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Debt Matters

Raising the Profile of Household Debt in America

July 19, 2006, 9:00am ET - 4:00pm ET

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About This Event

A One-Day Conference

Center for American Progress
1333 H Street NW, 10th Floor
Washington, D.C. 20005

“In America it is patriotic to help the weak and vulnerable, to stand up for those in need.” That message was delivered by North Carolina democratic Gov. Mike Easley during Wednesday’s Debt Matters conference, hosted by the Center for American Progress.

Easley was the keynote speaker of a day-long event featuring numerous experts and panel discussions. The event, designed to raise the profile of household debt as a national political issue, was highlighted by the release of a new public opinion report on the problem of debt.

John Podesta, president and CEO of the Center, opened the conference by pointing to record levels of debt, a negative savings rate, and the far-reaching implications of a heavily indebted society. Americans, he said, need “a fair shot at a financial future,” a shot they are not currently getting.

Those sentiments were supported by Easley. “Debt,” he said, “is a symptom of a larger problem.” Individuals and families are carrying a greater financial burden, forcing people to borrow increasingly larger amounts of money to pay for important fundamental services, such as education and health care. “Today, the middle class is getting deeper and deeper into debt,” Easley said, “not because they’re over-consuming, but just because they’re trying to maintain their standard of living.”

As a result, the American dream of social mobility is harder to achieve. “The foundation is now getting kicked out,” Easley said, because people have to go deeply into debt just to maintain their current position. That has serious implications for the entire nation. Our large debt burden, the governor said, is preventing America from reaching its economic potential. “This is not just about economic prosperity, but about economic security… we need an extraordinarily efficient economy,” he said, to meet today’s global challenges.

Heavy debt disrupts core American values, such as economic growth and access to education. “We know the correlation between wealth and education is indisputable,” Easley said. But “it is difficult to build talent, knowledge, and skill when our people are swimming in a sea of debt.”

The new survey, co-sponsored by the Center for American Progress and conducted by Greenberg Quinlan Rosner Research and Public Opinion Strategies, showed that Americans think debt is a problem but don’t necessarily think of it as a political issue. “We’re looking at some very serious numbers,” said Anna Greenberg, vice president of Greenberg Quinlan Rosner. Eight in 10 Americans, from across the ideological spectrum, believe the debt problem is getting worse.

Debt is seen as a very personal problem, which is partly why it has not become much of a political issue. Bill McInturff, co-founder of Public Opinion Strategies, said “we want to help people in need, but we want to see people helping themselves.” Even still, the survey showed broad public support for better consumer protections and government education programs. McInturff, citing results that cut across party affiliation, believes that the right political leader can turn debt into an important issue. “There’s something we can do,” he said. “Our political system could address it,” but people aren’t aware of that.

Other experts throughout the day looked more specifically at a poorly understood but important issue. The hope is that through events, such as today’s conference, growing debt will not just be a social problem, but be a problem with solutions. “People need to know,” said Easley, “that if they work hard and play by the rules, they’ll have a chance to succeed.”

Resources

Presentations

Video

Conference Materials

Debt and Faith

The Debt Survey: Public Recognizes Debt as a Fast Growing Problem in U.S.

Banking the Poor, by Michael S. Barr

Credit Where it Counts, by Michael S. Barr

The Financial Benefits of Credit Union Membership to Members of the State Employees' Credit Union of North Carolina, by Dr. William E. Jackson

American Saver, Spring 2006

The conference schedule is as follows:

Welcome - 8:45 am to 8:50 am
Derek Douglas, Associate Director for Economic Policy, Center for American Progress

Opening Remarks - 8:50 am to 9:00 am
John D. Podesta, President & CEO, Center for American Progress

Panel I: Overview of Household Debt - 9:00 am to 10:20 am
Panel I will explore the causes and consequences of recent trends in household debt. Panelists will discuss the implications of rising personal debt with respect to American families and the broader economy. Panelists will also address the role of personal responsibility with respect to these issues.

Moderator
Christian Weller, Senior Economist, Center for American Progress

Panelists
Martin Eakes, CEO, Self-Help Credit Union and Center for Responsible Lending
Janet Murguia, President and CEO, National Council of La Raza
Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard Law School
Mark Zandi, Chief Economist, Moody's Economy.com

Panel II: Public Perceptions of Household Debt - 10:40 am to 12:10 pm
Panel II will explore American’s perception of household debt. How much do American’s care about rising household debt? How do issues of debt compare with other concerns? What types of solutions do they want to see? A new bi-partisan poll, sponsored by the Center for American Progress, Center for Responsible Lending, National Military Families Association, and AARP, will be released. Panelists will discuss the diversity of populations who are impacted by debt, best practices for improving access to financial services, and why an agenda on debt issues can resonate with American families.

Opening Remarks
Anna Greenberg, Vice President, Greenberg Quinlan Rosner Research
Bill McInturff, Partner & Co-founder, Public Opinion Strategies

Moderator
John Halpin, Senior Fellow, Center for American Progress

Panelists
James Blaine, CEO, North Carolina State Employees Credit Union
George Gaberlavage, Associate Director, Public Policy Institute, AARP
Marva Williams, Senior Vice President, Woodstock Institute
and other exciting panelists

Luncheon Keynote Address - 12:30 pm to 1:30 pm

Introduction by
Melody Barnes, Executive Vice President for Policy, Center for American Progress

Keynote Speaker
Governor Michael Easley, Governor of North Carolina

Panel III: Payday Lending - Lessons From the Military - 1:45 pm to 3:15 pm
Panel III will focus on the credit and lending issues facing military families, with an emphasis on payday lending. Panelists will discuss the military’s response to the problem of debt, and how this can serve as a model for providing other communities with access to banking and financial services. 

Moderator
Lawrence J. Korb, Senior Fellow, Center for American Progress & Former Asst. Secretary of Defense under President Reagan

Panelists
Arty Arteaga, President & CEO, Defense Credit Union Council
Michael Barr, Professor of Law, University of Michigan Law School
Lt. General John Hopper, Jr., CEO, Air Force Aid Society
Sarah Shirley, Director, Military Saves, Consumer Federation of America
and other exciting panelists

Panel IV: Credit Cards - Trends and Solutions - 3:35 pm to 4:55 pm
Panel IV will focus on the increased role of credit cards in the lives of American famlies. Panelists will discuss the trends with respect to rising credit card debt and the structure of the industry. Panelists also will discuss ways in which industry and advocates can work together to deliver solutions.    
 
Moderator

Derek Douglas, Associate Director for Economic Policy, Center for American Progress

Panelists
Tamara Draut, Director, Economic Opportunity Program, DEMOS
Kimberly Gartner, Director, The Responsible Credit Partnerships
Caroline Mayer, Senior Writer, Washington Post.com
and other exciting panelists

 
Featured Remarks
James Scurlock, Director of the documentary film, Maxed Out

Closing Remarks - 4:55 pm to 5:00 pm
Derek Douglas, Associate Director for Economic Policy, Center for American Progress

Debt in the News

“The American Way of Debt.” Jackson Lears. New York Times. June 11, 2006. (subscription required)
Jackson Lears, author of Something for Nothing: Luck in America, describes the history of debt in America and how debt has historically been a vital tool for upwardly mobile families to increase their livelihoods. Using data compiled by the Center for American Progress, he shows that the most recent spike in consumer indebtedness is not the result of an over-consumptive lifestyle, but rather of a symptom of the squeeze on the middle class and a failure of public policy.

“Basics, Not Luxuries, Blamed for High Debt.” Kirstin Downey. The Washington Post. May 12, 2006.
The Post gives a summary of the Center for American Progress’ latest report on rising consumer debt rates and highlights the squeeze on middle class families.

“A Modest Proposal: Can a College Kid Catch a Break?” Elana Berkowitz and John Burton. Chicago Sun-Times. December 4, 2005.
Two recent college grads now working at the Center for American Progress describe how drastic cuts to student loan programs and rapidly rising education costs have saddled America’s next generation of leaders with tremendous debt.

“Military has payday loans in its sights; Service members called vulnerable.” San Diego Union-Tribune. May 23, 2006.
Military leaders are increasingly concerned about payday lending practices that are plunging service members into tremendous debt and hurting military readiness. The Union-Tribune reports that leaders have begun actively lobbying the California legislature to limit the predatory industry.

“The Doable Dozen.” The American Prospect. June 2006.
The American Prospect spotlights a dozen small, but “doable” policy proposals to address serious issues that receive little media attention. One of the featured policies (#8) is the Center for American Progress’ proposal to prevent abusive practices by credit card companies.

“Are you drowning in debt? Much of the middle class is.” Michael Rappaport. Inland Valley Daily Bulletin (Ontario, CA). May 25, 2006.
The Bulletin cites the Center for American Progress report on rising debt levels as proof that their fictitious tale of a struggling “Joe Homeowner” is actually an all too real reflection of the lives of millions of middle class Americans.

“Basic needs put America in debt; Study shows wages staying flat while costs of housing, education and health care are rising.” Charleston Daily Mail (West Virginia). May 12, 2006.
The Daily Mail’s summary of the Center for American Progress report on debt points out that the struggles of middle class America are not the result of irresponsible spending habits. Rising costs and stagnant wages have forced Americans into debt even as they cut back on their standards of living.

“The Race Savings Gap.” Michelle Singletary. Washington Post. July 16, 2006.
Personal finance columnist Michelle Singletary highlights troubling statistics that show that African Americans making over $50,000 are saving far less for retirement than their white counterparts.

“‘Fringe economy’ preys on poor.” Yolanda Young. USA Today. January 26, 2006.
Yolanda Young highlights Howard Karger’s new book describing the mechanics of the “fringe economy.” She explains how rising income disparities push more and more middle class Americans into a world of exploitative payday lenders and rent-to-own stores. Living paycheck to paycheck, millions of families teeter on the brink of financial disaster; just one medical emergency or other unexpected expense plunges them deep into inescapable debt.

“An Outcry Rises As Debt Collectors Play Rough.” Sewell Chan. The New York Times. July 5, 2006. (subscription required)
As household debt has risen, so too have complaints about over-the-line tactics by debt collectors. The Times piece brings attention to a number of disturbing stories of abuse by these for-hire collectors, including instances when collectors harassed, threatened, or lied to consumers to get them to repay debts they never incurred.

“Targeting ‘Predator Lenders.’” Tony Perry. The Los Angeles Times. June 17, 2006.
The California legislature is poised to act to restrict payday lending practices, but many military officials concerned about exploited service members are pushing for an even tougher stand.

“Close loopholes on predatory lenders.” The Oregonian. July 9, 2006.
Oregon has already passed an aggressive law to limit payday lending, but the Oregonian calls on legislators to extend the protections of the law to other lenders which have exploited working families in the past.

“America’s New Debtor Class: College Kids.” Jeffrey J. Williams. Chicago Sun-Times. July 16, 2006.
A college professor still struggling under the yolk of his own college debt describes how rising rates and low starting salary prospects have hamstrung young professionals’ opportunities for advancement. Many graduates are also being pushed away from careers in public service by high levels of outstanding debt.

 

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Location

Center for American Progress
1333 H St. NW
Washington, DC20005

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Nearest Metro: Blue/Orange Line to McPherson Square or Red Line to Metro Center