pageok
pageok
pageok
Congressional Black Caucus, Small Business, and Bankruptcy Reform:

Interesting article in the Washington Times this morning on the Congressional Black Caucus and their growing tendency to buck Democratic Party leadership and to vote independently on certain important pieces of legislation, namely the bipartisan Bankruptcy Reform legislation and the repeal of the estate tax. The article notes that about one-quarter of the caucus (10 out of the 41 members of the Congressional Black Caucus, which includes one senator) voted in favor of the bankruptcy reform legislation, and five voted for both bankruptcy reform and estate-tax repeal.

The article suggests that the key political dynamic at work is the growth in the black middle class and the growing recognition that many small businesses are minority-owned businesses. As a result, more members of the Congressional Black Caucus are taking the expressed views of small businesses into account in their voting pattern.

Consider David Scott, a Congressman from Georgia:

The caucus was founded in 1969 by 13 members of the House, primarily representing urban districts in the Northeast, Midwest and far West. Though it remains all-Democratic, it now has grown to 41 members, including a senator, Barack Obama of Illinois, and has spread to the booming suburbs near Southern cities. Mr. Scott, an honors graduate of the Wharton School of the University of Pennsylvania who went on to establish his own advertising agency, is the first black politician to be elected to a Southern district that was less than 40 percent black. "It is important that there be a rich political diversity in the Black Caucus because there is a rich diversity in America and within the black community," he said. As a businessman, Mr. Scott said voting for the bankruptcy bill and elimination of the estate tax was easy. "The business of America is business, and Georgia is one of the fastest-growing states in America because we are pro-business," he said.

Congressman Wynn adds:

Mr. Wynn, who represents Prince George's County, the wealthiest predominantly black county in the country, said his votes always have been consistent. "I campaigned on job creation and economic growth 13 years ago, and I don't view [my votes] as a change," said Mr. Wynn, whose district has a high concentration of both large and small black-owned businesses. "Most of my votes are tied to job growth, wealth creation and small- and minority-business growth." "Almost all in the minority-business community supported elimination of the estate tax. Access to capital has been a big issue, and small businesses and minority businesses are being hurt by unnecessary bankruptcy," he said.

As I noted earlier, when I attended the signing ceremony for the bankruptcy reform legislation, I sat next to the owners of a family-owned lumber store in rural New Jersey, who described for me the dramatic negative effects that bankruptcy losses can have on small businesses. And, of course, excessive bankruptcy losses are most likely to negatively impact higher-risk borrowers, such as young and minority borrowers, in terms of higher credit costs and reduced access to credit.

There may also be a generational change at work here, as those supporting these small-business initiatives also seem to be drawn from the younger and southern members of the Black Caucus (who joined most centrist Democrats in voting for bankruptcy reform), whereas the old rust-belt guys like Congressman Charles Rangel dismiss the votes as "just stupid" and John Conyers just chalks it up political ambition for higher office. In other words, it seems pretty clear where the new ideas in the Congressional Black Caucus lie on issues like bankruptcy reform.

The Senate roll call vote on the bankruptcy reform legislation is here; the House vote is here.