Biden cannot wage a war on poverty without debt cancellation.
As a devastating pandemic raged, America’s billionaires amassed a $ 1.3 trillion wealth in the past year, while millions of ordinary people have lost their jobs, health insurance and housing. The most vulnerable among us have been hit the hardest and are, according to research, the least able to recover.
The adoption of the US $ 1.9 trillion bailout is a welcome development. President Joe Biden, a proclaimed title, has “launched the second war on poverty. This is certainly what this country needs. But if the Biden administration is serious about remedying the uneven impact of the pandemic and winning the fight against poverty, it will need to do more than offer cash aid and tax credits to struggling citizens. He must also write off or write off debts altogether.
What this moment calls for is a revival of the concept of jubilee, the elimination of debts and a prioritization of the needs of the poor. There is an old and rich tradition to build on. The practice of the jubilee was at the heart of many ancient civilizations which understood how damaging unhindered debt could be to a society as a whole. Jubilee is also a foundational commandment throughout the Bible, in which not only are debts canceled, slaves are freed, wages are paid, and the poor and hungry are supplied.
While the pandemic has worsened pre-existing social and economic inequalities, it has also opened up new possibilities by changing the discourse on public spending. Along with predictable corporate bailouts, ordinary people have received unprecedented support from the state. Expanded unemployment insurance and stimulus checks have been a lifeline for countless households. The evictions were temporarily halted and student debt payments were suspended, giving some breathing space.
These measures deserve to be applauded, but they did not go far enough. Research shows that people spent 30 percent of their first stimulus checks to pay off their debts. Cash assistance does not mean much if it can be seized by debt collectors or if poor and low-income people have no choice but to use the money they receive for s ” Pay their overdue obligations, whether they are medical bills or credit cards to the maximum. Rather, it becomes a backdoor bailout for creditors. Likewise, student loan moratoriums and evictions are not enough if payments simply come back, regardless of people’s ability to make them, and a mountain of rent arrears suddenly comes due.
Millions of Americans are not just poor; they have less than nothing. The American dream is no longer to own a house with a white picket fence; he gets out of debt. In the richest country in the world, millions of people now aspire to have zero dollars. To compound their problems, debt amplifies and intensifies economic, racial and gender inequalities. While the rich can pay in cash or take advantage of low interest rates, the poor take advantage, sell subprime financial products and charge predatory interest. People without intergenerational wealth, who suffer from wage discrimination in the workplace, are the most likely to borrow and the least able to meet payments.
In 2019, before the pandemic, household debt in the United States exceeded $ 14 trillion for the first time. As of this month, total student loan debt reached $ 1.8 trillion. Over one million people defaulted on their federal student loans each year between 2015 and 2019. These record amounts are not the result of personal failures or bad choices. Rather, it is an indictment of a failing economic system that impoverishes millions of people by design. Underpaid at work and without adequate social services, too many people have no choice but to borrow to survive: student loans for college, credit cards and payday loans for food and rent and medical care. We are told that debt is a lifeline, but it is in fact an anchor, dragging millions of people deeper and deeper into poverty. Now is the time to cut the rope.
The argument for a jubilee is morally just and economically sound. A growing number of economists I agree this debt cancellation will act as a stimulus and help avoid depression. Meanwhile, the idea is growing in popularity thanks to the efforts of grassroots organizers who have long recognized that when we lift from the bottom, everyone gets up.
On March 28, the Debt Collective, a union of debtors and their allies, launched a national week of action, with protests from Los Angeles, Calif., To Brattleboro, Vermont, demanding the complete cancellation of student debt, on the grounds that student debt is unfair because everyone has the right to quality public education. Student debt is also a matter of racial and economic justice: it weighs most heavily on black women and serves as a sort of tax on the mobility of the poor who dream of leading a better life. Canceling everything would be a tax issue windfall, increasing GDP by a trillion dollars over a decade and creating jobs while helping to close the racial wealth gap. The Poor’s Campaign has also fought for debt relief, including medical debt, housing debt, water / utility debt, student debt, and municipal debt, as as top priority for the first 100 days of the Biden administration. The Campaign of the Poor calls its political program the “Jubilee platform. “
The call for debt cancellation may sound radical, but it is not. We know the federal government can provide debt relief because it did so last spring. The first COVID package contained generous debt relief, but only for the private sector. The Trump administration has embarked on an unprecedented program of corporate debt relief, stabilizing the market through its interventions and also offering forgiveness loans to businesses. same payday lenders and debt collectors who had been fined by regulators in the past got help. There is no reason why the Biden administration cannot extend the same mercy to ordinary people who are much more deserving and frankly desperate.
Biden campaigned by promising the immediate cancellation of a minimum of $ 10,000 in student debt, a policy it presents as a benefit to individual debtors. Yet so far he has failed to deliver, despite the fact that he has the Executive authority to do so, without waiting for Congress. What the president does not understand is that when our neighbors are overwhelmed with debt, we all suffer. And when their debts are written off, we all stand to gain. Research indicated that people who receive debt cancellation will be more productive, less stressed and more inclined to take risks that improve their lives. People will end up earning more money, which they will spend in the local economy, which will help create jobs, etc. It is a virtuous cycle.
Not surprising cities across the country, including DC last week, introduce and pass resolutions calling on the federal government to write off all student debt for the good of the country. Local officials recognize that all their constituencies would benefit from the resulting financial boost. Debt cancellation would certainly help individuals in difficulty, but it is also about helping entire communities and improving society as a whole.
Ultimately, however, the impact of a jubilee cannot be measured by economics alone. Debt cancellation is an act of grace that would reward everyone by helping to make our society less precarious and less punitive. This would move us away from a framework that sees debtors as guilty and in need of “forgiveness”, to one that sees everyone as having the right to lead a life of dignity.
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