|
April 25 issue - Let's say Peter Jennings was named Jeter Pennings and instead of making more than $7 million a year, he earns $70,000, still comfortably middle class. Pennings has lung cancer, and he understandably wants the best treatment available. But his insurance company won't cover experimental chemotherapy, so Pennings has an excruciating but familiar choice: he can charge the $25,000 chemo on his credit card or go without the cutting-edge treatment. If Pennings is like most people, he chooses to put his health first. With credit-card interest and late fees often totaling 100 percent a year, he's now so deep in the hole he'll never dig out. But under current law, he can file Chapter 7 and get on with what's left of his life.
Not for long. Last week Congress sent a new personal bankruptcy bill to President Bush's desk, where he will eagerly sign it. The legislation, which is designed to make it much harder and more expensive to get out of debt, is not all bad. With 1.5 million personal bankruptcies a year, some change was necessary. But this bill, like so many others moving through Congress, comforts the comfortable and afflicts the afflicted. Worse, it provides for no distinction between those who get unlucky in Las Vegas and those who get cancer.
The law was literally written by the credit-card industry, the same folks whose siren-song targeting of high-risk borrowers caused much of the bankruptcy problem in the first place. Financial services has now surpassed oil and gas as the most powerful lobby in Washington. It's a fitting coincidence of circumstances. First Congress puts a half trillion in budget deficits a year on the plastic for our grandchildren to pay off. Then it sells out the average American to predatory lenders, who have the run of the place. History should remember the 109th as the Credit Card Congress.
We're not talking here about that irresponsible guy you see in the mall who is buying a flat-screen TV he cannot afford. Making it harder for him to weasel out of his financial obligations is fine. But according to a Harvard study of bankruptcy, the most thorough ever undertaken, this deadbeat is the exception. Nearly 95 percent of those who declare personal bankruptcy are swamped by job loss, family breakup, medical problems or some combination. For about half, it's the health-care costs that do them in. (Alcohol- and drug-rehab expenses account for only 2 percent of defaulted expenses.) About 10 percent have the pleasure of getting cancer and going bankrupt at the same time.
This is an argument, of course, for overhauling our broken health-care system, or at least providing catastrophic coverage. But if Bush won't go there, the least he and the bipartisan bag men on Capitol Hill could have done was avoid further harming middle-class people who are already suffering enough. "All of the money is on one side of the debate," says Elizabeth Warren, who authored the Harvard study. "And all of the hurting is on the other." And remember, these borrowers are usually trying their best to get out of debt. By the time a debtor has filed for bankruptcy, he or she has often repaid the original credit-card debt plus some interest but still owes thousands in interest on the interest and other fees.
Tom DeLay's House, typically, allowed no amendments or real debate. In the Senate, one amendment would have protected those declaring bankruptcy for medical reasons. Another capped interest at 30 percent, which is usury by any standard. Both failed. Although the Bible clearly bars usury, all of the big congressional Bible thumpers sided with their corporate contributors. The only insolvent people who get a break are farmers, anti-abortion protesters (who continue to be protected against being sued into bankruptcy by the abortion clinics they try to shut down) and the deadbeat rich, who can still use "asset-protection trusts" to shelter their jewels and mansions from the bankruptcy court. For the GOP-led Congress, the other 98 percent of Americans are second-class citizens.
Traditionally, Republicans have been the party of creditors, Democrats the party of debtors. This is still largely true, though dozens of Democrats went with the plastic people this time. Ironically, the very credit-card companies who will prosper in the short run may pay down the road. Greed has a way of boomeranging politically, as the drug companies are learning. Some Democratic pollsters say this will be a sleeper issue in 2006 and 2008. Broke people have no lobby, but nearly every American knows these companies entice vulnerable customers to extend their balances, then nail them in the fine print.
The larger economy will also suffer from the bankruptcy bill. This is a country built on fresh starts, for reasons as practical as they are spiritual. We all have a vested interest in getting insolvent people back to work, paying taxes and out of the underground economy that this bill encourages. And if you think credit-card companies will now reduce their interest rates or late fees, well, not even the supporters have claimed as much. They insist the point of the bill is to restore the stigma of bankruptcy. That's just what a seriously ill, jobless or abandoned person needs—more stigma.
© 2005 Newsweek, Inc.
© 2005 MSNBC.com
|
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
