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“Your Debt Is Someone Else’s Asset”: Calls Mount to Cancel Debt & Halt Wealth Transfer to the Rich

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Image Credit: The Intercept

As calls grow for Biden to extend the moratorium on student debt, we speak with the Debt Collective’s Astra Taylor and feature her new film for The Intercept, “Your Debt Is Someone Else’s Asset,” animated by artist Molly Crabapple. The $15 trillion in U.S. household debt is “a form of wealth transfer” from the poor to the rich, Taylor says. “People are in debt by design.”

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StoryJun 01, 2023“Turning His Back on Student Debtors”: Biden’s Debt Deal Ends Freeze on Loan Payments for Millions
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Rights groups and lawmakers are calling on the Biden administration to extend the moratorium on student loan payments that’s been in place since the pandemic started. The Biden administration announced in August it would extend the pause for about 42 million people, but that extension is set to end in less than two months, on January 31st, 2022, even as many continue to struggle during the pandemic.

On Wednesday, 200 groups, led by the Student Borrower Protection Center, sent a letter to Biden saying, quote, “There is a broad consensus among borrowers, advocates, industry, regulators, enforcement officials, and lawmakers that a rush to resume student loan payments is a recipe for disaster and will result in widespread confusion and distress for student loan borrowers.”

Also this week, a group of 14 lawmakers, led by Senator Raphael Warnock of Georgia, called on Biden to waive the interest on student loans even after payment collection resumes, writing, quote, “Accumulating student loan interest can be a daunting challenge for borrowers with the lowest incomes or the heaviest student debt burdens,” unquote. They noted the debt crisis has also disproportionately impacted Black, Latinx and Native communities.

During his campaign, Biden vowed to cancel federal student loan debt and fix the “broken” student loan system. But his administration has said the extension pausing payments through next January would be the final one.

For more on the debt crisis, we’ll be joined in a minute by Astra Taylor, co-founder of the Debt Collective, a union for debtors. But first, I want to turn to her new animated short film she’s publishing today at The Intercept, with illustrations by artist Molly Crabapple, called Your Debt Is Someone Else’s Asset.

ASTRA TAYLOR: The American dream used to be owning your own home. Now it’s being debt-free. Altogether, Americans owe a record-breaking $15 trillion and counting. Sold as a lifeline, debt is too often an anchor, dragging people down with compounding interest and fees, pulling wealth and resources from the working class to bloat Wall Street’s bottom line.

Every debt we hold is someone else’s asset, with our monthly payments providing steady revenue streams for greedy creditors. Households with credit card debt pay around $1,155 a year in interest alone. Americans now die owing an average of $62,000, much of it credit card debt.

A significant amount of the $770 billion of credit card debt slushing around is medical bills — ambulance rides, doctor’s visits and surgeries paid for with the swipe of a little plastic card. Then there’s the additional $140 billion of medical debt in collections combined with an estimated $50 billion in back rent and $1.4 trillion in auto loans.

Much of this debt didn’t exist a few generations ago. Consider the $1.8 trillion in student loans this country now holds, which wasn’t a problem in the 1960s, when college was often free or close to it. Ronald Reagan helped change that. He made his name by demonizing protesters on the University of Berkeley campus. In 1967, as governor of California, he pushed the university system to start charging students tuition so they would, quote, “think twice” about whether they wanted to pay to carry a picket sign.

During his career as senator, Joe Biden advanced Reagan’s project, working to expand student lending. As a senator from Delaware, the credit card industry capital, Biden was a devoted servant of the financial sector. He fought relentlessly for 2005 legislation that weakened borrower protections and made bankruptcy more difficult for regular borrowers, strengthening the hand of the student loan and credit card industries and helping cause a wave of home foreclosures.

But debt is not just about money. It’s about power. Debt has long been both a source of profit and a tool of social control and racial domination. The Founding Fathers knew this. Thomas Jefferson argued that debt should be canceled after natural limits, which he took to be about a generation — but only for white men like himself. In 1803, he wrote that debt should be used as a weapon against Indigenous people to steal their territory. “We shall … be glad to see the good and influential individuals among them run in debt, because we observe that when these debts get beyond what the individuals can pay, they become willing to lop them off by a cession of lands.”

Sharecropping, redlining, predatory lending all continued this trend, deepening racial inequities. As a result of the 2008 mortgage crisis, Black and Brown families lost upwards of 50% of their collective wealth.

For regular debtors, even a late payment can spell disaster. A tanked credit score can make it impossible to rent an apartment or get a job. Default on your student loans? The government can seize your wages, tax refunds and Social Security. Debtors’ prisons are technically unconstitutional, but, in practice, people struggling to pay medical bills or court fees can wind up in jail.

But not all debtors are treated so cruelly. Rich people regularly walk away from their obligations, and companies engage in strategic defaults. The banks that crashed the economy in 2008, they got bailed out. Donald Trump, the self-professed king of debt, left a string of corporate bankruptcies in his wake. And don’t forget that during the COVID pandemic the federal government spent hundreds of billions of dollars buying up bad corporate debt belonging to entities including Exxon and Walmart and offering companies, including payday lenders, forgivable loans.

It’s time regular debtors got a break, too. It’s time for a jubilee, the erasure of debts and a rebalancing of power between regular people and elites. It’s not a new idea. Jubilee was described in the Bible, and many ancient civilizations had periodic jubilees to avert social and economic collapse. Our earliest recorded histories are stone tablets inscribed with credit ledgers. Nearly as long as debt has existed, debt cancellation has existed, too.

Throughout history, debtors have risen up to demand relief. In the early 6th century BCE, a debtors’ riot helped nudge Ancient Athens towards democracy. The reforms, known as the shaking off of burdens, included debt absolution and an end to debt bondage. Something similar happened in Ancient Rome after debtors mounted the world’s first general strike. In the United States, indebted workers and farmers revolted in the colonial era and then again during the Great Depression. Later, the call for debt cancellation rang out at Occupy Wall Street. In recent years, striking debtors helped force the government to cancel billions of dollars in student loans.

Abolishing medical debt, back rent and student loans would free up money now spent on debt servicing for other things. People could buy homes and start families, and the racial wealth gap would narrow. Research estimates that canceling student debt alone would boost the economy by up to $108 billion a year and create a million jobs.

Under pressure from activists, President Biden campaigned on a promise to cancel an immediate minimum of $10,000 of student debt per borrower. Thanks to the Higher Education Act of 1965, he has the power to cancel all federal student loans. With the single signature on an executive order, President Biden can free people from student debt, giving tens of millions of people their lives and futures back. Now we need to make him do it and much more. We deserve nothing less than a jubilee.

AMY GOODMAN: That’s the new animated short film, Your Debt Is Someone Else’s Asset, published today at The Intercept, with illustrations, remarkable illustrations, by the artist Molly Crabapple, narrated by Astra Taylor, who joins us now, writer, filmmaker, co-founder of the Debt Collective, a union for debtors. Her latest book is Remake the World: Essays, Reflections, Rebellions.

Astra, welcome back to Democracy Now! What a film! And kudos to Molly Crabapple. She is just a stunning illustrator and artist. If you can just start off with the title, Your Debt Is Someone Else’s Asset? Talk more about why you’re releasing this today and what that means.

ASTRA TAYLOR: Thank you so much for having me on and for premiering the film. And absolutely, Molly and her team, Kim Boekbinder and Jim Batt, did an amazing job.

Your Debt Is Someone Else’s Asset. One of the powers of animation is that it allows us to make something visible that we can’t normally see. So much of debt, you know, is invisible. And one thing this film shows is it shows debtors, but it also follows the chains of debt back to the people who hold our debts as assets, the people that we pay monthly, who collect the interest and fees, you know, who are essentially the 1%. These debt payments are a form of wealth transfer from the poor to the rich. And so, this film, one thing it does, in a playful but really serious style, is show that. So, there’s lots of evidence that debt is accelerating inequality, it’s compounding racial inequities, you know, because, again, these are — these debts that weigh us down are somebody else’s investments, and they’re very, very, very invested in protecting those assets.

NERMEEN SHAIKH: Astra Taylor, I mean, the figure that you give, a record-breaking $15 trillion of debt, can you provide some sense, some explanation of how the U.S. got to this point, $15 trillion?

ASTRA TAYLOR: Well, as this film shows, you know, in seven — less than seven minutes, we travel through thousands of years. So, debt is older than capitalism. Debt is really ancient. But there’s something about the form of capitalism we live under where debt is really central.

So, we can, for example, think back to the 1970s. You know, much of this debt, as I say in the animation, didn’t exist a few generations ago. Well, what’s happened? Wages have stagnated. Regulations on the financial sector have been rolled back. They rolled back usury limits, the limits on how much interest can be collected. So, what’s happened is that people have essentially been forced to borrow. People don’t live beyond their means; they’re denied the means to live. So, working people are robbed twice. You’re underpaid at the job, and then you’re charged interest because you’re having to borrow student loans to get an education, you’re having to go into debt for medical care, you’re having to take out a payday loan or a credit card to put food on the table. So debt has absolutely exploded.

That $15 trillion is a mortgage, mortgage debt for people — we have to go into debt to procure housing; $770 billion of credit card debt. As I say in the film, a lot of that is medical debt because people don’t have adequate healthcare in this country. If you have universal healthcare, medical debt doesn’t exist. So this is absolutely a problem that isn’t just intrinsic to human existence. It’s a consequence of political and economic choices. And as this situation has evolved, the creditors, the financial sector have amassed more and more power over Washington. And that’s why it’s so important to tell the economic story and the political story side by side, as this film does.

NERMEEN SHAIKH: Astra, one of the things that’s very striking and, of course, also disturbing in the film is the fact that you say that Americans, on average now, when they die, owe $62,000 in debt. Can you explain what happens to this debt after someone passes away? Is it erased, or is it passed on to the next generation?

ASTRA TAYLOR: Yeah, $62,000 of debt, that is an immense amount. So, not all is literally passed on to people’s family and heirs, but what it does is it impedes families’ ability to build intergenerational wealth. So, what we have is some people, who have assets, building into intergenerational wealth, and others who are never able to do that. They’re never able to get ahead. So, this is particularly true, we see this, with the racial wealth gap in this country, which is for the median households about 10 to one. For families who have student debt, the racial wealth gap between Black and white families swells to 20 to one. So, it impedes people’s ability to build wealth and to thrive.

And it also underscores — I think that powerful image of a coffin underwater with that number on it just underscores the fact that debt is a matter of life and death for people. We’re seeing this right now as the Biden administration is threatening to turn on student loan payments January 31st. We’re seeing debtors that are just absolutely not ready for that, people who are overwhelmed with anxiety, making them — you know, compounding their stress. You know, we’re just seeing that this is something that is really serious for people, and I think that illustration really drives that point home.

AMY GOODMAN: And you say that President Biden could wipe out the debt with his signature. Can you talk about the role he’s played in expanding both student and credit card debt, and what power he has right now?

ASTRA TAYLOR: Yes. As the animation shows, Biden is part of a long line of American presidents who have sided with creditors. I mean, we have what some scholars call a creditors’ constitution. The struggle between debtors and creditors is really essential to the founding of this country.

But Biden has played a really significant role as the former senator from Delaware, which is the credit card capital of the world. So he was absolutely instrumental in passing 2005 bankruptcy reform, which was something that credit card industries really wanted. It repealed bankruptcy protections for student debtors with private loans. So he has been on the wrong side of this.

That said, because of organizing, because of the group the Debt Collective, which I founded and I organize with, and other activists, you know, he was forced to run on a promise of $10,000 across-the-board debt relief, and even more for students from certain colleges. And he has the authority. We know this. The very same authority that Donald Trump used to do the student loan payment pause is the authority that President Biden can use to cancel all federal student debt — not just $10,000, not just $50,000, but all of it.

And it’s absolutely a moral imperative that he does it. A recent study showed that 90% of fully employed student debtors are not financially secure enough for the payments to go back on. And it will boost the economy. It will have all of these beneficial effects. It will narrow that racial wealth gap I mentioned from 20 to one for borrowers to three to one between Black and white households. And so we’re organizing for that. The Debt Collective is calling for a week of action, with an action in D.C. January 18th. We have to push him and make him do it, just like the film says.

AMY GOODMAN: And who does get bailed out? I mean, it’s not like, “Well, we just can’t afford to wipe out these debts.” Talk about the payday loan operators, the large corporations.

ASTRA TAYLOR: We can’t afford not to wipe out these debts. Again, if we have a jubilee, we, the 99%, will all be richer as a result. There are so many benefits to this. But a jubilee, as you’ve pointed out here, you know, is not a pie-in-the-sky idea. Debt cancellation happens all the time. It just happens for wealthy individuals and for corporations, those companies who have the lawyers who advise them on their strategic defaults, the banks that can get bailed out after 2008.

So, what we saw in 2020 when the coronavirus hit was the government stepping in in a massive way, buying up hundreds of billions of dollars of bad corporate debt belonging to the biggest companies in the country, offering payday lenders and other predators forgivable loans. You know, we need to extend this mercy, this generosity, to debtors, who have not done anything wrong. People are in debt by design. This is a system that gives people no other options for making ends meet. That’s what happens when you have a country with a minimum wage of $7.25. So, a jubilee is possible and is necessary, and debtors need to fight for it.

AMY GOODMAN: Astra Taylor, we want to thank you so much for being with us, writer, filmmaker and co-founder of the Debt Collective, a union for debtors; latest book, Remake the World: Essays, Reflections, Rebellions; co-writer and narrator of the new animated short film that we’ve just premiered, Your Debt Is Someone Else’s Asset.

Next up, we look at “The Invisible Wall: Inside the Secretive Libyan Prisons That Keep Migrants Out of Europe.” Stay with us.

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