Americans now owe a collective $1.13 trillion in credit card debt. This debt burden has exploded by a staggering 47% in only three years, draining the savings of millions of workers as the economy emerges from the pandemic. The stresses of sky high inflation – caused by competition between the US and China, supply chains disrupted by climate change and war, and uncontrolled price gouging by corporations – have hit working people the hardest. 46% of Americans now carry over credit card debt month-to-month, driving them further into debt as credit card interest rates hit record highs.
The most economically strapped Americans are hit with predatory late fees if they default on their monthly payment, perpetuating a vicious cycle of debt. Poor credit scores prevent people from leasing apartments, finding employment, or buying a car. This is a contributing factor to America’s growing homelessness crisis.
Record credit card debt also comes against a backdrop of increasing household and student debt. While big banks were bailed out during the 2009-2010 recession, working people were left to fend for ourselves, and we are still suffering the financial consequences over a decade later.
Younger workers in particular are struggling with a collective $1.74 trillion in student loan debt. The Biden administration has forgiven less than 10% of student loan debt as conservative courts moved to block larger scale forgiveness efforts and the Democrats failed to aggressively pursue reforms.
Debt affects all aspects of people’s lives and health. One scientific study reported that “high financial debt is associated with higher perceived stress and depression, worse self-reported general health, and higher blood pressure.” It is also linked to increased risk of suicide. Canceling debt would hurt nobody but the bankers’ profits while helping millions of workers live healthier, happier, and longer lives.
Corporate media paints workers’ debt as a moral failing, and economists chastise us for not budgeting effectively. But the hard truth is that no amount of budgeting and financial literacy can make up for massive price increases in the sectors of the economy that affect working people the most: food, gas and housing.
Woefully inadequate pay raises have only fueled this fire. The Biden administration’s half-measures like limiting “junk fees” barely put a dent in the problem, and the enforcement mechanism is already under attack by the right-wing court system. The greed of the bosses, the landlords, and the banks is the root cause of this crisis.
If debt is such a big problem for working people, why aren’t the Democrats rushing to the rescue and using all tools at their disposal to alleviate this pain? The answer is that both corporate parties are beholden to big business and take large donations from the financial industry to fund their campaigns.
During the 2020 election cycle, Wall Street spent $2.9 billion lobbying politicians and funding campaigns. Of the money pumped directly into campaigns, 47% went to Republicans and 53% to Democrats. This shows that the financial industry buys off politicians in both parties.
While the Republicans are openly hostile to canceling workers’ debt, the Democrats use the more subtle strategy of dangling big promises of relief in our faces, just to abandon us under the first sign of discontent from bank executives.
Fighting back against the big banks will require the mobilization of millions of workers in the streets and in the workplaces. Our demands should include loan forgiveness, taxing big business, banning predatory loans, and breaking up the largest banks. We should also demand a reduction in interest rates, elimination of late fees, and scrapping credit scores.
In parallel, workers must fight for universal healthcare and strong rent control measures so that our wages do not immediately go back into the pockets of the banks, landlords, and insurance companies. Such reforms will reduce the need for working and poor people to rely on credit to scrape by. A new worker-led, independent political party – with the involvement of labor unions, community groups, and organizations of struggle – could unite people around a common program and serve as a catalyst for change, putting the capitalist class in a position where they are forced to make concessions to workers.
However, as long as the capitalists remain in charge of the economy, they will attempt to roll back any concessions won by working people. This is why we must bring the top 500 companies and banks into public ownership so that we can determine how the wealth that we produce will be allocated to best address our needs.
