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When Democrats Join the Dark Side

JONATHAN CHAIT

Their kowtowing to home-state industries props up the Republicans.

March 04, 2005|JONATHAN CHAIT

Not long ago, I was listening to Sen. Joe Biden (D-Del.) being interviewed, and I was struck at how intelligent and morally serious he was. Biden is justly viewed as a smart foreign policy hawk, but he also expressed his opposition to Social Security privatization in a particularly lucid way.

All in all, he came across as just the sort of person you'd like to have as president.

There's just one issue that's the exception. And that's what's wrong with most of the Democrats: There's always one issue that's the exception. But before we get into that, let me explain Biden's particular problem.

Biden supports a bill in Congress that would make it harder for people to declare bankruptcy. This is one of those abysmal pieces of legislation that exists only because businesses with a vested interest in it have lobbied hard for its passage and that would have no chance of success if more than a tiny fraction of the public were aware of its existence.

Bankruptcy filings have risen slightly in recent years. Credit card companies argue that it's because people are gaming the system, going on irresponsible spending binges and then using bankruptcy to stick their creditors with the bill.

The more likely explanation is that the rise in health insurance costs has driven more people into bankruptcy. A recent Harvard study found that half of Americans who declared bankruptcy did so because of illness or medical bills. Regardless of why you go bankrupt, though, the new bill would make it easier for creditors to seize your assets. Nice, huh?

This isn't to say there aren't abuses in the bankruptcy system. There are. The bill simply does nothing to stop them.

The worst abuses are loopholes allowing corporations or wealthy individuals to declare bankruptcy and keep millions of dollars safe from creditors. One such device is something called an "asset protection trust" -- a kind of savings fund that can't be touched by creditors. States actually compete with one another to offer the most generous trusts so they can lure businesses and affluent individuals to park their money in that state.

The most popular state for such trusts is corporate-friendly Delaware.

Delaware, of course, is home to Joe Biden. It's also home to many credit card companies, the driving force behind the bankruptcy bill. You don't have to connect a lot of dots to see the picture here.

The law is littered with abuses like the bankruptcy bill: measures that benefit a narrow economic interest at the expense of the broader public good. Most Democrats, like Biden, are smart enough to oppose most of them. But there's almost always a Democratic senator or two willing to shill for their home state industry's favorite abusive privilege.

When the Enron scandal broke, for instance, it came out that a few Democrats had joined Republicans to help the accounting and financial industry stave off sensible regulations during the 1990s. New York's Charles Schumer helped fight off efforts to bar accounting firms from receiving lucrative consulting deals from the same firms they audit -- a practice whose inherent conflicts were made notorious by the misdeeds of the firm Arthur Andersen. Connecticut Democrats Joe Lieberman and Chris Dodd shamelessly do the insurance industry's bidding.

On the other hand, Northeasterners like Lieberman and Schumer staunchly impose tougher mileage requirements on the auto industry. Alas, the auto industry staunchly opposes such requirements, and therefore so does Carl Levin of Michigan, normally a supporter of such liberal causes as a clean environment.

There's plenty more. Rural Democrats can always be relied on to support giveaways to agribusiness. Washington Democrat Henry "Scoop" Jackson, an old New Deal liberal, was known in his day as "the senator from Boeing."

The trouble here is that the relationship each Democrat has with his home-state business interests is the relationship every Republican has with every business interest. The bankruptcy bill enjoys unanimous GOP support in the Senate. It's a familiar pattern: Noxious laws enjoy support from a coalition of all the Republicans plus a rotating handful of Democrats who have ties to interested parties. Almost all the Democrats are on the side of the angels on almost every issue. But it doesn't take many Democratic defectors to give the Republicans a majority.

The ultimate problem is that even liberal Democrats consider being in the pocket of a home-state industry an acceptable indulgence. A little bit of shame might go a long way.

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