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Cancel Our Debts, Then Cancel Debt

We need a country that doesn’t make debt accumulation the cost of entry into a decent life.

Illustration by Joan Wong/Shutterstock

The story of the pandemic is also a story about debt. One recent survey, conducted in October, found that more than a quarter of respondents had accumulated over $10,000 in new debts during the crisis. One in three had taken out a new credit card. An analysis from Philadelphia found a 70 percent increase from last year in people paying rent on credit and that, by December, rent-burdened households will owe roughly $7.2 billion in back rent, an average individual burden of $5,400.

The crisis of American debt predates the pandemic, but it’s clear that nine months of record unemployment and little relief has sharpened the knife for millions of people. Meaning, conservatives in Congress have created the conditions to bury people, while their establishment counterparts in the Democratic Party have displayed a stunning lack of imagination or urgency in crafting a response. The current reality faced by millions of people—compounding rent, student, medical, and credit card debts—is untenable, but so is the system built to force debt accumulation as the cost of entry to health care, education, and keeping a roof over your head. Half-measures have left us oscillating between frustration and desperation for decades now, facing down mounting interest and a pay-until-you-die pact with extortive industries. We need to cancel debts, then we need to cancel debt.

Tracing any one of these exploding debts back to its roots often leads to a similar place: the years directly following the civil rights movement. The moment Black and brown people finally began to attend public universities, participate more fully in the housing market, and routinely access the health care system via government-sponsored coverage, budget hawks like Ronald Reagan pounced.

Reagan, and many others before and after him, used his position of power to stoke deficit fears among the electorate—a thinly veiled message that these systems ought to be subsidized, as they were before, for white men and white men only. As Astra Taylor wrote for The New Republic in October, Reagan combined his anti-welfare message with the notion that the state should not be “subsidizing intellectual curiosity.” It was a belief that, between 1966 and 1969, coincided with a period in which “the San Francisco Bay Area and Los Angeles had the highest rate of Black college attendance in the country.” That, of course, was the entire point.

In the decades since, we’ve witnessed the weaponization of white resentment along these exact lines against public education, health care, housing subsidies, and other public goods. Speaking with Defector earlier this month, Dr. Louise Seamster, an associate professor of sociology, criminology, and African-American studies at the University of Iowa, took stock of the fractured reality this left us. “We’ve individualized things like healthcare, or what’s happened with public housing, or public education at the K-12 level,” Seamster said. “There’s kind of a similar shift from a system of funding public institutions of higher education at the state and federal level, to instead financing higher education through debt that a person takes on.” The trappings of a decent life, then, became luxury goods.

Even modern attempts by Democratic lawmakers to address the baked-in shortcomings in these privatized systems have reeked of individualization and a worship of market-based solutions. For all the good that Obamacare did to expand Medicaid services, the simple fact that it was not a single-payer system meant that the crisis of private insurance—inadequate plans, skyrocketing rates—was concretized rather than eradicated. The law also left millions in its coverage gaps or struggling to see doctors in states where Medicaid expansion was (and still is) being blocked by Republican politicians.

These debts feel inescapable because they often are—the state can garnish your Social Security over student loan debts, as just one example—but the emergency often fades to white noise, just another disturbing facet of life to blend in with all the rest: The American Civil Liberties Union estimates that 77 million people in America have a debt that has been turned over to a private collection agency. And as ProPublica elucidated in an October 2019 report, thousands are jailed annually for the crime of not being able to pay these debts, with over half of all collections being tied back to medical care. “Since the Affordable Care Act of 2010, prices for medical services have ballooned,” ProPublica wrote. “Insurers have nearly tripled deductibles—the amount a person pays before their coverage kicks in—and raised premiums and copays, as well.”

The pandemic has meant the debts for basic services have continued to pile up. Even amid an August report that U.S. household debt had fallen (by 0.2 percent) for the first time in six years, it was clear that all the Cares Act accomplished was kicking the can down the road. Assessing the efficacy of federal intervention, Joelle Scally, administrator of the Center for Microeconomic Data at the New York Fed, told Bloomberg, “These temporary relief measures may also mask the very real financial challenges that Americans may be experiencing.” The Covid-19 stimulus deal struck by Congress this week only extends the national eviction ban until the end of January, and it ends the pause in student loan payments. The debt emergency will be even more pronounced in 2021, and with millions still out of work, Republican lawmakers are unlikely to support a third stimulus bill after Joe Biden becomes president.

So what do we do? In lieu of an adequate federal response, people have taken action to forgive debts and reject debt as a foundational premise of the American dream: Over 2,500 Columbia University students initiated a tuition strike in early December, one of several initiated this year to bring attention to the ballooning debt. Groups like RIP Medical Debt banded together to raise funds to help provide people overwhelmed by predatory insurance loopholes and costly hospital trips financial relief. Across the country, tenants like A. Ramirez and Apollo O’Deorain, who had never before been part of tenants’ unions, took a leap of faith and organized with their neighbors. In Minnesota and South Dakota, groups of local residents found and created homes and shelters for the houseless while the local governments pursued racist anti-houseless policies.

These are all necessary, inspiring actions. But these interventions in a cruel debtors’ society are temporary salves. For anything to get better, the state has to step up.

In a September interview with The New Republic, Tara Raghuveer, a housing organizer and head of the K.C. Tenants, said stopping one or a million evictions isn’t the end goal of current tenant organizing. “It’s a 40-year vision for a country where we actually just guarantee that everyone has a home and housing is no longer treated as a commodity, but it’s guaranteed as a public good,” Raghuveer said. “With that as the North Star to direct all of my organizing, it just makes me better equipped—and I think it makes my comrades, who are part of that campaign, better equipped—to respond to crises today, in a way that builds power for homes guaranteed tomorrow.”

The same is true in other anti-debt movements. You can’t just forgive the debt. You have to remake the system. Otherwise, you’ll find yourself playing whack-a-mole when the same cycle of debt reboots. Joe Biden has publicly floated relieving up to $10,000 in federal student loan debt while Senate Minority Leader Chuck Schumer has called for the president-elect to bump the number up to $50,000. But even if Biden’s plan was a one-time clean-slate program that wiped away all existing accrued student debt—which has risen exponentially every year for the past two decades—the plan wouldn’t do much good to prevent the same form of debt from immediately beginning to build the following year.

College tuition prices, like the debt they’re connected to, are on the rise in part because public investment in education has stalled out, especially since the last recession, which conservative state legislatures saw as an opportunity to further question the investment altogether. The same goes for medical debt: Any reform to the health care system that is not a direct and swift change away from the scam that is the insurance industry and toward a single-payer system that provides coverage to every resident will only leave further loopholes to be exploited by bad actors. And reparations—undertaken by the federal government, not localities—remain integral to addressing the disproportionate share of these debts that continue to be dumped on Black communities in America.

These options are no longer secluded at the margins. Representatives Ilhan Omar and Ayanna Pressley introduced legislation at the beginning of the pandemic to provide student loan relief and block wage garnishing, a call echoed by Senate colleagues like Elizabeth Warren. Even prior to the pandemic, Omar and Pressley, along with Alexandria Ocasio-Cortez and Rashida Tlaib, fought for a legislative package known as the People’s Housing Platform, which included a surge in federal investment in public housing, a strengthening of tenant rights, and anti-displacement measures to combat gentrification. In both the House and Senate, bills calling for the creation of a Medicare for All system are now regular mainstays. Every one of these policies was initially derided as radical or politically unrealistic, yet they are now mainstream, both because the moment demands it and because groups like the Debt Collective and People’s Action and countless others pushed elected officials to act.

The future that America deserves is not just popular; it is necessary. To believe that debt is a natural part of life—or that the combined costs of the solutions are too steep—is to fall further into the trap that Reagan helped set. As Dr. Stephanie Kelton, a professor of economics and public policy at Stony Brook University and a former economic adviser to Bernie Sanders, wrote in her recent book, The Deficit Myth, the federal government has everything it needs to address and fix the problems it helped create. The money is there. The support is there. One day, America might be there, too.