Now that government shutdown and debt crisis has been averted for the moment, legislators are returning to the bargaining table and looking for ways to look good for the coming Midterm Election. One issue that may begin to brew in the coming months, thanks to the debt ceiling debate, is another issue related to debt.
The personal debt crisis.
Americans have, by and large, reduced their overall debt load over the last few years, prompted by the Great Recession. Still, many Americans find their daily debt load to be overwhelming, and part of that problem is that, despite a spike in personal bankruptcy filings over the last few years due to the housing market crash and oil shocks, a true “fresh start” is actually impossible to achieve.
When the bankruptcy code was first written, it was intended to offer citizens a chance to truly begin anew. The thinking was that people make bad decisions from time to time, and sometimes they get in over their heads, to the point where the debt they take on is too great to handle. Bankruptcy was originally intended to be an option to get out from under that load. Based in Old Testament principles, the code provided for a means to either repay creditors (Chapter 13) or wipe debts clean altogether (Chapter 7). Despite the stigma it carried with it, this fresh start gave many Americans a chance to learn from their mistakes, and refilling rate was relatively low.
What changed? For starters, government-backed student loans (Stafford, Perkins, Direct) were exempted from bankruptcy laws, meaning these debt can chase a person their entire lives unless some irrefutable evidence could be presented showing they could never be repaid in their entirety. This created a situation in which a person could rack up a mountain of debt which forces them from college, and yet they are forever caught in a debt cycle because the biggest debt of all, the one which forced them into bankruptcy court in the first place, cannot be forgiven and wiped clean. For millions of America college students, both degree earners and dropouts, this is a sobering reality. Despite bankruptcy judgments being granted, tax offsets and wage garnishments persist, all because of an exemption granted to a government-backed and subsidized industry.
The more insidious exemption is that enjoyed by the Internal Revenue Service. Unlike the student loan industry, the IRS is exempt from not just the bankruptcy code, it is also exempt from Fair Debt Collection Act regulations. For example, the IRS can threaten to take you to jail and do so (unlike private debtors, who can neither press charges against, nor threaten to, over a bad do), they can seize bank accounts and paychecks without a court order, and can call you during their business hours and harass, all because they are collecting taxes, which are considered debts exempt from conventional regulations. In the bankruptcy court, the IRS often settles the debts out for lower amounts, but almost never forgives.
A government-backed industry and a government agency both enjoying bankruptcy exemption sends a very powerful message to Americans: government gets what it wants, every time. Americans need to wake up to to a reality: that our "elected" representatives in Congress have far more wealth than their constituents, and they were covering their hind quarters when they brokered this onerous deal. Our government should have be forced to take the same poison pill the populace swallows every day, but that was too much for a group of out-of-touch, spoiled politicians to bear.
Is it any wonder the Tea Party rose to power? Is it any wonder the trust level among Americans towards their own government is at an all time low? When the government which is supposed to “of the people, by the people, and for the people” can take a person’s home, possessions and funds in the name of funding a government which admits can’t keep its own house in order, that presents the ultimate hypocrisy – do as we say, not as we do.
This is an issue which should be addressed in the upcoming midterm elections. Representatives and Senators should be called to account for this arrogance because, the fact is, President Barack Obama has no incentive to rectify this situation, as his signature piece of legislation has been upheld by the Supreme Court. Citizens must face a simple fact – the government is not beholden to the voters, but to corporate interests, labor interests, and the plutocracy which has managed to transfer itself from the Old World to the New World.
Congratulations, power elite – you finally won! Now, if Americans decide to take this debt crisis, look at it for the hypocrisy it really is, and do what the ancient Roman plebes did, this group of power brokers will continue to rule, but over empty streets filled with penniless citizens. The powerful were served by this debt crisis, but what about the powerless?
Here is a warning to our Congress: the French Revolution began because of attitude similar to that of our own Congress. Should Nancy Pelosi, Ted Cruz, or Michelle Obama ever come close to uttering the infamous Marie Antoinette line of "Let Them Eat Cake," riots in the street will be the least of their worries.