28 Jul 2011
- Written by Jason Johnson
Dr. Jason Johnson
How can public opinion sway so much on an issue that is fairly simple and that politicians have been messaging about for the better half of this year?
Because most politicians in Washington don’t understand that how they see debt and how average Americans see debt are further apart than Obama and Boehner were on the debt ceiling last week.
Republicans have been promoting the meme that, “We should manage the nation’s finances the way we manage finances at home.” That would be fine if how we manage finances at home was in any way effective. However, the average American only saves about five percent of his/her annual income, and the majority of the basic needs for living above the poverty line in America – a house, functional car and post secondary education – are all things that you generally can’t buy without taking out loans or extending credit.
More importantly, the problems that the government faces, and the bills they to attend to, are so much more complicated than your average person that this notion that fixing home finances and Washington finances are just a matter of sweat equity and discipline makes no sense.
For example, the United States has to worry about default on Aug. 2, but realistically we don’t’ have to worry about debt collection. China is not going to show up off the coast of California and ask for Chicago as collateral until we pay up. However, average Americans do have to think in terms of debt collection.
I spoke with Congressman Steve Cohen (D-Memphis), who recently proposed a bill in Congress called the “Fair Debt Collection Improvement Act.” If passed, the Act would make it illegal for debt collection agencies to pursue debts that are no longer valid due to a statute of limitations.
Let’s say you owe money from an old apartment you moved out of eight years ago because you left a stain on the carpet. They have about four to six to sue you for the money, depending on what state they’re in. After that, you still owe the money but they can’t take you to court for it. However, many times your debt is sold to a collection agency, and they’ll start harassing you over the phone and threatening to sue even if it’s not longer under the statute.
And here’s the catch: if you start paying again, then you re-open the chance for you to be sued. Cohen’s bill would make it illegal for collection agencies to get into the game and sue you long past the point of no return.
Now what does this have to do with our current debt crisis in Washington?
Simple, our debt problems and Washington’s debt problems are completely different, even if politicians keep trying to make them the same for political purposes. For your average American, debt is about having to pay off bills for things you need and trying not to get hunted down by aggressive, or even fraudulent, agencies when you can’t make payments. The federal government doesn’t have that problem, because the debts it incurs can always be re-paid and no one is coming to collect (like I said, no Chinese coming for Chicago) and we can always find someone else to loan money to us (China, Japan, U.K. etc.).
Is it a good thing to run a country that’s constantly in the hole? No? However, this Republican notion that you can comprehend federal and national financial issues from a local, familiar financial lens is not only wrong it’s downright dangerous for the body politic. Besides it’s not like your average American’s financial game is so flawless that most of us are in a position to criticize government largesse anyway.
Some members of Congress like Cohen really have their fingers on the pulse of how Americans deal with a struggle with debt. It’s a constant fear and drag on one’s life, not a matter of congressional votes to borrow more money and raise debt ceilings. Rather than trying to convince the public of their moral high-ground, maybe Congress should realize that more Americans are worried about keeping a roof over their heads than the debt ceiling.