parents were less stressed
out by their work; they wish they were less exhausted by their work;
and they wish they could spend more time with them. But this amendment
will deny overtime for more than 10 million workers, leaving them less
time to spend with their children.
What is more, this amendment would tie the hands of Federal and State
agencies trying to enforce the Federal laws that protect families,
children, and communities. It weakens the gun safety protections under
the Brady Act, which could lead to an increase in weapons sales to
criminals, jeopardizing our neighbors and children's safety. It weakens
environmental laws that require companies to disclose their toxic
emissions. It weakens reporting requirements under the Clean Water Act
and Safe Drinking Water Act. It undermines consumer protection laws
that require companies to report on the safety of their food. These
provisions put all Americans, especially

[[Page S2116]]

children, at risk of increased exposure to pollution, toxic substances,
and serious illness from unsafe foods.
We teach our children the importance of hard work. We encourage them
to do their best in school and be good citizens. We tell them their
reward will be good jobs that fulfill their hopes and dreams and enable
them to support healthy families. That is what America is about. But
for the 36 million Americans who live and work in poverty today, that
dream is unfulfilled. They work as hard as any American--often harder--
but too often they are forced into bankruptcy because the minimum wage
will not cover their bills and give their families the support they
need.
We can no longer turn our back on our fellow citizens, but that is
exactly what is happening in the Senate. Raising the minimum wage is
critical to preventing the economic free-fall that often leads to
bankruptcy. Amending the bankruptcy bill to increase the minimum wage
will help many of the people this so-called reform is likely to hurt:
low-income families, minorities, and women.
As I mentioned, nearly a third of those who file for bankruptcy are
in poverty at the time they file. That is half a million families who
are already living below the poverty line and will be plunged into
further hardship with this bankruptcy bill, and many of them are
minimum wage earners.
In the current economy, millions of Americans are suffering: 8
million are unemployed, 45 million are without health insurance, and 13
million children live in poverty. Poverty has doubled for full-time,
full-year workers since the 1970s. Minimum wage employees work 40 hours
a week, 52 weeks a year, and they deserve to be fairly paid.
Low-income families are being squeezed in every direction by the
economy, and families are just barely balancing on a cliff of piling
bills, hoping they will not topple over. Their costs are rising but not
their wages.
To make matters worse, the credit card companies prey on low-income
workers. They know these workers are desperate. They offer loans at
exorbitant interest rates that are made to seem cheaper than they are
by three of the most deceptive words in the English language: minimum
monthly payment.
While workers struggle, credit card companies reap skyrocketing
profits from their hardships. This is not only an economic issue, it is
a family issue and women's issue. Divorced women are 300 percent more
likely than single or married women to find themselves in bankruptcy
court, often because they are owed child support or alimony and cannot
collect it. They are trying to raise their children but they face a
daunting challenge. This bill will make it harder for them to meet that
challenge.
Sixty-one percent of those who will benefit from the minimum wage
increase are women and one-third of those women are mothers. The
minimum wage is so low today that many workers have to work several
minimum wage jobs in order to make ends meet.
Look what our program will do: Raise the minimum wage to $7.25. That
is $4,400 to a minimum wage family. That is 2 years of child care. That
is full tuition for a community college. That is a year and a half of
heat and electricity. It is more than a year of groceries. It is more
than 9 months of rent. That may not sound like a lot for people around
here, but that means a great deal to the people who can benefit from
this.
History clearly shows that raising the minimum wage does not have a
negative effect on jobs, employment, or inflation. In the first 4 years
after the last minimum wage increase, the economy had its strongest
growth in three decades. More than 11 million new jobs were added at a
rate of 200,000 a month. Compare that to the 530,000 private sector
jobs lost since this administration took office.
Minimum wage will not cause more job losses, but staying the course
on failed economic policies will. Overwhelming numbers of our fellow
citizens in Nevada and Florida showed the way last November by voting
for a higher minimum wage in their States. It is time for the
Republican Party to stop obstructing a fair increase in the minimum
wage for all employees across the Nation, and I hope that our Members
would support this.
I ask unanimous consent that Senators Lieberman, Durbin, Sarbanes,
and Harkin be added as cosponsors to the amendment.
The PRESIDING OFFICER (Mr. Martinez). Without objection, it is so
ordered.
The Senator from New Hampshire.
Mr. SUNUNU. Mr. President, I rise to oppose the Kennedy amendment. I
appreciate very much the Senator's remarks and his commitment and
passion on this issue, but I did want to make a couple of brief points
before Senator Santorum, who is offering an alternative, has a chance
to talk about the provisions of his amendment.
While I appreciate the belief of the Senator from Massachusetts, I do
think it is important to take a step back and allow this debate to
include a sense of what the deeply held concerns are about raising the
minimum wage, because it is not all a single-sided story. I do not
support the Kennedy amendment because I do not support raising the
minimum wage, and the reason is as follows: When the minimum wage is
raised, workers are priced out of the market. That is the economic
reality that seems to be missing, at least so far, from this
discussion.
When the minimum wage is raised, some workers are priced out of the
labor market, and we could have a discussion about how many are priced
out of the market, what mechanisms we might have to deal with that
fact, but it is an economic fact and the proponents of raising the
minimum wage like to dismiss this by saying, well, we have a hard time
measuring it, or the economy is large, or we have not been able to
measure significant increases in inflation as a result of increasing
the minimum wage.
I am not talking about inflation necessarily or economic growth. I am
talking about the workers themselves who are priced out of the market,
and if one does not believe that or they want to dismiss the economics,
think about this: If there was not an economic impact, why are we not
debating raising the minimum wage to $20 an hour?
Well, the answer is obvious. Because if the minimum wage were raised
to $20 an hour, even the proponents of the Kennedy amendment would have
to admit it would be cost prohibitive. Thousands, if not millions, of
people would be priced out of the market. The number of jobs would
shrink. Certainly the number of entry level jobs would be reduced.
Oh, but they say, we are not proposing raising the minimum wage to
$20 an hour because we know that is not a good idea. Well, then why are
they not proposing to raise it to $10 an hour? Because at $10 an hour
they would still have to admit the negative economic effects on prices
and on the total number of jobs, especially those at the entry level
that would be priced out of the market. So instead they seek a lower
level where the negative consequences are much more difficult to
measure but they still exist, because it is an economic fact of life
that when the minimum wage is raised, people are being priced out of
the markets.
The same economic fact is true for $8, $7, or $6 an hour. People are
being priced out of the market. I think this is most disturbing because
those priced out of the market are the very ones who most need the
opportunity. They are entry level workers. They are first-time job
seekers. They are people making the transition from welfare to work and
they are teenagers experiencing their first time in the labor force.
They are the ones who most need that job opportunity to build a
foundation to develop the experience that will enable them to earn even
more money in the future.
If one does not believe that, they can go to any small business and
ask them if they are hiring in at minimum wage--and there are very few
firms that do hire in at minimum wage, but if they do, how long those
employees actually earn at the minimum wage level. It is not long
because once a person has shown 3, 4 or 6 months of ability in a role
with an employer, their value has been proven and they are very quickly
going to move above whatever the entry level threshold was.
Those who are going to be priced out of the labor market by an
increase in the minimum wage are those who most

[[Page S2117]]

need that first job opportunity, and that is why I strongly disagree
with the Senator from Massachusetts and his amendment. The impact may
be small, and our economy is $11 trillion. It may only be 10 jobs that
are affected or 20,000 or 30,000 who never get that first job
opportunity at a job. Unfortunately, it is very difficult to
measure 10,000, 20,000, or 30,000 jobs in an economy the size of
America's, but it is there. The economic consequences are real. Again,
if one does not believe it, if they believe there are no economic
consequences, then they should be willing to step down to the Senate
floor and offer an amendment to raise the minimum wage to $20 or $30.
Or why even stop there?

One final point I do want to make is in regard to a phrase that was
used by the Senator from Massachusetts. It was a question or a phrase
about rewarding work. The question was whether we were willing to stand
up in the Congress or, I suppose, the Senate in particular, and reward
work by supporting an increase in the minimum wage.
I have a concern about this phrase because it suggests that as
Federal legislators it is our job to reward work. That may sound nice,
but it suggests that it is our job to set prices, that it is our job to
set wages, that it is our job to decide whether the work any citizen is
doing in the economy, in the private sector, is worth a particular
amount of money, whose work is worth more than someone else's and what
kind of rewards does the Federal Government give the taxpayer for doing
their job. That is not the role of the Federal Government. We should
not be deciding who gets rewarded for work, whose work is of value and
whose work is not of value.
In fact, there are few countries left on Earth where the central
government has the responsibility of rewarding work in and of itself,
and those are countries such as Cuba and North Korea that decide only
the federal government should be able to determine what one earns or
does not earn, how much one can charge and or not charge for a given
good. Our job is to pass good legislation that creates an economic
environment where people have incentives to commit capital to start
businesses to create economic opportunity and to create jobs and a good
quality of life.
It sounds nice to say we should reward work in the Senate, but the
only way to do that in passing Federal legislation is to start and to
try to set wages, to try to set prices, and to try to control the
levers of the economy. We have seen where that slippery slope can be
taken. We do not have to look farther than the former Soviet Union and
the former eastern European countries that have rejected that kind of
centralized state economy.
I appreciate the passion and the commitment of those on the other
side. I think they are wrong on the economics because the economics
hurt the very individuals who most need these entry level, first-time
job opportunities. They are certainly wrong with the idea that setting
prices for labor, setting prices for goods and deciding whose work has
value and whose work does not have value should start in Washington,
D.C. That is not the way our market economy works.
I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. Mr. President, I rise to offer an alternative to the
Kennedy amendment on minimum wage. I listened in part to my colleague
from Massachusetts describe that. Obviously I have a slightly different
take on what my amendment does than the Senator from Massachusetts
suggests, and I will go through that point by point and point out where
the Senator from Massachusetts may have exaggerated some of the claims
about what destruction this amendment would do to workers in my State
or any State.
I start out by suggesting why I am offering an increase in the
minimum wage. On this first chart it is important to see this green
line which is the percentage of hourly workers who are paid the minimum
wage. Since the minimum wage was instituted--actually not since it was
instituted but in the last 25 years we can see that the percentage of
workers now covered by the minimum wage is actually the lowest it has
been in quite some time. It is 2.7 percent of hourly paid workers who
now get paid the minimum wage. When one looks at that number, it sort
of cries out a bit and says it is time to bring it back up to be not
the absolute bottom where no one is paying that and there is
effectively no minimum wage--very few people are paid it--to a point
which sort of comports with at least recent history. That is what we
are trying to accomplish with our amendment, which is to bring it back
up to about here.
Our $1.10 increase over a period of 2 years would cover about 7.4
percent of all workers, which is actually slightly higher than it has
been over the last 15 years and is a little above historic trends.
Senator Kennedy's increase would actually put it to about almost 17
percent of workers in the economy who would be making minimum wage,
which at least going back to the 1970s would be much higher than it has
ever been as a percentage of wages.
So I think what we are suggesting is something that comports with the
current economy, certainly the way the economy has worked over the last
20-plus years, as opposed to something that harkens back to long ago
days where this was not just a minimum, it actually had, as Senator
Sununu suggested, a dramatic impact on the economy and a potentially
very inflationary impact if one looks at where the wages were of this
percentage of payroll and we have hyperinflation. You remember the 20-
percent mortgages and all the other things that were going on during
the time. That set the wages at a very high level. So look at how we
are providing a responsible floor for workers without having, as
Senator Sununu suggested, an impact on the economy, which could be
inflationary and damaging to all workers, as well as, particularly,
lower wage workers, looking at high rates of inflation, as well as
making sure we do not disadvantage businesses by pricing them out of
the ability to have workers, and also pricing laborers out of the
marketplace.

When you have extraordinarily high rates, as Senator Sununu
suggested, $20-an-hour, $30-an-hour minimum wage, you are going to be
pricing a lot of people out of the workforce.
I think what we are suggesting is a responsible approach. It keeps up
with the tradition over the past few years of a responsible floor for a
minimum wage. I am very comfortable that our proposal keeps the balance
between the ability of lower skill employees to enter the workforce at
a wage in which they are compensated for the skills they bring to the
job, and at the same time not forcing employers--because, again, see,
we are pretty far down on the number of people working at this level--
not forcing employers to forego employment with people in that slightly
increased amount we are suggesting. So it is not going to hurt
employment, it is not going to hurt their businesses dramatically, and
to the extent it does, as Senator Kennedy, at least, described the
provisions--I don't know that he accurately described the provisions--
we do have provisions in the legislation that deal with the smaller
businesses.
It is a general rule in the Federal Government that we have lots of
requirements--family and medical leave is one example, but there are
others, labor laws--that exempt small businesses. We either do it by
the number of employees or, in the case of the Fair Labor Standards
Act, by the amount of revenue that employer happens to take in.
In this case, we do raise the cap from $500,000 of revenue for your
business as being exempt from this provision to $1.2 million. That
provision was set, by the way, back in 1990. If you would have indexed
that for inflation, it would be $1.5 million today. So we are not even
keeping up with inflation. We are actually well below inflation in the
proposal that is being put forward, but we are capturing more small
businesses that are not affected.
This just affects the States that sort of tie their minimum wage laws
to the Federal laws. If you have a State that has no minimum wage--I
think there are six or seven of those--they would stay at the $500,000
level. We left that provision in place, in a sense to protect workers
because the States have not spoken on this. But for States that are
tied to the Federal level, we raised it. Obviously, if the States want
to go back, they are certainly welcome to do

[[Page S2118]]

so. But it does provide an exemption for smaller businesses--those that
are mom-and-pop stores, those who are just starting to build their
business--from the Fair Labor Standards Act.
It is important to understand. There are other things I will go
through, but before I move off into the other areas of the bill I want
to talk about how important it is not to dramatically increase the
minimum wage the way Senator Kennedy has suggested.
What we have seen about overtime is that this is where we are today
with the real value, if you add in a combination of the minimum wage
and the earned-income tax credit. Why do we say the earned-income tax
credit? You heard the Senator from Massachusetts talk about trying to
support a family, trying to make a living. I am sure he is not going to
go out and try to argue for the teenage son of a wealthy businessman,
that we have to make sure they earn a minimum wage because that wealthy
businessman's son needs the money. He may need it in his own right, but
that is not the purpose of the minimum wage. That is not what it is
for.
The argument for the minimum wage is we have to make sure those out
there in society whom the Senator from Massachusetts talked about--the
young lady in Johnstown, PA, making sure she had coverage. By the way,
the provision we authored that Senator Kennedy said applied to her with
the tip credit doesn't apply to the State of Pennsylvania. It is
written specifically to exclude States that have spoken on the tip
credit. It is only those that have not that this covered. So the young
woman in Johnstown, PA, is not covered by the provision. So the example
given by the Senator is inaccurate.
But, again, going back to the central point, which is what are we
trying to accomplish with the minimum wage, what we are trying to
accomplish is helping those people trying to support a family or
themselves out there working at low-wage jobs, welfare-to-work--that is
the example that is used. I am someone, in my office, who takes that
responsibility of making sure those who are on welfare have
opportunities for employment and, in fact, in my office we have hired,
over the course of my time in the Senate, eight people off of welfare-
to-work. I take that responsibility as an employer, and also going out
and talking to employers about the importance of giving people who are
transitioned off of welfare, trying to make a living for themselves and
their families, the opportunity to do so.
One of the ways we have done that is through the earned-income tax
credit. What the earned-income tax credit does is target those who are
trying to sustain a family. It helps them by building, on top of the
minimum wage, some Federal support. But it is targeted support. That
earned-income tax credit doesn't go to the teenager who is claimed on
his father's income taxes who is a wealthy businessman. It goes to the
mom who has two kids, who needs some help from the Federal Government
to be able to support those children.
This is much more targeted relief, if you will, than the blunt
instrument of a minimum wage increase.
Having said that, in this chart you see a decline--go all the way
back to 1939. You see the earned-income tax credit comes in and you see
the difference it makes up here recently. We are suggesting to bring it
back up by $1.10. If you add $1.10 to $7.22, you are at $8.32, which
would be higher than it has ever been with the combination of earned-
income tax credit and minimum wage.
So, again, to suggest somehow or another, as the Senator from
Massachusetts suggested, that his increase that would bring it off the
chart, if you will, is a responsible increase--it is a blunt instrument
that would benefit teenage kids of millionaires much more than it would
benefit these moms here. Why? Because as you get into the higher income
area, the earned-income tax credit goes away, it starts to phase out.
So this blunt instrument of the minimum wage helps folks who are not
the point of what a minimum wage is all about. When people come out
here and say they need the minimum wage, they don't talk about the son
of the wealthy businessman as the point. They talk about this mom.
Increasing the minimum wage, yes, helps everyone--if you want to say
``helps.'' Obviously, it will hurt many because they will not be able
to keep their job at this high rate of pay, for the maybe low skills
that the employee may bring to the business.

But here is what we do. What we do is balance it. We raise it
slightly to bring the level up to at least this level, which is where
it was several years ago when we last raised the minimum wage, without
affecting employers and the ability for low-skill workers to get the
jobs they need and to hold on to them and not to disproportionately
benefit a lot of workers out there making minimum wage who are not the
point of the minimum wage, and that is folks who are doing so sort of
as a side line and are not in need of Government interference in the
market to make sure that they have plenty to eat and a place to sleep.
It is a much more surgical attempt. I think what we are attempting
makes a lot more sense, to help those in need more directly, more
surgically, than the blunt instrument the Senator from Massachusetts
has suggested. I encourage our colleagues, when they look at our
amendment, I encourage Republican and Democrat colleagues to look at
what we want to accomplish.
Let me talk about another provision the Senator from Massachusetts
seemed to focus on quite a bit, which is the issue of flextime. The
Senator from Massachusetts talked about how flextime in this
legislation is going to force workers into working more than 40 hours a
week and deny them all of these--I will not repeat it. Read the
transcript. Read the Senator's arguments about how devastating this
would be to people, to have flextime imposed upon them.
No. 1, this provision as written does not impose anything. What it
says is that the employer and the employee have to enter into a written
agreement, where both have to sign, to agree that the employee will
work more hours in 1 week--no more than 10 in addition to the 40 hours,
in exchange for commensurate hours off the following week. Again, it is
mutual agreement. It has to be in writing. Of course, the employee can
decide to withdraw himself or herself from that agreement.
I happen to believe that flextime is a good thing. We have several
employees in my office who job share, who use flextime. Federal
employees have been able to use flextime for a long time. It is
something that is very popular in the Federal workforce. What we are
trying to do is make it available to others outside. Why? I can tell
you an example in my own office. The people who job share and have
flexible hours are moms who are in the workplace. Obviously, we have
seen a dramatic change in the workplace in the United States since the
minimum wage laws and the 40-hour workweek was put in place. This entry
into the workforce of nontraditional workers, if you will, has given
rise to a lot of workers seeking to have their hours reflected with
their obligations at home. What we are trying to do is have the laws of
the Federal Government reflect the changing dynamics in the workplace
without forcing anybody into a situation where they are not getting
fairly compensated.
But as I talked to I don't know how many parents who are friends and
neighbors and constituents, they suggested to me the most important
thing they would like to get out of the workplace is more flexibility
and more time to be able to do the things that their other job--most
people think their more important job, and that is being a husband or a
wife or a father or a mother--requires them to do at home.
The most amazing thing is the Senator from Massachusetts opposes
this. I know many who are supporters of the Kennedy amendment and
oppose this, also. We just went on to the AFL-CIO Web site and just
pulled off some things. This is their Web site. You can read the small
print, the exact Web page:

Alternative work schedules encompass work hours that do not
often necessarily fall inside the perimeters of the
traditional and often rigid 8-hour workday or 40 hour work
week. Such schedules allow working people to earn a paycheck
while having the flexibility to take care of children, older
relatives and other needs.

The AFL-CIO says they want that, and we are providing that. And all
of a sudden, maybe because we are providing it, maybe because it is in
a Republican alternative, maybe this is not

[[Page S2119]]

a good idea. Again, this is right off the AFL-CIO Web site:

Changes in the workforce and in the kinds of hours people
work are making alternative work schedules increasingly
important for working families trying to balance job and
family responsibilities.
Suggested family friendly provisions: Compressed work week.
Common examples of things asked are schedules that allow
workers to work eight 9-hour days and one 8-hour day for an
extra day off every 2 weeks.

Under the provisions we have in this law, that is exactly what we
have, allowing a mother or father who wants to stay at home instead of
working 10 8-hour days a week, work 9 10-hour days. Work extra hours
the days that you work for the day off. Again, that is not allowed
under the current law. We would have provided that flexibility. Again,
it would be upon a mutual agreement of both the employee and the
employer.
Look, there are some suggestions as to how we can make this more
explicit, although from everything I read it is very explicit in the
legislation as to how that would work. I am certainly happy to sit down
and talk with the Senator from Massachusetts and see what we can work
out in the future.
What we do in these provisions--yes, we do provide some tax benefits
for smaller businesses. We allow for small business expensing. We allow
for restaurants to be depreciated. Again, who is going to be affected
by this predominantly? It is going to be the restaurant industry that
pays employees at this level, and the travel and tourism industry.
Those are the folks who will be most affected. Those are the ones paid
at the lower end of the wage scale. So, yes, we do provide some support
for them because it is going to cost some of these businesses a
substantial amount of money.
We want to provide some relief from a Government mandate, mandating
additional cost. So we want to provide additional relief in doing so.
What I think we are trying to do is find an acceptable compromise to
be able to pass in the Senate.
I candidly don't believe--and I told the Senator from Massachusetts
when I spoke to him last week--this is the appropriate place for his
amendment. I understand there are a lot of dynamics at play here. But
the Senator from Massachusetts feels compelled to offer it on the
bankruptcy bill. I don't think there is any secret, after listening to
the debate over the past week, that we very much would like to keep
this bill on the Senate floor the way it came out of committee and the
way it has been forged over a period of three Congresses. This
compromise has almost passed this year, and time and time again for the
last three Congresses. Now we have an opportunity to actually get this
thing signed--passed by the House in the form it is right now on the
floor of the Senate, and then to the President.
I was hoping the Senator from Massachusetts would not offer his
amendment and would allow this amendment to the minimum wage laws to be
offered at a different time. I think we are marking up the welfare
reform bill this week. It is an extension of the 1997 act. It is an
appropriate place, in my opinion. We are talking about welfare-to-work,
and we are talking about helping low-income individuals transition into
the workplace and providing them with a quality of life that is family
sustaining. I was hoping the Senator from Massachusetts would wait
until that time, and maybe we could sit down and work out some sort of
compromise that the President would sign. During the campaign, he
talked about his willingness to sign a minimum wage proposal similar to
what I put forward. I don't think he would support what the Senator
from Massachusetts proposed.
If you want to actually do something to bring this level up, and do
it in a sort of targeted way that actually helps the people you are
really wanting to help focus on--that is, those who are trying to
provide for themselves and their families, not working summer jobs or
part-time jobs or going to school; that is really what we are focusing
on--we can do that in a way that I would argue does not have a poison
pill attached to it.
I take great exception to what the Senator from Massachusetts said.
These are not poison pills. These are responsible, proworker, pro-
small-business provisions that greatly help the people in this new and
dynamic workplace of America. It is a very different one than when the
40-hour week was established.
The Senator wants to offer his amendment and lock in a vote. But I
hope, candidly, that we don't agree to either amendment at this time,
although I would certainly vote for my amendment and vote against the
amendment offered by the Senator from Massachusetts.
But I am hopeful that we can get the requisite number of votes down
the road on a welfare bill, actually pass this legislation, and get it
over to the House. House leadership has not expressed a willingness to
bring this up.
Again, as we work on this, we have an opportunity to get it to
conference and hopefully be able to do something which provides much
more targeted relief to workers who are in need, as opposed to Senator
Kennedy's approach which is very blunt, forceful, and destructive, I
would argue, and brings a measure of damage to a lot of lower skilled,
lower income workers. And it would be very damaging to business at the
same time in that the economy is recovering very nicely right now.
This is a modest approach. It has half the increase the Senator from
Massachusetts is suggesting. It focuses on those who are most in need.
At the same time, it doesn't hurt the small business community. In
fact, it provides a much needed incentive for them to be able to
continue to hire employees and grow, which is obviously the ticket to
middle-class America.
There are other provisions in the bill that I certainly want to talk
about a little later. But we have other speakers. I don't want to use
up all the time.
With that, let me yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, I will take a moment or two to respond to
my good friend from New Hampshire and then also to the Senator from
Pennsylvania with regard to the points they have made.
First of all, I will respond to the Senator from New Hampshire about
the question of whether the increase in minimum wage is really good for
low-income working people and whether this isn't going to create more
problems for working people because of the increase in the minimum
wage.
He mentioned, if this was such good medicine--$7.25--why aren't we
going for $20 or $25? The obvious simple answer for that is we are
talking about a minimum wage, we are not talking about a maximum wage.
I haven't even gotten into discussing what has been happening at the
upper end of the economic ladder and the stories over the weekend that
showed the bonuses are going to the wealthiest individuals in the
corporate world. They have increased astronomically in a period of the
last few years.
Since the midthirties, we have had a minimum wage because we believed
as a matter of social justice men and women who are going to work in
this country and have families should at least have some minimum
standard, some minimum safety net; that this society is not the society
of survival of the fittest, but it is also a ``we'' society, not just a
``me'' society.
There has been a recognition of the importance of the minimum wage.
I will include in the Record the support for the increase of the
minimum wage.
Mr. President, 552 economists agree, including a number of Nobel
laureates. This is a summation of what they say.
We believe that a modest increase in the minimum wage would improve
the well being of low-wage workers and would not have the adverse
effect that critics have claimed. In particular, we share the view of
the Council of Economic Advisers' economic report, that the weight of
evidence suggests that the modest increase in the minimum wage has had
very little or no effect on employment.
That is what an outstanding group of economists have said. Let us not
just take what they have said, let us take a look at the facts in terms
of employment and job growth.
If you look over at this chart, you will find the increase in the
minimum wage in October of 1996. We had an increase in the minimum
wage. In October of 1997, it went up again. The minimum wage increased
to $4.75 in 1996, and then it went up to $5.15 an hour.
This red line is an indication of the job growth during this period
of time.

[[Page S2120]]

I don't accept the arguments that my good friend from New Hampshire
has made--that this is going to mean the loss of jobs. It just has not
been so.
If you look at the historic lows of unemployment after the minimum
wage, if you look again in 1996, the minimum wage went to $4.75, and
unemployment went up. It picked up a tenth of a point, but then it
started down.
The minimum wage goes up to $5.15, and what happened? It continues to
go down.
Here is the last time that we have the increase in the minimum wage,
and we see it had absolutely no impact--none, zero--in terms of
unemployment, as we reported, for good reason, because it is less than
one-fifth of 1 percent of total payroll. So it has no impact in terms
of unemployment, and it has virtually no impact in terms of inflation.
But it does have an important impact in terms of social justice.
This chart is interesting. It indicates that the States with the
higher minium wage add more jobs. These are the 39 States with the
minimum wage at $5.15. Their employment growth has been 4.1 percent,
and some have been somewhat higher at 6.2 percent.
We have debated this time in and time out. The most inclusive studies
were the Card-Krueger studies and the conclusions they have made. They
are from Princeton, NJ.

Contrary to the central prediction of the textbook model of
the minimum wage, but consistent with a number of recent
studies based on a cross-sectional time series comparison of
affected and under-affected communities of unaffected markets
or employees, we find no evidence that the rise in New
Jersey's minimum wage reduced employment.

This is pretty well established. It has a dramatic impact in other
areas.
I listened with interest to the Senator from Pennsylvania talking
about the increase in the minimum wage. Better than 60 percent of the
increase in the minimum wage goes for the lowest 40 percent on the
economic ladder.
Let us look at what has been happening in our country in the recent
times since the last increase in the minimum wage.
This is in the area of hunger. We have the survey of hunger and
homelessness by the Conference of Mayors. This is December 2004. This
is in their summary:
Officials in the survey estimate that during the past year, requests
for emergency food assistance increased by an average of 14 percent,
with 96 percent of the cities registering an increase; requests for
food assistance by families with children increased by an average of 13
percent; 56 percent of the people requesting emergency food were
members of families, children and parents; 34 percent of adults
requesting food assistance were employed.
These are people who just can't make it with the $5.15 increase in
the minimum wage.
Then I heard about flextime. We are all for flextime. The argument is
very simple on the issue of flextime. Our Republican friends want
flextime when the employer can decide it. They have flextime now under
current minimum wage. They can work that out with regard to flextime,
up to 40 hours. Then, if it is going to be more than 40 hours, they
have the overtime. But they negotiated that out. That is permitted
today under the law.
But that isn't what the Senator's amendment would say. If the
employer wants that individual to work 50 hours 1 week, and 30 hours
the next week, the employer can make up their mind.
Why is it always the individual employer who makes it up?
It was nice to hear my friend from Pennsylvania say they work it out
over in their office, and sometimes they work longer hours.
I would say, by and large, they work it out--the employees work it
out.

I doubt very much for many of us in the Senate, if we just told our
people what they were going to have to do, if they did not do it in the
sense of expectation and teamwork, I don't think we are going to be
very much value to many of our constituents.
The fact is, under the Santorum amendment one person makes that
decision on flextime, and that is the employer. If the employee says,
Look, I have a child who is in a play that I would like to go to, and
the employer says, No, you can't go--you don't go.
We tried for many years. I mentioned before the Senator arrived on
the floor of the Senate, I think he has been against any increase in
the minimum wage 17 times. It is a little difficult to get much
encouragement.
I think the Murray amendment asked that an employee would be able to
take 24 hours off with sufficient notice because of a child with
medical appointments, or because a child might be in a play, or a child
might have some special event. I was here many times when the Senator
from the State of Washington offered that amendment. It was voted down
every single time. The only way we get flextime is when the employer
does it. That is not fair. That is not right. He is correct. That is
what this bill does. And he will permit the employer to make that
judgment.
I want to make another point or two about the U.S. Conference of
Mayors study.
Seventeen percent of the homeless people in cities, according to the
Conference of Mayors, are employed. Ten percent are veterans.
The demand for emergency shelter is increasing. Seventy percent of
the cities are reporting an increase in the last year, and the
percentage of cities reporting an increase with homeless families with
children is even greater.
This is what is happening. It isn't just the Senator from
Massachusetts. This is the Conference of Mayors telling about what is
happening in urban and rural America. It is also about growth.
This is the general challenge. We have too many Americans who are now
living in poverty.
One in every 10 families, up to 44 million Americans, live poverty--
one out of every six children; one out of every five Hispanics; one out
of every four Americans. The greatest impact of raising the minimum
wage is going to be lifting up Hispanics and African American workers.
That is what the statistics demonstrate.
I don't know why we have the imperative of constantly saying no, that
we are just not going to help people who are working and want to work.
An interesting point--not a major one--is that when we raise the
minimum wage, it not only affects the 15 million lowest income people;
some of those people then will not be eligible for some of the other
programs. So it saves the taxpayer some money. We move them out and
work with the earned-income tax credit. We have the earned-income tax
credit that works with families who have children. If there is an
increase in the earned-income tax credit, if you have two or three
children, that is the way to go. For a single worker, if we are talking
about a single mom with one or two children, an increase of the minimum
wage is the way to go.
As a society, if you are interested in trying to do something about
poverty and working families, you are trying to do something about both
of those.
My friend from Iowa is here and I want to mention to him, because he
has been a leader in the Senate regarding overtime compensation, under
the Santorum amendment, this will take away the overtime rights that
exist for minimum wage workers because it excludes 10 million workers
from the Fair Labor Standards Act--6 million last year--and it will
result in millions losing their overtime coverage.
The second point I mention to my friend from Iowa, in this
legislation there is a prohibition for States to enforce their tax
credit provisions. We have the tip credit for $2.12 or $2.13, and that
is the Federal credit. Under the Santorum amendment, we are taking away
any kind of enforcement of that, not just by the Federal Government but
the State government.
I brought this up earlier because I want to remind the Senator from
Iowa the amendment on the increase in the minimum wage happens to be 3
pages long; his is 85 pages. That includes not only the tip credit, not
only eliminating from coverage those workers who work even in companies
that are capitalized at $500,000, if they are in interstate commerce--
That has been part of the minimum wage since the 1930s--but the Senator
from Pennsylvania wants to take out that kind of coverage. Hundreds of
thousands of workers will lose their coverage.
I don't understand why he is targeting those individuals. Quite
frankly, the most incredible provision in this amendment is to
eliminate any kind of enforcement.
The Senator might have difficulty in following all of the points I am
raising

[[Page S2121]]

on the amendment, but on page 14 of the Santorum amendment it sounds
very appealing. Small Business Paperwork Reduction; skip over to page
16 and we find out on the bottom of that, line 22, what it is about.

Notwithstanding any other provision, no State may impose a
civil penalty on a small business concern.

And it applies that to every kind of unsafe work conditions,
including air pollution, toxic substances, unsafe food. What in the
world are we thinking of? Why would we include those? What is the
reason we are doing that?
I don't understand it. I can understand the Senator from Pennsylvania
saying he wants a lower increase in the minimum wage, but then to have
provisions in his amendment which are so punitive to millions of
workers--not just on the overtime but in terms of protecting those
workers that get the tip credit of $2.12 and then depend on tips for
the rest of it, and to say, no, we are not going to enforce the $2.12.
Mr. SANTORUM. Will the Senator yield?
Mr. KENNEDY. Briefly.
Mr. SANTORUM. Mr. President, I point out to the Senator page 20 of my
amendment discusses the tip credit. It specifically refers to only
States that are covered by this provision as States that do not have a
tip credit. I believe it is seven States that are the only States
covered by this provision.
So I don't know where you get ``millions'' of workers.
Mr. KENNEDY. If you read from page 21, the top line from 2 down to
line 16, it effectively states: ``may not establish or enforce any laws
that require employers to tip credit employee.''
Mr. SANTORUM. I refer the Senator to line 20 through line 25. If the
Senator would read that, he will find that any State which prohibits
any portion of employee tips from being considered as wages, so that is
the operative language that limits this provision--just in the States
that do not allow a tip credit.
Mr. KENNEDY. The Senator understands that every State has to have the
tip credit at the present time. They have to have the $2.12.
Mr. SANTORUM. My understanding is that is not the case and there are
seven States that do not.
Mr. KENNEDY. Under Federal law at the present time, every State has
to have a minimum of $2.13 and then the States can add on top of that.
Many of the States do. The State of Pennsylvania has added, I believe,
60 or 70 cents on top of that.
So when you talk about not permitting any States to enforce the tip
credit, you are talking all the States. That is the way we read it.
Mr. SANTORUM. I say to the Senator from Massachusetts--
Mr. KENNEDY. If the Senator can clarify that language, we would be
glad to work with him.
I see my friend and colleague. We have pointed out the fact that we
have not increased the minimum wage now in 8 years. It is at the second
lowest purchasing level in nearly 60 years. A third of all those that
go into bankruptcy are those below the poverty line. This has a direct
relevancy to the underlying bill because we are trying to raise up
people with the minimum wage. We are not going to get them up to the
poverty line, but we will probably raise up some people as a result of
the increase.
Therefore, it is appropriate to this legislation. It is long, long
overdue. It seems to me at a time we are doing so much for the credit
card industries, companies that have billions of dollars in profits,
that we ought to be willing to make work pay.
I know that bothers some Senators. It bothers the Senator from New
Hampshire who criticized this and said, Well, we do not want to be like
the Soviet Union and like communist countries.
It is interesting that Great Britain just went up to more than $9 for
the minimum wage last week. They have the most successful economy in
Europe at the present time. They have taken 1.2 million children out of
poverty. They have the lowest home mortgages in 50 years. They brought
unemployment down. And they are trying to do better for the children
that are living in poverty. They have just raised their minimum wage in
Great Britain.
I will include the other countries that are not, allegedly,
Communist. That includes a good many of the European countries:
Belgium, Ireland, U.K., Portugal, France, Spain, and Greece.
I don't think the argument was serious.
Mr. HARKIN. Will the Senator yield?
Mr. KENNEDY. I am happy to yield.
Mr. HARKIN. Did I hear the Senator correctly that someone was
suggesting the minimum wage is communistic?
Mr. KENNEDY. I think the argument made by my friend--and I want to be
careful about how I explain it. He took issue when I said in the Senate
Chamber what I believed, that this is a value issue. We hear a great
deal about the importance of values, having work pay, respecting that
work is a value issue. It is a family issue that affects children.
However, it is a value issue. It indicates that we believe work should
pay.
My good friend, and he is my friend from New Hampshire, said that
sounded an awful like a government establishing pay like Communist
economies did. I don't want to go into it a great deal more.
Mr. HARKIN. If the Senator would yield, it seems we have settled that
issue in this country. Going back how many years now have we had a
minimum wage?
Mr. KENNEDY. More than 60 years.
Mr. HARKIN. More than 60 years we have had a minimum wage in this
country.
I don't have the data with me right now, but I have seen the data
that indicates when the minimum wage was higher relative to, say,
corporate salaries and what CEOs were making, that, in fact, our
country enjoyed a higher standard of living. Is it not true that if
people are making a more decent minimum wage, it lifts them out of
poverty; they are better able to provide food and clothing and shelter
for their kids and their family, better able to pay tuition to go to
college.
It seems to this Senator, and I ask my friend from Massachusetts,
under the underlying bill, the bankruptcy bill, we are providing all
kinds of support, immunities, coverage, for creditors and especially
credit card companies; we are providing them all protection, but now
when it comes to providing minimum protection for the lowest income
people in this country, we cannot seem to do it.
It seems incongruous that we would protect the biggest, but for the
smallest we cannot seem to do that.
The PRESIDING OFFICER (Mr. Vitter). The Senator from Massachusetts.
Mr. KENNEDY. The Senator is absolutely right.
I want to catch my friend from Pennsylvania before he walks out. The
Senator is quite correct. In a more basic way, this has been something
Republicans and Democrats have worked on together. President
Eisenhower, the first President Bush, President Ford--all supported an
increase. Since the time I have been here we have had bipartisan
coalitions. But as the Senator remembers, under the Republican
leadership they have refused to do so.
I mention one thing to my friend from Pennsylvania. I have a letter,
which I will include in an appropriate place, from Ohio State
University, from a professor of law who said the proposed Santorum
legislation would also reduce existing protections provided to tip
employees by prohibiting State and local governments from enforcing any
State or local law that fails to grant a 100 percent tip credit. That
is, employers would be allowed under State and local law to pay nothing
to tip employees as long as their tips from customers add up to the
minimum wage. This provision would even override the laws of States
that have eliminated the tip credit entirely or that require tip
employees to be paid minimum wage by their employers.
That is the reason I mentioned this earlier. If that was not the
intention of the Senator, hopefully we can correct that.
The PRESIDING OFFICER. The Senator from Pennsylvania is recognized.
Mr. SANTORUM. Mr. President, I will be brief. I know the Senator from
Iowa is here. I do not want to stop him from making his remarks. I just
want to respond to several of the things the Senator from Massachusetts
said.
First, I would be happy to look at the letter from the Ohio State
professor and see how he, in my opinion, misread the provision we had.
I think I am very

[[Page S2122]]

clear on the intent. If there is some language clarification, I would
be happy to sit down and work on that. I know Senator Enzi, of course,
from the HELP Committee worked on this language and would be willing to
do so also.
A couple of comments. The Senator from Massachusetts talked at length
about economists and others who are suggesting that we need--I think I
am using the Senator's words--a modest increase in the minimum wage. I
did not see any of the charts that he brought out that supported his
particular minimum wage increase. And he used the term ``modest''
repeatedly. I am not sure there would be too many economists in the
economy of today who would say a 40-percent increase in the minimum
wage would be modest. I think a 40-percent increase, by definition,
probably is outside the bounds of what most people would consider
modest.
I would make the argument that a 20-percent increase--this is what we
are suggesting--a 21-percent increase would probably be extending the
bounds of modesty, but it would certainly be much more within what most
people consider to be the traditional definition.
I would just like to thank the Senator from Massachusetts for
bringing up support for my amendment because I think, in comparing the
two, the increase we are putting forth of $1.10 comports very well with
what the economists are saying would not be damaging to the economy and
fit in very well with what would not be damaging to employees and
employers. So the $1.10, fits the modest framework.
Secondly, the issue of flextime. Again, I would just point the
Senator to the actual language in the amendment. On page 3 of the
amendment, it says:

Except as provided in paragraph (2), no employee may be
required to participate in a program described in this
section.

So it is purely voluntary. It says employers may do this. Employees
may participate. It provides for a written agreement arrived at with
collective bargaining. Obviously, the collective bargaining unit, the
labor union, would be responsible for any kind of flextime, which is
the way it would be under the law.
Here, with respect to an employee who is not represented by a labor
organization: No. 1, ``a written agreement arrived at between the
employer and employee before the performance of the work involved if
the agreement was entered into knowingly and voluntarily by such
employee and was not a condition of employment.''
Now, again, I would ask the Senator from Massachusetts, if there is
stronger language he would like us to use to make sure this is a
voluntary agreement and that the employee and employer enter into it
willingly--there are quadruple damages if the employer violates this.
Also, the Senator from Massachusetts talks about how onerous this is
on employees. The Senator from Massachusetts voted for this with
respect to Federal employees. He voted for this provision, as we see
here, flextime, for Federal employees on more than one occasion. As you
know, we now have this provision, this ``onerous'' provision, which, I
can tell you, my employees do not see as onerous. They see it as
something that is of a great benefit to them and their families.
So again, if the Senator from Massachusetts has some tougher language
he would like--but I think the language I have read from my amendment--
and I am not reading the summary. This is my amendment.

Amendment No. 128

(Purpose: To promote job creation, family time, and small business
preservation in the adjustment of the Federal minimum wage)

In fact, Mr. President, I send the amendment to the desk and ask for
its consideration.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative clerk read as follows:

The Senator from Pennsylvania [Mr. Santorum] proposes an
amendment numbered 128.

Mr. SANTORUM. I ask unanimous consent reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The amendment is printed in today's Record under ``Text of
Amendments.'')
Mr. SANTORUM. So I am reading from the text of the amendment. And
again, the Senator from Massachusetts may quibble, and certainly has,
with the voluntariness of this program. I think the language certainly
expresses my intent and the intent of all those who are supporting this
amendment, that it is a voluntary program and an employee goes into it
knowingly and voluntarily with a written agreement. If there is other
language that the Senator from Massachusetts would like, obviously we
are not going to do that today, but I would be happy to sit down and
see if there is a word that is more voluntary than ``voluntary.''

I think usually when you use the word ``voluntary'' that sums up
voluntary very well. But if there is a better word for voluntary than
the word ``voluntary,'' then I am pretty happy to do so. If there is a
better word--whether it is ``discretionary''--than the word ``may,'' I
am happy to look at a better word than ``may.'' ``May'' is usually a
pretty good word when it describes ``you do not have to.'' ``May,''
that is what we usually use. But if ``voluntary'' and ``may'' are not
strong enough words, I will be happy enough to sit down with the
Senator from Massachusetts and come up with a better one.
I repeat, the Senator from Massachusetts has voted for this for
Federal employees, and there are quadruple damages--quadruple damages--
for employers who violate this provision and impose this on their
workers unknowingly and involuntarily or as a condition of employment.
So I would just suggest there are pretty high and threatening damages
to employers who abuse this provision.
One final point I want to make. The Senator talks about its
importance, that this is the only way we are going to help people out
of poverty. I would suggest that is simply not the case. There are lots
of ways, in fact, I would say very much more complicated ways that
people get out of poverty than just by the blunt instrument of the
Government setting minimum wages.
In fact, looking at this chart, the welfare reform bill we passed in
1996 shows just how effective other ways are. Requiring work is the
best way. The Senator put up poverty statistics. What he did not tell
you is what those numbers looked like before 1996 and the welfare
reform law, which I stood on the floor and argued passionately for. And
I was called a whole number of things as to what I was going to do to
all these poor children.
What happened as a result of the welfare reform bill was that poverty
among African-American children, the thing Senator Kennedy referred to,
was at its lowest rate ever by the year 2000. It has crept up slightly
during the economic decline of the early part of this decade, but it is
going back down.
So the idea that the minimum wage solves these problems is just a
fallacy. There are lots of things that work. One of them is work.
Another is marriage. We are going to have an opportunity on the floor
of the Senate, when the welfare bill comes up, to talk about how we
shift Government policy away from, at best--I think it is ``at best''--
neutrality toward marriage, how we shift Government policy when it
comes to interacting with families and being neutral with respect to
marriage. See what the huge impact is on the poor, the huge impact on
poor communities and poor children, when moms and dads are helped to
stay together in marriage and, more importantly, when they are
introduced to the concept because many women and, unfortunately, men
choose not to marry when children are born out of wedlock.
So there will be plenty of time for debate on this issue of other
things we can do. But I can tell you, if you look at all these other
things we are studying, the thing that is most powerful is, No. 1,
jobs. The concern many have--and there are studies we can put into the
Record about what the impact of a dramatic increase--not a small
increase, as we are proposing, but a dramatic increase--in the minimum
wage would have to the employment picture of these very people who came
off welfare and their ability to find work and get out of poverty. It
will have a dramatically negative impact on them, a 40-percent increase
in the minimum wage.
But again, there are positive things we can do as we look to the
future.

[[Page S2123]]

This bill, in my opinion, belongs on welfare legislation, requiring
work, more work, which is what is going to be required in this bill, as
well as some things to bring fathers back into the home with the Father
Initiative that Senator Bayh and Senator Domenici and I have been
pushing for several years, as well as the marriage initiative that the
President has talked about.
This is a complex picture and blunt instruments like minimum wages
are not the answer. Yes, I am proposing an increase. I am doing one
that I think comports with balancing the interest of low-income workers
having a better wage with making sure they have a job in the first
place because that is the most important thing. I think we have done so
with this $1.10 increase and the provisions I have.
Yes, it is a long amendment. But there are a lot of things in here
that I think will add to the quality of life of many workers and
certainly help small businesses absorb some of the costs of the
increase in the minimum wage.
So with that, Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
The Senator from Iowa is recognized.
Mr. HARKIN. Parliamentary inquiry: Who controls the time?
The PRESIDING OFFICER. The Senators from Pennsylvania and
Massachusetts control the time.
Mr. HARKIN. Mr. President, how much time is left on either side?
The PRESIDING OFFICER. The Senator from Massachusetts has 32\1/2\
minutes and the Senator from Pennsylvania has 48 minutes 17 seconds.
Mr. HARKIN. I will take 12 minutes. Will the Chair please remind the
Senator when 10 minutes is used up?
The PRESIDING OFFICER. The Chair will so notify the Senator.
Mr. HARKIN. I appreciate that.
Mr. President, with the increase in the unemployment rate that we
learned of last Friday, it is clear we are in the midst of a two-tiered
economic recovery. We have one recovery for high-income Americans, for
people on Wall Street, and we have a very different recovery for people
working on Main Street.
The Neiman Marcus crowd is popping champagne corks, but it is a very
different story for Wal-Mart and K-mart shoppers and for the Americans
who work at Wal-Mart and K-mart and in other jobs paying low wages. The
number of Americans in poverty has increased by more than 4 million
since President Bush took office. Nearly 36 million people live in
poverty, 13 million children. Among full-time year-round workers,
poverty has doubled since the late 1970s, from about 1.3 million then
to 2.6 million now. Every day that the minimum wage is not increased,
it continues to lose value and workers fall further and further behind.
Unfortunately, the Bush administration's priority is not lifting
working Americans out of poverty; its priority is keeping labor costs
low for corporate America. But this is not surprising. The President
has been quite frank and open about taking care of what he calls his
``base.''
I strongly support Senator Kennedy's amendment to raise the minimum
wage to $7.25 in three steps. It is long overdue. It has been 5 years
since we last had a vote on the minimum wage, and it has been 8 years
since we last voted to raise the minimum wage. To have the same
purchasing power it had in 1968, the minimum wage would have to be
nearly $8.50 today, not $5.15. Since the last increase in 1997, the
value has eroded by more than 15 percent.
I noticed that the Senator from Pennsylvania was saying that this
would increase the minimum wage by 40 percent. Actually, it is 37
percent that Senator Kennedy's amendment would raise the minimum wage.
In three stages, it would increase it by 37 percent. The Senator from
Pennsylvania said this was unprecedented. Under Franklin Roosevelt, it
went up 53 percent; under Truman, 47 percent. Under Eisenhower, it went
up 33 percent. Under the first President Bush, it went up 25 percent.
The point is that since 1997, the last time we raised it, the value has
eroded by 15 percent. So if we are going to boost it up over the next 3
years and it increases by 37 percent, you are really only going up by
22 percent more than what it was in 1997. I don't think that is an
undue burden on business in America.
Since 1997, the last time we raised the minimum wage, Members of
Congress have raised their own pay seven times in the last 8 years by
$28,500. Think about that. We vote to raise our pay seven times in 8
years by $28,500, but for minimum wage workers earning $10,700 a year,
we can't vote to raise their minimum wage--shame on the Senate.
We have heard in the past that it is mostly teenagers and part-time
workers who are working for the minimum wage. That is not the case. The
facts are, 35 percent of those earning the minimum wage are the
family's sole breadwinners, 61 percent are women, and almost a third of
those women are raising children.
The Senate Finance Committee may soon be marking up a welfare
reauthorization bill. As the Senate contemplates welfare
reauthorization, as we address the goal of moving people from welfare
to work, it is especially important we act to raise the minimum wage.
Since 1996, we reduced the number of welfare cases by half.
I was intrigued by the chart the Senator from Pennsylvania put up
because many of the people who moved off of welfare did not move out of
poverty. Why? Because the minimum wage is not a living wage; it is a
poverty wage. But an increase to $7.25, such as Senator Kennedy wants
to do, would make a dramatic difference. For a full-time year-round
worker, that would add $4,370 in income. That could be a real value to
a family living in poverty. For a low-income family of three, let's say
one wage earner, single mother, two children, that would be enough
money to pay for a year and a half of heat and electricity or a full
tuition for a family member pursuing a community college degree.
The Senator from Pennsylvania said what really lifts people out of
poverty is more work, not raising the minimum wage. I ask: How can a
single mother of two working a minimum wage job work more? What is she
supposed to do--work 16 hours a day at the minimum wage? How much more
can people be expected to work?
The amendment of the Senator from Pennsylvania changes the 40-hour
workweek to an 80-hour work period over 2 weeks, with the maximum that
anyone can work in 1 week of 50 hours. Add it up. It doesn't take a
mathematician. Eighty hours for 2 weeks; you can work up to 50 hours in
1 week. So you work 50 hours 1 week, 30 hours the next week. Guess
what. You just got cheated out of 10 hours of overtime. Before, you
would work 40 hours. If you worked 50, you would get 10 hours of
overtime. Now you don't get any overtime. That is what is happening to
low-income workers in America today.
First of all, we have a bankruptcy bill that slaps them in the face.
It makes them pay through the nose. I don't know if anyone read the
article in the Washington Post yesterday. I will ask consent to print
this article at the conclusion of my remarks. They mention a Ruth Owens
in Cleveland who tried for 6 years to pay off a $1,900 balance on her
Discover card, sending the credit company a total of $3,492 in monthly
payments from 1997 to 2003. Yet her balance grew to $5,564.28 even
though she never used the card to buy anything more. So she paid $3,492
on a $1,900 balance, and she still has yet to pay off her balance.
They mention another person, a special education teacher, Fatemeh
Hosseini, who worked a second job to keep up with the monthly payment
she collectively sent to five banks to try to pay $25,000 in credit
card debt. Even though she had not used the cards to buy anything more,
her debt nearly doubled to $40,574 by the time she filed for bankruptcy
last June.
That is what is happening to poor people. The credit card companies
suck them in with a credit card, go out and charge it up, nice and
easy. They find they have a $1,900 bill to pay. They start paying a
little bit here and there. They miss a couple of payments. All of a
sudden they have $5,564 to pay.
Nearly 7.5 million workers would directly benefit from the Kennedy
amendment. In Iowa, 87,400 workers would benefit from the increase.
That is over 6 percent of Iowa's workforce. The minimum wage needs to
be raised to a level that is not a subsistence wage. The way to do that
is to raise the

[[Page S2124]]

minimum wage to a level that respects work, honors it, and rewards work
at a reasonable level.
Just last week our friends on the other side of the aisle were
touting what they called their ``Republican poverty alleviation
agenda.'' I say watch what they do, not what they say. The President
sent up a budget request replete with cut after cut to antipoverty
programs. Now the Senator from Pennsylvania has launched a new attack
on the minimum wage and the 40-hour workweek. Now the Senator from
Pennsylvania says he wants to increase the minimum wage, albeit only
$1.10 an hour over the next 2 years, about half of the Kennedy
amendment. But again, he guts it by ending the 40-hour workweek and
going to this 50-hour max, 80-hour work period over 2 weeks.
The PRESIDING OFFICER. The Senator has used 10 minutes to this point.
Mr. HARKIN. I thank the Chair.
Last year, the Bush administration's new rule effectively eliminated
overtime pay protection for some 6 million American workers. The
Senator from Pennsylvania is opening a second front in the war on the
minimum wage and the 40-hour workweek. While 1.2 million workers would
qualify for the minimum wage increase under the Santorum amendment,
another 6.8 million workers would lose their current minimum wage
protection.
As I said, then we get the 80-hour work period for a 40-hour
workweek. This has only one purpose: to allow more employers to avoid
paying overtime compensation. In my 30 years in Congress, I don't
recall such a bold, brazen assault on the compensation of American
workers than what we see in the Santorum amendment. It ought to be
called the shock-and-awe amendment. Workers get the shock, and
corporate America sits back in awe at the latest gift from the party it
financed in the last election.
I am proud to stand with Senator Kennedy to raise the minimum wage to
$7.25. The present one, at $5.15, is a poverty wage. It doesn't respect
the dignity of their work, including the most humble. As Senator
Kennedy said, of all the issues we are debating, this is a values
issue. Think about this compared to all the things we are doing to help
the credit card companies with the bankruptcy bill. Think about that.
We are going to stick it to low-income people, hard-working Americans
like Ruth Owens and Fatemeh Hosseini, and then we are going to stick it
to them again by not allowing them to even have an increase in the
minimum wage.
I would have hoped that the President would have come and asked for
an increase in the minimum wage and got his party in the Congress to
work with us to increase it. We have done it under Republican
Presidents in the past and Democratic Presidents. I don't know why we
cannot do it again.
Mr. President, I ask unanimous consent that the Washington Post
article entitled ``Credit Card Penalties, Fees Bury Debtors'' by
Kathleen Day and Caroline E. Mayer, which appeared yesterday, be
printed at this point in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the Washington Post, Mar. 6, 2005]

Credit Card Penalties, Fees Bury Debtors

(By Kathleen Day and Caroline E. Mayer)

For more than two years, special-education teacher Fatemeh
Hosseini worked a second job to keep up with the $2,000 in
monthly payments she collectively sent to five banks to try
to pay $25,000 in credit card debt.
Even though she had not used the cards to buy anything
more, her debt had nearly doubled to $49,574 by the time the
Sunnyvale, Calif., resident filed for bankruptcy last June.
That is because Hosseini's payments sometimes were tardy,
triggering late fees ranging from $25 to $50 and doubling
interest rates to nearly 30 percent. When the additional
costs pushed her balance over her credit limit, the credit
card companies added more penalties.
``I was really trying hard to make minimum payments,'' said
Hosseini, whose financial problems began in the late 1990s
when her husband left her and their three children. ``All of
my salary was going to the credit card companies, but there
was no change in the balances because of that interest and
those penalties.''
Punitive charges--penalty fees and sharply higher interest
rates after a payment is late--compound the problems of many
financially strapped consumers, sometimes making it
impossible for them to dig their way out of debt and pushing
them into bankruptcy.
The Senate is to vote as soon as this week on a bill that
would make it harder for individuals to wipe out debt through
bankruptcy. The Senate last week voted down several
amendments intended to curb excessive fees and other
practices that critics of the industry say are abusive. House
leaders say they will act soon after that, and President Bush
has said he supports the bill.
Bankruptcy experts say that too often, by the time an
individual has filed for bankruptcy or is hauled into court
by creditors, he or she has repaid an amount equal to their
original credit card debt plus double-digit interest, but
still owes hundreds or thousands of dollars because of
penalties.
``How is it that the person who wants to do right ends up
so worse off?'' Cleveland Municipal Judge Robert J. Triozzi
said last fall when he ruled against Discover in the
company's breach-of-contract suit against another struggling
credit cardholder, Ruth M. Owens.
Owens tried for six years to payoff a $1,900 balance on her
Discover card, sending the credit company a total of $3,492
in monthly payments from 1997 to 2003. Yet her balance grew
to $5,564.28, even though, like Hosseini, she never used the
card to buy anything more. Of that total, over-limit penalty
fees alone were $1,158.
Triozzi denied Discover's claim, calling its attempt to
collect more money from Owens ``unconscionable.''
The bankruptcy measure now being debated in Congress has
been sought for nearly eight years by the credit card
industry. Twice in that time, versions of it have passed both
the House and Senate. Once, President Bill Clinton refused to
sign it, saying it was unfair, and once the House reversed
its vote after Democrats attached an amendment that would
prevent individuals such as anti-abortion protesters from
using bankruptcy as a shield against court-imposed fines.
Credit card companies and most congressional Republicans
say current law needs to be changed to prevent abuse and make
more people repay at least part of their debt. Consumer-
advocacy groups and many Democrats say people who seek
bankruptcy protection do so mostly because they have fallen
on hard times through illness, divorce or job loss. They also
argue that current law has strong provisions that judges can
use to weed out those who abuse the system.
Opponents also argue that the legislation is unfair because
it ignores loopholes that would allow rich debtors to shield
millions of dollars during bankruptcy through expensive homes
and complex trusts, while ignoring the need for more
disclosure to cardholders about rates and fees and curbs on
what they say is irresponsible behavior by the credit card
industry. The Republican majority, along with a few
Democrats, has voted down dozens of proposed amendments to
the bill, including one that would make it easier for the
elderly to protect their homes in bankruptcy and another that
would require credit card companies to tell customers how
much extra interest they would pay over time by making only
minimum payments.
No one knows how many consumers get caught in the spiral of
``negative amortization,'' which is what regulators call it
when a consumer makes payments but balances continue to grow
because of penalty costs. The problem is widespread enough to
worry federal bank regulators, who say nearly all major
credit card issuers engage in the practice.
Two years ago regulators adopted a policy that will require
credit card companies to set monthly minimum payments high
enough to cover penalties and interest and lower some of the
customer's original debt, known as principal, so that if a
consumer makes no new charges and makes monthly minimum
payments, his or her balance will begin to decline.
Banks agreed to the new rules after, in the words of one
top federal regulator, ``some arm-twisting.'' But bank
executives persuaded regulators to allow the higher minimum
payments to be phased in over several years, through 2006,
arguing that many customers are so much in debt that even
slight increases too soon could push many into financial
disaster.
Credit card companies declined to comment on specific cases
or customers for this article, but banking industry
officials, speaking generally, said there is a good reason
for the fees they charge.
``It's to encourage people to pay their bills the way they
said they would in their contract, to encourage good
financial management,'' said Nessa Feddis, senior federal
counsel for the American Bankers Association. ``There has to
be some onus on the cardholder, some responsibility to manage
their finances. ``
High fees ``may be extreme cases, but they are not the
trend, not the norm,'' Feddis said.
``Banks are pretty flexible,'' she said. ``If you are a
good customer and have an occasional mishap, they'll waive
the fees, because there's so much competition and it's too
easy to go someplace else.'' Banks are also willing to
work out settlements with people in financial difficulty,
she said, because ``there are still a lot of options even
for people who've been in trouble.''
Many bankruptcy lawyers disagree. James S.K. ``Ike''
Shulman, Hosseini's lawyer, said credit card companies
hounded her and did not live up to several promises to work
with her to cut mounting fees.

[[Page S2125]]

Regulators say it is appropriate for lenders to charge
higher-risk debtors a higher interest rate, but that negative
amortization and other practices go too far, posing risks to
the banking system by threatening borrowers' ability to repay
their debts and by being unfair to individuals.
U.S. Bankruptcy Judge David H. Adams of Norfolk, who is
also the president of the National Conference of Bankruptcy
Judges, said many debtors who get in over their heads ``are
spending money, buying things they shouldn't be buying.''
Even so, he said, ``once you add all these fees on, the
amount of principal being paid is negligible. The fees and
interest and other charges are so high, they may never be
able to pay it off.''
Judges say there is little they can do by the time cases
get to bankruptcy court. Under the law, ``the credit card
company is legally entitled to collect every dollar without a
distinction'' whether the balance is from fees, interest or
principal, said retired U.S. Bankruptcy Judge Ronald
Barliant, who presided in Chicago. The only question for the
courts is whether the debt is accurate, judges and lawyers
say.
John Rao, staff attorney of the National Consumer Law
Center, one of many consumer groups fighting the bankruptcy
bill, says the plight consumers face was illustrated last
year in a bankruptcy case filed in Northern Virginia.
Manassas resident Josephine McCarthy's Providian Visa bill
increased to $5,357 from $4,888 in two years, even though
McCarthy has used the card for only $218.16 in purchases and
has made monthly payments totaling $3,058. Those payments,
noted U.S. Bankruptcy Judge Stephen S. Mitchell in
Alexandria, all went to ``pay finance charges (at a whopping
29.99%), late charges, over-limit fees, bad check fees and
phone payment fees.'' Mitchell allowed the claim ``because
the debtor admitted owing it.'' McCarthy, through her lawyer,
declined to be interviewed.
Alan Elias, a Providian Financial Corp. spokesman, said:
``When consumers sign up for a credit card, they should
understand that it's a loan, no different than their mortgage
payment or their car payment, and it needs to be repaid. And
just like a mortgage payment and a car payment, if you are
late you are assessed a fee.'' The 29.99 percent interest
rate, he said, is the default rate charged to consumers ``who
don't met their obligation to pay their bills on time'' and
is clearly disclosed on account applications.
Feddis, of the banker's association, said the nature of
debt means that interest will often end up being more than
the original principal. ``Anytime you have a loan that's
going to extend for any period of time, the interest is going
to accumulate. Look at a 30-year-mortgage. The interest is
much, much more than the principal.''
Samuel J. Gerdano, executive director of the American
Bankruptcy Institute, a nonpartisan research group, said that
focusing on late fees is ``refusing to look at the elephant
in the room, and that's the massive levels of consumer debt
which is not being paid. People are living right up to the
edge,'' failing to save so when they lose a second job or
overtime, face medical expense or their family breaks up,
they have no money to cope.
``Late fees aren't the cause of debt,'' he said.
Credit card use continues to grow, with an average of 6.3
bank credit cards and 6.3 store credit cards for every
household, according to Cardweb.com Inc., which monitors the
industry. Fifteen years ago, the averages were 3.4 bank
credit cards and 4.1 retail credit cards per household.
Despite, or perhaps because or, the large increase in
cards, there is a ``fee feeding frenzy,'' among credit card
issuers, said Robert McKinley, Cardweb's president and chief
executive. ``The whole mentality has really changed over the
last several years,'' with the industry imposing fees and
increasing interest rates if a single payment is late.
Penalty interest rates usually are about 30 percent, with
some as high as 40 percent, while late fees now often are $39
a month, and over-limit fees, about $35, McKinley said. ``If
you drag that out for a year, it could be very damaging,'' he
said. ``Late and over-limit fees alone can easily rack up
$900 in fees, and a 30 percent interest rate on a $13,000
balance can add another $1,000, so you could go from $2,000
to $5,000 in just one year if you fail to make payments.''
According to R.K. Hammer Investment Bankers, a California
credit card consulting firm, banks collected $14.8 billion in
penalty fees last year, or 10.9 percent of revenue, up from
$10.7 billion, or 9 percent of revenue, in 2002, the first
year the firm began to track penalty fees.
The way the fees are now imposed, ``people would be better
off if they stopped paying'' once they get in over their
heads, said T. Bentley Leonard, a North Carolina bankruptcy
attorney. Once you stop paying, creditors write off the debt
and sell it to a debt collector. ``They may harass you, but
your balance doesn't keep rising. That's the irony.''

Mr. HARKIN. Again, I urge my colleagues to disavow the Santorum
amendment and support the Kennedy amendment. It is the least we can do
for the least among us--to raise their minimum wage, give value to
their work. This is a values issue. This is at the heart of it. It is
an issue of what kind of country we want, what kind of Congress we are,
and what kind of Senators we are.
With that, I yield the floor.
The PRESIDING OFFICER. The Senator from Nebraska is recognized.
Mr. HAGEL. Mr. President, I ask unanimous consent that I be allowed
to speak as in morning business for the purpose of introducing
legislation. My time would be charged against Senator Santorum's time.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The remarks of Mr. Hagel pertaining to the introduction of S. 540
are located in today's Record under ``Statements on Introduced Bills
and Joint Resolutions.'')
The PRESIDING OFFICER. Who yields time?
The Senator from Massachusetts.
Mr. HARKIN. Will the Senator yield for a unanimous consent request?
Mr. KENNEDY. Yes.
Mr. HARKIN. I ask that the pending amendments be set aside so I can
offer a germane filed amendment.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.

Amendment No. 66

Mr. HARKIN. Mr. President, I call up amendment No. 66.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Iowa [Mr. Harkin], for himself, Mr.
Rockefeller, Mr. Leahy, Mr. Dayton, and Mr. Kennedy, proposes
an amendment numbered 66.

Mr. HARKIN. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(Purpose: To increase the accrual period for the employee wage
priority in bankruptcy)

On page 498, strike lines 23 and 24, and insert the
following:
(1) in paragraph (4), by striking ``within 90 days'';
Mr. HARKIN. I offer this amendment on behalf of myself, Senators
Rockefeller, Leahy, and Dayton, and I ask unanimous consent that
Senator Kennedy be added as a cosponsor.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HARKIN. I ask that the amendment be set aside.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The Senator from Massachusetts is recognized.

Amendment No. 44

Mr. KENNEDY. Mr. President, there is a point that I would hope our
colleagues would pay close attention to, and that is that the Santorum
amendment will eliminate the equal pay provision for women working for
companies with sales of less than $1 million. This is enormously
important.
The Republican amendment gives pennies to minimum wage workers with
one hand. With the other, it takes thousands of dollars away from
minimum wage, middle-class, and women workers. As I mentioned earlier,
it slowed it up with antiworker poison pills, and the pill that is the
hardest to swallow of the Republican amendments effectively denies over
10 million more workers minimum wage, overtime pay, and equal pay
protections by eliminating the Fair Labor Standards Act coverage
completely.
Currently, all employees who work for employers that are engaged in
interstate commerce and have gross annual sales of at least $500,000
are guaranteed Fair Labor Standard protections. But even in businesses
that have less than $500,000 in annual sales, the employees still have
individual Fair Labor Standard coverage if they are engaged in
interstate commerce.
The Santorum amendment raises the $500,000 annual sales threshold to
$1 million, as he mentioned, and virtually eliminates this individual
Fair Labor Standard coverage, even for workers who are engaged in
interstate commerce. It makes one exception for workers engaged in
industrial housework.
It allows businesses to pay their workers less than the Federal
minimum wage, requires them to work longer hours without overtime pay,
and to be able to pay men and women differently.
The gross annual sales threshold was created as a way to determine
the employers that are engaged in interstate

[[Page S2126]]

commerce, not as a way to exempt the workers from the Fair Labor
Standards Act.
For over 60 years, Congress has amended the Fair Labor Standards Act
to provide even more workers with the minimum wage. Instead of trying
to exclude over 10 million workers from the guaranteed minimum wage, we
should raise it.
I refer to the paragraph of the Fair Labor Standards Act, paragraph
206, that says each employer shall pay to each of his employees whose
work is engaged in commerce, in the production of goods for commerce--
that is those who are being paid who are working for companies earning
less than $500,000. In the same paragraph it says:

No employer having employees subject to any provisions of
this section shall discriminate.

Those are eliminated. So we don't have equal pay for equal work in
the United States. There are only a few areas where we do. It is in
this particular area that we do and the Santorum amendment eliminates
it for those individuals. I say to our colleagues here in the Senate
who care about equal pay for equal work for women, this is a bad deal.
The PRESIDING OFFICER. Who yields time? The Senator from
Pennsylvania.
Mr. SANTORUM. I would say in response to the Senator from
Massachusetts, my understanding of this legislation, the way it is
written, there was an error made in the drafting of the statute such
that the threshold had been basically ignored because of the provision
to which the Senator from Massachusetts refers. It was a difference
between an ``and'' and an ``or'' as to how it was written. My
understanding is that the intent of the Congress was to exempt small
businesses as we do from a variety of different labor laws. I mentioned
before the one I am most familiar with, the Family and Medical Leave
Act, which has an employee threshold. There are others that have
thresholds in the Federal law, where we chose not to include very small
businesses in some of the mandates the Federal Government imposes, a
variety of different labor mandates. We do so because of the nature of
the small business. A lot of these are mom-and-pop businesses, a
garage, very small employers, where the burden of complying with a
variety of Federal statutes having to do with labor laws when it comes
to a small operation can be an onerous one and costly one. It can be a
barrier to starting a business.
So many, including Senator Harkin and Senator Reid, your leader, have
supported this small business exemption as a clean exemption with no
``or'' provision, ``as engaged in interstate commerce.''
Why? Because we understand that Federal law and these kinds of
provisions can be very costly to very small businesses and can be a
barrier of entry to businesses and can involve them in a cost which
they may not be willing to assume.
So there has always been, to my knowledge, in almost every, if not
every, Federal labor law a small business exemption, what the Senator
from Massachusetts has said there should not be in this case. That is a
very legitimate position. I do not think the Members of this body would
agree--on either side of the aisle, I might add--that there should be
no exemption for any business from this provision of the Fair Labor
Standards Act. That is what we attempt to correct, to make that comport
with what was broadly agreed was the intent. Unfortunately, it has
never been remedied.
If the Senator from Massachusetts wants to make the argument that
there should be no businesses exempt from the Federal Fair Labor
Standards Act, fine. Make that argument and we will have that debate
and we will find out how many votes we have, whether there should be a
small business exemption or not. But don't suggest what I am doing here
is some sort of subterfuge other than to clarify that there are
exemptions for legitimate reasons for very small businesses. The
threshold was set at half a million dollars back in 1990. If you index
that to inflation, it would be $1.5 million today. We set it at a
million, which is lower than the rate of inflation. That is hardly
overreaching on the part of this amendment.
If the Senator wants to say there should be no exemption, that all
businesses should be covered and there should be no small business
exemption to any labor law, fine, if that is what the Senator from
Massachusetts wants. Understand the consequences, that Democrats and
Republicans for years have understood here, which is these mandates on
very small startup businesses in particular, but any small business,
can be damaging to the economy in our poorest neighborhoods, in the
cleaning services, in the landscape businesses, and a whole host of
other small businesses where people are trying to make ends meet by
pursuing their entrepreneurial spirit. By putting these kinds of
requirements and labor laws and regulations on these small businesses,
we damage and destroy the very small businesses in this country.

I do not think that is where most on his side of the aisle are. That
may be where the Senator from Massachusetts is. If that is where he is,
fine, but I would be very proud to defend that provision that says the
smallest businesses in America should not have these kinds of mandates
imposed on them by Federal law.
Mr. DURBIN. Will the Senator yield for a question?
Mr. SANTORUM. I am happy to yield for a question.
Mr. DURBIN. I am sorry that I just arrived. I am trying to catch up
with this debate. Would the amendment reduce the number of workers in
America eligible for overtime pay and reduce the number of businesses
in America required to pay the minimum wage?
Mr. SANTORUM. I think I was pretty clear about that. The answer is
yes. Because we raise the threshold from a half million, small
business, to a million. As I said before, the half million threshold
was set in 1990. It has not been indexed. I hear a lot of comments
about why we should index things here. We should index the minimum
wage, we should index a whole host of other things that have the
benefit of, in this case, increasing workers' pay. If that is the case,
if we thought $500,000 was a legitimate threshold in 1990, I don't know
why it should not be indexed to include in real terms that same class
of small businesses at this time.
Mr. DURBIN. Will the Senator yield for a further question?
Mr. SANTORUM. I am happy to.
Mr. DURBIN. If the Senator is prepared to double the size of the
business from $500,000 to $1 million because it should keep up with
inflation, would the Senator be prepared to double the minimum wage of
1990 to what it should be today?
Mr. SANTORUM. I say to the Senator from Illinois, we are increasing--
in fact, my amendment does increase the minimum wage by 20 percent.
Mr. DURBIN. By 100 percent?
Mr. SANTORUM. I don't recall exactly what the increase was. I will
check and see what the wage was in 1990 as compared to what it is
today. We are proposing a modest increase. If the Senator is suggesting
it should be a smaller increase, I will be happy to negotiate a smaller
increase if it makes the Senator comfortable.
The Senator from Massachusetts is not suggesting it should be a
smaller increase. He is suggesting there should be no exemption at all
and that there was a provision--and that is what the debate is about--
that if they included anyone in interstate commerce, even one employee,
that they should be covered. In fact, that is my understanding of how
the Labor Department has interpreted this provision. In a sense, there
has not been any threshold.
Again, if the Senator from Illinois would like to have a threshold
that indexes with the minimum wage, I would be happy to accept that as
a reasonable index. But I think to suggest it should not change at all
over a period of time does, of course, begin to gather and cover more
and more businesses that are small by nature and then again it would be
a barrier to entry and a difficulty in sustaining those businesses over
time.
I am willing, if there is a legitimate concern about this as to how
much we are raising the cap, again, we are willing to negotiate that.
That is not what the Senator from Massachusetts is saying. What the
Senator from Massachusetts is saying is there should not be any
threshold at all; we should keep the zero threshold which exists today
in law.

[[Page S2127]]

I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. The history for interstate workers is that from 1938,
when the minimum wage was first passed, the minimum wage has applied to
them. That is being changed by the Senator from Pennsylvania. We
understand that. That is being changed. It is going to have a profound
effect on millions of workers.
It is not only by the provisions, the coverage of the Fair Labor
Standards Act, it is not only the payment, but it is also the equal
payment.
Second, there have been different rules with regard to retail
workers. There was the overall figure of $1 million that was used on
retail workers. That was reduced to $500,000 and even down to $250,000.
So we have been dealing with this for many times.
The point of the matter is, under the Santorum amendment, the way it
is constructed, there will be millions and millions and millions who
will be outside the coverage of the Fair Labor Standards Act. That is
plain and simple.
Mr. SANTORUM. Will the Senator yield?
Mr. KENNEDY. I only have a few minutes left now. The point I was
making earlier, when I offered our amendment, it is 3 pages long, to
deal with the increases in the minimum wage for workers. The Senator
from Pennsylvania has an 85-page law. He has opposed the minimum wage
17 times in 10 years. Minimum wagers, beware.

Mr. SANTORUM. Mr. President, does the Senator from Massachusetts
yield?
Mr. KENNEDY. I have to withhold my remaining time.
Mr. SANTORUM. Mr. President, I would like to correct the record. I
have supported the minimum wage on more than one occasion during my
time in Congress. When I started in the House, the last minimum wage
that passed I supported. Under the Clinton administration, I voted for
an increase. I have voted for an increase in the minimum wage in the
past. I voted for a similar minimum wage increase in the last session
of Congress, or the time before. I have not had any ideological
problems supporting minimum wage. I want to correct the record about
what the Senator from Massachusetts said.
I would also say with respect to workers not being covered as a
result of this provision of raising the threshold, as you know and as
the Senator from Massachusetts knows, there are operative State laws
which provide worker protections in addition to Federal law. In fact,
for the States that do not have operative State laws which provide
these worker protections, we leave the threshold at 500-fold. We don't
change the threshold for the States that do not have operative worker
protections for the things that the Fair Labor Standards Act applies
to.
I want to make the record clear. No one is falling through the cracks
here. The States that only have Federal law covering this area do not
change. The ones that do have State laws change accordingly. Again,
many of those State laws will remain in place and cover workers who are
not covered under the Fair Labor Standards Act under their own State
labor protection laws.
I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, I ask unanimous consent to speak for 5
minutes, and I ask the Chair to notify me when I have used 4 minutes.
The PRESIDING OFFICER. Does this time come out of the time of the
Senator from Massachusetts?
Mr. KENNEDY. I yield 5 minutes.
Mr. DURBIN. Mr. President, Members of the Senate will have a choice
in just a few minutes about the future of the minimum wage.
There was a time when we didn't even debate this. There was a time
when Democrats and Republicans agreed that every once in a while you
have to raise the minimum wage. The cost of living goes up in America.
Republican and Democratic Presidents alike said: Can't we come together
and reasonably increase the minimum wage so that the poorest among us
have a fighting chance for a decent life?
We used to do it that way. When we stopped doing it 8 years ago when
Republicans took control of Congress, they decided this was a partisan
issue, that good Republicans didn't support an increase in the minimum
wage; only Democrats supported it. Today, we have a choice. The choice
is very stark.
Senator Santorum comes to the Senate floor and says let us raise the
minimum wage for 1.8 million Americans. That is a pretty good thing. At
least they are going to get some help. But look at Senator Kennedy's
alternative. In his alternative, 7.3 million Americans would have an
increase in the minimum wage.
The Santorum Republican approach helps 1 out of 4 of the workers who
Senator Kennedy's approach helps. But it gets worse. In order for
Senator Santorum to work up the political courage to bring this to the
floor, he said: I have to turn around and do something on the business
side. So what I will do is to exempt 10 million workers in America from
coverage for overtime pay.
Think about that. You can work 50 hours a week at straight time. That
is the deal we are going to offer you for a slight increase in the
minimum wage. Does that make sense?
He goes further and says we are going to say that fewer businesses in
America are required to pay the minimum wage. What a deal. After
waiting 8 years, he helps 1 out of 4 of the workers who Senator Kennedy
helps, and for the 1.8 million he helps, he pushes 5 times as many
overboard. He says: You are not going to get overtime. I will vote for
an increase in minimum wage, but that is just part of the deal.
It is really appropriate that we have this debate on the bankruptcy
bill, isn't it, when you think about it? We are going to force some of
the most marginal workers, so many of the hardest working people in
America, into a position where they can't pay their bills; then our
beautiful Bankruptcy Code reform pushed by the credit card industry
will make sure they are saddled with debt for a lifetime. That is what
this debate comes down to.
In order to bring up the courage on the Republican side to offer any
minimum wage increase, they had to offer to the business community this
disqualification for overtime pay the incentive that many businesses
would not pay a minimum wage, not to mention adhere to the equal pay
provisions. Some of these minimum wage workers across America are
young, single mothers struggling to raise kids. Sometimes they are
working one or two minimum wage jobs. They would like to be paid equal
pay in their workplace. Senator Santorum thinks that goes too far when
it comes to small businesses. I think this is wrong.
We need to get back to the bipartisan consensus we had on minimum
wage. If you stand for moral values--wasn't that the big issue in the
last campaign?--wouldn't one moral value be as follows: If you get up
and go to work every day in America, if you follow the rules and show
up for work, you shouldn't live in poverty in America. That is a fact.
Some people working every single day at a minimum wage job are living
below the poverty line.
Poverty has doubled since the late 1970s. The poverty rolls have
increased by 4 million people since President Bush has taken office.
The low minimum wage is a big part of that. Minimum wage employees who
work 40 hours a week earn $10,750 a year. Think about how you would get
by on $10,700 a year. In fact, we say officially that this is $5,000
less than you need to raise a family of three. We acknowledge that. If
you go to work, work hard, and are paid the minimum wage, you are going
to live in poverty.
We believe on the Democratic side of the aisle that America, if it is
a just nation, should move to the point where hard-working Americans
get a decent paycheck.
That is what Senator Kennedy has been fighting for for 8 years. I
would be happy to be part of that fight.
I say in conclusion that we talk a lot in the Senate about what our
priorities should be. The top priority of this Senate now is to make
the bankruptcy laws more difficult for those swamped by medical bills.
We have tried to offer amendments to stand up for the activated Guard
and Reserve people who are forced into bankruptcy. The Republican side
rejected every single amendment we offered. Now we come with a
sensible, just amendment to, frankly, raise the minimum wage up to a
decent level in America, and what we are offered on the other side of
the aisle is an unacceptable alternative.

[[Page S2128]]

I yield the floor.
Mr. HATCH. Mr. President, today the Senate will consider two minimum
wage amendments to the bankruptcy reform bill, S. 256. Senator Ted
Kennedy's minimum wage amendment proposes to increase the minimum wage
by $2.10 per hour in three steps over 26 months, and Senator Rick
Santorum's amendment would raise the minimum wage by $1.10 an hour over
18 months.
I have always believed that increasing the minimum wage is not an
effective way to improve living standards for the Nation's working
poor. Simply put, raising the minimum wage is a Federal government
mandate which creates negative ripples throughout the national economy
by making goods and services more expensive for families. Raising the
minimum wage closes the doors of many small businesses, and forces
companies to move jobs offshore to less costly countries. Such an
increase makes it more difficult for many lower skilled U.S. workers to
get started in the job market.
Small businesses are the engine for economic growth in America and
represent a powerful vehicle for opportunity. A minimum wage increase
would negatively affect small businesses across the nation and in my
home State of Utah.
For example, Wangsgard's grocery store of Ogden, UT, offers a full
line of groceries, along with a meat shop, oven-fresh bakery, fresh
produce, a deli and snack bar, coffee counter, garden center and Ace
Hardware. Without a doubt, this store really is a one-stop solution.
Phillip Child, president and owner of Wangsgard's grocery store,
informs me that a minimum wage increase would force him to reduce jobs.
In fact, Mr. Child confirms that of his 93 employees, those who are
earning minimum wage are either in high school or living at home with
their parents. These employees are not supporting families. With the
goal to open a second Wangsgard's grocery store in the near future, Mr.
Child is concerned that an increase in minimum wage would certainly cut
the number of new jobs available to the community.
I believe education and job-training programs are the key to raising
take-home pay. Of course, it's much easier to pose as the champion of
the poor and worry about the consequences later. Yet if Congress does
move to increase the minimum wage, it should adopt a small, more
gradual increase, and offset the negative consequences of a wage hike
with measures to protect the small businesses that generate a majority
of all new jobs and employ most Americans. That is why I support the
Santorum amendment and oppose the Kennedy amendment.
Mr. CORZINE. Mr. President, I rise today to speak in support of
Senator Kennedy's amendment that would amend the Fair Labor Standards
Act of 1938 to provide for gradual increases in the Federal minimum
wage.
An increase in the Federal minimum wage is long overdue.
It has now been over 7 years since Congress last raised the minimum
wage to its current level of $5.15 per hour. Since that last increase,
Congress's failure to adjust the wage for inflation has reduced the
purchasing power of the minimum wage to record low levels. In fact,
after accounting for the loss of real value due to inflation, the
purchasing power of the minimum wage has not been this low since the
wage increase of 1945.
When Congress last raised the minimum wage in 1996, the wage was
raised from $4.75 to its current $5.15. At the time, this modest
increase had real results. The adjustment increased the take home pay
of nearly 10 million hard working Americans. But with inflation, the
real dollar value of that increase is long gone.
So that we are clear, raising the minimum wage is a family issue. So
often in this body we talk about family issues. This is our chance to
act.
No family gets rich from earning the minimum wage. In fact, the
current minimum wage does not even lift a family out of poverty. A
person earning the current minimum wage, working 40 hours a week, 52
weeks a year, earns only $10,700--nearly $4,000 below the poverty line
for a family of three.
Seven out of every 10 minimum wage workers are adults, and 40 percent
of minimum wage workers are the sole breadwinners of their families.
Moreover, a disproportionate number of minimum wage workers are women.
Sixty percent of the 11 million minimum wage workers are women, and
many are single mothers who must put food on the table, make rent
payments, and provide childcare. Increasing the minimum wage by a mere
$1.50 per hour would mean an extra $3,000 a year for working families.
These additional dollars can provide tangible help to these families in
the form of groceries, rent, and the ability to pay one's utility
bills.
The problems posed by our insufficient minimum wage are stark in my
home State of New Jersey.
According to New Jersey Department of Labor statistics, there are
just over 181,000 people making minimum wage in the State. While some
States have set higher minimum wage levels, New Jersey is like most
States--its minimum wage mirrors the Federal minimum wage. But New
Jersey is also different because the cost of living in New Jersey far
exceeds the national average and working families in the State are
unable to make ends meet at the current minimum wage. As a result,
minimum wage workers in New Jersey are worse off than minimum wage
workers living in other parts of the country.

Let me quantify the severity of this problem in a high-cost State
such as New Jersey. Last year, Legal Services of New Jersey released a
self-sufficiency study that found that--without private or public
assistance--a New Jersey family of four needs a yearly salary of
anywhere from $37,516 to $56,670 to make ends meet. Now remember, as I
mentioned earlier, an individual earning the current minimum wage,
working 40 hours a week, 52 weeks a year, earns only $10,700. What that
then means is that in New Jersey, a family of four that has both
parents working full-time for the minimum wage would still face an
annual shortfall likely in excess of $20,000 in order to cover basic
living needs.
While the Kennedy amendment seeks to provide a real wage increase to
workers that will help them keep up with the rising cost of living in
our Nation, the Santorum amendment offered by my Republican colleagues
is a cruel hoax on hard-working Americans.
It is politics over policy, and it is just plain wrong.
The Santorum amendment only provides about half of the minimum wage
increase of the Kennedy amendment. It also denies minimum wage,
overtime and equal pay rights from over 10 million workers.
The Santorum amendment will increase the minimum wage by a mere $1.10
per hour. This amendment will benefit only 1.8 million workers--5.5
million fewer than the Kennedy amendment.
The difference between an increase to $7.25 and an increase to $6.25
for a minimum wage worker has a real impact on people's lives,
particularly in a State such as New Jersey. It means on average 15
fewer months of child care; over a year less of tuition at a community
college; 10 fewer months of heat and electricity; 6 fewer months of
groceries; and 5 fewer months of rent.
The Santorum amendment denies more than 10 million workers minimum
wage, overtime pay and equal pay rights by ending individual Fair Labor
Standards coverage and raising the enterprise coverage threshold to $1
million from $500,000.
The Santorum amendment would be the death of the 40-hour workweek and
the American weekend. After the Administration's denial last year of
overtime protections for 6 million workers, this proposal would further
undermine overtime protections by allowing employers to refuse to pay
workers up to 10 hours of earned overtime pay every 2 weeks.
That means a pay cut of $3,000 a year for a median income earner--
$43,000 per year--and an $800 pay cut for minimum wage workers.
Employers are already free to offer more flexible schedules under
current law--the only difference is that now they have to pay workers
overtime when they work more than 40 hours in a week.
Finally, the Santorum amendment prohibits states from providing
stronger wage protections than the Federal standard for tipped
employees like waiters and waitresses.
There are some items in the Santorum amendment that can help our
small businesses. But this amendment has been so bloated down with

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provisions that are harmful to American workers that as a whole it is
not just bad for workers, it is ultimately bad for business.
All of our hard working families nationwide need and deserve a
minimum wage that reflects the increased cost of living in America. It
is the least we can do for people who work hard and make a positive
contribution to our great Nation.
Let's not dishonor them or their efforts. I urge my colleagues to
support the Kennedy amendment.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. ENZI. Mr. President, I rise today in opposition to the amendment
offered by Senator Kennedy which would increase the minimum wage by an
unprecedented 41 percent. Apart from its numerous other problems, this
proposal is fundamentally flawed because it presumes that Congress, by
simply imposing an artificial wage increase, will meaningfully address
the real issues of the lowest paid workers. That is simply not the
case.
Regardless of the size of a wage increase Congress might impose, the
reality is that yesterday's lowest paid worker, assuming he still has a
job, will continue to be America's lowest paid worker tomorrow.
Advancement on the job and earned wage growth can simply not be
legislated. We do a disservice to all concerned--most especially the
chronic low-wage worker--to suggest that a Federal wage mandate is the
answer. What we need to focus on is not an artificially imposed number
but on the acquisition and improvement of jobs and job-related skills.
In this context, we should recognize that only 68 percent of the
students entering the ninth grade 4 years ago are expected to graduate
this year. For minority students, this number hovers around 50 percent.
In addition, we continue to experience a dropout rate of 11 percent per
year.
These noncompletions and dropout rates and the poor earnings capacity
that comes with them cannot be fixed by a Federal wage policy. We
always have to keep this in mind. The phrase ``minimum wage worker'' is
an arbitrary designation. A more accurate description and one that
should always be at the center of this debate is that we are seeking to
address those workers who have few if any skills that they can use to
compete for better jobs and command higher wages. The effect may be low
wages, but the cause is low skills. In short, the problem is not a
minimum wage. The problem is minimum skills.
I had a Workforce Investment Act bill that the Senate 2 years ago
passed unanimously. We cannot get a conference committee to do upgrades
in skills for 900,000 people a year. That would have upped the minimum
wage, and it would have upped it in a true way. If we are to approach
this debate in a constructive and candid way, we need to know certain
basic principles of economics. Wages do not cause sales. Sales are
needed to provide wages. Wages do not cause revenue. Revenue drives
wages. Wages can cause productivity, but the productivity has to come
first to be able to afford the wages.
Skills, however, operate differently than wages. Skills do create
sales. Sales produce revenue. Skills do create productivity. Skills get
compensated with higher wages or else the employee simply goes
elsewhere for true higher wages. Wage increases without increased sales
or higher productivity have to be paid for by higher prices. Higher
prices wipe out wage increases. Skills, not artificial wage increases,
produce the true net gains in income.
The minimum wage should be for all workers what it is for most: A
starting point; a starting point in an individual's lifelong working
career. Viewed as a starting point, it becomes clear that the focus
needs to be less on where an individual begins his or her working
career. Instead, more emphasis should be placed on how an individual
can best progress.
Real wage growth happens every day and it is not the function of a
Government mandate. It is the direct result of an individual becoming
more skilled and therefore more valuable to his or her employer.
As a former small business owner, I know that these entry level jobs
are a gateway into the workforce for people without skills or
experience. These minimum skills jobs can open the door to better jobs
and better lives for low-skilled workers if we give them the tools they
need to succeed.
We have a great example in Cheyenne, WY, of minimum skilled workers
who were given the tools and the opportunity to reach the American
dream. Mr. Jack Price, the owner of eight McDonald's restaurants in
Wyoming--everyone likes to use McDonald's for the example--had three
employees who started working for McDonald's at minimum wage. Now those
three employees, those minimum wage employees, own a total of 20
restaurants. They got the skills.
This type of wage progression and success should be the norm for
workers across our country. However, there are some minimum skilled
workers for whom stagnation at the lower tier wage is a longer term
proposition. The answer for these workers, however, is not simply to
raise the lowest wage rung, which raises all the other rungs, which
drives up the price and takes away their advantage; rather, these
individuals must acquire the training and skills that result in
meaningful and lasting wage growth.
We must equip our workers with skills they need to compete in this
technology-driven global economy. It is estimated that 60 percent of
tomorrow's jobs will require skills that only 20 percent of today's
workers possess. It is also estimated that graduating students will
likely change careers some 14 times in their life, and 10 of those jobs
have not even been invented yet.
To support these needs, we need a system in place that can support a
lifetime of education, training, and retraining for workers. The end
result would be the attainment of goals that provide meaningful wage
growth. As legislators, our efforts should better focus on ensuring
that the tools and the opportunities for training and enhancing skills
over a Worker's lifetime are available and are utilized.
We tried to do that through the Work First Investment Act that got
blocked in the last Congress; 900,000 people trained to higher skilled
jobs each year. That would have been a lot of people getting higher
wages each and every year.
Since 1998, the Democrats have been pushing a drastic increase in the
Federal minimum wage except--listen to this--except when they were in
the majority, when they controlled this body. In the 18 months from
mid-2001 through all of 2002, while the Democrats held the
majority they did not bring the minimum wage vote to the floor. The
question must be asked, who would really be helped? Who would be hurt
by this amendment we have today to raise the minimum wage by an
unprecedented 41 percent, to $7.25 an hour.

First, we must realize that the large increase in minimum wage will
hurt low-income, low-skilled individuals, the very workers proponents
claim they want to help. Let us be clear: Mandated hikes in the minimum
wage do not cure poverty. They clearly do not create jobs.
The Congressional Budget Office has said most economists would agree
that an increase in the minimum wage rate would cause firms to employ
fewer low-wage workers or employ them for fewer hours. That is the CBO
estimate of October 18, 1999. In 1999, based on a dollar increase, CBO
found that a plausible range of estimates for the potential job losses
holds that a 10-percent increase--not a 41-percent increase, a 10-
percent increase--in the minimum wage would result in a half to 2
percent reduction in the employment level of teenagers and a smaller
percentage reduction for young adults ages 20 to 24. These estimates
imply employment losses for an increase in the minimum wage of the
amount provided in the 1999 proposal of roughly 100,000 to half a
million jobs. Applying that same analysis today could actually double
this prediction. Upwards of one million low-wage workers, mostly
teenagers and young adults, can expect to lose their jobs or lose
opportunities due to the proposal before the Senate for the $2.10 an
hour increase.
What every student who has ever taken an economics course knows, if
you increase the cost of something--in this case, the minimum wage--you
decrease the demand for those jobs. Misleading political rhetoric
cannot change the basic principles of supply

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and demand. The majority of economists continue to affirm the job-
killing nature of mandated wage increases.
A recent poll concluded that 77 percent--that is nearly 17,000
economists--believe that a minimum wage hike causes job loss. The
argument these economists understand is this: By requiring employers to
pay a higher wage for positions they consider entry level, the mandate
forces employers to search for higher skilled employees. Moreover,
mandated higher entry-level wages force employers to redefine the
nature of the job and the expectations they have for their entry-level
workers. Unskilled and low-skilled workers without the new
qualifications will, therefore, be the first to be displaced and the
last to be employed.
In short, Congress can mandate how much employers pay entry-level
employees, but they cannot mandate which workers employers pay.
Even Dr. Rebecca Blank, a former member of President Clinton's
Council of Economic Advisers, has admitted that without the earned-
income credit there would be greater pressure to increase the minimum
wage, which has growing disemployment effects as it rises, since it
induces employers to substitute away from less-skilled labor toward
other technologies.
Let me repeat what President Clinton's Economic Adviser said, because
this is something proponents on the Senate floor are unwilling to meet.
Minimum wage increases induce employers to substitute away the less-
skilled labor toward other technologies. Low-skilled workers will be
displaced and lose jobs or will not be hired in the first place.
This massive Federal wage proposal is based on a false assumption
that a business that employs 50 minimum wage workers before this wage
increase is enacted will still employ 50 minimum wage workers
afterwards. Whether a business is in Washington or Wyoming, employers
cannot absorb a 41 percent increase in their costs without a
corresponding decrease in the number of jobs or of benefits they can
provide workers.
So we know there are losers when we raise the minimum wage, but who
are the individuals who benefit? While minimum wage supporters often
claim the wage floor must be raised in order to lift employees out of
poverty, this is simply not the case. Again, the average family income
of potential beneficiaries from a $7.25-an-hour minimum wage rate is
over $41,000 a year. Clearly, the minimum wage is not a poverty level
wage for most employees.
Minimum wage earners who support a family solely based on the wage
are actually few and far between. Fully 85 percent--this is very
important--of the minimum wage earners live with their parents, have a
working spouse, or are living alone without children. Forty percent
live with a parent or relative. Twenty-one percent live with another
wage earner. Twenty-four percent are single or are the sole breadwinner
in a household with no children. And they lack skills. They have
minimum skills. They get paid for minimum skills.
Research shows that the poor targeting and other unintended
consequences of the minimum wage make it terribly ineffective at
reducing poverty in America--the intended purpose of the policy. In
fact, two Stanford University economists concluded that a minimum wage
increase is paid for by higher prices that hurt poor families the most.
A 2001 study conducted by Stanford University economists found that
only one in four of the poorest 20 percent of families would benefit
from an increase in the minimum wage. Three in four of the poorest
workers would be hurt by a wage hike because they would shoulder the
costs of the resulting higher prices.
Artificial wage hikes drive prices up. They have to. You cannot pay
the wages without it. Everything but Government spending has to be paid
for. To pay a higher minimum wage and other wages that have to go up
because of it means prices have to be raised. We should not trick
workers into thinking they are earning more when they still cannot pay
the bills at the end of the month.
As we discuss the Federal minimum wage, we must keep in mind the
dangers, also, of a ``Washington knows best'' and a ``one size fits
all'' mentality. An increase in the Federal minimum wage is a classic
lesson that Washington does not know best and that one size does not
fit all. A Federal wage mandate does not account for the cost of living
that varies across the country. It costs over twice as much to live in
New York City than it does in Cheyenne, WY. However, a Federal minimum
wage hike that applies from coast to coast is like saying a bag of
groceries in New York City must cost the same as a bag of groceries in
Cheyenne. Local labor market conditions and the cost of living
determine pay rates, not Federal minimum wage laws dictated from
Washington.
Incidentally, that is why Maine has a higher wage rate than the
Federal Government. That is why a lot of States have a higher rate. It
fits their State. The States can do it without our help. Isn't that
amazing.
Now, proponents of a large, federally mandated increase in the
minimum wage repeatedly state that the wage floor is too low and that
minimum wage earners earn below the poverty line. This argument
neglects to figure in the effects of the earned-income credit.
Proponents of large minimum wage increases argue that we should
return the starting wage to its 1968 value, when the minimum wage was
at its all-time high when adjusted for inflation. However, it is
important to note, that the real value of the current minimum wage in
2004 dollars plus the real value of the Earned income credit for a
full-time minimum wage employee with two children comes close to
matching the 1968 value Democrats claim they are targeting.
As my colleagues are no doubt aware, the earned income credit is a
Federal income tax credit for low-income workers that reduces the
amount of tax an individual owes, and is frequently returned in the
form of a refund. This can supplement incomes by as much as $4,290, for
a single adult with two dependents which works out to a cash credit
equal to more than $2 per hour paid directly to the worker.
For every dollar in wages earned by a low-income family with two
children, the Federal Government provides a tax credit of 40 percent.
Workers with one child have an effective minimum wage rate of $6.90
per hour, $5.15 per hour, plus a 34-percent credit of $1.75 per hour.
Workers with two or more children have an effective minimum wage rate
of $7.22 per hour, $5.15 plus a 40-percent credit of $2.07 per hour.
As a household's income rises above around $15,000 per year, the
earned income credit begins to be phased out.
It would take a minimum wage increase of around a dollar per hour to
reach the ``appropriate'' 1968 rate, when the earned income credit is
applied.
The earned income credit has retained the value of the minimum wage
for employed workers with families by supplementing their income while
avoiding the adverse effects of minimum wage hikes. In fact, using the
earned income credit allows us to more effectively target assistance to
those workers raising families on low incomes.
Contrast this targeted policy with massive increases in the minimum
wage that inefficiently distribute ``assistance'' to individuals
without children--mostly teenagers from wealthy families. In summary,
the earned income credit is ignored by wage-hike proponents because it
proves the flaws in their arguments. Regardless of whether their
arguments made sense in 1938, or even in 1968, their rhetoric has been
overridden by newer policies such as the earned income credit. I prefer
to promote modern policies that help the poor, and not to dwell on
stale arguments that no longer ring true.

My colleagues on the other side of the aisle suggest that the only
time low-income workers receive wage increases is when Congress
mandates an increase in the minimum wage. It is preposterous and
demeaning to argue that only Congress can give low-wage workers a pay
raise. More often than not, it is the workers' own dedication, hard
work, and willingness to learn that results in their earning higher
wages. Workers who were making the minimum wage when it was last hiked
in 1997 have learned job skills, received valuable experience, and, as
a result, have earned raises above the minimum wage.

[[Page S2131]]

Whenever they seek to increase the minimum wage, the Democrats
announce the number of workers who will ``benefit'' from the mandate.
Interestingly, however, that number has shrunk dramatically over the
past 6 years.
On September 3, 1998, Senator Kennedy issued a press release counting
the number of minimum-wage-increase beneficiaries at 12 million. That
was when his wage hike went up to $6.65 per hour instead of today's
$7.25 per hour increase. Today, however, he puts the number at only 7.5
million. That is 4.5 million fewer workers affected by a minimum wage
increase. Where did they go?
Where did the other 4.5 million individuals go? They earned raises,
on their own, without Congress imposing a Federal wage hike. In fact,
statistics show that most minimum-wage workers will earn raises in
their first year on the job. These minimum-skilled workers will earn
raises as their skills and experience increase.
I share the same goal as Senator Kennedy--to help American workers
find and keep well-paying jobs. Minimum skills--not minimum wages--are
the problem. Education and training will solve that problem and lead to
the kind of increased wages and better jobs we all want to create for
our Nation's workers. Lets get the Workforce Investment Act passed and
conferenced so the President can sign it and get higher skills training
accelerated.
The PRESIDING OFFICER (Mr. Burr). The Senator's time has expired.
Mr. ENZI. Mr. President, it is a false economy, and if we really
wanted to raise it, we would have done something with the Workforce
Investment Act, the job training. We would have raised skills, and then
employees would have been compensated well.
I yield the floor.
The PRESIDING OFFICER. The Democratic leader is recognized.
Mr. REID. Mr. President, I will use leader time for this
presentation.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, I have not been on the floor all day to
listen to the debate, but I have listened to part of it. I am stunned
by some of the remarks by those opposed to raising the minimum wage. To
indicate that people who are drawing minimum wage live with their
parents or others--they do because they make so little money. And all
the denigration of these entry-level jobs--these are jobs that people
have to have filled. They may be low, entry-level jobs, but they are
jobs people need. People are not hiring these people out of the
goodness of their heart, to say: Well, here is somebody. We'll hire a
few minimum wage employees.
There are a few people like that, but the reason you have these
minimum wage jobs is because people need results. The employer needs
the work done. The employee needs the job.
I have heard on this floor a number of times today people saying: It
is pushing a drastic increase in the minimum wage. The minimum wage was
valid when it was initiated many years ago. It is valid today. We
should at least keep up with the cost of living. Using the logic of
those who oppose the increase in the minimum wage with these
``drastic,'' as they say, minimum wage increases, the longer you wait,
the less chance there would be to raise it because it would become more
``drastic,'' in their words, all the time. All we are trying to do, all
Senator Kennedy is trying to do, is keep up with the cost of living.
My friend, the distinguished Senator from Wyoming, indicated that
during the short time we were in control--of course, a lot of the time
we were in charge there was no legislative business going on, but keep
in mind that every time we have attempted, no matter who is in the
majority in the last 8 years, the Republicans have stopped it, either
through an actual filibuster or through some parliamentary maneuver.
They have opposed raising the minimum wage.
I think the logic of so doing, that it is a ``drastic'' increase--I
repeat--means that the longer you wait until you attempt to raise the
minimum wage, the less chance it would have to pass because it would
become, in their minds, more drastic. Think of the poor people who are
trying to earn a living with this minimum wage. It becomes very drastic
for them.
I was heartened last week to see my Republican colleagues express
their commitment to addressing the issue of poverty. Press conferences
were held. But I believe the time has come for them to back up their
words with action and vote to increase the minimum wage to $7.25 an
hour. It is not going to happen. We understand that the marching orders
have been given, and they will all walk up here and vote against
increasing the minimum wage.
In a country that values work and the opportunity to get ahead, a
hard day's work should bring a decent day's pay, whether it is an
entry-level job or a job that is a more skilled job. In America, this
is not the case as it relates to entry-level work. We have mothers and
fathers working full time in minimum wage jobs but still living in
poverty, still struggling to get ahead.
I met with some of these workers in Nevada last month. When you talk
with them, you begin to understand that increasing the minimum wage is
not about helping teenagers earn more from their summer jobs, it is
about helping families realize the promise of America. This fact was
driven home during a conversation I had with a woman from Reno named
Natasha. She is married, has a child, and works as a server in a
popular restaurant. She works hard. In fact, the restaurant is one of
my favorites. It is in a little strip mall. The restaurant is called
Pinocchio's. It is a wonderful restaurant.
She has served me on a number of occasions. She works hard, as does
her husband. But with a minimum wage job, she has trouble making ends
meet and affording basics, such as food, clothing, and housing. She has
tried to get ahead by taking classes at a community college in the
area, but she had to cut back because she could not afford to go to
school and also pay for what she needed to take care of her family. She
earns the minimum wage, plus her tips.
Now, I would say to my friend from Wyoming, the employer is not going
to eliminate her job if the minimum wage is increased. He needs
somebody to wait those tables, and she is willing to do this because
she needs the work. And the tips are not that bad. She is trying to
live the American dream by going to school and getting ahead but unable
to do it because the minimum wage in this country is not enough money.
Her story is like many others we have all heard, if we listen--
stories of families caught in the cycle of poverty, a cycle we can
begin to end today by increasing the minimum wage.
An increase in the minimum wage will help 7 million Americans. This
may not sound like a lot of money, but to these people it is a lot of
money. An increase of this size can help a family heat their home, pay
for transportation to work, or can help a mother afford childcare so
she does not have to worry about her kids while she is away.
The majority is calling to increase the minimum wage to $6.25 and
further attempting to end the 40-hour workweek with what they call
flextime. These measures are unacceptable. Raise the minimum wage, not
play games with making it easier for employers to stagger the work of
employees. They have already, through the President, eliminated
overtime in many instances.
First, a nominal increase in the minimum wage will help millions of
Americans. This is important. Ending the 40-hour workweek, replacing it
with flextime, would deny over 10 million minimum wage workers the
ability to earn overtime pay.
We can do better. Helping our families live more productive lives
must be our top priority. Providing workers a wage that is consistent
with the rising cost of living is both fair and just. I urge my
colleagues to pass this increase in the minimum wage.
The distinguished Senator from Massachusetts has spent a lifetime in
the national legislature helping people who don't have lobbyists. When
Senators walk up to this door here--sometimes we come in by subway--
many times we are overwhelmed by lobbyists, so many that we can't work
our way through them. But we will not see lobbyists here representing
minimum wage workers.
I send to my friend through the Chair my appreciation for a lifetime
of work

[[Page S2132]]

helping those who don't have lobbyists, people who are working like
Natasha trying to make ends meet. The minimum wage should be increased.
It is a shame that we have to fight for it so hard. Frankly, we have
not been successful for 8 years. I say to my friend--and I don't like
to hear myself say this--they have their marching orders over there. We
are going to lose again.
The people who are in these entry-level jobs are again going to be
without an increase. There are people out there who had hope. I am
sorry. The marching orders have been given, and there will be no
increase.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, how much time remains?
The PRESIDING OFFICER. The Senator has 8 minutes.
Mr. KENNEDY. I ask the Chair to let me know when I have used 7
minutes.
Mr. President, we have had a good discussion with my friend and
colleague, the Senator from Pennsylvania. During the course of the
debate, I did mention that a range of different groups are supporting
our position. I will include those endorsements in the Record. One I
would like to mention is from the Catholic Bishops. This is their
position:

The Catholic Bishops have been long time supporters of the
minimum wage. In Catholic teaching, the principle of a living
wage is integral to our understanding of human work. Wages
must be adequate for workers to provide for themselves and
their families in dignity. Because the minimum wage is not a
living wage, the Catholic Bishops have supported increasing
the minimum wage over the decades.
We are aware that some accommodations are being offered to
alleviate possible adverse effects on small businesses . . .
that might occur with a modest increase in the minimum wage.
However, other changes and modification being contemplated
that will affect overtime pay or the 40 hour workweek are
unwarranted and unwise. Other workers should not lose minimum
wage protection or overtime pay as the price of increasing
the wages of America's lowest paid workers. At the very
least, such changes to the Fair Labor Standards Act should be
considered in the formal legislative process, not attached to
a popular increase in the minimum wage as a condition of
passage.

They indicate their support for our amendment.
In just a few moments the Senate will have an opportunity to vote
either in favor of the Santorum amendment or my amendment. I believe a
vote for the Santorum amendment is a vote to deny the minimum wage to
more than 10 million workers. Those workers are looking to us for a
fair raise to reward their hard work and to help care for their
families.
But the Santorum amendment takes away their minimum wage rights
entirely. A vote for the Santorum amendment is a vote to deny overtime
pay to more than 10 million workers. These workers rely on overtime pay
to make ends meet, and overtime pay is compensation for many long hours
away from their families.
A vote for the Santorum amendment is a vote for a pay cut for workers
who rely on tips--waitresses, taxi drivers, and hairdressers. This is
contrary to our values as Americans. We believe that work should have a
reward. The Santorum amendment dishonors that. It is an insult to the
low-wage workers of this country.
The amendment I offer is about everything that we stand for as a
nation. It is about opportunity. It ensures that every American at
least has the opportunity to move up and achieve the American dream. It
is about fairness. What is fair about working hard 52 weeks of the year
and still living in poverty? What is fair when Members of Congress
raise their own salaries seven times, by $28,000, over the last 8 years
and refuse to vote for an increase in the minimum wage? What is fair
about that? What is fair about executives who pay themselves millions
of dollars but can't find a way to pay a decent minimum wage?
It is about making our economy work for everyone, not just the
privileged few. There is no doubt that this is one of the central moral
questions of our time. It is how we treat the least of those among us.
It is why religious leaders have supported a minimum wage increase. The
Santorum amendment fails the fundamental obligations of a just and fair
society. Under the guise of raising the minimum wage, it cuts overtime
pay and leaves out too many individuals.
Who are these minimum wage workers? First of all, they are men and
women of dignity. They assist in the classrooms every day to teach the
children. They work in nursing homes to help care for the elderly who
have sacrificed for their children and have made such a difference for
this country. This issue is about women working in our society, because
a majority of those who will benefit from this minimum wage increase
are women. It is a women's issue. It is a children's issue because a
third of those women have children. It is a children's and a women's
issue--and a family issue. It is a civil rights issue because so many
of the men and women who receive the minimum wage are men and women of
color. And most of all, it is a fairness issue.
If there is a value which the American people understand, it is
fairness. The American people believe if you work 40 hours a week, 52
weeks of the year, you should not have to live in poverty. They are
living in poverty today with the second lowest minimum wage in nearly
the last 60 years.
The amendment I offer will provide a helping hand to men and women of
dignity to live in a decent and fair respect.
I hope the Senate will accept it.
I yield back my time and ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The question is on agreeing to amendment No. 44.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. McCONNELL. The following Senators were necessarily absent.
The Senator from Nevada (Mr. Ensign) and the Senator from
Pennsylvania (Mr. Specter).
Mr. DURBIN. I announce that the Senator from Montana (Mr. Baucus),
the Senator from North Dakota (Mr. Conrad), and the Senator from
Maryland (Ms. Mikulski) are necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 46, nays 49, as follows:

[Rollcall Vote No. 26 Leg.]

YEAS--46

Akaka
Bayh
Biden
Bingaman
Boxer
Byrd
Cantwell
Carper
Chafee
Clinton
Coleman
Corzine
Dayton
DeWine
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Harkin
Inouye
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Murray
Nelson (FL)
Nelson (NE)
Obama
Pryor
Reed
Reid
Rockefeller
Salazar
Sarbanes
Schumer
Stabenow
Wyden

NAYS--49

Alexander
Allard
Allen
Bennett
Bond
Brownback
Bunning
Burns
Burr
Chambliss
Coburn
Cochran
Collins
Cornyn
Craig
Crapo
DeMint
Dole
Enzi
Frist
Graham
Grassley
Gregg
Hagel
Hatch
Hutchison
Inhofe
Isakson
Kyl
Lott
Lugar
Martinez
McCain
McConnell
Murkowski
Roberts
Santorum
Sessions
Shelby
Smith
Snowe
Stevens
Sununu
Talent
Thomas
Thune
Vitter
Voinovich
Warner

NOT VOTING--5

Baucus
Conrad
Ensign
Mikulski
Specter
The PRESIDING OFFICER. Under the previous order, the amendment not
having garnered 60 votes in the affirmative, the Senate action on this
amendment is vitiated and the amendment is withdrawn.

Vote on Amendment No. 128

The PRESIDING OFFICER. The question is on agreeing to amendment No.
128.
Mr. SANTORUM. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. DURBIN. I announce that the Senator from Maryland (Ms. Mikulski)
is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?

[[Page S2133]]

The result was announced--yeas 38, nays 61, as follows:

[Rollcall Vote No. 27 Leg.]

YEAS--38

Allen
Bennett
Brownback
Bunning
Burns
Coleman
Craig
Crapo
DeWine
Dole
Domenici
Ensign
Enzi
Frist
Graham
Grassley
Hagel
Hatch
Hutchison
Kyl
Lugar
Martinez
McCain
McConnell
Murkowski
Roberts
Santorum
Sessions
Shelby
Smith
Snowe
Specter
Stevens
Talent
Thomas
Thune
Voinovich
Warner

NAYS--61

Akaka
Alexander
Allard
Baucus
Bayh
Biden
Bingaman
Bond
Boxer
Burr
Byrd
Cantwell
Carper
Chafee
Chambliss
Clinton
Coburn
Cochran
Collins
Conrad
Cornyn
Corzine
Dayton
DeMint
Dodd
Dorgan
Durbin
Feingold
Feinstein
Gregg
Harkin
Inhofe
Inouye
Isakson
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Lott
Murray
Nelson (FL)
Nelson (NE)
Obama
Pryor
Reed
Reid
Rockefeller
Salazar
Sarbanes
Schumer
Stabenow
Sununu
Vitter
Wyden

NOT VOTING--1

Mikulski

The PRESIDING OFFICER. Under the previous order, the amendment not
having garnered 60 votes in the affirmative, the Senate action on this
amendment is vitiated and the amendment is withdrawn.
The Democratic leader.

Amendment No. 19 Withdrawn

Mr. REID. On behalf of Senator Feinstein, I ask unanimous consent
that amendment No. 19 be withdrawn.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Connecticut.

Amendment No. 67

Mr. DODD. Mr. President, I ask unanimous consent that the pending
amendment be laid aside and that amendment No. 67 be called up, the
reading of the amendment be dispensed with, and the amendment laid
aside so that the next amendment may be called up.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

Amendment No. 67

(Purpose: To modify the bill to protect families, and for other
purposes)

At the end of the bill, add the following:

TITLE XVI--MODIFICATIONS FOR THE PROTECTION OF FAMILIES

SEC. 1601. MODIFICATIONS FOR THE PROTECTION OF FAMILIES.

(a) Dismissal or Conversion.--Section 707(b)(2)(A)(ii) of
title 11, United States Code, as amended by this Act, is
further amended--
(1) in subclause (IV), by striking ``$1,500'' and inserting
``$5,000''; and
(2) by adding at the end the following:
``(VI) In addition, the debtor's monthly expenses shall
include--
``(aa) taxes and mandatory withholdings from wages;
``(bb) alimony, child, and spousal support payments;
``(cc) legal fees necessary for the debtor's case;
``(dd) pension payments;
``(ee) religious and charitable contributions;
``(ff) union dues;
``(gg) other expenses necessary for the operation of a
business of the debtor or for the debtor's employment;
``(hh) ownership costs for 1 motor vehicle (or 2 in the
case of a joint filing), determined in accordance with
Internal Revenue Service transportation standards, reduced by
any payments on debts secured by the motor vehicle or vehicle
lease payments made by the debtor;
``(ii) expenses for children's toys and recreation for
children of the debtor, tax credits for earned income
determined under section 32 of the Internal Revenue Code of
1986; and
``(jj) miscellaneous and emergency expenses.''.
(b) Definition of Current Monthly Income.--Section
101(10A)(B) of title 11, United States Code, as amended by
this Act, is further amended by inserting ``payments received
as domestic spousal obligations,'' after ``Social Security
Act,''.
(c) Property of the Estate.--Section 541 of title 11,
United States Code, as amended by this Act, is further
amended--
(1) in subsection (a)(5)(B) by inserting ``except as
provided under subsection (b)(11),'' before ``as a result'';
and
(2) in subsection (b)--
(A) in paragraph (8), by striking ``or'' after the
semicolon;
(B) in paragraph (9), by striking the period at the end and
inserting a semicolon; and
(C) by inserting after paragraph (9) the following:
``(10) any--
``(A) refund of tax due to the debtor under subtitle A of
the Internal Revenue Code of 1986 for any taxable year to the
extent that the refund does not exceed the amount of an
applicable earned income tax credit allowed under section 32
of such Code for such year and the amount of an applicable
child tax credit allowed under section 24 of such Code for
such year; and
``(B) advance payment for an earned income tax credit
described in subparagraph (A); or
``(11) the right of the debtor to receive domestic spousal
obligations for the debtor or dependent of the debtor.''.
(d) Protection of Earned Income Tax Credit and Support
Payments Under Bankruptcy Repayment Plans in Chapter 12.--
Section 1225(b) of title 11, United States Code, as amended
by this Act, is further amended by adding at the end the
following:
``(3) In determining disposable income, the court shall not
consider amounts the debtor receives or is entitled to
receive from--
``(A) any refund of tax due to the debtor under subtitle A
of the Internal Revenue Code of 1986 for any taxable year to
the extent that the refund does not exceed the amount of an
applicable earned income tax credit allowed under section 32
of the Internal Revenue Code of 1986 for such year and the
amount of an applicable child tax credit allowed under
section 24 of such Code for such year;
``(B) any advance payment for an earned income tax credit
described in subparagraph (A); or
``(C) child support, foster care, or disability payment for
the care of a dependent child in accordance with applicable
nonbankruptcy law.''.
(e) Protection of Earned Income Tax Credit and Support
Payments Under Bankruptcy Repayment Plans in Chapter 13.--
Section 1325(b) of title 11, United States Code, as amended
by this Act, is further amended by adding at the end the
following:
``(5) In determining disposable income, the court shall not
consider amounts the debtor receives or is entitled to
receive from--
``(A) any refund of tax due to the debtor under subtitle A
of the Internal Revenue Code of 1986 for any taxable year to
the extent that the refund does not exceed the amount of an
applicable earned income tax credit allowed by section 32 of
the Internal Revenue Code of 1986 for such year and the
amount of an applicable child tax credit allowed under
section 24 of such Code for such year;
``(B) any advance payment for an earned income tax credit
described in subparagraph (A); or
``(C) child support, foster care, or disability payment for
the care of a dependent child in accordance with applicable
nonbankruptcy law.''.
(f) Exemptions.--Section 522(d)(10) of title 11, United
States Code, as amended by this Act, is further amended--
(1) in subparagraph (C), by inserting ``or'' after the
semicolon;
(2) by striking subparagraph (D); and
(3) by striking ``(E)'' and inserting ``(D)''.
(g) Personal Property.--
(1) Section 521.--Section 521(a)(6) of title 11, United
States Code, as amended by this Act, is further amended by
striking ``of personal property'' and inserting ``of an item
of personal property purchased for more than $3,000''.
(2) Section 362.--Section 362(h)(1) of title 11, United
States Code, as amended by this Act, is further amended by
striking ``to personal property'' and inserting ``to an item
of personal property purchased for more than $3,000''.
(h) Restoring the Foundation for Secured Credit.--Section
1325(a) of title 11, United States Code, as amended by this
Act, is further amended in the flush matter at the end by
striking ``if the debt was incurred'' and inserting ``to the
extent that the debt was incurred to purchase that thing of
value''.
(i) Household Goods.--
(1) Definition.--Section 101 of title 11, United States
Code, as amended by this Act, is further amended--
(A) by redesignating paragraph (27A) as paragraph (27B);
and
(B) by inserting before paragraph (27B) the following:
``(27A) `household goods '--
``(A) includes tangible personal property normally found in
or around a residence; and
``(B) does not include motor vehicles used for
transportation purposes;''.
(2) For purposes of section 522.--Section 522(f) of title
11, United States Code, as amended by this Act, is further
amended by striking paragraph (4).
(j) Limitation on Luxury Goods.--Section 523(a)(2)(C)(i) of
title 11, United States Code, as amended by this Act, is
further amended--
(1) in subclause (I)--
(A) by striking ``$500'' and inserting ``$1,000'';
(B) by striking ``90'' and inserting ``70''; and
(C) by inserting ``if the creditor proves by a
preponderance of the evidence at a hearing that the goods or
services were not reasonably necessary for the maintenance or
support of the debtor or the dependents of the debtor'' after
``nondischargeable''; and
(2) in subclause (II)--
(A) by striking ``$750'' and inserting ``$1,225''; and
(B) by striking ``70'' and inserting ``60''.
(k) Exceptions to Discharge.--Section 523 of title 11,
United States Code, as amended by this Act, is further
amended--

[[Page S2134]]

(1) in subsection (c), by inserting ``or (14)(A),'' after
``or (6)'' each place it appears; and
(2) in subsection (d), by striking ``(a)(2)'' and inserting
``(a)(2) or (14A)''.

Amendments Nos. 68 through 72, and 119

Mr. DODD. Mr. President, I ask unanimous consent that the pending
amendment be laid aside and, on behalf of Senator Kennedy, that
amendments Nos. 68, 69, 70, 71, 72 and 119 be called up in turn, that
reading of each amendment be dispensed with, that each amendment be
laid aside so that the next amendment may be called up.
The PRESIDING OFFICER. Without objection, it is so ordered.

The amendments are as follows:

amendment no. 68

(Purpose: To provide a maximum amount for a homestead exemption under
State law)

On page 191, between lines 11 and 12, insert the
following:
(c) Further Limitation on Homestead Exemption.--Section
522(b) of title 11, United States Code, is amended by adding
at the end the following:
``(5) Notwithstanding any other provision of this section,
the maximum amount of a homestead exemption that may be
provided under State law shall be $300,000.''.

amendment no. 69

(Purpose: To amend the definition of current monthly income)

On page 20, line 16, strike ``Act,'' and insert ``Act,
income from any job in which the debtor is no longer
employed, income from any activity which the debtor can no
longer engage in due to disability,''.

amendment no. 70

(Purpose: To exempt debtors whose financial problems were caused by
failure to receive alimony or child support, or both, from means
testing)

On page 19, between lines 13 and 14, insert the following:
``(8)(A) No judge, United States trustee (or bankruptcy
administrator, if any), trustee, or other party in interest
may file a motion under paragraph (2) if the debtor, in any
consecutive 12-month period during the 2 years before the
date of the filing of the petition, failed to receive alimony
or child support income, or both, that such debtor was
entitled to receive pursuant to a valid court order, totaling
an amount in excess of 35 percent of the debtor's household
income for such 12-month period.''.

amendment no. 71

(Purpose: To strike the provision relating to the presumption of luxury
goods)

Beginning on page 155, strike line 3 and all that follows
through page 156, line 5.

amendment no. 72

(Purpose: To ensure that families below median income are not subjected
to means test requirements)

On page 28, between lines 21 and 22, insert the following:

SEC. 102A. PROTECTION OF FAMILIES BELOW MEDIAN INCOME.

Section 707(b) of title 11, United States Code, as amended
by section 102, is further amended--
(1) in paragraph (2)(C), by striking ``calculated'' and
inserting ``calculated, except that a debtor described in
paragraph (7) need only provide the calculations or other
information showing that the debtor meets the standards of
such paragraph''; and
(2) in paragraph (7)(A), by striking ``No judge, United
States trustee (or bankruptcy administrator, if any),
trustee, or other party in interest may file a motion under
paragraph (2)'' and inserting ``Paragraph (2) does not apply,
and the court may not dismiss a case based on any form of
means testing,''.

amendment no. 119

(Purpose: To amend section 502(b) of title 11, United States Code, to
limit usurious claims in bankruptcy)

On page 45, strike lines 22 through 24, and insert the
following:
(a) Reduction of Claim.--Section 502 of title 11, United
States Code, is amended--
(1) in subsection (b)--
(A) in paragraph (8), by striking ``or'' at the end;
(B) in paragraph (9), by striking the period at the end and
inserting ``; or''; and
(C) by adding at the end the following:
``(10) such claim is for a credit transaction involving a
consumer (as defined in section 103(h) of the Truth in
Lending Act (15 U.S.C. 1602(g))), and the interest included
as part of such claim exceeds the maximum amount allowed by
the laws of the State, Territory, or District in which the
debtor resides.''; and
(2) by adding at the end the following:

Vote Explanation

Mr. SPECTER. Mr. President, I have sought recognition to comment on
the last two votes. I had traveled with the President to Pittsburgh, PA
today so that I was absent during the vote on the Kennedy amendment.
Had I been present, I would have voted for the Kennedy amendment. I
arrived 7 minutes into the vote on the Santorum amendment. I would like
to have made the vote for the first amendment but voted for the
Santorum amendment. As between the two, my preference would have been
the Kennedy amendment because it raised the minimum wage more, and
after a 7\1/2\ year hiatus, it seemed to me that that amendment was in
order.
I commend Senator Kennedy for his continuing efforts on the minimum
wage, and I commend my distinguished colleague for his efforts which
bridged a considerable gap. I wanted to explain or comment for the
record why I was absent on the Kennedy amendment but present on the
Santorum amendment, even though I would have preferred the Kennedy
amendment to the Santorum amendment. But I would have in any event
voted for both of them.
The last time Congress voted to raise the minimum wage was in 1996,
raising it from $4.25 to $4.75 to eventually $5.15. Since 2000, the
number of Americans in poverty has increased by 4.3 million for a grand
total of 36 million people, which includes 13 million children. Among
full-time, year-round workers, poverty has doubled since the late 1970s
from about 1.3 million then to more than 2.6 million. Since 1981 on 10
different occasions, I have voted to increase the minimum wage.
History clearly demonstrates that raising the minimum wage has no
adverse impact on jobs, employment, or inflation. In the 4 years after
the last minimum wage increase passed, the economy experienced its
strongest growth in over three decades. More than 11 million new jobs
were added, at the pace of 232,000 per month.
Nearly 7\1/2\ million workers will directly benefit from this minimum
wage increase while 8 million more will benefit indirectly. That is a
total of 15\1/2\ million Americans who would get a raise due to this
legislation and would enable a working family to afford almost 2 more
years of childcare, full tuition for a community college degree, and
many other staples for a healthy standard of living. Unfortunately, the
current minimum wage fails to meet these standards.
I thank the Chair and yield the floor.
The PRESIDING OFFICER. The Senator from Hawaii.

Amendment No. 105

Mr. AKAKA. Mr. President, I ask unanimous consent that the pending
amendments be set aside so that I may offer an amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. AKAKA. Mr. President, I call up amendment No. 105.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Hawaii [Mr. Akaka] proposes an amendment
numbered 105.

Mr. AKAKA. I ask unanimous consent that reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

amendment no. 105

(Purpose: To limit claims in bankruptcy by certain unsecured creditors)

On page 45, strike lines 22 through 24, and insert the
following:
(a) Reduction of Claim.--Section 502 of title 11, United
States Code, is amended--
(1) in subsection (b)--
(A) in paragraph (8), by striking ``or'' at the end;
(B) in paragraph (9), by striking the period at the end and
inserting ``; or''; and
(C) by adding at the end the following:
``(10) such consumer debt is an unsecured claim arising
from a debt to a creditor that does not have, as of the date
of the order for relief, a policy of waiving additional
interest for all debtors who participate in a debt management
plan administered by a nonprofit budget and credit counseling
agency described in section 111(a).''; and
(2) by adding at the end the following:

Mr. AKAKA. Mr. President, I ask unanimous consent that my amendment
be set aside.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Wisconsin.

Amendments Nos. 87 through 101

Mr. FEINGOLD. Mr. President, I have filed a number of amendments to
this bill, most of which I believe are germane and therefore can be
offered and debated and voted on even if cloture is invoked tomorrow. I
wanted to make sure that my amendments have been called up prior to
cloture so that I am assured of getting a vote on any amendment that is
germane. It is not my intention to debate these amendments tonight.
That is what this request is designed to do, merely to allow my germane
amendments to be voted

[[Page S2135]]

on prior to a vote on final passage of the bill.
I ask unanimous consent that the pending amendment be laid aside and
that each of my amendments Nos. 87 through 101 be called up in turn,
that the reading of each amendment be dispensed with, and each
amendment in turn be laid aside so that another amendment can become
the pending business, and that the last amendment in the list then be
laid aside so that the amendment that is now pending is again the
pending business.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments are as follows: '

amendment no. 87

(Purpose: To amend section 104 of title 11, United States Code, to
include certain provisions in the triennial inflation adjustment of
dollar amounts)

On page 445, strike lines 10 through 13, and insert the
following:

SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

Section 104(b) of title 11, United States Code, as amended
by this Act, is further amended--
(1) by inserting ``101(19A),'' after ``101(18),'' each
place it appears;
(2) by inserting ``522(f)(3),'' after ``522(d),'' each
place it appears;
(3) by inserting ``541(b), 547(c)(9),'' after
``523(a)(2)(C),'' each place it appears;
(4) in pagagraph (1), by striking ``and 1325(b)(3)'' and
inserting ``1322(d), 1325(b), and 1326(b)(3) of this title
and section 1409(b) of title 28''; and
(5) in paragraph (2), by striking ``and 1325(b)(3) of this
title'' and inserting ``1322(d), 1325(b), and 1326(b)(3) of
this title and section 1409(b) of title 28''.

amendment no. 88

(Purpose: To amend the plan filing and confirmation deadlines)

Beginning on page 230, strike line 7 and all that follows
through page 231, line 6, and insert the following:
``(e) In a small business case--
``(1) only the debtor may file a plan until after 180 days
after the date of the order for relief, unless that period
is--
``(A) extended as provided by this subsection, after notice
and a hearing; or
``(B) the court, for cause, orders otherwise;
``(2) the plan and a disclosure statement (if any) shall be
filed not later than 300 days after the date of the order for
relief, unless that period is--
``(A) extended as provided by this subsection, after notice
and a hearing; or
``(B) the court, for cause, orders otherwise; and
``(3) the time periods specified in paragraphs (1) and (2),
and the time fixed in section 1129(e) within which the plan
shall be confirmed, may be extended only if--
``(A) the debtor, after providing notice to parties in
interest (including the United States trustee), demonstrates
by a preponderance of the evidence that it is more likely
than not that the court will confirm a plan within a
reasonable period of time;
``(B) a new deadline is imposed at the time the extension
is granted; and
``(C) the order extending time is signed before the
existing deadline has expired.''.

amendment no. 89

(Purpose: To strike certain small business related bankruptcy
provisions in the bill)

Beginning on page 221, strike line 1 and all that follows
through page 240, line 4, and insert the following:

Subtitle B--Small Business Bankruptcy Provisions

SEC. 431. SCHEDULING CONFERENCES.

Section 105(d) of title 11, United States Code, is
amended--
(1) in the matter preceding paragraph (1), by striking ``,
may''; and
(2) by striking paragraph (1) and inserting the following:
``(1) shall hold such status conferences as are necessary
to further the expeditious and economical resolution of the
case; and''.

SEC. 432. SERIAL FILER PROVISIONS.

Section 362 of title 11, United States Code, as amended by
sections 106, 305, and 311, is amended--
(1) in subsection (k), as so redesignated by section 305--
(A) by striking ``An'' and inserting ``(1) Except as
provided in paragraph (2), an''; and
(B) by adding at the end the following:
``(2) If such violation is based on an action taken by an
entity in the good faith belief that subsection (h) applies
to the debtor, the recovery under paragraph (1) of this
subsection against such entity shall be limited to actual
damages.''; and
(2) by adding at the end the following:
``(n)(1) Except as provided in paragraph (2), subsection
(a) does not apply in a case in which the debtor--
``(A) is a debtor in a small business case pending at the
time the petition is filed;
``(B) was a debtor in a small business case that was
dismissed for any reason by an order that became final in the
2-year period ending on the date of the order for relief
entered with respect to the petition;
``(C) was a debtor in a small business case in which a plan
was confirmed in the 2-year period ending on the date of the
order for relief entered with respect to the petition; or
``(D) is an entity that has acquired substantially all of
the assets or business of a small business debtor described
in subparagraph (A), (B), or (C), unless such entity
establishes by a preponderance of the evidence that such
entity acquired substantially all of the assets or business
of such small business debtor in good faith and not for the
purpose of evading this paragraph.
``(2) Paragraph (1) does not apply--
``(A) to an involuntary case involving no collusion by the
debtor with creditors; or
``(B) to the filing of a petition if--
``(i) the debtor proves by a preponderance of the evidence
that the filing of the petition resulted from circumstances
beyond the control of the debtor not foreseeable at the time
the case then pending was filed; and
``(ii) it is more likely than not that the court will
confirm a feasible plan, but not a liquidating plan, within a
reasonable period of time.''.

amendment no. 90

(Purpose: To amend the provision relating to fair notice given to
creditors)

Beginning on page 167, strike line 3 and all that follows
through page 169, line 25, and insert the following:
(a) Notice.--Section 342 of title 11, United States Code,
is amended--
(1) in subsection (c), by adding before the period at the
end the following: ``unless the creditor cannot with
reasonable effort identify the account to which the notice
applies without the information required by this
subsection''; and
(2) by adding at the end the following:
``(e) At any time in a case under chapter 7 or 13
concerning an individual debtor, a creditor may file with the
court and serve on the debtor a notice of the address to be
used for service of notice on the creditor in that case.
Beginning 10 days after the creditor files and serves the
notice, any notice that the court or the debtor is required
to give shall be given at the address contained in the
creditor's notice of address.
``(f)(1) An entity may file with any bankruptcy court a
notice of address to be used by all the bankruptcy courts or
by particular bankruptcy courts, as so specified by such
entity at the time such notice is filed, to provide notice to
such entity in all cases under chapters 7 and 13 pending in
the courts with respect to which such notice is filed, in
which such entity is a creditor.
``(2) In any case filed under chapter 7 or 13, any notice
required to be provided by a court with respect to which a
notice is filed under paragraph (1), to such entity later
than 30 days after the filing of such notice under paragraph
(1) shall be provided to such address unless with respect to
a particular case a different address is specified in a
notice filed and served in accordance with subsection (e).
``(3) In any case filed under chapter 7 or 13, any notice
required to be provided by any party in interest with respect
to which a notice is filed under paragraph (1), to such
entity later than 120 days after the filing of such notice
under paragraph (1) shall be provided to such address unless
with respect to a particular case a different address is
specified in a notice filed and served in accordance with
subsection (e).
``(4) A notice filed under paragraph (1) may be withdrawn
by such entity.
``(g)(1) Notice given to a creditor other than as provided
in this section is not effective until that notice has been
brought to the attention of the creditor. If the creditor
designates a person or department to be responsible for
receiving notices concerning bankruptcy cases by a filing in
accordance with subsection (d) or (e) and establishes
reasonable procedures so that bankruptcy notices received by
the creditor are actually delivered to the person or
department, notice is not considered to have been brought to
the attention of the creditor until that person or department
receives the notice.
``(2) The court may not impose either a sanction under
section 362(h) or a sanction that a court may otherwise
impose on account of a violation of the stay under section
362(a) or a failure to comply with section 542 or 543 on
account of any action of the creditor unless the action
occurs after the creditor has received either notice of the
commencement of the case effective under this section or
other actual notice reasonably calculated to come to the
attention of the creditor, the creditor's attorney, the
creditor's agent taking the action, or other appropriate
person.''.

amendment no. 91

(Purpose: To amend section 303 of title 11, United States Code, with
respect to the sealing and expungement of court records relating to
fraudulent involuntary bankruptcy petitions)

On page 205, between lines 16 and 17, insert the
following:

SEC. 332. FRAUDULENT INVOLUNTARY BANKRUPTCY.

(a) Short Title.--This section may be cited as the
``Involuntary Bankruptcy Improvement Act of 2005''.
(b) Involuntary Cases.--Section 303 of title 11, United
States Code, is amended by adding at the end the following:
``(l)(1) If--
``(A) the petition under this section is false or contains
any materially false, fictitious, or fraudulent statement;
``(B) the debtor is an individual; and
``(C) the court dismisses such petition,

the court, upon the motion of the debtor, shall seal all the
records of the court relating to such petition, and all
references to such petition.

[[Page S2136]]

``(2) If the debtor is an individual and the court
dismisses a petition under this section, the court may enter
an order prohibiting all consumer reporting agencies (as
defined in section 603(f) of the Fair Credit Reporting Act
(15 U.S.C. 1681a(f))) from making any consumer report (as
defined in section 603(d) of that Act) that contains any
information relating to such petition or to the case
commenced by the filing of such petition.
``(3) Upon the expiration of the statute of limitations
described in section 3282 of title 18, for a violation of
section 152 or 157 of such title, the court, upon the motion
of the debtor and for good cause, may expunge any records
relating to a petition filed under this section.''.
(c) Bankruptcy Fraud.--Section 157 of title 18, United
States Code, is amended by inserting ``, including a
fraudulent involuntary bankruptcy petition under section 303
of such title'' after ``title 11''.

amendment no. 92

(The amendment is printed in today's Record under ``Text of
Amendments.'')

amendment no. 93

(Purpose: To modify the disclosure requirements for debt relief
agencies providing bankruptcy assistance)

On page 112, strike line 17 and all that follows through
page 120, line 24, and insert the following:
``(12A) `debt relief agency' means any person, other than
an attorney or an employee of an attorney, who provides any
bankruptcy assistance to an assisted person in return for the
payment of money or other valuable consideration, or who is a
bankruptcy petition preparer under section 110, but does not
include--
``(A) any person who is an officer, director, employee, or
agent of a person who provides such assistance or of the
bankruptcy petition preparer;
``(B) a nonprofit organization that is exempt from taxation
under section 501(c)(3) of the Internal Revenue Code of 1986;
``(C) a creditor of such assisted person, to the extent
that the creditor is assisting such assisted person to
restructure any debt owed by such assisted person to the
creditor;
``(D) a depository institution (as defined in section 3 of
the Federal Deposit Insurance Act) or any Federal credit
union or State credit union (as those terms are defined in
section 101 of the Federal Credit Union Act), or any
affiliate or subsidiary of such depository institution or
credit union; or
``(E) an author, publisher, distributor, or seller of works
subject to copyright protection under title 17, when acting
in such capacity.''.
(b) Conforming Amendment.--Section 104(b) of title 11,
United States Code, is amended by inserting ``101(3),'' after
``sections'' each place it appears.

SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.

(a) Enforcement.--Subchapter II of chapter 5 of title 11,
United States Code, is amended by adding at the end the
following:

``Sec. 526. Restrictions on debt relief agencies

``(a) A debt relief agency shall not--
``(1) fail to perform any service that such agency informed
an assisted person or prospective assisted person it would
provide in connection with a case or proceeding under this
title;
``(2) make any statement, or counsel or advise any assisted
person or prospective assisted person to make a statement in
a document filed in a case or proceeding under this title,
that is untrue and misleading, or that upon the exercise of
reasonable care, should have been known by such agency to be
untrue or misleading;
``(3) misrepresent to any assisted person or prospective
assisted person, directly or indirectly, affirmatively or by
material omission, with respect to--
``(A) the services that such agency will provide to such
person; or
``(B) the benefits and risks that may result if such person
becomes a debtor in a case under this title; or
``(4) advise an assisted person or prospective assisted
person to incur more debt in contemplation of such person
filing a case under this title or to pay an attorney or
bankruptcy petition preparer fee or charge for services
performed as part of preparing for or representing a debtor
in a case under this title.
``(b) Any waiver by any assisted person of any protection
or right provided under this section shall not be enforceable
against the debtor by any Federal or State court or any other
person, but may be enforced against a debt relief agency.
``(c)(1) Any contract for bankruptcy assistance between a
debt relief agency and an assisted person that does not
comply with the material requirements of this section,
section 527, or section 528 shall be void and may not be
enforced by any Federal or State court or by any other
person, other than such assisted person.
``(2) Any debt relief agency shall be liable to an assisted
person in the amount of any fees or charges in connection
with providing bankruptcy assistance to such person that such
debt relief agency has received, for actual damages, and for
reasonable attorneys' fees and costs if such agency is found,
after notice and a hearing, to have--
``(A) intentionally or negligently failed to comply with
any provision of this section, section 527, or section 528
with respect to a case or proceeding under this title for
such assisted person;
``(B) provided bankruptcy assistance to an assisted person
in a case or proceeding under this title that is dismissed or
converted to a case under another chapter of this title
because of such agency's intentional or negligent failure to
file any required document including those specified in
section 521; or
``(C) intentionally or negligently disregarded the material
requirements of this title or the Federal Rules of Bankruptcy
Procedure applicable to such agency.
``(3) In addition to such other remedies as are provided
under State law, whenever the chief law enforcement officer
of a State, or an official or agency designated by a State,
has reason to believe that any person has violated or is
violating this section, the State--
``(A) may bring an action to enjoin such violation;
``(B) may bring an action on behalf of its residents to
recover the actual damages of assisted persons arising from
such violation, including any liability under paragraph (2);
and
``(C) in the case of any successful action under
subparagraph (A) or (B), shall be awarded the costs of the
action and reasonable attorneys' fees as determined by the
court.
``(4) The district courts of the United States for
districts located in the State shall have concurrent
jurisdiction of any action under subparagraph (A) or (B) of
paragraph (3).
``(5) Notwithstanding any other provision of Federal law
and in addition to any other remedy provided under Federal or
State law, if the court, on its own motion or on the motion
of the United States trustee or the debtor, finds that a
person intentionally violated this section, or engaged in a
clear and consistent pattern or practice of violating this
section, the court may--
``(A) enjoin the violation of such section; or
``(B) impose an appropriate civil penalty against such
person.
``(d) No provision of this section, section 527, or section
528 shall--
``(1) annul, alter, affect, or exempt any person subject to
such sections from complying with any law of any State except
to the extent that such law is inconsistent with those
sections, and then only to the extent of the inconsistency;
or
``(2) be deemed to limit or curtail the authority or
ability--
``(A) of a State or subdivision or instrumentality thereof,
to determine and enforce qualifications for the practice of
law under the laws of that State; or
``(B) of a Federal court to determine and enforce the
qualifications for the practice of law before that court.''.
(b) Conforming Amendment.--The table of sections for
chapter 5 of title 11, United States Code, is amended by
inserting after the item relating to section 525, the
following:

``526. Restrictions on debt relief agencies.''.

SEC. 228. DISCLOSURES.

(a) Disclosures.--Subchapter II of chapter 5 of title 11,
United States Code, as amended by section 227, is amended by
adding at the end the following:

``Sec. 527. Disclosures

``(a) A debt relief agency providing bankruptcy assistance
to an assisted person shall provide--
``(1) the written notice required under section 342(b)(1);
and
``(2) to the extent not covered in the written notice
described in paragraph (1), and not later than 3 business
days after the first date on which a debt relief agency first
offers to provide any bankruptcy assistance services to an
assisted person, a clear and conspicuous written notice
advising assisted persons that--
``(A) all information that the assisted person is required
to provide with a petition and thereafter during a case under
this title is required to be complete, accurate, and
truthful;
``(B) all assets and all liabilities are required to be
completely and accurately disclosed in the documents filed to
commence the case, and the replacement value of each asset as
defined in section 506 must be stated in those documents
where requested after reasonable inquiry to establish such
value;
``(C) current monthly income, the amounts specified in
section 707(b)(2), and, in a case under chapter 13 of this
title, disposable income (determined in accordance with
section 707(b)(2)), are required to be stated after
reasonable inquiry; and
``(D) information that an assisted person provides during
their case may be audited pursuant to this title, and that
failure to provide such information may result in dismissal
of the case under this title or other sanction, including a
criminal sanction.
``(b) A debt relief agency providing bankruptcy assistance
to an assisted person shall provide each assisted person at
the same time as the notices required under subsection (a)(1)
the following statement, to the extent applicable, or one
substantially similar. The statement shall be clear and
conspicuous and shall be in a single document separate from
other documents or notices provided to the assisted person:
`` `IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE
SERVICES FROM A BANKRUPTCY PETITION PREPARER.
`` `If you decide to seek bankruptcy relief, you can
represent yourself, you can hire an attorney to represent
you, or you can get

[[Page S2137]]

help in some localities from a bankruptcy petition preparer
who is not an attorney. THE LAW REQUIRES A BANKRUPTCY
PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING
WHAT THE BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW
MUCH IT WILL COST. Ask to see the contract before you hire
anyone.' ''

amendment no. 94

(Purpose: To clarify the application of the term disposable income)

Beginning on page 24, strike line 9 and all that follows
through page 26, line 7, and insert the following:
(h) Applicability of Means Test to Chapter 13.--Section
1325(b) of title 11, United States Code, is amended by
striking paragraph (2) and inserting the following:
``(2) For purposes of this subsection, the term `disposable
income' means current monthly income received by the debtor
(other than child support payments, foster care payments, or
disability payments for a dependent child made in accordance
with applicable nonbankruptcy law to the extent reasonably
necessary to be expended for such child) less amounts
reasonably necessary to be expended--
``(A)(i) for the maintenance or support of the debtor or a
dependent of the debtor, or for a domestic support
obligation, that first becomes payable after the date the
petition is filed; and
``(ii) for charitable contributions (that meet the
definition of `charitable contribution' under section
548(d)(3) to a qualified religious or charitable entity or
organization (as defined in section 548(d)(4)) in an amount
not to exceed 15 percent of gross income of the debtor for
the year in which the contributions are made; and
``(B) if the debtor is engaged in business, for the payment
of expenditures necessary for the continuation, preservation,
and operation of such business.
``(3) Amounts reasonably necessary to be expended under
paragraph (2)(A)(i), shall be determined in accordance with
subparagraphs (A) and (B) of section 707(b)(2), if the debtor
has current monthly income, when multiplied by 12, greater
than--
``(A) in the case of a debtor in a household of 1 person,
the median family income of the applicable State for 1
earner;
``(B) in the case of a debtor in a household of 2, 3, or 4
individuals, the highest median family income of the
applicable State for a family of the same number or fewer
individuals; or
``(C) in the case of a debtor in a household exceeding 4
individuals, the highest median family income of the
applicable State for a family of 4 or fewer individuals, plus
$525 per month for each individual in excess of 4.''.

amendment no. 95

(Purpose: To amend the provisions relating to the discharge of taxes
under chapter 13)

On page 265, between lines 18 and 19, insert the following:

SEC. 707A. DISCHARGE UNDER CHAPTER 13.

Section 1328(a) of title 11, United States Code, as amended
by this Act, is further amended--
(1) in paragraph (2), by striking ``(1)(B), (1)(C),'';
(2) in paragraph (3), by striking ``or'' after the
semicolon;
(3) in paragraph (4), by striking the period at the end and
inserting ``; or''; and
(4) by adding at the end the following:
``(5) for taxes with respect to which the debtor filed a
fraudulent return.''.

amendment no. 96

(Purpose: To amend the provisions relating to chapter 13 plans to have
a 5-year duration in certain cases and to amend the definition of
disposable income for purposes of chapter 13)

Beginning on page 24, strike line 16 and all that follows
through page 26, line 7, and insert the following:
``(2)(A) For purposes of this subsection, the term
`disposable income' means current monthly income received by
the debtor (other than child support payments, foster care
payments, or disability payments for a dependent child made
in accordance with applicable nonbankruptcy law to the extent
reasonably necessary to be expended for such child) less
amounts reasonably necessary to be expended--
``(i)(I) for the maintenance or support of the debtor or a
dependent of the debtor, or for a domestic support
obligation, that first becomes payable after the date the
petition is filed; and
``(II) for charitable contributions (that meet the
definition of `charitable contribution' under section
548(d)(3) to a qualified religious or charitable entity or
organization (as defined in section 548(d)(4)) in an amount
not to exceed 15 percent of gross income of the debtor for
the year in which the contributions are made; and
``(ii) if the debtor is engaged in business, for the
payment of expenditures necessary for the continuation,
preservation, and operation of such business.
``(B) However, the debtor's disposable income may be
adjusted if the debtor demonstrates special circumstances
that justify adjustments of current monthly income for which
there is no reasonable alternative, as described in section
707(b)(2)(B) of this title.
``(3)(A) Amounts reasonably necessary to be expended under
paragraph (2) shall be determined in accordance with
subparagraphs (A) and (B) of section 707(b)(2), if the debtor
has current monthly income, when multiplied by 12, greater
than--
``(i) in the case of a debtor in a household of 1 person,
the median family income of the applicable State for 1
earner;
``(ii) in the case of a debtor in a household of 2, 3, or 4
individuals, the highest median family income of the
applicable State for a family of the same number or fewer
individuals; or
``(iii) in the case of a debtor in a household exceeding 4
individuals, the highest median family income of the
applicable State for a family of 4 or fewer individuals, plus
$525 per month for each individual in excess of 4.
``(B) However, this paragraph shall not apply if the debtor
demonstrates special circumstances that justify adjustments
of current monthly income for which there is no reasonable
alternative, as described in section 707(b)(2)(B) of this
title, and which bring the debtor's income below the
applicable amount set forth in this paragraph.''.
(i) Reduction of the Term of the Plan For Certain
Debtors.--Section 1329 of title 11, United States Code, is
amended by adding at the end the following:
``(d) Notwithstanding paragraphs (1)(B) and (4) of section
1325(b), if the actual income of the debtor, or in a joint
case the debtor and the debtor's spouse, has dropped below
the applicable amount stated in section 1325(b)(3), either
before or after the petition, and is unlikely to increase
above such amounts within 1 year, the debtor's plan may be
modified to reduce the term of the plan to a time period
equal to or greater than the applicable commitment period in
section 1325(b)(4)(A)(i) and the debtor shall not be subject
to section 1325(b)(3).''.

amendment no. 97

(Purpose: To amend the provisions relating to chapter 13 plans to have
a 5-year duration in certain cases and to amend the definition of
disposable income for purposes of chapter 13)

On page 182, between lines 3 and 4, insert the following:

SEC. 318A. APPLICABILITY OF MEANS TEST AND PLANS TO HAVE A 5-
YEAR DURATION IN CERTAIN CASES.

(a) Applicability of Means Test to Chapter 13.--Section
1325(b) of title 11, United States Code, as amended by this
Act, is further amended--
(1) in paragraph (2), by inserting ``or, if lower and not
likely to increase substantially in the 2 months after the
order for relief, the debtor's monthly income on the date of
the order for relief under this chapter'' after ``received by
the debtor'';
(2) in paragraph (3), by inserting ``(or, if lower and not
likely to increase substantially in the 2 months after the
order for relief, the debtor's monthly income on the date of
the order for relief under this chapter)'' after ``if the
debtor has current monthly income''; and
(3) in paragraph (4)--
(A) in subparagraph (A)(ii), by striking ``debtor and the
debtor's spouse combined'' and inserting ``debtor, and in a
joint case the debtor and the debtor's spouse, or, if lower
and not likely to increase substantially in the 2 months
after the order for relief, the monthly income on the date of
the order for relief under this chapter'';
(B) in subparagraph (A)(ii)(III), by striking ``and'' after
the semicolon;
(C) in subparagraph (B), by striking the period at the end
and inserting ``; and''; and
(D) by adding at the end the following:
``(C) provided that if the debtor's income decreases during
the case to less than the amount set forth in subparagraph
(A)(ii), and is not likely again to exceed that amount within
1 month, may be reduced to 3 years.''.
(b) Chapter 13 Plans to Have a 5-year Duration in Certain
Cases.--Section 1322(d) of title 11, United States Code, as
amended by this Act, is further amended--
(1) in paragraph (1), by striking ``debtor and the debtor's
spouse combined'' and inserting ``debtor, and in a joint case
the debtor and the debtor's spouse, or, if lower and not
likely to increase substantially in the 2 months after the
order for relief, the monthly income on the date of the order
for relief under this chapter''; and
(2) in paragraph (2), by striking ``debtor and the debtor's
spouse combined'' and inserting ``debtor, and in a joint case
the debtor and the debtor's spouse, or, if lower and not
likely to increase substantially in the 2 months after the
order for relief, the monthly income on the date of the order
for relief under this chapter''.

amendment no. 98

(Purpose: To modify the disclosure requirements for debt relief
agencies providing bankruptcy assistance)

On page 112, line 17, insert ``, other than an attorney or
an employee of an attorney'' after ``any person''.
On page 120, lines 12 and 13, strike ``AN ATTORNEY OR'' and
insert ``A''.
On page 120, line 19, strike ``AN ATTORNEY OR'' and insert
``A''.
On page 120, lines 21 and 22, strike ``ATTORNEY OR''.

amendment no. 99

(Purpose: To provide no bankruptcy protection for insolvent political
committees)

On page 205, between lines 16 and 17, insert the following:

[[Page S2138]]

SEC. 332. NO BANKRUPTCY FOR INSOLVENT POLITICAL COMMITTEES.

Section 109 of title 11, United States Code, is amended by
adding at the end the following:
``(i) A political committee subject to the jurisdiction of
the Federal Election Commission under Federal election laws
may not be a debtor under this title.''.

amendment no. 100

(Purpose: To provide authority for a court to order disgorgement or
other remedies relating to an agreement that is not enforceable)

On page 63, between lines 3 and 4, insert the following:
``(4) Nothing in this section shall preclude a court from
ordering disgorgement of payments accepted, or other remedies
under this title or other applicable law, when a creditor has
accepted payments under such agreement or in anticipation of
such agreement and the agreement is not enforceable.

amendment no. 101

(Purpose: To amend the definition of small business debtor)

Beginning on page 222, strike line 23 and all that follows
through page 223, line 21, and insert the following:
``(A) subject to subparagraph (B), means a person engaged
in commercial or business activities (including any affiliate
of such person that is also a debtor under this title and
excluding a person whose primary activity is the business of
owning or operating real property or activities incidental
thereto) that has aggregate noncontingent liquidated secured
and unsecured debts as of the date of the petition or the
date of the order for relief in an amount not more than
$1,250,000 (excluding debts owed to 1 or more affiliates or
insiders) for a case in which the United States trustee has
not appointed under section 1102(a)(1) a committee of
unsecured creditors or where the court has determined that
the committee of unsecured creditors is not sufficiently
active and representative to provide effective oversight of
the debtor; and
``(B) does not include any member of a group of affiliated
debtors that has aggregate noncontingent liquidated secured
and unsecured debts in an amount greater than $1,250,000
(excluding debt owed to 1 or more affiliates or insiders);''.

Mr. SESSIONS. Mr. President, on the unanimous consent request,
reserving the right to object, I know the Senator from Wisconsin has
worked hard on the bankruptcy bill and has a number of relevant,
germane amendments. I know he cares about the bill. I think he would
like to see it die, but he wants to make it better. How many amendments
did he have?
Mr. FEINGOLD. Fifteen total. This is not a number that I would
actually offer. I will be able to pare that list down, but I wanted to
preserve my right to have any germane amendment voted on postcloture.
Mr. SESSIONS. I have great respect for the Senator from Wisconsin,
and I will not object if he will use his best judgment and try to avoid
as many votes as we can.
Mr. FEINGOLD. Mr. President, I have found the Senator very reasonable
in working on these amendments. Certainly some will not be offered,
others are not major amendments, others will require votes, but it will
be a list significantly smaller than 15.
Mr. SESSIONS. I will not object.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 121

Mr. TALENT. Mr. President, I ask unanimous consent that the pending
amendment be set side and my amendment No. 121 be called up, the
reading be dispensed with, and it then be set aside.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The amendment (No. 121) is as follows:

(Purpose: To deter corporate fraud and prevent the abuse of State self-
settled trust law)

On page 500, between lines 2 and 3, insert the following:
(4) by adding at the end the following:
``(e)(1) In addition to any transfer that the trustee may
otherwise avoid, the trustee may avoid any transfer of an
interest of the debtor in property that was made on or within
10 years before the date of the filing of the petition, if--
``(A) such transfer was made to a self-settled trust or
similar device;
``(B) such transfer was by the debtor;
``(C) the debtor is a beneficiary of such trust or similar
device; and
``(D) the debtor made such transfer with actual intent to
hinder, delay, or defraud any entity to which the debtor was
or became, on or after the date that such transfer was made,
indebted.
``(2) For the purposes of this subsection, a transfer
includes a transfer made in anticipation of any money
judgment, settlement, civil penalty, equitable order, or
criminal fine incurred by, or which the debtor believed would
be incurred by--
``(A) any violation of the securities laws (as defined in
section 3(a)(47) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(47))), any State securities laws, or any
regulation or order issued under Federal securities laws or
State securities laws; or
``(B) fraud, deceit, or manipulation in a fiduciary
capacity or in connection with the purchase or sale of any
security registered under section 12 or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78l and 78o(d)) or
under section 6 of the Securities Act of 1933 (15 U.S.C.
77f).''.

Amendment No. 129 to Amendment No. 121

Mr. SCHUMER. Mr. President, I offer a second-degree amendment to
amendment No. 121, proposed by Senator Talent.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from New York [Mr. Schumer] proposes an
amendment numbered 129 to amendment No. 121.

Mr. SCHUMER. Mr. President, I ask unanimous consent that the reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(Purpose: To limit the exemption for asset protection trusts)

Beginning on page 1 of the amendment, strike all after (4)
and insert the following:
``(e)(1) In addition to any transfer that the trustee may
otherwise avoid, the trustee may avoid any transfer of an
interest of the debtor in property that was made on or within
10 years before the date of the filing of the petition, if--
``(A) such transfer was made to a self-settled trust or
similar device;
``(B) such transfer was by the debtor; and
``(C) the debtor is a beneficiary of such trust or similar
device.
``(2) Paragraph (1) shall not apply to the trusts specified
in section 522(d)(12).''.

Mr. SCHUMER. Mr. President, I will be very brief. Late last week,
this body, in its wisdom, defeated our amendment to close the
millionaire's loophole, an amendment that would allow certain trusts to
be set up by anybody, but, of course, they are expensive and only those
very wealthy who have a purpose would do it and shield their assets in
the trust and then declare bankruptcy and shed their debt.
It meant that if you were very wealthy, and you could afford some
fancy lawyers, you were a lot better off than somebody who went
bankrupt who made $40,000, $45,000, $50,000, or $55,000. I was hoping
the amendment could have been adopted, but it was not.
After that point, a number of my colleagues from the other side said,
let's try to work something out. We tried this morning but did not
reach agreement. So Senator Talent, my friend from Missouri, just
offered his amendment, which I regret to say does not close the
millionaire's loophole at all. It is something of a subterfuge. There
are two basic problems with it.
First, you would have to prove that the intent of the filer of the
trust was to avoid bankruptcy. I do not have to tell anyone here who is
a lawyer that to prove that intent, especially when the filer would
want to make sure that intent could not be proven and would leave no
paper trail, no documents or anything else, would be next to
impossible. So in a sense, it would not close the loophole at all.
But there is a broader point. Whether the intent was to do it or not,
why should someone be able to shield millions of dollars of assets and
declare bankruptcy? We are trying to close abuses here. Why are the
abuses of the wealthy any less worthy of being closed than, say, of the
middle class, someone who might gamble their meager assets away?
This amendment removes the requirement that you must prove the intent
of setting up the trust was simply to avoid your assets being taken in
bankruptcy, as well as doing one other thing. The amendment has another
problem with it which deals with pensions, and our amendment corrects
that as well.
Their amendment on pensions would subject pensions to these rules,
and we do not want to do that. That is quite different than somebody
hiding their assets in these trusts. But some of these trusts are used
by pension plans. We do not bring pension plans into it. In fact, we
take them out.
The Talent amendment has kept the pension proposal. I am sure we will
be debating the Talent amendment and my second-degree amendment to the
Talent amendment at some point as we

[[Page S2139]]

move forward on the bankruptcy bill, but I wanted to let my colleagues
know what has happened.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. Mr. President, will the Senator from New York yield for
a question?
Mr. SCHUMER. I will be happy to yield for a question.
Mr. SESSIONS. Mr. President, we went through a debate last time over
the retirement benefits, the savings plans. I thought we capped those
at $1 million.
My question to the Senator from New York, Mr. President, is, how
confident is he under the bankruptcy bill as written that these trusts
will be held by bankruptcy judges as not subject to being part of the
assets of the debtor's estate? Is this something about which the
Senator from New York is concerned? And we are not sure or do we have
any law that will give the Senator cause to believe that they would not
be captured as part of the estate?
Mr. SCHUMER. The lawyers we have consulted have said it is pretty
clear-cut that these assets would be held immune from bankruptcy. But
probably more important than my opinion, there was an article in the
New York Times written by a Pulitzer Prize-winning author who is an
expert on the Tax Code who checked this out with many different
sources, as I read the article, and said it is pretty clear that these
assets would be held immune from bankruptcy.
Let me remind my colleague, only five States allow the setting up of
these trusts, but neither Alabama nor New York. Citizens in our States
could set up these trusts in Utah. I do not remember all the other
States. I remember Utah because Senator Hatch came over to me and said:
that is my State you are picking on. They could set up these trusts,
use the trusts in those States, and they would be immune from
bankruptcy, no matter what the jurisdiction.
Mr. SESSIONS. I thank the Senator from New York. It is a matter that
could be significant, and I am glad we are discussing it.
Mr. SCHUMER. If my colleague will yield for a minute, I would prefer
not to second degree the amendment of my friend from Missouri. I would
like to come to a compromise that truly closes this loophole. I know my
friend from Iowa, the leader on this bill, had mentioned in his remarks
that he was interested in closing this. My colleague from Utah had
mentioned that he was interested in closing this, and rather than
having a debate on the amendment of the Senator from Missouri and my
second degree, if we could come to a compromise that truly closes the
loophole without going further, I would be happy to do that.
Mr. SESSIONS. I thank the Senator for that offer and will look
forward to taking him up on that.
Mr. SCHUMER. I thank my colleague, and I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.

Amendments Nos. 110, 111, 112

Mr. DURBIN. Mr. President, I ask unanimous consent that the pending
amendment be set aside for the purpose of offering en bloc amendments
Nos. 110, 111, and 112.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
The amendments are as follows:

amendment no. 110

(Purpose: To clarify that the means test does not apply to debtors
below median income)

On page 18, strike line 1 and all that follows through
``(2)'' on line 3, and insert the following:
(7)(A) Notwithstanding paragraph (2), a debtor described in
this paragraph need only provide the calculations or other
information showing that the debtor meets the standards of
this paragraph. Paragraph (2) shall not apply, and the court
may not dismiss a case based on any form of means testing,

amendment no. 111

(Purpose: To protect veterans and members of the armed forces on active
duty or performing homeland security activities from means testing in
bankruptcy)

On page 13, between lines 13 and 14, insert the following:
``(D) Subparagraphs (A) through (C) shall not apply, and
the court may not dismiss or convert a case based on any form
of means testing, if--
``(i) the debtor or the debtor's spouse is a member of the
armed forces--
``(I) on active duty (as defined in section 101(d)(1) of
title 10); or
``(II) performing a homeland defense activity (as defined
in section 901(1) of title 32);
``(ii) the debtor or the debtor's spouse is a veteran (as
defined in section 101(2) of title 38), and the indebtedness
occurred primarily during a period of not less than 180 days,
during which he or she was--
``(I) on active duty (as defined in section 101(d)(1) of
title 10); or
``(II) performing a homeland defense activity (as defined
in section 901(1) of title 32);
``(iii) the debtor or the debtor's spouse is a reserve of
the armed forces, and the indebtedness occurred primarily
during a period of not less than 180 days, during which he or
she was--
``(I) on active duty (as defined in section 101(d)(1) of
title 10); or
``(II) performing a homeland defense activity (as defined
in section 901(1) of title 32); or
``(iv) the debtor's spouse died while serving as a member
of the armed forces--
``(I) on active duty (as defined in section 101(d)(1) of
title 10); or
``(II) performing a homeland defense activity (as defined
in section 901(1) of title 32).

amendment no. 112

(Purpose: To protect disabled veterans from means testing in bankruptcy
under certain circumstances)

On page 13, between lines 13 and 14, insert the following:
``(D) Subparagraphs (A) through (C) shall not apply, and
the court may not dismiss or convert a case based on any form
of means testing, if the debtor is a disabled veteran (as
defined in section 3741(1) of title 38), and the indebtedness
occurred primarily during a period during which he or she
was--
``(i) on active duty (as defined in section 101(d)(1) of
title 10); or
``(ii) performing a homeland defense activity (as defined
in section 901(1) of title 32).

Amendment No. 26, as Modified

Mr. DURBIN. Mr. President, on behalf of Senator Leahy, I send a
modification of amendment 26 to the desk. This amendment has been
cleared on both sides.
The PRESIDING OFFICER. Is there objection to the modification?
The PRESIDING OFFICER. Without objection, it is so ordered. The
amendment will be so modified.
The amendment (No. 26), as modified, is as follows:

(Purpose: To restrict access to certain personal information in
bankruptcy documents)

On page 132, between lines 5 and 6, insert the following:

SEC. 234. PROTECTION OF PERSONAL INFORMATION.

(a) Restriction of Public Access to Certain Information
Contained in Bankruptcy Case Files.--Section 107 of title 11,
United States Code, is amended by adding at the end the
following:
``(c)(1) The bankruptcy court, for cause, may protect an
individual, with respect to the following types of
information to the extent the court finds that disclosure of
such information would create undue risk of identity theft or
other unlawful injury to the individual or the individual's
property:
``(A) Any means of identification (as defined in section
1028(d) of title 18) contained in a paper filed, or to be
filed, in a case under this title.
``(B) Other information contained in a paper described in
subparagraph (A).
``(2) Upon ex parte application demonstrating cause, the
court shall provide access to information protected pursuant
to paragraph (1) to an entity acting pursuant to the police
or regulatory power of a domestic governmental unit.
``(3) The United States trustee, bankruptcy administrator,
trustee, and any auditor serving under section 586(f) of
title 28--
``(A) shall have full access to all information contained
in any paper filed or submitted in a case under this title;
and
``(B) shall not disclose information specifically protected
by the court under this title.''.
(b) Security of Social Security Account Number of Debtor in
Notice to Creditor.--Section 342(c) of title 11, United
States Code, is amended--
(1) by inserting ``last 4 digits of the'' before ``taxpayer
identification number''; and
(2) by adding at the end the following: ``If the notice
concerns an amendment that adds a creditor to the schedules
of assets and liabilities, the debtor shall include the full
taxpayer identification number in the notice sent to that
creditor, but the debtor shall include only the last 4 digits
of the taxpayer identification number in the copy of the
notice filed with the court.''.
(c) Conforming Amendment.--Section 107(a) of title 11,
United States Code, is amended by striking ``subsection
(b),'' and inserting ``subsections (b) and (c),''.

Mr. LEAHY. Mr. President, the recent debacles at ChoicePoint and Bank
of America remind us that we must vigilantly protect our personal
information at all points of vulnerability. The bankruptcy process,
which inherently involves the exchange of highly personal information,
should be no different.
This is a bipartisan amendment that balances the need to protect
personal

[[Page S2140]]

information with the needs of creditors, regulators and law enforcement
to access critical information. The amendment is strongly supported by
the non-partisan Judicial Conference, and also by the Center for
Democracy and Technology.
I am pleased that my colleagues Senator Snowe and Senator Cantwell
have agreed to cosponsor this amendment, and that Chairman Specter and
Senator Grassley worked so closely with us to improve the amendment
even further. They have all been leaders on privacy issues, and I
appreciate their support.
Our bipartisan amendment does two things. It enhances court
discretion to balance the need to know against the need to protect
personal information, and it requires truncation of social security
numbers in publicly filed documents. This protection is particularly
important in an electronic filing environment, where information once
filed is immediately available to the public via the Internet.
The amendment allows the court, for cause, to protect personal
information. For example, the court can seal or redact information,
such as the home or employment address of a debtor, because of a
personal security risk, including fear of injury by a former spouse or
stalker. The amendment would also give the court the leeway to protect
other information normally considered private, such as personal medical
records.
Our bipartisan amendment still protects law enforcement and creditors
where necessary. A law enforcement provision ensures that police and
regulators can get needed information directly from the bankruptcy
court, and a creditor protection provision specifies that creditors,
including the IRS, receive the full Social Security number of a debtor
in the initial notice of the case. Finally, we also clarify that these
protections should not limit the access of the trustees, administrators
and auditors to necessary information.
We must be careful that our efforts to require documentation for
accuracy and accountability do not inadvertently create problems for
privacy and security. As modified, the amendment properly balances
these concerns, and protects the needs of those who need to know.
This has been a cooperative, bi-partisan effort, I extend special
thanks to Senator Snowe, Chairman Specter, and Senator Grassley for all
their hard-work in reaching an agreement, and I am pleased to submit
this modification.
Ms. SNOWE. Mr. President, I support the amendment offered by my
colleague Senator Leahy, to ensure that the private, personal
identification information filed in bankruptcy proceedings does not
fall into the hands of identity thieves, violent stalkers, and other
persons with criminal intentions. I, along with my colleague Senator
Cantwell, join as cosponsors to the Leahy amendment and urge its
adoption by the Senate. This amendment is endorsed by the Judicial
Conference of the United States, which is presided over by Chief
Justice Rehnquist, and to which Congress regularly defers in the
writing of the rules of our Federal court system.
Bankruptcy court filings, like most other court proceedings, are
public record, and most papers filed in these cases are publicly
available record. This is a good thing, because the administration of
justice in our country should not be a secret affair. It is the
public's right to know how its courts are meting out justice. The
Bankruptcy Code affirmatively adopts this policy.
At the same time, bankruptcy proceedings are unique in that the
explicit financial information of the debtor and its creditors are
filed with the court, and likewise available for public review. Such
information includes not only a person's name and address, but
information such as the person's social security number, date of birth,
driver's license number, and electronic addresses and routing codes.
This information has long been available for public review at our
Nation's courthouses. However, in today's information age, more and
more Federal courts are making all of their public documents available
on-line as well. While this is an advancement in efficiency in most
regards, it opens up a great potential for abuse for identity thieves
and others who access the Internet with the intent to commit fraud,
physical harm, or other crimes.
More and more agencies today gain access to such personal information
through publicly available documents. And as the recent computer
hacking incident at Choice Point Corporation demonstrates, such
personal information can be obtained even from companies in the
businesses of collecting and securely storing such information.
Moreover, access to such personal, sensitive information could pose
serious risks to victims of domestic abuse, stalking, and other violent
crime. Because any person with a computer can obtain these court
documents, a person's safety and the safety of her property could be
seriously put at risk.
Senator Leahy, Senator Cantwell, and I have devised this amendment to
help prevent these harmful invasions of privacy from ever occurring.
Currently the Bankruptcy Code allows courts to issue protective orders
to prevent public disclosure of trade secrets and confidential research
and commercial information. Our amendment would expand the court's
authority to provide for similar protection of the personally
identifiable information that I just described, as well as give the
court the ability to shield other information if its release would
create an undue risk of either identity theft or of injury to an
individual's person or property. It further provides that when publicly
available notices are filed with the court, only the last four digits
of a person's social security number are required to be included in the
documents. A separate filing with the full social security number will
be sent privately to each party in interest in the bankruptcy
proceeding. This amendment also creates an exception to ensure that law
enforcement can gain access, and it has the support of the Department
of Justice.
Furthermore, I have worked closely with the sponsors of the
underlying bill, which I support, to ensure that this amendment does
nothing to harm the efficient functioning of the credit and banking
industries. Credit reporting agencies often rely on taxpayer
identification numbers--most often social security numbers--to
determine a person's creditworthiness. To ensure accuracy in such
credit reports, we have modified the original language of this
amendment to address the industry's concerns without in any way
weakening the protections that we seek to enact. The new language
strikes the appropriate balance for all concerned, and I understand
that the industry finds the modification acceptable.
Giving the sensitive nature of bankruptcy filings and the increased
threat of identity theft in today's society, this is a common sense
measure to the underlying bankruptcy reform bill, which I support. I am
pleased that all sides have come to agreement, and that this amendment
will be adopted.
Ms. CANTWELL. Mr. President, I want to thank my colleagues on the
Senate Judiciary Committee and others who have worked together for many
years, despite considerable differences in the area of bankruptcy
reform, to produce a bill that has passed the Senate a number of times.
All that said, the bill is far from perfect, and the Senate should take
full advantage of this opportunity to take a number of steps to amend
this bill and improve it. I have supported amendments that improve the
bill in areas where it affects particularly vulnerable consumers and
retirees, and I believe we should also address incidents of corporate
abuse. There are also ways to bring the bill up to date with modern
technology and crime.
For example, I proudly join my colleague from Vermont, Mr. Leahy, in
recommending to all my colleagues the pending Leahy-Cantwell-Snowe
privacy amendment, Amendment No. 26. This amendment is an appropriate
response to the recent erosion of informational privacy in our society,
demonstrated by the ChoicePoint and Bank of America personal
informational security breaches, where the personal information of
thousands of people was misappropriated by identity thieves.
Consumers should not have to surrender their privacy rights, just to
gain access to our Nation's bankruptcy system. There are a number of
reasons why it is simply sound practice for bankruptcy courts to join
other Federal courts that already have a viable

[[Page S2141]]

mechanism to file personal information of debtors and others under
seal. Identity theft is a predictable outcome when criminals have
virtually unfettered access to an obvious public database of people who
are already vulnerable in public bankruptcy court files. In some
instances, a debtor might be a battered woman, a victim of a stalker or
another victim of domestic violence, and the disclosure of that
person's private information may subject her to further abuse. Congress
has recognized the need to render private such personal information in
court filings in much of the Federal court system, and this body should
now add the bankruptcy courts to the list of properly protected public
entities. Although I recognize that bankruptcy courts have some
discretion to protect ``scandalous or defamatory matter,'' the point or
preserving privacy of this information should also be to protect
information that could be used to injure the consumer, either
financially or even physically. It is also clear that such courts do
not have the same ability to do protect information for cause as do
other Federal courts. It is time to fix this unjustifiable distinction
between the privacy rights of litigants in one kind of Federal court
and another. I ask my colleagues to support Leahy-Cantwell-Snowe,
because people's economic and even their physical security may be in
jeopardy otherwise. Let's not wait for the inevitable abuse of this
loophole, which could lead to stolen identities, or physical harm,
before we act.
I urge my colleagues to vote for the Leahy-Cantwell-Snowe amendment.
Mr. DURBIN. Mr. President, I rise to speak very briefly about the
amendments I have offered this evening to the pending bankruptcy bill.
I have found as I traveled back in Illinois and around the country that
some people follow the C-SPAN floor debate very closely. Just over this
weekend, having traveled to Arizona and Nevada, I am amazed to find
people who heard my speech on the bankruptcy bill, which always
intrigues me that so many people suffer from insomnia that they watch
C-SPAN gavel to gavel, but in all honesty I admire them for their
interest in our Government, and I hope that they follow this debate.
But if one is a newcomer to this bankruptcy bill debate, I will say a
few words about the bill and the amendments which I have offered.
When it comes to the bill itself, which is 510 pages, it will amend
the bankruptcy law of America. It is a bill which has been considered
for years. We have had versions of this bill over the last 9 or 10
years. I know because years ago I worked with Senator Grassley on one
of the first modifications to the Bankruptcy Code. Some of these
changes passed the Senate and failed in the House. Some have passed the
House and Senate and been vetoed by President Clinton. The bill has had
its ups and downs. It never did become law in that period of time.
Now for the second bill of the session, one of the highest priorities
on the Republican side of the aisle--they are pushing for the
bankruptcy reform bill. When one thinks of all the challenges in
America, the obvious question is, why are we considering bankruptcy
reform before we would even consider health care in America or doing
something about the economy creating jobs or addressing the budget
deficit in America or even addressing Social Security? Why is this
bankruptcy bill such a high priority? Well, the reason is this bill
makes fundamental changes in the law as to which Americans will qualify
for bankruptcy.
Bankruptcy, of course, was created in the law of many civilized
nations such as the United States because in the old days if one went
deeply into debt they could be put in prison. People decided that was
barbaric. They said there should reach a point, if one cannot pay their
debts, they can be exonerated or have those debts wiped clean from
their record and start new, start fresh. That is what bankruptcy is all
about.
Chapter 7 of the Bankruptcy Code is that situation. One walks into
the court and they say, here are all of my debts, here are all of my
assets, and the court should basically liquidate whatever they have,
pay off as much of the debt as possible, and at the end of the day they
walk out of the court without much left on this Earth but without any
debts, wipe the slate clean. That is bankruptcy.
There are other provisions in the Bankruptcy Code, notably chapter
13. Under chapter 13, one walks into court and says: I have more debts
than I can pay, but I can pay something. The court then says: We will
work out a schedule for what you will pay over a period of time. That
is chapter 13. So one does not walk out with their debts relieved, but
they may walk out with fewer debts to pay and a schedule to pay them.
The court monitors their progress under chapter 13. So in chapter 7,
one walks out with the slate clean. Chapter 13, they walk out still
paying off their debts.
In came the credit card companies and the major banks to Congress
about 10 years ago and said, we believe that too many people are having
the slate wiped clean and that they should continue to pay off their
debts, even if they think they should be relieved of all liability. The
purpose of this bill is to say that people walking into bankruptcy
court are now going to have a much more difficult time wiping the slate
clean to start over. More likely than not, particularly if they are
making more than the median income in America, which is not a huge,
princely sum, the credit card industry comes in and says, we want to
make sure that if someone comes into court and wants to file
bankruptcy, when it is all said and done, they will still have credit
card bills to pay, and not just credit card bills. They could be
medical bills. They could be any number of different bills. So they
pushed hard for 10 years to get this bill passed by the Senate in the
hopes that fewer Americans will have an opportunity to start fresh and
to start new. So we have been debating for over a week changes in this
bill, changes that were designed to take into consideration special
circumstances.
I give credit to my friends on the Republican side of the aisle. They
have rejected every single change. Let me say what they have rejected
so far. I offered an amendment that said if one served in the Guard or
Reserve, if they are in the military and they are serving their country
overseas and as a result of their service their family or their
business goes into bankruptcy, we are not going to be so harsh on them.
We are going to give them an easier time of it in bankruptcy because
their circumstances serving our country, risking their lives for
America, warrant better consideration than some other circumstances. I
thought that was a reasonable amendment. I hear all my fellow
Senators praising our men and women in uniform, how they are standing
behind them. Well, I had veterans groups and military family groups all
supporting my amendment. They said this is a reasonable thing to do. A
lot of people who are activated end up losing their businesses, and
they should be given some consideration in bankruptcy court.

I lost that amendment 58 to 38. Every Republican Senator voted
against it. I cannot quite understand why, but that was their position.
Then came Senator Kennedy. Senator Kennedy said we just did a survey,
and the No. 1 reason people file bankruptcy now is because of medical
bills. Senator Kennedy said if someone has gone through a medical
crisis in their life and they have medical bills they cannot pay, we
will at least say that when they go into bankruptcy court because of
those bills, they can protect a small home, $150,000 home, which in
some communities in America would be a very small home. It says that
even though one has been through an illness, they had all of these
medical bills, they have been forced into bankruptcy, they will have a
roof over their head. That amendment was rejected, too. The thought
that we would give people and their families facing medical
catastrophes a break to be able to keep a home was rejected.
I then offered an amendment that said, what if the creditor is what
we call a predatory lender, somebody who breaks the rules, breaks the
law--for example, offers a second mortgage on a home at an unreasonable
interest rate, hidden charges, balloon payments that prey upon people
like senior citizens--what are we going to do when they come to
bankruptcy court? Why should we allow them to take away the home of a
person if they have broken the law in giving the loan?
I thought that was pretty obvious. A person coming into bankruptcy
court

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as a creditor doesn't have clean hands if they have broken the law with
the loan they are trying to enforce. I thought at least we would stand
for the law, that we would only enforce legal loans, not illegal loans.
Rejected. It was rejected largely on a party-line vote. Every
Republican Senator but one voted against it.
As you can see, as we have gone through these amendments, whether we
are talking about men and women in the military, whether we are talking
about people with medical bills, whether we are talking about victims
of predatory loans, even if we are talking about people who are victims
of identity theft--we are all following the news accounts of
ChoicePoint where a lot of personal information has been disclosed
about individuals. It scares a lot of folks that someone will grab
their Social Security number and their identity and run up some bills.
It happens. Unfortunately it happens a lot.
Senator Bill Nelson of Florida said if you are a victim of identity
theft, you should be given a break in bankruptcy court. They weren't
debts you incurred; they were debts incurred by someone who stole your
identity. I thought that was a reasonable amendment, too.
Rejected. Every Republican voted against it. They don't want to take
into consideration the real-life tragedies and misfortunes that bring
someone into bankruptcy court. They want to make sure that at the end
of the day the credit card companies and the major financial
institutions will get more money from people walking into bankruptcy
court.
Senator Akaka offered an amendment and said, shouldn't these credit
card companies disclose more in their monthly statements, these
companies that just inundate us with applications for credit cards?
Shouldn't their monthly statements at least say: If you make the
minimum monthly payment, this is how long it will take to pay off the
loan and here is how much you will pay in interest? Is that
unreasonable? I don't think it is.

These companies are making huge amounts of money. In 2003 the credit
card companies made $30 billion in profit.
So Senator Akaka offered an amendment that said at least these credit
card monthly statements should tell the consumer more so they make the
right choices for themselves and their families.
Rejected, again, on a party-line vote, with only one Senator from the
Republican side of the aisle voting for it.
You think to yourself, if you can't hold the credit card companies to
even that minimum standard, what is this debate all about? We are not
creating exceptions for real-life situations. We are not giving
consumers more tools to decide what is a reasonable amount of credit.
All we are doing is saying, at the end of the day, the credit card
companies are going to get their bill and they are going to get more
money out of people filing in bankruptcy court.
Time and again in this debate, many of my colleagues, whom I respect
much, have said: Senator Durbin, you have it all wrong. If people make
less than the median income in America, they will not be affected by
this bill. They are going to be off the hook. You have to be making
over the median income to possibly get into a situation where you are
going to have to pay off more of your debts.
I have listened to that over and over. My staff and I, over the
weekend, read the bill. It turns out that is not the case. In order to
prove that you are below median income, you have to go through an
expensive and extensive process under this bill. So I felt that it was
only reasonable to say to my colleagues: Why don't we give those below
median income a better chance to prove that they should not be covered
by the provisions in this bill?
We make clear in amendment No. 110 that debtors in bankruptcy falling
below median income need only provide calculations or other information
showing the debtor's situation satisfies the below-median-income
standard.
In other words, you don't have to hire a lawyer. You don't have to
incur thousands of dollars of legal debt if you are below median
income. You establish that to the court and then you move forward.
Second, the amendment says that a court may not dismiss a case based
on any forms of means testing if the current monthly income of the
debtor falls at or below the median family income of the applicable
State. What the language in my amendment does is reinforce every
argument we have heard from the other side of the aisle. Time and again
they have said: If you make low income in America, you will not be
affected by this bill.
We say: Fine, then let's change the bill and clarify that so a person
filing for bankruptcy doesn't have to go through all of the pain and
all of the expense of filing all the documents required under this
bill.
We had a program under President Clinton not that long ago called the
COPS Program--you may remember it--bringing more police back to the
communities of America. It was a wildly successful program. It brought
thousands of policemen to the State of Illinois and many other States.
We ended up having a one-page application for that program. We prided
ourselves on the fact that we were not absolutely swamping people in
communities with all kinds of Federal paperwork and applications. With
one page you could qualify for a COPS grant in your community.
What we are saying here is, shouldn't a person in bankruptcy court,
already probably embarrassed by the process, already worried about
paying the legal bills, if they are below median income, shouldn't we
simplify the process for them?
I am going to give my colleagues a chance to vote on that.
The second thing we do is to return to the issue of veterans and
members of the Armed Forces on active duty, and whether they are going
to be treated the same in bankruptcy as other people. I will go back to
the argument. I think if someone is serving our country, risking their
lives for America, to protect me and my home, that we should do
everything we can to help them. So we say, in this case, if your
indebtedness as a veteran or a member of the military is primarily
incurred while you are on active duty, that you can go into the
bankruptcy court and escape the worst parts of the means test. It is a
way to consolidate some of the arguments made earlier and to try to
appeal to my friends on the Republican side of the aisle, for one last
time, to be sensitive to some of the real hardships that have been
created for families of Guardsmen and Reserves who have been activated.
The last point is one I almost offer in desperation, amendment No.
112. I cannot believe my colleagues have rejected all of these
amendments when they relate to men and women in the armed services, but
the last amendment relates to disabled veterans, men and women who
become disabled as a result of their service in America and face
bankruptcy. It is a final appeal to my friends on both sides of the
aisle: If you cannot work up sympathy for men and women in uniform
serving our country, at least have some concern for those who are
disabled and come back and face bankruptcy. Don't put them through
these unreasonable tests and standards in this bill. I would think all
of us could agree that disabled veterans should be given some sort of a
helping hand in this bankruptcy process.

So we will try again with the amendments that we offer. I know some
of them will be debated at length. I just sincerely hope this week the
supporters of this bill will at least take a little time and consider
the possibility of amending this bill.
To my knowledge, the only perfect law that was ever written were the
Ten Commandments, and they were not written by Senators. They were
written by somebody in higher office.
This bill, as good as it may be, can be better. It should be better.
It should be more sensitive to some of the real-world challenges that
we face. I hope we will consider these amendments favorably, enact them
soon, and make them part of this legislation. It will make a bill which
I think is unfair in many respects a lot fairer.

Amendment No. 26, As Modified

One last thing. I ask unanimous consent the Leahy-Snowe privacy
amendment No. 26, as modified, be accepted.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
The amendment (No. 26), as modified, was agreed to.
The PRESIDING OFFICER. The Senator from Alabama.

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Mr. SESSIONS. Mr. President, I would just say Senator Durbin is an
excellent advocate, but this is the fourth time that this bill in
substantially this form has been before this body. It has been marked
up in the Judiciary Committee four times. We have had weeks on it each
time it has come up for debate here. After several weeks of debate, the
last time it came up it passed 83 to 15.
The issues that he raises are really covered by the bill. If someone,
anyone is disabled and they have a continuing extra medical expense,
that would be considered in whether or not they would ever have to pay
any of their debts back. If their income is below median income, they
would never be required to pay their debts back. All they would have to
do is introduce some evidence from their pay stubs or their income tax,
what their income is. Certainly we have a right to ask that before we
discharge, wipe out, eliminate all debts, as people do when they come
into bankruptcy.
I really would just say that we have given great consideration to
these issues. We could disagree, but these amendments, for the most
part, have been up before. I do not believe that most are going to be
accepted. But there is every right of my colleague's side to offer
them.

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