Press Releases

Ninth District Congressman Adam Smith today will vote to overhaul bankruptcy law and require debtors to repay some or all of their debt when they are financially able.

“Reforming bankruptcy laws is all about personal responsibility,” said Smith. “People who can afford to repay their debts should do so.”

The Bankruptcy Reform Act of 1999 (H.R. 833) is expected to pass the House today.

Under current law, bankruptcy filers may file under Chapter 7 and be absolved of all debt, or file under Chapter 13, preventing repossession of property but agreeing to repay some or all of their debt. H.R. 833 institutes a needs-based formula to steer more debtors into Chapter 13 and thereby require greater debt repayment.

“The formula is very balanced and fair,” explained Smith. “First of all, it only affects taxpayers earning more than the median income. It then provides allowances for living expenses, exempts child support payments, exempts secured debts such as mortgage and car payments, exempts retirement and education savings, and determines an individual’s ability to pay their debt. If there is an extenuating circumstance, such as job loss or medical emergency, a judge can still opt to forgive the debt. If it is determined that the debtor can afford to repay some of the debt, he or she is required to do so.”

It is estimated that bankruptcies cost each American household $400 per year in the form of higher prices for goods and services. Bankruptcies also restrict access to credit for lower- and middle-income families. 

Smith says bankruptcy reform will provide fairness for the vast majority of consumers who do pay bills on time. “It is unfair that many higher-income families are declaring bankruptcy even when they have the ability to repay some of their debts, costing other families hundreds of dollars a year.” he said.

Small businesses are another victim of irresponsible bankrutpcy filings, according to Smith. “A small business can be devastated by just one or two debtors declaring bankruptcy and not paying their bills,” he explained. “The Bankruptcy Reform Act will change this by only allowing those consumers truly in need of bankruptcy reform to be absolved of their debts.”

The legislation also ensures that child support payments are first priority for debt repayment, unlike current law which places child support seventh on the list of priorities for repayment.

Smith says he supports the legislation because it emphasizes the value of personal responsibility. “We need to ensure that government policy promotes values like personal responsibility,” said Smith. “Requiring people to pay off the debt they incur whenever possible is a very basic tenet of personal responsibility.”

Ninth District Congressman Adam Smith was named to the Honor Roll on the Concord Coalition Tough Choices scorecard, which scored Members of Congress on their votes related to fiscal discipline and responsible budgeting.

The Concord Coalition is a bipartisan, grassroots organization advocating fiscal responsibility and entitlement reform to protect their viaiblity and fairness for all generations. Their “Tough Choices” scorecard rates 12 votes in the House of Representatives that promote fiscal discipline. Priorities include protecting the budget surplus until the long-term Social Security problem has been solved, keeping the budget enforcement procedures, such as the pay-as-you-go rules, intact, and eliminating wastefull or unnecessary government programs.

The 12 votes scored by the Concord Coalition were weighted according to their relative importance to deficit reduction. The median score in the House of Representatives was 36.

Smith earned a raw score of 74 and was in the 97th percentile, which places him number 12 out of 435 Members of Congress. The top fifteen include Members of both parties from around the country: Representatives Mark Sanford (R-SC), David Skaggs (D-Colo), Tom Barrett (D-Wis), Ron Kind (D-Wis), Michael Castle (R-Del), Lloyd Doggett (D-Tex), Bill Luther (D-Minn), David Minge (D-Minn), Pete Stark (D-Calif), Barbara Lee (D-Calif), Vic Fazio (D-Calif), Ben Cardin (D-Md), Adam Smith (D-Wash), Charles Stenholm (D-Tex), and Ron Paul (R-Tex).

“Although I don’t vote based on how I will be rated by any organization, I’m very proud to be on the Concord Coalition’s honor roll,” said Smith. “The Concord Coalition is extremely well-respected and is the leading advocate of fiscal responsibility. Since maintaining fiscal discipline and reducing the debt is a top priority for me, it is nice to be recognized by an organization that prioritizes these issues.”

Ninth District Congressman Adam Smith will donate $400 to the South King County Multi-Service Center to purchase books for the agency’s HEART (Homeless Education to Achieve Readiness for Tomorrow) program.

In 1997, Smith voted against a Congressional pay raise; however, it passed and Members of Congress received a 2.3 percent raise. Since then, Smith has donated that raise to education and community programs in the Ninth District.

“The South King County Multi-Service Center does a great job of providing services to families in our area that are in need of health services, transportation, education or training, or basics like food and clothing,” Smith said. “I’m very pleased to donate a portion of my pay raise to purchase books for the center’s literacy program. I strongly believe that we need to ensure that every child is ready to learn and possesses the skills necessary to achieve in the next century, and I am happy I have the chance to help.”

The HEART program is targeted towards children living in the Kent homeless shelter sponsored by the South King Cunty Multi Service Center. It is held after school and offers tutoring for basic skills, homework hour, and learning activities led by trained literacy staff members and volunteers.

Smith will present his donation on Friday, April 9th at 3:30 p.m. at the South King County Multi-Service Center at 1200 S 336th Street in Federal Way.

Washington state Congressman Adam Smith today announced his support of the Crane-Dooley Sanctions Process Reform legislation, which establishes new procedures for consideration of future U.S. unilateral sanctions.

“Unilateral sanctions don’t work,” Smith explained. “I am a strong supporter of this legislation because it’s clear that unilateral sanctions do not help advance U.S. foreign policy goals; on the contrary, unilateral sanctions can work to our disadvantage because they erect further barriers between America and the rest of the world.”

The Crane-Dooley Sanctions Process Reform bill creates a more deliberative and thoughtful approach to unilateral sanctions, according to Smith. “The bill requires that we answer some common sense questions, such as whether or not the unilateral sanction will be effective, if it is working towards a specific objective, and whether or not the proposed sanction will actually undermine other U.S. security, foreign policy or humanitarian objectives,” Smith said. “It also requires us to take into account the economic costs imposed on our own country. Our companies are competing globally, and unilateral sanctions simply allow other countries to capture foreign markets, which can have grave consequences on American companies, workers, and the economy. Between 1993 and 1996, 61 new unilateral sanctions were authorized. Currently, U.S. companies are prohibited from exporting to 41 percent of the world’s population because of sanctions.”

Smith also noted, “As a New Democrat, I feel that it’s critical that we examine other options before immediately resorting to a unilateral sanction. This legislation requires us to examine other options, and it is my hope that we will avoid unilateral sanctions in the future and instead adopt policies that are more effective.”

Ninth District Congressman Adam Smith will introduce legislation today that will exempt family-owned businesses and farms from the estate tax.

“In my two short years in Congress, I’ve already witnessed family-owned businesses, the most prominent being Frank Russell Company of Tacoma, not being passed down to the next generation because of the onerous estate tax,” Smith said. “My legislation will exempt family-owned businesses and farms from the estate tax so that they can stay in the family and survive.”

More than 70 percent of all family businesses and farms do not survive through the second generation, and 87 percent do not make it through the third generation. Smith says that the high estate tax is at least partly to blame.

“Under current law, only the first $675,000 of a decedent’s estate is exempt from estate taxes. Beyond that, the value of the estate is taxed at rate ranging from 18 to 55 percent. This is extremely burdensome to family-owned businesses and farms, because while a business or farm may hold assets greater than $675,000, rare is the company or farm that has the kind of liquid cash necessary to pay the high tax bill,” Smith explained. “Therefore, too many family farms and businesses are sold before they can be passed to the next generation or must be dismantled, mortgaged, or liquidated in order to pay the tax bill. That estate tax policy is morally and economically wrong.”

Smith argues that estate tax relief should be focused on businesses and farms that are family-owned and stay in the family. The legislation requires that the business or farm stay in the family in order to be exempt from the estate tax.

“Not only do family-owned businesses account for about 60 percent of our gross domestic product, but they are a critical part of America’s culture and heritage,” Smith said. “All throughout my district, I see family-owned businesses — whether it’s the Redondo Community Store or Woodworth & Co. in Tacoma. I want to make sure those businesses are passed on to their children and grandchildren.”