By Elizabeth Warren
“It’s the economy, stupid.” Where do the famous words that propelled Bill Clinton into the White House fit in the optimism-pessimism paradigm that Kim, Solomon, and Kessler assert defines the politics of winning? Nowhere, and that’s what’s wrong with their paradigm.
Bill Clinton ran for office on a clear statement that he got it. I agree with Jacob Hacker (once again) that Clinton understood what was wrong in America, and he thought we could do better. If that were KSK’s message, then I’d be singing doo-wop backup in the chorus.
There is optimism born of realism–the “here’s the problem, and here’s how we can beat it” attitude, conveyed in the messages of “here’s what we need to unleash the potential of our young people” and “here’s how we can secure the safety of our neighborhoods.” It is the optimism that knows things are wrong and but believes that things can get better.
But something called optimism that is nothing more than trying to put a happy face on the struggles facing middle-class families in America is not optimism. Quoting average statistics of wealth that are inflated by the extraordinary gains made by those at the top is a manipulative ploy. Talking about the rise in family income without talking about the fact that the entire increase came from putting a second earner into the marketplace and that a median-earning one-earner family in America is hanging on by its fingernails to the bottom rung of the middle class is an insult. Politicians who try these sorts of good-news number scams should be called on it.
So what is the reality? Each year since Bush has occupied the White House, more people have filed for bankruptcy than have graduated from college.1 Why? Just three reasons–job losses, medical problems, and family breakups–explain 90% of those bankruptcies. Americans across the spectrum are drowning in debt, with the median family now owing a record 108% of its annual income.2 Try telling those hard-working, middle-class families that Americans are richer than ever.
I think of the people behind the data–the families fielding debt collection calls, the half of Americans who wake up at night worrying about paying their bills,3 the third of Americans who owe money they cannot pay to a doctor or hospital.4 I think about the 46.6 million Americans with no health insurance (a new record!),5 and the 21 million households that couldn’t afford to make more than a minimum monthly payment on their credit card bill.6 I think of one in four military families who are trying to serve their countries while they are tangled up in financial scams and payday loans that are running an average of 400% interest.7 I think about the 20-30% of college grads who will graduate with so much debt that experts predict their debt loads will be “very difficult to manage,”8 and the almost 20 percent of low-income high school graduates with very high math test scores for whom money is a barrier that keeps them from going on to college.9
I think we can do better. And I think that’s a message of real optimism.
A native Oklahoman, Warren graduated from the University of Houston and Rutgers Law School. She is now the Leo Gottlieb Professor of Law at Harvard Law School, where she teaches contract law, bankruptcy and commercial law. Her latest book, All Your Worth, is for people who worry about money. She posts on TPM Cafe.
1Administrative Office of the United States Courts; U.S. Census Bureau. Data calculations in Warren and Tyagi, The Two-Income Trap, Chapter 1.
2Center for American Progress, Drowning in Debt (analysis of 2004 Survey of Consumer Finance data)
3AP/Neilsen poll of 1,000 Americans December 2004, reported in “Poll: Half of Americans Worry About Debts” (December 20, 2004). The medical effects of these worries are discussed in Jean Lawrence, “Debt Can be Bad for Your Health,” WebMD (January 3, 2005); Center for American Progress/Center for Responsible Lending, “Frequency Questionnaire,” April 13-20, 2006 (33% of respondents “very worried” or “somewhat worried” about being the victim of a terrorist attack, 48% “very worried” or “somewhat worried” about “not having enough money to pay all your bills”).
4Sarah Collins, Michelle Doty, Karen Davis, Cathy Schoen, Alyssa Holmgren, and Alice Ho, The Affordability Crisis in U.S. Health Care: Findings from the Commonwealth Fund Biennial Health Insurance Survey xii (March 2004) (reporting 32% of Americans aged 18-64 with incomes above $35,000 have outstanding medical bills they cannot pay, have been contacted by collection agents on behalf of health care providers, have medical debt being paid off over time or have other signs of distress in paying medical bills).
5Rick Lyman, Census Reports Slight Increase In ’05 Incomes, New York Times, August 30, 2006.
6Cambridge Consumer Credit Index, March 7, 2005 (45% of those with credit balances were making minimum payment or no payment because they couldn’t afford more); 2004 Survey of Consumer Finance, A-30 2006 (46.2% of all household carry an unpaid credit card balance).
7Summary data at Center for Responsible Lending.
8Sandy Baum and Marie O’Malley, College on Credit, Nellie Mae, 2003.
9David Ellwood and Thomas Kane, “Who is Getting a College Education? Family Background and the Growing Gaps in Enrollment,” in S. Danziger and J. Waldfogel, eds. Securing the Future. New York: Russell Sage (2000). See also Sandy Baum and Kathleen Payea, Education Pays: The Benefits of Higher Education for Individuals and Society, 2004. The College Board, 2004.
By Elizabeth Warren