Household Debt Is a National Crisis

Years after Toni Potter’s husband passed away from pancreatic cancer, debt collectors in her state of Washington were still relentlessly hounding her about his hospital bills.

Andrea Anderson, a young student in Oregon, has been saddled with $150,000 in college loans as she pursues her dream of becoming a social worker. She knows she’ll be paying the loans back for decades, threatening her other dreams of buying a home or starting a family.

Linda Mock of Idaho was trapped by a payday loan that quickly grew from the original $300 to more than $900 in interest alone. Trying to break free of the debt, she took out a title loan on her car and ended up losing her only transportation.

Family debt is no personal failing — it’s a national crisis. Even as unemployment declines, the debt crisis is holding back a full economic recovery and pushing more people into poverty.

That’s why President Barack Obama announced recently that he’s instructed the Department of Education and other federal agencies to do more to help borrowers afford their monthly loan payments.

That’s a step in the right direction. 

But I’d urge him to go further and rein in the lenders, banks, and collection agencies that are profiting from Americans’ debt. It’s time to stop blaming borrowers and instead hold the financial interests that created the crisis accountable.

When hospitals give big price breaks to insurance companies but refuse to work with a widow struggling to make ends meet, something’s not right.

When a federal student loan provider charges young students nearly twice the interest it charges homeowners, something’s not right.

When payday lenders can get away with charging 300-percent interest on a short-term loan to a poor family just trying to fix their car so they can get to work, something’s not right.

The explosion of predatory lenders hurts families and siphons money out of local economies. There are more than two payday-lending storefronts for every Starbucks coffee shop in the United States.

Meanwhile, more than 70 percent of the students who graduate with a bachelor’s degree leave school deep in debt. The average student loan debt totals almost $30,000 today, up from $19,000 a decade ago.

For many Americans, there’s no way out.

Student loans can’t be discharged in bankruptcy. Some states will take your your driver’s licenses and professional certifications if you fall behind in your student loan repayment.

And if you can’t afford your legal fees, you could go to jail — just for being poor.

It’s time to break the shame around debt and start putting the responsibility for solutions where it belongs: on those profiting off struggling families. That means placing fair caps on interest rates, ending predatory practices that push people further into debt, and creating a path out of debt for people who are struggling.

Recently, folks from different communities across the country came together for a national online conference, “Up from Debt,” hosted by my organization, the Alliance for a Just Society. People from Seattle to New York shared powerful and moving stories — not to gain sympathy, but to erase the stigma that further burdens families trapped in debt.

The Obama administration should investigate all forms of predatory lending, including student loans, payday loans, medical loans, mortgages, and credit cards. On the White House website, you can sign a petition asking the president to create a pathway out of debt so families can reclaim their futures.

Our children, our neighbors, our parents, the sick, and the struggling aren’t cash cows for bankers and lenders to milk. It’s time to demand solutions that help families move up from debt.

LeeAnn Hall is the executive director of the Alliance for a Just Society, a national policy and organizing network that works on racial, health and economic justice issues.

 

Household Debt is a National Crisis

Household Debt Is a National Crisis (Mar.25, 2015)

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Daley Weekly: Federal Budget Horror 2016 (Don’t Read This Alone)

The Texas Chainsaw Massacre Goes National

Both Houses of the Congress have begun processing their budgets for fiscal year 2016.

Those of you who enjoy terror movies will take special pleasure in this version of the Daley Weekly wherein we devote ourselves to a summary of the Congressional Budgets.  They amount to a Chainsaw Massacre for the nation.

The budgets are plans intended to guide tax and spending policies in the coming year. They set goals for the various appropriations committees. The resolutions can be adopted with a mere majority vote, but are not actual law and do not go to the President for approval. Budget bills also can set procedural rules for various policy proposals and can be used to pass legislation without the possibility of a filibuster in the Senate.

Budget Committee Chairs in both Houses issued plans this week and the process began on the effort to adopt them before their theoretical April 15 deadline.

Both budgets are comprehensive blueprints for economic malaise. They could not possibly be worse.

The underlying frame for both budgets is the intent to “balance the budget” in the next decade. To reach this goal the House proposal would reduce federal funding by $5.5 trillion ($4.5 trillion in the Senate) while raising no new revenues.

Entitlements:

Both budgets will make major changes in Medicare, Medicaid and food stamp programs. Additionally, the House (but not the Senate) proposal also contemplates some sort of process that will fast track changes in Social Security. Wrapped in undefined rhetorical terms like “flexibility,” the proposals would block-grant and cut funding for entitlements. The Children’s Health Insurance Program (CHIP) is merged with a newly block-granted Medicaid program. SNAP, the food stamp program, is block-granted and cut by $125 billion. Medicare is “partially privatized” and turned into a voucher program.

Sequester:

This refers to the automatic cuts in defense and domestic programs set in place a few years ago. The House plan slips money into an off budget defense fund to be used for overseas wars and lets the cuts to domestic programs proceed. The Senate plan anticipates that sequester will proceed for one more year.

ACA:

Both plans anticipate the repeal of the Affordable Care Act, including expansions in Medicaid coverage. All totaled, about $3 trillion are cut out of health care programs.

Taxation:

There are no new revenues contemplated in either budget. The House proposal makes room for tax reform without any specificity about what that might mean, but they do not intend to use this to raise revenues. There are some tax breaks for the affluent: repeal of the Medicare tax expansions in the ACA and the Alternative Minimum Tax (AMT). These would reduce federal revenues by $1.3 trillion over ten years. At the same time they appear to let the expanded Earned Income Tax Credit and Child Tax Credit lapse in 2017 – a tax increase for thirteen million low-income families. So taxes go up for low income families – but are cut for the affluent.

Reconciliation:

This is the procedural process that permits the passage of substantive legislation without needing sixty votes in the Senate. The House proposal would apply reconciliation rules to eight different policy proposals, but the Senate would apply it only to repeal of the ACA.

Gimmicks:

Both proposals use revenues in the amount of about $2 trillion that come from taxes in the ACA even though they repeal the rest of the Act. The House proposal plans to cut $1.1 trillion in domestic programs but provides little detail about where it might come from. Associated narrative does suggest that such things as Pell Grants, supplemental security income, housing, veteran’s programs, pensions, and farm programs are likely candidates, but we do not really know because they choose not to say.

The House plan includes no accommodation for the “extenders” – the annual package of tax breaks largely of benefit to corporations. Since it is impossible to believe that they do not intend to pass a passel of these, the refusal to mention them means that they intend to blow another hole in the budget without accounting for them in the plan.

Late news suggests that a “typo” in the House plan understated the cuts planned for federal employee pensions and health care by a mere $900 million, bringing the corrected total to $1 billion instead of $100 million.

Both proposals use “dynamic scoring,” a completely bogus assumption that draconian cuts will lead to economic growth and, therefore, increased tax revenues.

Economics:

If these plans are adopted, they will have an inevitable impact on the economy. Federal spending will be at record lows as a portion of the GDP. Experiments like this in states and in other countries have led to economic stagnation. The policies in these budgets are almost exact parallels to the recession inducing economic policies in Greece, Portugal, and Spain.

Timing:

Both the Senate and the House have passed their versions out of committee. The Senate did adopt an amendment increasing defense funding. The budget leaders apparently hope to pass the bills through each House of the Congress by the end of next week.

Bill Daley, national legislative director

 

You Are Not a Loan – You Are Not Alone!

Debt isn’t a personal failing – it’s a national crisis.

We are standing up for those burdened by debt that is threatening their future and ours: students, homeowners, the working poor, and those with serious illness and crushing medical debt.

We are gathering the nation – inviting everyone to come together – and help us we begin building a national road out of debt.

The future belongs to all of us. Join us on Saturday to fight for it!

“Up From Debt” will connect our experiences, share our stories, and launch a national movement that addresses debt as a deep and broad problem that needs real solutions right now.

Join us for a national online conference on Saturday, March 14 – watch it live here 

What you can do right now:

Tell us your story. Fill out our brief survey on your experience with debt. We will release the results at Up From Debt. 

Spread the word on social media. Use Facebook and Twitter to spread the word about Up From Debt.

‪#‎UpFromDebt
‪#‎YouAreNotALoan
‪#‎DeclareYourDebt

Join our Thunderclap to add your voice to others the day of the event.

Declare your debt! You are not alone in being in debt. And you are not a loan! We are in this together. See what others have shared.

Watch the Up From Debt summit from your computer live Saturday, March 14.

You are not a loan – and you are not alone! People all over the country will speak in one voice to end predatory lending, and take back our future.