2012 lse mpa dissertation - chris wang

8/13/2019 2012 LSE MPA Dissertation - Chris Wang

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Strategies of Congressional Debate:

Decomposing the Dynamics and Nature of the2005 US Bankruptcy Reform Hearings

A dissertation by Candidate 58950Toward completion of the MPA in Public and Economic PolicyThe London School of Economics and Political Science

Key words: Democratic Process, Politics, Lobbies, Industry Capture, Automated Text Analysis,Bankruptcy, Legislative Strategy, Rent Seeking, Institutional Design

Submitted: 3 May 2012Word Count: 10,992

Abstract

On April 20, 2005 the US Congress enacted the Bankruptcy Abuse Preventionand Consumer Protection Act of 2005, the most sweeping personal and corporatebankruptcy law reform in US history. Using as a data corpus the entirecongressional record on debates and hearings regarding the act, I employautomated content software to empirically analyze the content, form and rhetoricof the debates leading to the passage of this very controversial act. In particular,I identify six primary classes of arguments and debate employed in Congress,and demonstrate strong evidence that the debates appear to have been heavilyskewed toward serving the interests of the credit industry lobby. This broadlysupports a large body of work that attempts to understand and measure thedegree of industry capture on the part of the consumer credit industry as a resultof this Act.


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Contents

page

Introduction 2

I. Overview of BAPCPA 8II. Literature Review and the Theory of Lobbies, Rhetoric and

Rational Actors in Politics13

III. Research Questions, Methodology and Data 17IV. Results and Discussion 21

Class 1 Goals of ReformClass 2 Emotive Appeal/Personal ImpactClass 3 Credit Industry

Class 4 Congress and BipartisanshipClass 5 The Judicial System/ImplementationClass 6 Procedural RhetoricInterrelation Among Classes

V. Relation of Results to Theoretical Models and Policy 37 VI. Conclusion 40

References 42 Appendices 44


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And if the tenants failed to pay their rent they were liable to be haled into slavery, andtheir children with them. All loans secured upon the debtor's person, a custom thatprevailed until the time of Solon, who was the first to appear as the champion of thepeople.

Aristotle, 350 BC

At the end of every seven years you must cancel debtsbecause the Lord's time forcanceling debts has been proclaimed. Deuteronomy 15:1-2

And if someone is in hardship, then let there be postponement until a time of ease. But ifyou give from your right as charity, then it is better for you, if you only knew

Quran, Chapter 2 Verse 280

Since ancient times, policy for the treatment of debtors unable to meet their

obligations has been a core part of societal laws. The deep importance and

personal nature of debt policy in societies both ancient and present speaks to the

fact that debt impacts many individuals, and on a very deep level. Debt is an

inevitable part of any society which transacts business. This policy is even more

relevant today given the huge role of finance in society and the current economic

crisis, where unemployment and debt crises are a part of everyday life.

Bankruptcy is not a fun topic per se; its very nature invokes images of

emotional pain, distress, and hardship. But it is an extremely important topic

for all individuals, whether they file for bankruptcy or not, because bankruptcy

policy in part determines consumer and corporate interest rates, and thus

impacts broader economic growth via impacts on total factor productivity. 1

Therefore, one must be absolutely certain that the democratic institutions

1 Hahn and Lim (2002).


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responsible for setting bankruptcy policy on behalf of citizens are fit to the task

and that interests are aligned and represented in the best possible way.

Motivated by this, this paper analyzes how leaders debated and evaluated a

recent and significant bankruptcy reform that passed into law in 2005, namely

the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA or

the Act). The goal of this paper is to more deeply and objectively understand

the democratic legislative processes and institutions behind the bill. This

instance is one of the few reforms where we see a return to harsher treatment of

the debtor; this begs the question of just how such a reform came to pass in a

representative democracy, since it would appear few individual citizens would

willingly vote for such a reform that largely only made their lives potentially

more painful and difficult. In short, I find that the legislative institution was in

this case particularly prone to capture by an industry lobby, and that the lobby

and supporting legislators succeeded in steering the rhetoric and argumentative

lines of the debate in such a way as to skew the outcome heavily in the favor of

the credit industry lobby at the expense of citizens and future bankruptcy filerswho were greatly under-represented in the process. This under-representation

was partly the result of a collective action problem and partly a result of the

rhetoric of the debate.

BAPCPA was met with heavy criticism and controversy; one critic went so far as

to declare the bill monstrously labeled and written, bought and paid for by the

credit card industry. 2 Indeed the credit card industry lobby did greatlyfinancially support the bill, so it follows that most of the existing analysis on

BAPCPA attempts to demonstrate the gains to the credit card industry in the

post-reform period. 3 However, critics have spent far fewer resources analyzing

the legislative process preceding BAPCPA and examining what one can learn

about the process and the institution behind the Act. Motivated by this gap in

2

Congressional Record, GPO, 107th

Congress (2001-2003).3 Some figures estimate the credit industry spent approximately $100 million supporting the Act.


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the literature, the precise aim of this paper is to bridge the gap by empirically

evaluating the dynamics of the legislative process and the argumentative

strategies employed by various stakeholders in Congress. A further aim of this

paper is to relate these events to the current political science literature on

lobbies, rhetoric, and rational choice models, in an attempt to better understand

to what extent these events were foreseeable and/or preventable. To my

knowledge, no individual has attempted such an analysis of the BAPCPA

proceedings using automated text analysis software to analyze the congressional

record, a key contribution of this paper to the existing literature. Further, to my

knowledge no individual has examined political science models to better

understand the dynamics of the lobby as related to BAPCPA. 4 BAPCPA presents

a unique and valuable opportunity in which one can observe and analyze the

dynamics of congress in party transition and a lobby with no clear opposition

group, a rare situation in US ideological debates but one of which we must be

vigilantly aware given the potential ramifications.

Questions Remaining in the BAPCPA StorySeveral theories and judgments regarding the BAPCPA debates abound, often

conflicting. The first and foremost question is just how did the US Congress

come to pass a bill that so many experts deride? The most common but often

least supported assessments claim that this case was a clear and simple instance

of industry capture; the credit industry simply spent the money and got what it

wanted. However Dickerson contends that the single industry capture story is

not sophisticated enough to explain everything, and that one must look deeper totruly understand the events. 5 A second line of argument considers whether the

legislative proceedings were ideological in nature or technical in nature; this line

contends that to the extent debates are framed as more ideological and less

technical, citizen interest and participation increases, which would result in a

4 This work is in a similar vein to that of Schonhardt-Baileys analysis of the congressionaldebates on partial birth abortions (2008) and the Kerry-Bush national speeches on national

security (2005).5 Dickerson (2006).


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more representative result. 6 A third line of argument considers whether

republicans and democrats systematically used differing lines and styles of

argument, and to what end. 7 Fourth, there is much debate as to whether the

proper amount of effort was expended in order to incorporate potential future

debtors i.e. the stakeholders directly opposite the credit industry lobby into

the process. 8 Finally, several critics contend that too much focus was placed on

the overly exaggerated issue of debtor abuse and far too little focus was placed

on preserving the viability and maximizing the value of the debtor; thus the

debates were heavily skewed toward protecting the interests of creditors. 9

A Method for Analyzing Political Debates and Discourse

Given these several open questions regarding the debates, and the lack

heretofore of a scientific approach for analyzing the debates, it becomes

interesting to systematically analyze the BAPCPA proceedings and see what

information and conclusions one can glean from a deeper, more rigorous

examination. While some articles have been less formally written about the

process, no researcher has yet attempted an empirical analysis of the text of thecongressional records behind the Act. Automated text analysis generates an

unbiased assessment of a body of text i.e. one that is not skewed by a

researchers preconceptions of a debate and thus lends a statistical and

scientific hand to an otherwise quite subjective analytical subject. The software

program ALCESTE 4.8 offers three key tools for my purposes. First, it enables

me to identify in a hierarchical fashion the key classes of words, phrases, and

ideas, and assess the relative presence and therefore implicit importance of each.Second, it enables me to map these ideas spatially dependent on speaker traits

(e.g. political affiliation and final vote) and degree of occurrences. Third, it

enables me to assess the relative degree of interrelation between the various

classes.

6 Ibid.7 Meyerowitz (2008).8

Ibid.9 Dickerson (2006).


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ALCESTEs key advantage is that the programme makes no pre-conceived

hypothesis about a body of text, nor does it require the researcher to do so. This

analysis is top down in this manner; ALCESTE takes a body of text as given

and generates the hierarchical classes of words, phrases and ideas on its own,

based on a chi-squared methodology which identifies the key characteristic

words and phrases based on frequency and adjacency. 10 In this way, ALCESTE

is primarily an exploratory tool, producing a set of unbiased analyses that the

researcher then must interpret. This ensures a high degree of transparency as I

provide the main ALCESTE outputs at the beginning of each section and then

provide my interpretations of each. 11

Purpose of this Dissertation and Key Findings

The primary purpose of this entire exercise is to gain a better and more thorough

understanding of the BAPCPA debates and lend an objective and scientific hand

to the existing discourse on the debates. The current discourse on BAPCPA is

largely anecdotal, and mainly driven by stakeholders who clearly have axes togrind. Therefore my aim is to as scientifically as possible dissect and

understand the nature of the debates from an objective, academic perspective.

This paper thus analyzes two main areas regarding the BAPCPA congressional

debates. First, I evaluate the content, form and rhetoric of the arguments of

leaders themselves leading to BAPCPA by analyzing the ALCESTE output, the

main contribution of this paper. Second, I briefly explore and evaluate the

extent to which these outcomes and shortcomings may have been predictableand/or avoidable by relating the results to current models and predictions of

political science. In short, I do find strong support that the process was largely

ineffective in focusing attention and resources on the correct priorities, and

10 The ALCESTE methodology is discussed in further detail in the methodology section. As thisresearch method is relatively new, further detail of the precise algorithms and mathematics iscontained in the appendices.11

I am grateful to Dr. Cheryl Schonhardt-Bailey and Dr. Aude Bicquelet of the London School ofEconomics for their guidance and assistance in interpreting the results.


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therefore we ended up with a bill that not only missed its mark but also

potentially enabled the credit card lobby to extract significant rents. In

particular, I find that: 1) supporters of BAPCPA defined goals of the reform

mainly in the vein of pointing out errors in the current system, where opponents

focused on what the goals of a comprehensive system ought to be; 2) supporters

argued for these main goals using interested parties, where opponents relied

more on bankruptcy experts (judges); 3) supporters tended to focus on the

broader societal implications of bankruptcy, where opponents relied more on

arguments of pathos and ethos , potentially to their own detriment; 4)

bipartisanship, while expressed as a key theme of the debates, was not

necessarily well-founded or even valid; and 5) to the extent the judicial system

was considered, the tone and arguments took a tone of a fait accompli and a

technical argument rather than one based on ideology. These findings serve as

strong evidence that the main priority of BAPCPA and its supporters was not

progress in the bankruptcy system or consumer protection, but gain for the

consumer credit card industry and its lobbyists. I further find that this outcome

was largely predictable given the circumstances and that the US governmentcould have pursued means to prevent this outcome.

This paper proceeds as follows. First, I discuss key background information on

bankruptcy and BAPCPA and key stakeholders. Second, I briefly review the

existing literature on BAPCPA, and explore the relevant political scientific

theory on lobbies, political rhetoric and agency models, which are useful tools for

our analysis of the debates. Third, I discuss my methodologies and data indetail. Fourth, I analyze the results of the text analysis and relate the results to

political science theory and policy, the main section of this paper. Finally, I

conclude and discuss potential areas for further research.


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I. A Brief Overview of Bankruptcy and BAPCPA

What is Bankruptcy?

Before I begin it is important we understand precisely what bankruptcy is, sincethe term bankruptcy itself is subject to fairly wide and deep misconception

among the general public. Himmelstein et al (2005) provide an apt technical

summary of US personal bankruptcy that highlights the main provisions of the

Bankruptcy Code (the Code):

Bankrupt is not synonymous with broke. Bankrupt means filing a petition in a federalcourt asking for protection from creditors via the bankruptcy lawsthe court [then]assumes legal control of the debtors assets and halts all collection efforts . A court-appointed trustee convenes a meeting to inventory the debtors assets and debts and todetermine which assets are exempt from seizure. States may regulate these exemptions .

About 70% of all consumer debtors file under Chapter 7 of the Bankruptcy Code; mostothers file under Chapter 13. In Chapter 7 the trustee liquidates all nonexempt assets.

At the conclusion of [a Chapter 7] bankruptcy, the debtor is freed from many debts. InChapter 13 the debtor proposes a repayment plan, which extends for up to five years. Under both chapters, taxes, student loans, alimony, and child support remain payable infull, and debtors must make payments on all secured loans or forfeit the collateral. 12 [Emphases added]

Keys points to take from here are 1) bankruptcy law is mainly about defining

debtors and creditors rights under bankruptcy and protecting debtors from

creditors who could otherwise seize their assets; 2) there are two distinct forms

of bankruptcy, Chapter 7 and Chapter 13; 3) at conclusion of Chapter 7

bankruptcy, the debtor is freed from many debts, where under Chapter 13

debtors must repay a greater portion of their debt; and 4) thus creditors (i.e.

lenders, primarily credit card companies and commercial banks) generally

strongly prefer Chapter 13 to Chapter 7, which explains in part why creditors

generally strongly supported BAPCPA.

12 Himmelstein et al (2005).


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Background of BAPCPA in Congress

BAPCPA was the most sweeping bankruptcy law reform in US history. 13 The

stated intent of the Act was to prevent abuse of the bankruptcy system and

curtail irresponsible borrowing in order to address the rapidly increasing

bankruptcy filing rates in the US. One of the key supporters of the bill,

Congressman F. James Sensenbrenner (R-WI), argued: [The Act] will help

restore responsibility and integrity to the bankruptcy system by cracking down

on fraudulent, abusive, and opportunistic bankruptcy claims. 14 BAPCPAs

enactment marked the completion of nearly a decade of deliberation in Congress.

The original bill was drafted in 1997 and introduced in 1998, and passed in 2000

under a version called the Bankruptcy Reform Act of 2000. 15 President Clinton

however employed a strategy equivalent to a veto, known as a pocket veto,

rendering the Act moot. 16 From 2000 forward, BAPCPA faced strong opposition

and repeated threats of filibuster, primarily from Democrats. Following the

significant increase in Republican majorities in both the House and the Senate

after the 2004 elections, Congress finally passed BAPCPA in 2005 by large

margins, 302 to 126 in the House of Representatives and 74 to 25 in the Senate.However, even this passage occurred in a controversial fashion supporters,

primarily Republicans, pushed for a vote on the bill so quickly that even

amendments simply requesting the correction of typos and spelling errors were

denied. 17

Key Reforms of the Act

BAPCPAs key impact on individual citizens was that it made it far moredifficult for debtors to file under Chapter 7 and instead forced more debtors to

13 So significant were its reforms that legislators and bankruptcy practitioners often refer to itsimply as the new bankruptcy law.14 Day (2005).15 This long history is somewhat misleading, as the bill was often pushed aside for far morepressing issues, particularly the terrorist attacks of September 11, 2001, the Clintonimpeachment hearings, and the anthrax scare.16

Associated Press (2000).17 These errors necessitated the Bankruptcy Technical Corrections Act of 2010.


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file under Chapter 13. 18 Banks and credit card companies strongly supported

the bill since it directly resulted in higher recovery rates on debts owed them.

The bill achieved this aim in two ways, first by introducing a test to assess

whether the bankruptcy filing constituted abuse, and second by introducing a

means-test with the intended effect of denying certain bankruptcy provisions to

individuals deemed too wealthy for bankruptcy. The Act also requires debtors to

complete a detailed credit counseling process. One consequence of this was that

BAPCPA made it far more difficult for all individuals poor and rich alike to

file for bankruptcy since the associated paperwork and legal fees increased by

approximately 30-50% due to the higher stringency and complexity of the

process. 19 This lack of regard for the viability of the debtor was a source of great

controversy, as was the credit industrys role in supporting the bill.

Primary Criticisms and the Collective Action Problem

Attorney Marshall J. Wolf succinctly and powerfully wrote to Senator Ted

Kennedy regarding the Act in 2001 summarizing the key criticisms and

sentiments of many bankruptcy experts and professionals regarding the Act:

I write concerning the latest version of a cruel hoax that has been written, bought andpaid for by the credit card industry, the monstrously labeled Bankruptcy AbusePrevention and Consumer Protection Act of 2001." This billdoes not prevent abuses ofthe bankruptcy laws, nor does it afford protection to any consumer. The protectionthat members of Congress will be providing with passage of this bill will be to the creditcard industry whose millions of dollars have swamped the coffers of campaigncommittees during the last three election cycles. This is the type of protection that isconjured up in B-grade gangster movies. Contrary to the right of working classconsumers, protection of the wealthy and of the credit card industry is the only result ofthis bill. 20 [Emphases added]

Clearly Mr. Wolf is on one extreme of the debate, however his argument

effectively summarizes the key criticisms many allege of the bill, namely 1) that

its core motivation was not social progress but industry interest on the part of

18 While BAPCPA impacted both individuals and corporations, this dissertation focuses only onBAPCPAs impact on individuals.19 Data from the US Government Accountability Office show the average attorney fee for aChapter 7 case increased from $712 just before BAPCPA to $1,078, while Chapter 13 filing fees

increased from about $2,000 to $3,000.20 Congressional Record, GPO, 107 th Congress (2001-2003).


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the credit lobby and 2) that the bill largely ignored experts consensus on what a

better bankruptcy system ought to look like. My analysis sheds further light

onto the validity of this claim. Clearly, the credit card industry/lobby did stand

to gain directly from passage of the bill, but the fact that the bill would benefit

the credit card industry is in itself not a unique problem: many legislative

reforms benefit certain industries and thus lobbies arise to support such bills.

However, this bill in particular suffered from a unique type of collective action

problem due to the nature of its stakeholders.

A key distinction between this reform and most bills was that most bills have a

clear opposition party of stakeholders, with each lobby serving as an effective

check and balance against the other. 21 In the situation of BAPCPA, there was no

clear opposing lobby or interest group due to the unique nature of the opposing

stakeholders involved. The key opposing party in this case ought to have been

those future debtors who would face the negative ramifications of the reforms.

However this group by nature does not exist because bankruptcy filers rarely (if

ever) know before the fact that they will file for bankruptcy. Further, asDickerson notes, this group is difficult to organize because the reasons for

bankruptcy are so diverse, and by definition the group of overly indebted people

would not have the funds necessary to fund a successful lobbying effort. 22 Critics

contend that this made citizens particularly vulnerable to legislative reforms as

they lacked a strong defender in Congress.

Key Leaders and the Polarization between Democrats and Republicans A clear line of distinction on BAPCPA arose between political affiliations, with

Democrats generally strongly opposing the bill and Republicans strongly

supporting the bill. Politicians strongly supporting the bill included: Sen. Chuck

Grassley (R-IA), the chief sponsor of the bill; Rep. F. James Sensenbrenner (R-

21 For example, tobacco lobbyists are opposed by health advocates; natural resource and

manufacturing lobbyists are opposed by environmental interest groups.22 Dickerson (2006).


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WI), Republican chairman of the House Judiciary Committee; Rep. Bob Barr (R-

GA); Rep. Nick Smith (R-MI); and Rep. Tom DeLay (R-TX). Politicians strongly

opposing the bill included: Rep. Jerrold Nadler (D-NY); Rep. John Conyers (D-

MI); Rep. William Delahunt (D-MA); and Rep. Melvin Watt (D-NC). The

appendix contains full roll calls of the final House and Senate votes.


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II. Literature Review and the Theory of Lobbies and Rhetoric inPolitics

Past Literature Analyzing BAPCPA

As previously mentioned, the overwhelming majority of the studies on BAPCPA

have focused on the post-reform period and attempted to demonstrate

ineffectiveness and industry capture. Paik (2009) examined the impact of the

Act on entrepreneurial activity. 23 Neustadter (2007) examined the impact of

BAPCPA on consumer bankruptcy legal activity. 24 Coelho (2010) examined the

relationship between BAPCPA and securities market pricing implications. 25

Both Scott (2007) and Simkovic (2009) analyzed payoffs to the credit industry

following BAPCPA. 26 Cornwell and Xu (2011) as well as Jacoby et al (2009)

explored the effect of BAPCPA on the composition of types of filings and chapter

composition. 27 Dickerson (2006) is the only author of whom I am aware to

attempt to formally analyze the BAPCPA legislative process itself, however this

analysis is written more from a legal and procedural perspective than from a

political science and policy oriented perspective. 28 To my knowledge, no person

has attempted an empirical analysis of the debates using automated contentanalysis, a major contribution of this paper.

Theoretical Models of Legislatures and Lobbies in Political Science

To properly analyze the legislative process regarding BAPCPA and relate the Act

to the broader picture, we must understand the theoretical role of legislatures

and lobbies in a representative democracy. Besley and Coate (2001) provide the

most salient political science framework as related to lobbying for our purposes. 29 Besley and Coate employ a citizen-candidate model and specify lobbying as a

23 Paik (2009).24 Neustadter (2007).25 Coelho (2010).26 Scott (2007); Simkovic (2009).27 Cornwell and Xu (2011); Jacoby et al (2009).28

Dickerson (2006).29 Besley and Coate (2001).


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menu-auction as developed by Grossman and Helpman (1994). 30 Essentially,

the citizen-candidate model describes how policy-motivated citizens, who cannot

commit to policy choices in advance, decide to become candidates for office. The

menu-auction model assumes that a set of given (i.e. exogenous) lobbies

competes for policymakers support by offering policy contingent favors.

Combining these two models, Besley and Coate derive several interesting

predictions. First, it is possible under certain conditions that lobbying has no

effect on policy choices, especially if citizens delegate policymaking to a

representative who neutralizes the impact of the lobby. Second, at the other

extreme, lobbying can completely dominate electoral competition, meaning that a

strong lobby will make certain that a candidate with any preference will produce

their preferred outcome at that point, a lobby simply decides which politicians

are cheapest to buy. Third, in all cases, lobbying generates rents to office

holding.

Estimates derived from studies of the magnitude of the effects of rent-seeking

and lobbies are mixed, but all are highly material. The following table adaptedfrom Tollison (1997) demonstrates the range of estimates.

Table 1 Estimates of the Cost of Rent-Seeking

Source: Tollison (1997).Note: Cowling and Mueller use gross corporate product (GCP) as their measure.

30 Grossman and Helpman (1994).

Study Economy YearRent-Seeking

Costs NotesKrueger India 1964 7% GNPKrueger Turkey 1968 15% GNP trade sectorPosner US Various 3% GNP regulationCowling & Mueller US 1963-6 13% GCP private monopolyCowling & Mueller UK 1968-9 7% GCP private monopolyRoss Kenya 1980 38% GDP trade sectorMohammand & Whalley India 1980-1 25-40% GNPLaband & Sophocleus US 1985 50% GNPRegression Based Studies Various Various Up to 45% GNP


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I make no particular assumption about the precise impact of lobbies or causal

channels by which rent-seeking affects welfare, but instead provide this table

simply to demonstrate that lobbies may have a large-scale impact on welfare and

outcomes.

Theories of Rhetoric and the Rational Actor Theory

In analysing BAPCPA a basic understanding of the key theories of rhetoric and

forms of debate is also useful in understanding the nature and relative validity

of various strategies of debate. Aristotle (400 BC) outlined three general

dimensions of persuasion: ethos , pathos , and logos .31 Per Norreklit (2003), ethos

pertains to the credibility and authority of the speaker, pathos is associated with

emotional appeals directed at the audience, and logos captures all arguments

which use reason as their main approach, meaning not only logical arguments

but also inductive and abductive arguments. 32 While most politicians and

leaders in Congress employ some combination of all three dimensions, within

serious political discourse only logos is considered publicly acceptable. 33

Members of Congress often use elements of ethos and pathos in order to make an

argument more accessible ( pathos ) or to try and undermine the credibility of

witnesses ( ethos ), both generally acceptable practices under the correct

circumstances, however neither should be relied on to replace logos as the core of

the argument. 34

The idea that logos is the most legitimate strategy aligns directly with pluralist

accounts of the political rational actor theory, which is prominent in politics

today. The model of decision-making presented by Allison and Zelikow assumes

that single actors react in response to a set of circumstances based on rational

deliberations and that these actors make decisions in order to maximize the

value of the final outcome of a debate according to their own beliefs and

31 Aristotle (400 BC).32 Norreklit (2003).33

Bauer (2009).34 Ibid.


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perception of the issue. 35 This is particularly important in the case of BAPCPA

because there are so many ways to view and frame the issue, and thus the way

in which the issue is framed in Congress could greatly determine how individual

actors perceive and value the issue. This is of further importance in the case

where a lobby is involved, as individual actors facing strong incentives to seek

rents may be inclined to steer away from their true policy preferences.

35 Allison and Zelikow (1999).


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III. Research Questions, Methodology and Data

As stated earlier, the primary goals of this dissertation are first to analyze

objectively the arguments and tactics each side employed in the debates andevaluate their effectiveness in addressing the bankruptcy issue, and second to

frame these results into broader theoretical frameworks to answer whether these

inputs and outcomes were largely predictable and/or avoidable. Thus we have

two primary research questions.

Research Question 1: What were the most characteristic arguments, rhetoric andpolitical strategies used by various stakeholders and what do they imply about

the nature of the BAPCPA debates?

Methodology

To answer this research question I employ computer-assisted content analysis to

measure empirically and map spatially the key themes, arguments, and tones

employed by various members of Congress in debating BAPCPA. I use the

computer programme ALCESTE, which is uniquely suited for this precise task.

This programmes key advantage over other content analysis tools is that

ALCESTE is specifically designed to analyze naturally occurring textual units in

a debate on one coherent topic, and do so in a systematic and holistic way,

enabling the researcher to assess the relative importance of various

classifications of text. The program accomplishes this by using a chi-squared

criterion to derive a rough statistical classification of statements in order to

identify the most characteristic words of the corpus of text, and these words can

then be distinguished as groups representing various forms of discourse within

the debates. I provide a detailed description of ALCESTEs algorithm and

related proofs in the appendix.

Preconditions to obtaining good results with ALCESTE include: 1) the text to be

analysed must show a certain thematic coherence and 2) the text must be

sufficiently large, a minimum of 10,000 words. My data corpus fits both of these

characteristics very well as they are restricted to a particular topic this


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particular bankruptcy reform and the text analysed consists of over 170,000

words of text.

Data and Text Corpus Preparation

The source of the data for my text analysis is the US congressional record from

1999 to 2005 for all hearings pertaining to BAPCPA. Congress is held in the US

every two years, resulting in four congresses over the period of interest. The

congressional record is available in full text PDF form from the US Government

Printing Office, and contains transcripts of all congressional hearings as well as

written prepared statements by individuals and follow-on question and answer

sessions.

I converted text from all four congressional hearing sessions into a single text

(*.txt) file containing all 170,000 words of dialogue in over 1,000 individual

instances of speech. I then cleaned the entire body of text for spelling errors and

to remove non-meaningful characters and characters which ALCESTE requires

be removed ($, * and apostrophes) as these characters are used to code units oftext (see below). This proved the be a labourious task, as text extracted from the

congressional PDF files would often not entirely copy over correctly e.g. the

phrase means-test might be recognised as ncans-tes1. In cases where a word

was too ambiguous to recognise I consulted the primary document, which in all

cases clarified the intended words. I then applied coding in order to indentify

each individual speaker, and added in additional passive variables to each tag

in order to indicate the speakers last name, political affiliation (Democrat,Republican or Independent) and final vote on the Act (Yea, Nay or Abstain). 36

This aids ALCESTE in its correspondence analysis and enables the researcher to

examine various dimensions of the results based on the variables (see section IV

for detail). In total I manually entered over 1,100 speaker tags, one for each

time dialogue changed speakers, and passive variables for each speaker.

36

For example, when Congressman Sensenbrenner speaks in the 2005 Congress, I would enter**** *Congress_2005 *speaker_Sensenbren *party_Repub *vote_Yea.


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Table 2 Texts Analyzed with ALCESTE

Source: Government Printing Office, authors analysis.

Strengths and Limitations

A key advantage of ALCESTE is that due to the holistic nature of the algorithm

the potential for researcher bias is minimal. The program automatically

classifies the rhetorical units, and then requires the researcher to then interpret

the results. Other content analysis programs on the other hand tend to require

the user to select and classify certain portions of text, and therefore the

researchers pre-conceived biases and opinions of the text have a strong potential

to enter in the coding of the data. Another way of stating this is that ALCESTE

is primarily an exploratory tool intended to analyze an impression of a

voluminous data corpus. ALCESTE is not intended to be a technique for a priori

hypothesis testing per se, but rather a way to better understand the themes and

rhetoric of a body of text through exploration and descriptive methods. 37 This is

well suited to this task as my primary goal is to better understand the content,

rhetoric and style of various arguments as well as the relative importance of

37

Manual from MY591 Workshop Applied Analysis Software, The London School of Economicsand Political Science.

Hearing Congress

Hearing

Date(s) Description Pages

Approx. Word

Count SerialBankruptcy Reform 106th 11 Mar 1999 Joint hearing b efore Subcommittee on

Commercial and Administrative Law ofthe House Committee of the Judiciaryand the Subcommittee on

Administrative Oversight and theCourts of the Senate Committee on theJudiciary

195 47,830 No. 106-2

Bankruptcy AbusePrevention and ConsumerProtection Act of 2001

107th 7-8 Feb 2001 Hearings before the Committee on theJudiciary, House of Representatives onH.R. 333

238 64,838 No. 107-7

Bankruptcy AbusePrevention and ConsumerProtection Act of 2003 andthe Need for BankruptcyReform

108th 4 Mar 2003 Hearing before the Subcommittee onCommercial and Administrative Law ofthe Committee on the Judiciary, Houseof Representatives on H.R. 975

232 39,211 No. 108-24

Implementation of theBankruptcy AbusePrevention and ConsumerProtection Act of 2005

109th 26 Jul 2005 Hearing before the Subcommittee onCommercial and Administrative Law ofthe Committee on the Judiciary, Houseof Representatives

43 19,246 No. 109-55

Totals 708 171,125


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each hierarchical classification. One limitation of ALCESTE is that it is less apt

at diving deeper into specific details within the data for this purpose, I

employed a manual content analysis tool known as NVivo 8 which serves as a

sort of robustness check of the ALCESTE results and strengthens the validity of

the results. 38 Further detail of the precise ALCESTE mathematical algorithm

and statistical approach is provided in the appendix.

Research Question 2: Were the inputs and outcomes of this legislative processlargely a) predictable and/or b) avoidable?

Methodology

This research question is more qualitative and conceptual in nature but

important in terms of determining policy and relating my results to the broader

picture. Where question 1 seeks to identify the nature of the BAPCPAs

legislation, this question seeks to identify potential issues and explore whether

these can be avoided in the future, and if so how. Rather than answering this

question through the use of external empirical data (which could be a

dissertation or thesis in and of itself), I apply the previously discussed theories ofpolitical science and the political rational actor model (see Section V) to the case

of BAPCPA and see to what extent the predictions of the model match outcomes

in BAPCPA. To the extent that the outcomes match the predictions, we can see

that the negative effects of the legislation should have been predictable. In order

to answer whether this was avoidable, I briefly examine the legislative

institutional structure itself and see whether an opportunity existed to stem the

process and avert any potential negative issues.

38 Kronberger (2009).


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IV. Results and Discussion

The primary results of the analysis are provided below. From the corpus of text,

ALCESTE identified six distinct classes of text. The total word count for thecorpus was 171,125, and of these 126,136 were unique words analysed by the

programme. 39 Tagged indicators designate variables characterizing a speaker, in

this case name, party, and final vote on the Act. The Initial Context Unit or

ICU is effectively the sampling unit i.e. a pre-existing level or division of text

defined by the user. Here I have referred to ICUs as any time the person

speaking changes, resulting in 1,129 such changes over the course of the four

congressional sessions analysed.

Table 3 Primary ALCESTE Results

The Elementary Context Unit or ECU is a gauged sentence, which the

programme automatically constructs based on word length and punctuation in

the sentence. 40 Based on the presence or absence of words in each ECU,

ALCESTE calculates matrices on which to build classifications. The programme

runs two initial calculations, each using slightly different lengths for the ECU,

and then selects the length that maximizes the proportion of ECUs able to be

39 Plurals and conjugation endings are reduced to a single word-form (e.g. the words bankrupt,bankruptcy, and bankruptcies would be reduced to the single word-form bankrup+) and noncewords (words not expected to repeat) are eliminated from the analysis this leaves a smaller

word count that is analysed by the programme.40 Schonhardt-Bailey (2008).

Measure Figure Notes

Total Word Count (#) 171,125 Minimum required is 10,000Unique Words Analysed (#) 126,136 Similar words are truncated to rootTagged Indicators (Passive Variables, #) 4 Tags: speaker name, party, final voteNumber of ICUs (#) 1,129 Individual Context Units (change in speaker)Classified ECUs (#) 3,426 Characteristic phrases

% of Retained ECUs 74.7% Signifies a high degree of strength in theanalysis

Lexical Classes 6 Automatically generated by ALCESTEDistribution of Classes (%): 1) Goals of reform 24.3% Percentages roughly denote the relative 2) Emotive appeal/personal impact 17.6% importance of each class 3) Credit industry 14.7% 4) Congress and bipartisanship 10.2% Interrelation among the classes is discussed 5) The judicial system/implementation 7.1% further below 6) Procedural rhetoric 26.1%

100.0%


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classified relative to the total ECUs available. 41 The percent of retained ECUs

metric serves roughly as a measure of the strength of the analysis, with results

in the 70-80% ranges generally viewed as a strong analysis. 42 My resultant

measure of 74.7% falls comfortably within this range.

The detailed output of ALCESTE provides a number of useful tools for

conceptualizing the content of classes. Two are particularly useful: characteristic

words and characteristic ECUs. The most characteristic words for each lexical

class (along with their chi-squared significance) provide an indication of the

theme or frame of argument that defines and unifies the class. The highest chi-

squared values indicate the most characteristic words. ECUs are then useful for

understanding and analyzing the context of the words and the actual arguments

used. Below, for each of the six classes, I present the most characteristic words

and representative characteristic ECUs, analysing each class in detail based on

the results.

41

Please see the appendix for further detail of the ALCESTE algorithm and mathematics.42 Ibid.


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Class 1: Goals of Reform

The most characteristic words (highest chi-square) in this class were: debtor+

(514.7), test+ (184.9), creditor+ (161.5), mean+ (142.0), reliev+ (134.8), code+

(118.1), burden+ (106.9), circumstance (94.0), asset+ (91.8), current+ (88.8),

require+ (87.8), seek (86.8), chapter+ (85.4), discretion+ (84.1), create+ (83.5),

plan+ (82.4), case+ (79.4), court+ (71.1), system+ (63.9), provision+ (63.8), estate+

(60.9), standard+ (60.5), dismiss+ (58.6), honest+ (53.6), section+ (53.5), abuse+

(51.8), confirm+ (50.0), bankrupt+ (49.0), repayment+ (48.3), reorganiz+ (48.3),

obtain+ (44.9), discharge+ (43.0), determine+ (42.4), legal+ (40.6) and change+

(40.6). 43

These characteristic words prima facie convey that this class of text is mainly

concerned with establishing the general aims and goals of the reform. This class

is markedly devoid of emotive or intense language. Surprisingly, words such as

bankrupt+, repayment+, reorganiz+ and discharge+ appear relatively low on the

list, where words such as test+, mean+, reliev+ and burden+ score extremely

high. This may indicate that most of this discussion was centered around meanstesting as opposed to discussion of the various treatment options available for

the debtors in question. A closer look at characteristic ECUs aids us in learning

more about the dynamics of this lexical class.

Below are highly characteristic (i.e. high chi-square score) ECUs of class 1 for

both opponents and supporters of the bill. The top twenty ECUs in this class

were fairly evenly divided between opponents and supporters of the Act. Chi-squared scores appear in parentheses, and hash marks (#) designate words that

are representative of Class 1 within each ECU.

43 Note: chi-square scores appear in parentheses. For each class, I present the highest 35 scoressubject to the constraint that the score is above 45. I exclude non-meaningful words such as

prepositions and articles (e.g. the, these, to, a) as well as ICU tags (e.g. *vote_NA or*speaker_Strauss).


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ECUs characteristic of the arguments of opponents to the bill highlight their

specific concerns with the Act, and tend to reflect what the aims and goals of the

Act ought to consider. These arguments also emphasize the upper hand that

creditors possess over debtors. It is also worth noting that the most

characteristic arguments of opponents of the bill came from expert judges, who

had no direct financial interest in the Act.

(33) #creditors do not have to #prove anything; #indeed, the entire #burden is on the #debtor to #prove he/ she is #entitled to #bankruptcy #relief #including that he/ she #fitswithin one of the #exceptions to the #means #test. [Judge Karen Gross]

(30) the #bankruptcy judge should also have some #discretion to #adjust the #internal

revenue service_s #expense #standards, #made applicable by #section 102, where equity #requires. the #internal revenue service #exercises #discretion when it #applies the #standards. without judicial elbow room, some #honest but #unfortunate #debtors will be #unable to #obtain #relief #under #chapter 7 and #unable to #obtain #relief #under #chapter 13. [Judge Ralph Mabey]

(28) there is a #compelling reason for affording the judge #discretion in the #means #testing #formula. without it, some #honest, but #unfortunate #debtors, will be ineligible,for #bankruptcy #relief #under #chapter 7 and #unable to #obtain #bankruptcy #relief

#under r #chapter 13. [Judge Ralph Mabey]

On the other side, supporters of the bill tended to focus more heavily on the

current flaws of the system, the potential for abuse by the debtor, and how one

must address these flaws. Of note here are that the first two ECUs come from

the chairman and CEO of MBNA Bank, while the third comes from one of the

few Democrats who voted in favor of the Act.

(26) to #address this #flaw, the #bankruptcy #code must be #amended so that a #debtorwho needs #bankruptcy #protection will #receive it, but only to the #extent of that need.[Bruce Hammonds, Sr. Vice Chairman and CEO, MBNA Bank]

(20) in fact, today, a #debtor may #discharge his or her debts without ever #demonstrating actual need for such #relief. to #address this #flaw, the #bankruptcy #code must be #amended so that a #debtor who needs #bankruptcy #protection will #receive it, but only to the #extent of that need. [Ibid]

(30) this needs #based #system would #create a simple #formula, #based on a #debtor_sincome and #obligations, to #determine #exactly how-much #relief the #debtor needs.

#individuals with no #means to #repay their debts could file for #bankruptcy #under #chapter 7, thereby #obtaining #complete debt #relief and a #fresh #start. [Hon. Rep.Rick Boucher, D-VA]


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In sum, class 1 reveals three interesting points regarding the debates as they

relate to the current discourse on the Act. First, opponents of the bill mainly

structured their arguments around what the Act ought to accomplish, discussing

ideals of the system and flaws of the proposed Act, whereas proponents tended to

focus more on those flaws in the existing law which perhaps not coincidentally

pertained to those witnesses direct financial interests. Second, supporters of

BAPCPA tended to speak in a way that presumes the guilt of the debtor citizen,

whereas opponents tend to view debtors as innocent victims of society. Last,

arguments characteristic of opponents tended to come from judges and

bankruptcy experts with no direct financial interest, where the characteristic

arguments of proponents tended to belong to witnesses who had direct financial

interests.


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(33) there are, of course, some #people who truly have a #legitimate need for bankruptcy.at #times, #hard working #families may #face a #serious #family #illness, a disability,

#unemployment or the loss of a #spouse which may #necessitate the need for bankruptcyprotection. [Rep. Steve Chabot, R-OH]

(30) but for that sub #group of #filers, for those higher #income individuals who would #use chapter 7 to #push their #debts on to #others #regardless of the #filer_s ability to #pay, the #up front, needs based approach would have #said, no, #pay what you can #afford. [Dean Shaeffer, VP and Director of Credit, Boscovs]

(29) #pay what you can #afford, and #society will #wipe #out the #rest. if individualsmade less than the #median #income, or couldn_t #afford to #pay 20 percent of their

#unsecured #debts, H_R_ 3150 would allow them to #file in chapter 7 without question.[Ibid]

(41) this #money does not #simply disappear. the cost of these losses and #unpaid #debts

are borne by #everyone #else. when an individual #declares bankruptcy rather than #paythe 300 they may #owe to boscov_s, or the #thousand #dollars they may #owe in state

#taxes or other bills, they #force the #rest of us to #pick #up their expenses. [Ibid]

In sum, in class 2 we see several interesting delineations between supporters

and opponents of BAPCPA. First, opponents of the bill appear to strongly

depend on an argument of pathos , potentially to their detriment following a

strategy closer to that they followed in class 1 may have served opponents better.

Second, proponents arguments tended to draw heavily on inducing a sense of

personal responsibility and accountability in the debates, which had the effect of

steering the conversation away from the potential downsides to the average

consumer and placing the median voter in a position of looking weak and

irresponsible if he or she disagreed.


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Class 3: The Credit Industry

The most characteristic words (highest chi-square) in this class were: credit

(705.4), rate+ (351.8), consumer+ (300.5), union+ (285.7), card+ (282.8), losses

(264.5), percent+ (210.9), bank+ (205.9), loan+ (193.9), bankruptcies (170.1),

high+ (159.6), profit+ (143.3), industr+ (138.0), increase+ (124.6), market+

(119.1), filing+ (112.7), mill+ (103.4), lender+ (97.2), saving+ (90.7), total+

(88.18), customer+ (84.9), interest+ (83.3), price+ (77.6), american+ (71.3), cause+

(70.8), service+ (68.7), recent+ (64.4), rise (63.6), loss (62.3), borrow+ (62.0), lend

(61.6), estimate+ (60.6), number+ (58.5), nationwide (56.5), and low+ (54.7).

These words are generally associated with credit providers and users, relating to

technical aspects of lending and borrowing in the US and the nature of the

bankruptcy issue the Act alleges and tries to address. Again we look to the

highest scoring ECUs for further context.

Proponents of the bill focused primarily in data driven arguments that attempt

to demonstrate the scale and reasons for the rise in bankruptcy filings, and theconsequences of having more individuals file for bankruptcy.

(58) inevitably, these #losses are passed on to all #consumers in the form of #higher #rates and #higher #prices for #goods and #services. MBNA #america #bank is the #largest #independent #credit #card #lender in the #world and one of the three #largest #credit #card #lenders overall. [Bruce Hammonds, Sr. Vice Chairman and CEO, MBNABank]

(49) these bankruptcy #filings #generate #huge #losses. while MBNA_s #credit #card #losses have consistently been among the #lowest in the #business, this precipitous

#increase in the #number of #consumer bankruptcy #filings has #impacted virtuallyevery #lender, #large and small [Ibid]

Opponents of the bill conversely largely focused their attack on the practices of

predatory lending and the profiteering nature of the credit industry:

(49) #due to #high #interest #rates of 16, 18, 20 #percent or #higher, the #lending #community has #discovered that it #profits when families get in #over their #heads.[Gary Klein, Esq. National Consumer Law Center]


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(49) however, the #total #amount of their #credit #card debts #increased from about 11,000 in 1994 to about 29, 000 in 1997, #largely #due to the accumulation of #interest at an

#average #annual #rate of 17. [Ibid]

In sum, these arguments show us two key storylines within class 3. First, interms of technical arguments, proponents of the bill focused mainly on losses

from bankruptcy, again presuming that debtors are abusing the system and that

bankruptcy is somehow avoidable. Second, opponents of the bill tended to focus

more on exorbitant rates of interest than on the issue at hand chapter 7 versus

chapter 13 a classic use of ethos to attack the credit industry, but not an

entirely relevant argument given the circumstances, and one that may have cost

opponents a degree of credibility in the debates. This line of reasoning perhapsdid more to distract than to work toward a better reform.


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Class 4: Congress and Bipartisanship

The most characteristic words (highest chi-square) in this class were: congress+

(354.1), legislat+ (335.9), pass+ (308.7), house+ (288.9), reform+ (272.9),bipartisan+ (257.8), compromise+ (245.5), senate+ (200.4), conference+ (197.0),

report+ (194.5), bill+ (138.8), veto+ (132.4), hearings (120.7), meaningful (113.4),

vote+ (105.2), commission+ (100.6), year+ (90.6), negotiat+ (87.1), consider+

(81.6), introduce+ (79.0), urge+ (76.4), hold (74.9), identi+ (70.2), reintroduc+

(70.2), enact+ (67.3), end+ (66.1), original+ (64.8), strong+ (62.7), voice+ (60.9),

balance+ (59.7), overwhelm+ (57.7), hope+ (54.8), analysis (51.1), soon+ (47.9)

and predecessor+ (47.0).

This set of words implies a strong value on the bipartisan nature of the bill and

on the expression of a compromise and negotiation. Thus it becomes interesting

to examine just what the nature of the bipartisanship dialogue was as well as

the nature of these compromises and negotiations. Closer examination of the

ECUs reveals some fascinating insights as far as these factors are concerned.

Supporters of BAPCPA tend to strongly emphasize that the bill was a

compromise that underwent extensive change as the product of bipartisan work

in its early years, and then stayed essentially identical following Clintons pocket

veto in 2000. These arguments also attempt to compel Congress to act quickly,

implying that continuing the debate longer would not be worthwhile, a dubious

claim at best.

(83) likewise after #extensive amendment the #senate #passed its #bill with extremely #strong #bipartisan #support. H_R_ 833 and 6. 625, however, had significant #differences. after #extensive #compromises between #house and #senate #negotiatedfrom #february until the #end of #july, 2000, a #compromise #bill was #worked out whichbecame HR 2415 in the #last #days of the 106th #congress. [George Wallace, Esq. Coalition for Responsible Bankruptcy Laws]

(81) H_R_ 975 is yet a further #perfection of #legislation that has been the #subject ofintense #congressional #consideration and #debate for nearly 6 #years. it is #essentially

#identical to the bankruptcy #reform #legislation that the #house #considered and #passed less than 4 months ago on the #last #day of the 107th #congress by a #vote of 244to 116. [Rep. James Sensenbrenner, R-WI]


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(69) #last #year_s #conference #report, while a #product of #compromise, did a good job ofbalancing these #issues. we #strongly #urge the 107th #congress to #pass this

#compromise #bill as #soon as possible. [Kenneth Beine, President, Shoreline CreditUnion]

It is worth noting here that there is an inherent contradiction in the supporters

arguments. When Clinton pocket vetoed the bill in 2000, Congressmen likely

voted under the strong impression that he would do so. Thus, swing voters

(primarily democrats) knew that in all likelihood their votes would not

ultimately matter, and so they could demonstrate support for the bill without the

consequences a form of pretend bipartisanship. 44 By introducing an

essentially identical bill in the following Congress, proponents de facto concededthat the bill had not passed a true bipartisan test, and thus the only way the bill

could pass in this Congress without major amendments is if there had been a

large shift in power in the House from Democrats to Republicans, which indeed

there had been. The uncertainty of not knowing how long this majority may last

certainly may have had an impact on Republicans desire to pass the bill as soon

as possible. As mentioned previously, even opponents requests for simple

amendments to correct spelling errors and typos were denied time so that the

vote could be held as soon as possible. Further, interestingly among the top 20

ECUs, proponents of the bill are the only ones to mention the word

bipartisanship, whereas opponents do not use the word once.

Opponents of the bill rejected the notion of bipartisanship in BAPCPA and noted

that the fact that the bill was identical was the precise reason to again reject it,

directly contradicting supporters claims that the fact that the bill was a repeat

should be reason to support it. Further, dissenters noted that there was not

ample time or forum in which to discuss dissenting views of the bill.

(59) without even convening any #conference committee wherein dissenting #views couldbe #voiced. #passage #occurred only after a cloture motion was defeated in late 2000.however, after #adjournment of the 106 #congress, the #president #vetoed the bankruptcy

#reform act. the current #bills, S_220 and H_R333, were #immediately #reintroducedupon the convening of the #years #congress. [Marshall Wolf, Attorney, Wolf & Akers]

44 Zywicki (2005).


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(57) H_R_ 333, this #year_s #version of the bankruptcy #bill, is #essentially aresubmission of #last #year_s #conference #report, and accordingly we #oppose it. we

#strongly #urge this committee to #consider not just our #view [Damon Silvers, Esq. American Federation of Labor]

In sum, we learn many important lessons from this fourth class of text. First,

supporters of the bill largely cite bipartisan efforts and compromise as hallmarks

of the Act. Second, supporters of the bill largely pushed for a quick vote, likely to

capitalize on the newly born Republican majority in both the House and Senate.

Third, however, this alleged bipartisanship did not convince many dissenters,

and opponents strongly demonstrate that the nature of the debates on

amendments to the Act did not sufficiently cater to bipartisan participation.

Last, without a true yea vote prior to the hasty pushing of BAPCPA through the

2005 Congress, we cannot be certain to what extent any bipartisan support truly

existed pre-2005.


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Class 5: The Judicial System and Implementation

The most characteristic words (highest chi-square) in this class were: judicial

(439.4), program+ (386.5), unit+ (342.2), trustee+ (327.8), implement+ (291.4),

district+ (253.8), office+ (242.13), appeal+ (234.7), court+ (195.8), civil+ (193.0),

rule+ (177.7), enforce+ (166.0), audit+ (157), case+ (137.7), form+ (122.2),

conference+ (121.1), interim (117.7), executive+ (112.1), direct+ (101.1), clerk+

(96.1), return+ (93.6), train+ (91.5), precedent+ (91.5), conduct+ (88.0), official+

(87.9), state+ (86.8), supreme (80.8), develop+ (79.6), judge+ (79.2), caseload+

(78.3), responsibilit+ (76.5), initiative+ (76.1), fraud (75.3), data (74.5), and task+

(65.5).

These words imply a strong focus on the implementation and judicial side of the

debate, with the top ten or so words all applying to judiciary type tasks and

roles. Interestingly, the word fraud does appear here, but only toward the

bottom in terms of relative importance, and abuse does not enter into the debate

at all this implies that these segments of the debates were highly technical in

nature, focusing on the implementation of a fait accompli rather than adiscussion of how to construct the Act. This is borne out in a closer examination

of the ECUs, the most characteristic of which follow below. This class of text

does not break cleanly into proponents and opponents, but the ECUs do

demonstrate the key administrative and implementation concerns that experts

and members of Congress shared.

(86) to #re #authorize the lapsed #south #carolina #judgeship and #provide the otherneeded #judgeships, to leave intact the current filing #fee #structure, to #re #assign the

#responsibility to compile and report financial #data and maintain #tax #returns to the #united #states #trustee #program, which is better suited to #meet these #responsibilit ies, [Judge Edward Becker, US Court of Appeals, 2001 Congress]

(78) the routine filing of #tax #returns, however, would be problematic. #recognizing that #tax #returns are not to be made #available to the #public, the bill requires the #directorof the #administrative #office to #establish #procedures to #safeguard the confidentialityof #tax #information and to #establish a system to make the #information #available tothe #united #states #trustee, #case #trustee, [Ibid]

(75) the #act requires the #executive #office to proactively #identify abusive bankruptcy

#cases and to #conduct random #audits of #cases, as #directed by the #act. we would like


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to know how the #united #states #trustee #program will #implement these #responsibilit ies. [Rep. Hon. Chris Cannon, R-UT]

(53) 225 and advanced #case #management techniques, there remains a dire need formore #judicial #resources to #handle the burgeoning #judicial workload. section 325 ofthe bill amends the #statutory filing #fees for chapter 7 and chapter 13 #cases and #reallocates a portion of the #revenues generated by such #fees from the #judiciary and thetreasury #general #fund to the #united #states [Becker]

(51) and the #executive #office of the #united #states #trustee. and as a result, #drafts of40 to 50 #interim #rules and #forms are almost ready. [Judge Thomas Small]

As we can see, discussion dating back as far as 2001 focused on very minute

details of the Act rather than on the judiciarys role in forming the Act in the

first place. One could argue that given the collective action problem present, thismatter should have been dealt with exclusively by judges and the court, a

possibility I will discuss further in Section V.

Class 6: Procedural Rhetoric

The most characteristic words (highest chi-square) in this class were: chairman+

(642.1), thank+ (619), gentleman+ (299.4), question+ (145.9), minute+ (119.1),

expire+ (103.2), answer+ (97.3), ask+ (90.5), chair+ (83.0), subcommittee+ (74.8),

follow+ (57.7), record+ (57.3), unanimous (57.1), testify+ (55.3), consent (51.33),

appreci+ (50.4), committee+ (48.7), congressm+ (46.0), and yield+ (45.2).

This class of words simply reflects the procedural and formal workings of

congress and bears little meaning for the purposes of our analysis. Thus we do

not require a complete discussion of this lexical class.


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Interrelation Among Classes

A further useful functionality of ALCESTE is the ability to measure the degree

of relation and overlap between the six various classes of text. Two outputs are

primarily useful for this, the dendrogram and the spatial matrix. This first

graph is schematized according to ALCESTEs descending hierarchical system.

The percentage weight assigned to each class by the analysis is given to the right

of the class, as well as the number of ECUs identified. The relative location of

the intersection of two classes, left to right, designates the degree of relatedness

for example, Class 6 is only loosely related to all other classes, where classes 1

and 5 (as well as 2 and 3) exhibit the strongest relationship in terms of the

relative distance of the classes and the words within the classes.

Table 4 Interrelation Between Classes

This second graph of interest represents the same information but spatially on a

two dimensional plot, known as a correspondence analysis. The positions of the

points of the classes depends on correlations rather than strict coordinates,

where distance reflects the relative degree of co-occurrence (the chi-squared

distance) thus the measures of the axes numerically are arbitrary in that they

dont represent a concrete measure per se, but these figures do express the

relative distance or overlap between classes effectively. Class numbers are

Class % # ECUs Degree of Interrelatedness Between Classes

High Medium Low

Class 1 24.3% 833 Goals of Reform

Class 5 7.1% 244The Judicial System /Implementation

Class 4 10.2% 350Congress andBipartisanship

Class 2 17.6% 602Emotive Appeal /Personal Impact

Class 3 14.7% 504 The Credit Industry

Class 6 26.1% 893 Procedural Rhetoric


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designated in highlights. Words near a highlighted number constitute words

representative of that class of text.

Table 5 Correspondence Analysis

+-----|---------|---------|---------+---------|---------|---------|-----+19 | | provision+ |18 | | |17 | judge+ court+ |16 | | abuse+section+ |15 | administr+. .rule+ .review+case+ |14 | new+ integr+ .enforce+develop+ |13 | justice| .#05. ..conference+task+ |12 | implement+unit+| .. .district+ judicialcurrent+|11 | executive+. . .. . tax ..audit+form+estate+ |10 | initiative+ clerk+...#01 temporarydebtor+

9 | | direct+ ...confirm+discretion+|8 | congress+reform+ test+ . .fiscal+ .data |7 | legislat+bill+ |6 | urge+voice+ seek. |5 | state+ reintroduc#04negotiat+meaningful |4 | vote+senate+ .. ... . mean.compromise+ creditor+ |3 | hope+house+ hold. | .veto+analysisstrong+ |2 | introduce+ pass+|original+commission+chapter+ |1 | testify+subcommittee | |0 +---.minute+hear.chair+---------lastbalance+----------------------------+1 ask+.#06ire+chairman+ | |2 | ..gentleman+consent | |3 msmr question+ end+ |4 | | |5 | record+ | year+ file+job+ way+interest+ |6 | | children+ |7 | | hospital+medi+ |8 | divorce+couple . lose. .annelise+ |9 | live+thousand+ daughter+ cash+use+ |

10 | | purchase#02 problem+pay. |11 | | car+ home+debt+increase+ |12 | up lender+ .. .nationwidedollar+ |13 | moneyprofit+ . lend.saving+famil+ |14 | cause+bank+ #03. .rate+industr+recent+15 | union+mill+ ..market+lossesnumber+ |16 | community+ ....low+bankruptciesborrow+ |17 | | credit american+ |18 | | card+lossaverage+ |

+-----|---------|---------|---------+---------|---------|---------|-----+

These charts tell us three things. First, this indicates that class related to the

goals of reform (class 1) was closely related to the judicial system (class 5), and

that bipartisanship (class 4) was a factor related to each of these. Second, it tells

us that arguments related to emotive appeal or pathos (class 2) were most closely

related to arguments related to the credit industry (class 3), rather than to the

judicial system or goals of reform. Last, we see that the procedural rhetoric

category (class 6) is not highly related to any other class, which we would expect

to see and which also serves as a sign that the ALCESTE analysis ran correctly.


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V. Relation of Results to Theoretical Models and Policy

As stated in Section II, Besley and Coate make three predictions of pertaining to

the possible effects of a lobby. First, it is possible under certain conditions that

lobbying has no effect on policy choices, especially if citizens delegate

policymaking to a representative who neutralizes the impact of the lobby.

Second, at the other extreme, lobbying can completely dominate electoral

competition, meaning that a strong lobby will make certain that a candidate

with any preference will produce their preferred outcome at that point, a lobby

simply decides which politicians are cheapest to buy. Third, in all cases, lobbying

generates rents to office holding.

With regard to the first prediction, in the case of BAPCPA we can clearly see

that the decision was not delegated to a neutralizing party but rather fell into

the hands of a largely Republican-biased House and Senate. Therefore, this

condition would not neutralize the impact of the lobby. With regard to the

second prediction, the impact of a lobby appears to be a function of 1) how well

funded the lobby is and 2) the degree of competition for candidates. We know

that in this case the consumer credit lobby was quite well funded, thus

increasing the potential impact of the lobby. Second, we know that citizens in

this case suffered largely from a collective action problem and a lack of a clear

identity in terms of voting demographics; thus, even for leaders primarily

concerned with satisfying a representative constituency there was no clear way

to do so. Dickerson notes that several amendments were accommodated in order

to cater to interests of certain interest groups, namely the elderly, veterans and

people in armed forces. There are two ways to interpret this. First, we could say

that these were the result of bipartisan compromise. However, my results imply

that this bipartisanship was weak at best and counterfeit at worst. This lends

more credence to an alternative explanation, which is that these amendments

were simply another form of payment from supporters to dissenters and a way to

entice them to pass the bill, since these former dissenters could now demonstrate


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to these interest groups that they had succeeded in exempting them from the

Act. Since these interest groups actually constituted a small portion of

bankruptcy filers, this would come at a small cost to the credit industry lobby.

Thus, the model predicts that the lobby would seek out these cheap members of

Congress and buy them out, which appears to have happened. With regard to

the final prediction, we can see that this clearly held true in this case in fact,

this lobby perhaps generated the most rents of any lobby toward a single act of

Congress. These results further support the idea that representatives will seek

to influence the outcome of a debate in a way that maximize their returns. In

this case, it appears that the greatest returns were measured in the form of vote-

seeking rather than some other measure (social welfare, etc.).

Thus, in short we see that these results appear to have been rather predictable,

given a case where a strong and well-funded lobby seeks to pass a bill and no

clear opposing constituency exists to oppose such activity. While further testing

would be necessary to prove this definitively, the results support the notion that

by modeling a technical debate rather than an ideological debate, Congress wasable to keep the median citizen from caring much about the reform, and thus the

necessary opposition never formed.

Institutional Considerations

We can see from the above that the outcomes in BAPCPA appear to have been

largely predictable, but the question remains whether it was avoidable. Under

the current structure of the US legislative branch, the answer appears to be no.Per Article One of the US Constitution, in order for a bill to become law, it must

simply pass both the House and the Senate and then be agreed to by the

President. So long as a bill passes these measures, it can only be repealed by the

exact same process by which it passed into law.

This brings to light several interesting considerations regarding the legislative

institutional structure. First, in a case where debate is clearly one-sided and


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representativeness is questionable due to a collective action problem, should a

third-party arbiter have the power to reconsider or veto a bill? Second, for bills

with such a collective action problem, what can legislators do to increase the

visibility of the bill and make the average citizen, who may not otherwise care

about the result, care? The fact that these events appear to be largely

predictable but not preventable begs that further research and consideration be

given to alternative forms of governance in cases where strong industry capture

and a lack of representativeness are possible.


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VI. Conclusion

This work contributes to a larger body of evidence that demonstrates some of the

issues and complexity surrounding BAPCPA. I present a systematic andobjective way of analysing an otherwise very difficult subject, one that is

applicable in a number of other contexts, and arrive at several interesting

findings related to the nature and dynamics of the BAPCPA debates. This helps

in part to address some of the open questions regarding the BAPCPA story which

I described in the introduction. Whereas most analyses of BAPCPA have been

goal-driven, my analysis is intended to be as objective and exploratory as

possible, making no pre-conceived notion of the BAPCPA story.

In short, I find that the content of the BAPCPA debates can be broadly classified

into six classes. Most importantly, these classes show that: 1) supporters defined

goals of the reform mainly in the vein of pointing out errors in the current

system, where opponents focused on what the goals of a comprehensive system

ought to be; 2) supporters argued for these main goals using interested parties,

where opponents relied more on bankruptcy experts (judges); 3) supporters

tended to focus on the broader societal implications of bankruptcy, where

opponents relied more on arguments of pathos and ethos , potentially to their own

detriment; 4) bipartisanship, while expressed as a key theme of the debates, was

not necessarily well-founded or even valid; and 5) to the extent the judicial

system was considered, the tone and arguments took a tone of a fait accompli

and a technical argument rather than one based on ideology.

These observations are summarized below by class.


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Table 6: Main Conclusions and Implications of Text Analysis

Relating these results back to the political science literature and policy

implications, this work suggests that these effects were largely predictable, and

thus the question remains how to address such situations in the future. Possible

solutions include a system of detection within the government to monitor

stakeholders and representativeness in key reforms and increasing the visibility

of key reforms among citizens in situations where citizens may be

underrepresented due to a collective action problem.

Each of these areas represents a potentially interesting area of further research

in institutional design and effectiveness. Another potential area of research

would be to run similar analyses on other acts of Congress and see to what

extent these results coincide with other acts. A further interesting potential

area of research would be to compare among several acts of Congress the style

and tone of arguments by Republicans and Democrats and see whether any

significant patterns emerge.

ClassKey Characteristic Arguments /

Areas of Debate Rhetoric / ToneSupporters Opponents Supporters Opponents

Class 1 Goals of Reform Current flaws of the systemand potential for abuse;main arguments were bythose with direct financialinterests

The upper hand position ofcreditors; main argumentswere by judges with nodirect financial interest

Presumed the 'guilt' of thedebtors; invoked thatbankruptcy must be for'need'

Focused on what the Act'ought' to consider; vieweddebtors as victims of society

Class 2 Emotive Appeal /Personal Impact

Societal ramifications ofbankruptcy; morality andresponsibility of debtors

Story based testimony fromvictims of financialhardship; demonstratingthe 'need' for bankruptcyprotection

More matter of fact andalmost condescending;treats debtors in a low light

Highly emotive ( pathos )style tone

Class 3 The Credit Industry Rise of bankruptcy filingsand the growing problem;societal ramifications

Predatory lending by creditproviders

Again presumed 'guilt' ofthe debtors; imply thatbankruptcy is many timesavoidable

Attacking tone ( ethos )against the credit industrylobby

Class 4 Congress andBipartisanship

Act represents significantcompromise; compelCongress to act quickly

Reject the notion ofbipartisanship;institutional flaws (no

opportunity to dissent)

Heavy emphasis onbipartisanship, but ill-founded

Largely angry/disappointed

Class 5 The Judicial System /Implementation

Strong focus onimplementation

Similar to supporters Formal and technical Similar to supporters

Class 6 Procedural Rhetoric NM NM NM NM


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25. Simkovic, M. (2009). The Effect of BAPCPA on Credit Card Industry Profits andPrices. American Bankruptcy Law Journal, v. 83, 2009, pp. 1-26.

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Appendices

Appendix A: ALCESTE Methodology 45

ALCESTE is textual analysis software that identifies a speakers association of

ideas and main arguments ideas and arguments which can then be correlated

with the speakers characteristics (party affiliation, constituency characteristics

and so on). The package relies upon co-occurrence analysis, which is the

statistical analysis of frequent word pairs in a text corpus. ALCESTE was

developed by Max Reinert and has been applied in sociology and psychology, and

in political science. It has been described as a methodology in so far as it

integrates a multitude of highly sophisticated statistical methods, and: Taken

together, the program realizes a complex descending hierarchical classification

combining elements of different statistical methods like segmentation,

hierarchical classification and dichotomization based on reciprocal averaging or

correspondence analysis and the theory of dynamic clouds. More simply, it may

be described as a marriage of textual and statistical analysis.

There are two preconditions for good results with ALCESTE: (1) the textual data

must be consistent within the whole (for example, themes and conditions of

production are

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