Not Biden The Hand That Feeds You
From a Jonathan Chait piece from 2005, posted on Common Dreams, Biden stands firmly on the side of the people -- the people making the hugest campaign contributions, that is:
Biden supports a bill in Congress that would make it harder for people to declare bankruptcy. This is one of those abysmal pieces of legislation that exists only because businesses with a vested interest in it have lobbied hard for its passage and that would have no chance of success if more than a tiny fraction of the public were aware of its existence.Bankruptcy filings have risen slightly in recent years. Credit card companies argue that it's because people are gaming the system, going on irresponsible spending binges and then using bankruptcy to stick their creditors with the bill.
The more likely explanation is that the rise in health insurance costs has driven more people into bankruptcy. A recent Harvard study found that half of Americans who declared bankruptcy did so because of illness or medical bills. Regardless of why you go bankrupt, though, the new bill would make it easier for creditors to seize your assets. Nice, huh?
This isn't to say there aren't abuses in the bankruptcy system. There are. The bill simply does nothing to stop them.
The worst abuses are loopholes allowing corporations or wealthy individuals to declare bankruptcy and keep millions of dollars safe from creditors. One such device is something called an "asset protection trust" -- a kind of savings fund that can't be touched by creditors. States actually compete with one another to offer the most generous trusts so they can lure businesses and affluent individuals to park their money in that state.
The most popular state for such trusts is corporate-friendly Delaware.
Delaware, of course, is home to Joe Biden. It's also home to many credit card companies, the driving force behind the bankruptcy bill. You don't have to connect a lot of dots to see the picture here.
No, you don't. If you're going to make it harder for people to declare bankruptcy, make it harder for all people.
I'm especially touched by Biden's vote for corporate welfare. When corporations go boom, it's the shareholders who suffer -- in a lot of cases, Joe Nobody taxpayers like you and me.
Well, there are a couple of things to realize, here.
The first is that although "the wealthy" are singled out yet again as evil for having money and the wit to keep it, Joe Sixpack can also engage in the formation of tax shelters for his hard-earned dough. But he doesn't. He doesn't even recognize, in most cases, that one does not become "rich" by earning an hourly wage; no matter how big that number, it is limited by time. Something else must be done to generate serious money.
The second is to note the actual nature of a corporation - here, also, singled out for "welfare" in some implication of injustice, if not illegality. A corporation is a legal entity formed to coordinate an activity. Although the details are different, that's exactly what a city, county, state or national government is; the corporation exists at the pleasure of such governments. Now for the hard part: 100% of the costs of operating a corporation are passed on to the consumer. Taxes are an expense to be dealt with just like any other cost of doing business; the primary difference is that taxes take money from the consumer directly, rather than "filter" it through the uses of the company's stockholders. Various arguments about "obscene profits" also try to shift the blame for consumer action to the corporation, but that's really a seperate issue regarding the degree to which socialism is to apply to the marketplace.
When we talk about "corporate welfare", we get all indignant because we think it's our business what the shareholders do to manage the company. It's not.
And in the case of an individual paying too much in taxes - Elvis is a favorite example - we think "there's an idiot". So much for consistency of thought.
Avoid the stereotype. Chrysler got Federal help and paid things back early under Iacocca. Most foreign manufacturers - you do admire BMW, Honda, Toyota, etc., don't you? - have the backing of their home country, not to mention help right here in the USA.
To be brief: there is a difference between buying Federal officers and getting help starting or staying in a business. Make that distinction.
Radwaste at August 25, 2008 2:16 AM
One of the main forces behind this bill are the credit-card companies. Of course, if credit-card companies
then much of the problem wouldn't exist.
bradley13 at August 25, 2008 2:47 AM
Guys, you overlooked the point about half of personal bankruptcies being due to illness.
I fell behind myself helping out when my daughter fell ill. (I don't even want to think of where she is.) I've since caught up and, in fact, have almost paid off. What isn't paid off will be this winter.
However, this is only because I involved the banking department. Before I did, Capital One (unfortunatley, they were in my wallet) wouldn't even talk to me to work out a payment arrangement. Just wanted to keep tacking on late and over the limit fees indefinitely at $60 a month of the $100 a month I was trying to pay off at (at a balance before which the monthly payment was $40 a month). This when I only missed like two or three months. Which I realize I shouldn't have but when my daughter almost died, Capital One was not foremost on my mind. Believe it or not, she and my grandson were what I was worrying about. Yet, they refused to even discuss it until I sent them a certified letter and cc'd the banking department.
The one other credit card I had (or rather the collection agency it had gone to) when I finally had the presence of mind to call was very nice about it, expressed sympathy and very cheerily worked out a payment plan. The regular interest is being charged and it's not light but they took $50 a month and waived late charges and over limit fees. Now that Capital One's paid up, I'm also gonna start sending the $150 a month they agreed to after my involving the banking department. They'll be done by mid-winter.
Yes, I'm proud of that. Not proud I let them slip but proud that I'll soon be out of debt entirely. And that's $200 a month that can then go in my retirement fund (minus any astronomical heating bills though I've allowed pretty generously in my budget for that and shouldn't need to use it but I've oil heat for the first time in my life and I've no idea what I'm in for, especially now).
Now as to the debt my daughter ran up, I don't even want to think. And with the bankruptcy laws, she has to pay more cash up front to even file for bankruptcy. She won't even be able to do that until she gets her tax refund -- if she gets it. I won't be surprised if someone has a lien against it.
These companies do prey on the mentally ill (and the dumb/naive/desperate) and part of the reason why is they get to bypass the usury laws by calling excessive charges fees instead of interest. But we sure as hell won't see a law on the books against that in the current political clime where they're favored.
So, no I don't have any sympathy for them when someone does file bankruptcy. As bradley points out, they have unsavory business practices.
T's Grammy at August 25, 2008 6:05 AM
> Guys, you overlooked the point
> about half of personal
> bankruptcies being due to illness.
Tell Brian! Tell Brian!
Har!
Crid [cridcridatgmail] at August 25, 2008 10:42 AM
It remains that debt is incurred by the debtor.
The best advice I've even seen on late-night TV was an old guy who came on and wheezed, "You want to be rich? Then, look at what the poor people do, and don't do that!"
Radwaste at August 25, 2008 2:36 PM
I used to work for a personal bankruptcy firm. In 2005, when the law changed, it was designed to make more people file chapter 13 (Repayment) versus chapter 7 (elimination). In the end, it only affected about 3% of the people filing for bankruptcy. It actually didn't change much.
The funniest part of all of this is, that even though they spent millions (probably billions), the credit card companies have always been able to write off the losses from bankruptcy when filing for the corporate taxes. So explain to me how this was a loss for them. They come out ahead, no matter what the situation.
And our buddy Joe, just walks in lockstep. He certainly doesn't have the interests of the common taxpayer in mind. Only the special interests who can help re-elect him.
Really, its very sad.
wolfboy69 at August 25, 2008 7:43 PM
Duh, Rad. Point out to me where I claimed otherwise. Did you even pick up on the part wherein I said I've almost paid off all my debt? All I was pointing out is that shit happens. Sometimes unexpected shit. That's why the bankruptcy laws exist in the first place.
And if I hear that stupid line one more time, I'm gonna go ballistic. All well and fine if you have the option not to do as the poor do. If you start out poor, guess what? You don't always have the option. Credit cards, maybe you can apply this. But guess what owning instead of renting? Nope. Don't have the option. Car instead of public transit? Nope. Don't have the option. College instead of going to work right out of high school? Back in 1976 anyway, nope. Didn't have the option. I love it. Somehow those of us without money are supposed to do what their money enables those of them with it to do. What a stupid mother-fucking saying!
And, as far as credit goes, good luck never using credit if you're poor. This is not the Sims where everyone starts out their life with $20,000 -- or even $2,000 -- to buy furniture and pots and pans, clothes for that job you just got, etc., etc., etc. If you're savvy and there's a thrift store nearby, you can spend $200 instead of $2000 but they don't deliver and if you ain't got a car, you ain't got a way to get things like furniture home. If you do have a car -- it either cost you at least what you'd save and if that's all it costs, you are going to be putting out as much in maintenance as you would be buying a better car on, guess what, -- that's right, credit!!! Sometimes, I've got lucky and had friends with car enough to help me out and sometimes I haven't.
People who think you can choose to not do what poor people do when you don't have money are ignorant and naive and would never fucking live the way they fucking expect you not to. Amy's the rare person I've seen not be hypocritical in that. It never would even have occurred to me to sleep on a door and all like she's done but I certainly have shopped thrift stores for clothes and household goods. But, at minimum, I have to have something to sit and sleep on. Hell, if you think about it even phone service, rent and utilities are credit.
Let's face it, American society is structured around credit so entirely that it's damned near impossible to live without it -- unless you earn enough to pay up front. It's a vicious cycle for those who don't have the cash up front. I finally have enough that I can wait until I have cash for any new furnture, etc. I want/desire but I sure didn't start out with enough. But for the fact that I don't drive, I would still be credit dependent for a vehicle. Public transporation has grown so horrid that I am contemplating learning to drive. It's the cost of driving that deters me. Including having to buy a car on credit and pay for the insurance over time.
I'm willing to bet that most people who would condemn me for ever using credit would also not comprehend how I get by without a vehicle.
wolfboy, it only looks like 3% were effected because that doesn't count those who aren't filing for bankruptcy because they don't have the cash up front for both the lawyer and the now required credit counseling and therefore aren't bothering to file but letting themselves be discharged as bad debt by companies who write it off (this is why Capital One, I suspect, gave me such a hard time when I called to work out a payment arrangement, they actually yelled at me when I said but I'm calling to make arrangements to pay you, I actually had to enlist the banking department to get them to both take my money and credit it to my account, unreal and I sure as hell wasn't going to send it to them with them claiming they weren't going to). Those stats are only looking at bankruptcies that got to court; not debts that are just not paid and the companies write off on taxes because it's more lucrative than suing people who don't have money.
T's Grammy at August 26, 2008 7:34 AM
T's Grammy - I was looking at the number of people who came in to begin the process, not those that got to court. The numbers are about even on both.
What I was trying to get at, was that the credit card companies were yelling about how much money they were losing to bankruptcy, so they pushed for several years to get the laws changed, and then it only affected about 3% of all people considering bankruptcy.
Lets be honest, the credit card companies have a tendency to treat thier customers like dirt. Instead of looking at each individuals history and determining if they are a good risk to work out some kind of repayment, they blanket all customers with the same brush (I know, very generalized - but for the most part true).
And while half of bankruptcies are from illness, medical debt, layoffs...there are those who abuse the system. We had several repeat filers. Called every 7 years like clockwork. There are a lot of people out there, who unlike you, aren't even trying to be responsible for thier spending or saving habits. I don't argue that it is difficult when you are poor, but I would just about guarantee that each household filing has at least 1 t.v., cell phones, and possibly game systems (xbox, playstation, etc.). A lot of it is the entitlement attitude that people have in todays climate. Personal resposibility, sadly, doesn't exist for most.
off the soapbox now. :)
wolfboy69 at August 26, 2008 7:58 AM
I hear that, wolfboy. And absolutely right on the companies. Hence, my problems dealing with Capital One when I wanted to pay them back. It was like they didn't want me to and made it hard for me to do so.
As for the rest, though, where does this sense that the poor are supposed to remain sane and just be happy to not starve on the street come from? My playstation was bought used for $100, my TV cost less than that. And I only occassionally buy games and usually buy them used. Cash up front for all of the above. I do use a cell but I got it and keep it for the same reason -- it's cheaper than a landline. You sound like no one should be able to file if they have anything other than the damned shirt on their back. We don't have enough problems with insanity in this country?
If their one TV is a huge HDTV, you have a point. If their cell phone is an iPhone, you have a point. If they have the more expensive Playstation 3 and buy new games at $40 a pop or more every week you have a point. But if they're watching some 19" with no cable and wondering if they're gonna be able to raise the money for the converter box before February (frankly it probably takes effect in February because that's just the kind of "extra" plenty of poor folks buy with their tax refund) or lose reception, you don't.
When Amy blogs here about someone expecting tax payers to pay the medical bills for their kids while they want to afford the luxury of being a stay at home mom, fund their college education (I'm tougher than most on that one, pisses me off funding in others what I couldn't have myself, I don't think we should ever pay for someone's college education) or bail out their mortgages and I'll agree with you about the ones filing every 7 years like clockwork, but to say the smuck whose lost his job to downsizing or illness shouldn't be able to have some meager pleasure in life, not even one TV, then we'll be at odds. We can't predict everything and shit does happen. Those who abuse the system should be clamped down on but saying someone shouldn't be able to have a TV and file for bankruptcy. Christ, why don't you just take anyone who's luck has turned sour out to the woods and shoot them?
Sometimes I'm disgusted here. It disgusts me that criminals and teen mothers are given a college education and everyone says better they should get a better job (like that's gonna change their personality, probably just from blue collar crime to white) but bankruptcy shouldn't be an avenue available because perhaps these exploitive credit card companies are so deserving of more respect than the people they exploit? Why don't we just go back to throwing people who owe money and can't pay back into jail why we're at it? At least then, they won't own the TV they're watching and can get a college education. Of course, if you're going to get sent to the big house for owing money, you might as well hold someone up to get it.
T's Grammy at August 26, 2008 11:05 AM
T's Grammy - I think we are beginning to misread what the other is saying. I went back and read the last paragraph of my last post, and I see where I wrote it wrong. I was referring to those who are serial filers.
Those who through layoff, medical issues, or situations beyond thier control, I have all the compassion for in the world. And they should have options.
But those who seem to think this world owes them something, or feel that they should be free to do what they want with no consequences, I think we are in agreement that they deserve our contempt. I saw too many of these people, who would come in with all the toys, but claim to be unable to pay for them....one question...if you have no idea how to pay for it...why are you buying it? A t.v. isn't a necessity...a cell phone and a home phone isn't necessary - you can survive with just one.
I certainly don't agree with debtor's prisons...how can you pay back your debt, if you are there?
Too many people refuse to take responsibility for thier actions. There will always be those who, through no fault of thier own, have bad things happen, and we should be willing to help them. But for those who refuse to step up and want to play the system, time to take away thier toys and not let them play anymore.
wolfboy69 at August 26, 2008 12:23 PM
Yes, we are reading each other wrong. I'm sorry, wolfboy. We are in total agreement there. I am so sick and tired of carrying the load for people who play the system.
They, frankly, don't even know the disservice they're doing themself. I don't have much but I take pride in knowing that what I do have, I have through my own hard work and efforts. To quote Neil Diamond, "Don't have a lot but with me that's fine. Whatever I have, well, I know that it's mine."
T's Grammy at August 27, 2008 7:36 AM
Grammy, the question then becomes, how do you fix the system so that type of abuse doesn't happen. Education? Punishment? IMO, we need to take government out of education. Sadly, we have so failed todays kids in just the basics...the three R's. Now, we have graduations for kindergarten? For what? To give that sense of accomplishment? Shouldn't accomplishment be based on...I don't know....accomplishing something?
There are no easy solutions at this point. For any of it. And that it is to that point, is a sad, sad thing.
woflboy69 at August 27, 2008 8:23 AM
Now that I don't know but I do nix the education. (Though high school, if not junior high, should contain some mandatory classes on practical living -- managing a budget, job seeking, etc.)
A free ride for losers to college, though, really gets my goat. I get fed up with working hard and flying straight then seeing those who didn't given all the handouts/pats on the head. I don't really expect them but to see other's rewarded for bad behavior when the only reward (and the only one those who scream rehabilitation seem to think I have a right to, can't disagree just don't think the rehabs should be rewarded for their bad behavior) I get is that I'm not in jail and have a decent job.
See, as I've been pointing out lately, if you reward bad behavior with a college education, for instance, it doesn't change the bad behavior. Your kid throws a temper tantrum because they want ice cream half an hour before dinner and you give it to them, they're gonna keep demanding the ice cream and are not gonna learn to eat right. Same thing applies to this situation. We're really seeing the fallout from it in our society too. People are misbehaving and demanding a handout for it because they see reward in being irresponsible instead of responsible.
What is the answer? Wish I knew. (Not that anyone who mattered would listen to me if I did.)
T's Grammy at August 28, 2008 8:08 AM
Not much else to say but.....
AMEN
wolfboy69 at August 28, 2008 6:10 PM
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