President Bush at the bankruptcy bill signing ceremony:

Under the new law, Americans who have the ability to pay will be required to pay back at least a portion of their debts. Those who fall behind their state's median income will not be required to pay back their debts.

The President's comment is simply not true. Let me count just some of the ways:

1) Under current law, everyone pays back taxes, child support, alimony and student loans, and if they want to keep the house or the car, they have to pay those loans too. This bill expands the list of non-dischargeable debts for EVERYONE, regardless of income, and it expands the amounts that they have to pay for cars and other assets. To say that people leave bankruptcy and "don't have to pay back their debts" is just plain wrong.

2) The means test will require EVERYONE who files bankruptcy--regardless of income--to file new forms, detailed budgets, tax returns and new affidavits. If the person cannot afford the higher lawyers' fees to manage this new work or if the person trips over one of the requirements, then she is tossed out of bankruptcy--regardless of whether she is above or below median income. In some places, the means test bites above-median and below-median debtors differently, but it bites everyone.

3) The dozens and dozens of other provisions in the bill that are aimed at consumers have no income test. They apply to everyone, regardless of income.

4) The millionaires’ loopholes remain open. To say that those with above-median income will pay something is true only for the common folk. The millionaires can still slide through.

This bill has always suffered from a truth-in-advertising problem. The proponents say the bill does one thing, while the reality is very different. Evidently that problem persists even as the President describes what he is signing.

A bankruptcy-related poll at MSNBC asks: “Will new bankruptcy laws curb Americans' spending habits?” The choices are (1) Yes, it's a good deterrent and will rein in reckless spenders and (2) No, spendthrifts will overspend no matter what the law says.

What's the correct answer? Neither. The poll is predicated on the hackneyed premise that the average American bankruptcy filer is a spendthrift whose unchecked pursuit of luxury goods is the root cause of her bankruptcy. If that were true, bankruptcy reform would be easy. But it isn’t true. The research has been overwhelming. About 90% of those who file for bankruptcy do so after a job loss, a serious medical problem or a family break up. How about a poll on that?

• “Will the new bankruptcy laws help Americans keep their jobs?”
• “Will a change in bankruptcy law cause more people to stay away from the emergency room when they feel chest pains?”
• “Will the new bankruptcy laws cause more husbands and wives to stay together - or, better yet, cause fewer spouses to die?”

Part of the reason the fight against this bill has been an uphill battle is the widespread but false presumption that Americans go bankrupt because they purchase bigger televisions, bigger cars and bigger homes. Even though that assertion bears no relationship to the empirical evidence, the bill’s proponents asserted it as if it were unquestioned truth - and some of the media parroted the view, no questions asked (see the poll).

Whether you identify as a progressive, a moderate or a (compassionate?) conservative, it’s important to get the facts right. The fact is that for every hypothetical spendthrift or abuser the new law reigns in, it will adversely impact scores of real, hard-working, middle class folks who are down on their luck and desperate to get on with their lives.

President Bush signed the bankruptcy bill this afternoon. More to come soon...