Salon.com > Debt

Romney oversimplifies debt ‘inferno’

Wed, 16 May 2012 15:45:00 +0000

WASHINGTON (AP) — When Republican presidential hopeful Mitt Romney decried the "prairie fire" of U.S. debt Tuesday, he ignored some of the sparks that set it ablaze.

One was the Great Recession that took hold before Barack Obama became president. That landmark event went unmentioned in Romney's speech. Another was a series of Bush-era tax cuts that Romney wants to follow with even lower rates.

Instead he laid the blame on Obama, a president who has certainly increased the nation's eye-popping debt — but not, as Romney claimed, by nearly as much as all other presidents combined.

A look at some of Romney's assertions and how they compare with the facts:

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ROMNEY: "America counted on President Obama to rescue the economy, tame the deficit and help create jobs. Instead, he bailed out the public sector, gave billions of your dollars to the companies of his friends, and added almost as much debt as all the prior presidents combined."

THE FACTS. Hardly. Presidents from George Washington through George W. Bush ran the national debt up to $10.62 trillion, the amount it was on the day Obama took office. Today, it is $15.67 trillion, according to the Treasury Department's Bureau of Public Debt. So it has gone up by $5.05 trillion under Obama. That's roughly half of the amount amassed by all the other presidents combined.

Margaret Atwood talks revenge

Thu, 26 Apr 2012 08:50:00 +0000

Margaret Atwood's "Payback: Debt and the Shadow Side of Wealth" is a book of essays that became a series of speeches and radio broadcasts in 2008. Given all the indelible novels Atwood has written (including "The Handmaid's Tale"), it may seem the most unlikely of her works to be adapted for the screen. Yet Jennifer Baichwal’s new documentary, "Payback," is just that, a wide-ranging reexamination of what we owe -- to each other, to society and to the planet -- linked by Atwood's own exploration of the theme.

Atwood appears in the documentary; she is shown working on her manuscript and giving her talks, which were commissioned by the celebrated Massey Lectures series in Canada. Her ideas link stories that include the BP oil spill in the Gulf of Mexico, Canadian mogul Conrad Black's prison stint, efforts to unionize tomato farm workers in Florida, and most memorably, a neighborhood feud in Albania that resulted in a family being unable to leave their home for fear of being killed by their enemies.

The evolution of American debt

Sat, 14 Jan 2012 14:00:00 +0000

In the US today, debt is ubiquitous. Whether it’s paying back thousands of dollars in student loans, using your Visa card for a pack of gum when you’re out of cash, or taking out a mortgage on a first home, it's been woven into our financial system so tightly, that even when we suffer the sometimes cruel and unusual detriments of borrowing, we have little to no realistic impetus to stop. But it wasn’t always this way. In fact before the 20^th century, debt was a taboo, feared, shameful, and kept in the shadows. So what events and institutions brought debt from its meager beginnings to its central role in American life?

In his new book, "Borrow: The American Way of Debt," Cornell professor Louis Hyman writes, in essence, a biography of American debt. He traces debt through American history: from the late 19^th century, when unpaid dues meant public ignominy, to the 1920s, when the auto industry changed the face of borrowing to the mortgage fallouts that led the Great Depression to the invention of the credit card as we now know it, all the way to the current shambles of our national economic livelihood. Along the way we meet characters like the Henry Ford, the xenophobic inventor of the Model T whose scorn for the liberal age of borrowing got the best him, and Lower East Side grocery clerk Joseph Miraglia, whose miraculous $10,000 spending spree in 1965 made history as one of America’s heftiest credit cart blunders.

The shady credit agencies that run your life

Fri, 02 Dec 2011 17:45:00 +0000

Remember the old idiom, “Don’t become a statistic”? Well, you already are.

The Minneapolis-based Fair Issac Corporation, popularly known as FICO, keeps close tabs on your credit files and uses a secret formula to reduce that information to a number that can powerfully impact your life. If you pay a bill late, they know about it. When you use your credit card, they see it. They even know if you are making inquiries to learn about your credit score.

There’s also a lot they don’t know. Some things, like your race or marital status, are prohibited by law from being considered in credit scoring. Other things, like your employment history, where you live, or how much you’ve saved, don’t fit into the algorithms FICO uses. Any normal person might suspect they are relevant to assessing the quality of your credit, but they won’t make a difference in your score.

Old people getting richer, young people getting poorer

Tue, 08 Nov 2011 16:54:00 +0000

Have you noticed how most of the Tea Party people were sort of old, while most of the Occupy Wall Street people are fairly young? Here's an interesting factoid, from the USA Today: Old people are much, much richer than young people. According to the Pew Research Center, Americans 65 and older are 47 times richer than those 35 and younger.

It makes sense that old people would have more money than young people, because they have been working and saving longer. But this wealth gap is massive by historical standards. In 1984, old people were a mere 10 times richer than young people. Not only have old people gotten richer since then, but the median net worth of households headed by young people has declined considerably.

Households headed by adults ages 35 and younger had a median net worth of $3,662 in 2009. That marks a 68% decline in wealth, compared to that same age group 25 years earlier.

Over the same time frame, households headed by adults ages 65 years and older, have seen just the opposite. Their wealth rose 42%, to a median of $170,494.

Some plans for addressing American debt

Mon, 07 Nov 2011 18:50:00 +0000

Something has to be done about the debt. Household debt is currently at 90 percent of GDP and unless the powers that be do something to help people out, calls for mass forgiveness will only grow stronger.

Help still isn't on the way, but I did see a couple of proposals worth highlighting today to actually do something concrete to help people who are struggling.

First, Mike Konczal wrote about student loan debt. A very brief history: Every single law Congress has passed regarding student loans since the federal program was introduced in 1965 has benefited lenders and made repayment or bankruptcy harder for borrowers. In addition to being unfair, this seems perhaps like bad policy, unless we really think it's best for college graduates to spend their first decade (or decades) in the workforce sending substantial portions of their income to private lenders.

Mike Konczal's plan is very simple: Just roll back the laws to what they were before 1990. Then, student loans are dischargable in bankruptcy after five years, instead of never.

I’m an artist about to explode

Thu, 27 Oct 2011 00:00:00 +0000

Dear Cary,

I can't do everything and I am pissed off that I can't. I am also preemptively pissed off at your peanut gallery since they trend anti-artist and tend to take a sadistic glee in other people's hard knocks. I just wanted to give them the middle finger before I get on with my letter. Yeah assholes. This is me. Writing to Cary. STFU.

OK cool. Just between you and me, Cary, in that Internet way: I got a terrible review at work. In fact, I am about to have a meeting with my boss about it in two hours. I work for a nonprofit. I HATE MY JOB, although I don't really have anything against the org -- or even my boss really. I am an artist. I work really, really hard to keep that dream alive. My artwork is the car I'll never own, the house I'll never own, the baby I'll never get to have.

I am my own sugar daddy. I work 55 hours a week. I make totally decent money. In fact if I don't screw up, my org is very generous with the 401K. I have to work here long enough for it to vest, though. My health insurance is off the hook too. Like shit I can and do totally see a doctor on a regular basis. It is rad. Oh, did I tell you that my student loans rival those of lawyers and doctors and I have never been late or missed a payment ever? Yep, I got that going on too.

Student loan debts crush an entire generation

Thu, 20 Oct 2011 11:45:00 +0000

[UPDATED] USA Today says that at some point this year, student loan debt will exceed $1 trillion, surpassing even credit card debt. Felix Salmon says the number is closer to $550 billion. Either way total student loan debt is rising as other debts have tailed off. Delinquency has increased, too, since the height of the financial crisis.

It's a huge mess.

Some people have noticed that "student loan debt" comes up a lot among the Wall Street Occupiers and the members of the 99 percent movement. Often, older people, who either attended school when tuition was reasonable, or who didn't attend college at all in an era when a high school diploma was enough of a qualification for a stable, middle-class career, tend to think this is all the entitled whining of spoiled kids. They don't understand that these kids accepted a home mortgage worth of debt before they ever even had a regular income, based on phony promises, and that the debt is inescapable, regardless of life circumstances or ability to pay.