Uneasy Rhetoric

E. J. Dionne gets it almost exactly right. He argues that the bankruptcy bill before Congress, which would gut Chapter 7 bankruptcy, a policy which allows consumers with too much debt to wipe the slate clean, does not distinguish between the unfortunate son who has a heart attack and can’t pay his medical bills (often even with insurance) and the flippant dandy who charges ’till he can’t charge no more.

Absolutely. Even I, an unabashed liberal, draw the line at idiots who don’t understand the nature of credit and go deep into debt because they have to have stuff now instead of later. Heck, I’ve even been one of those people from time to time.

But as a more-or-less, somewhat responsible spender, the times my credit card bill has gotten out of hand have usually involved a crappy automobile and the necessity of being able to get to and from a work site that was 45 minutes to an hour away by car. Had I not been able to work, I would not have been able to pay any bills, let alone my credit card bill. Like many Americans, I live paycheck to paycheck, with perhaps a one to two-month cushion (more if I use my credit cards!)

For people who go into debt because of unforeseen medical expenses, or because they don’t make enough money to pay the rent and eat and keep the lights on, or because they suddenly loose a job, there has to be some kind of recourse. Consumer credit counseling can help if the problem is temporary (or if the problem really is just exuberant spending), but such action often cannot help someone who is suddenly impoverished.

Dionne does not mention two other problems with the Bankruptcy Bill.

First, the credit card industry is pushing the bill. It is true that one of the reasons credit card interest rates are so high is because of high-risk creditors. Now here is where it gets interesting. The credit card industry could do the conservative thing and self-regulate. They could stop issuing credit cards to high-risk customers. But that isn’t what they want. They want to be able to continue issuing every American sixteen credit cards and a personal line of credit and charging anywhere from 9.9% to over 20% interest. Why would they want to do that? Because even under the current system with Chapter 7, they are raking in the dough.

Without Chapter 7, the government will be handing the credit card companies a bigger rake. One big enough to rake a person right into destitution, right into a permanent, negative financial relationship with a usurer.

Second, if exuberant spending is the problem, why are we not being asked to save, to conserve, to scale back our spending? Because it is driving a fragile economy. And now the same Administration that has not asked us to make a single financial sacrifice during the time of so-called “war” (personal liberties are a story for another time), wants to take away what has always been an important middle class safety net?

I applaud Senator Kennedy’s offering amendments to the bill to ensure that a bankruptcy option will still exist for “those facing bankruptcy primarily for medical reasons, as well as for men and women in military service.” I will applaud even louder if he can manage to kill the bill entirely.

Democrats should oppose this drivel bitterly. Republicans from all of those rural red states, where poverty is a real and ongoing problem just like in the inner city, should realize that more of their constituents than they care to admit are probably indebted beyond their means to pay, and not because they bought a new plasma screen TV. It’s probably because the pickup is in the shop and grandma’s roof was leaking.