Debt For College. Debt For Life.

It came in the mail, mixed in with the barrage of college and university flyers that my 17 year old son has been receiving since he first took the PSAT.

It was a brown-black envelope, decorated with a pattern made of positive-thinking words.

On the front, two short declarative statements:

"For College.  For Life."

I thought, at first, it was a marketing offer for a credit card, in this case, the Discover card.  Which it might have been.

Obviously, the good folks at the College Board have not just marketed my son to colleges, but have also sold his information to the credit card companies.  Or to a reseller of information.

I was, at first, a little cheesed.  The absolute last thing you want a young person to start out their life with is debt.  Credit cards in the hands of freshmen are dangerous, dangerous things, and can trap the unwise or the unwary in a cycle of overconsumption and financial insecurity.  They create unrealistic, debt-fueled expectations for what life is like, at precisely the time when they have limited incomes and only the modest capacity to sustain themselves.

But if you can get a young adult hooked on the debt-expectation early, they'll stay hooked.

So I was prepared to be furious with the College Board, but then I thought, wait a minute.  This might be an offer from Discover's student loan branch, as the credit card company has gone into the very lucrative business of making loans to college-bound students.

For most college bound folks, isn't that what college itself is these days?  Debt, driven by social anxieties and expectations?

Here, these huge and bloated institutions, that market the "experience" of college more aggressively than they market the life-knowledge that college is meant to impart.  Higher education is increasingly fueled on the false growth of debt, with endless administrative structures and entertainment complexes springing up even as adjunct professors and teaching assistants are paid dismal salaries to do the actual teaching.

But we need it, must have it, or we will not be successful.  And so of course we go into hock, because what colleges market is success, is winning, is being able to have the good things in life.  We want that.  We want to touch it and hold it and be it.

So we must go into debt, or our culture tells us we cannot have these things.

Was it for college loans, or for a credit card?  I looked at the unopened envelope again.

Really, is there a difference?

It went straight into the recycling.  Unopened.

The Cake is a Lie

The markets are soaring lately, riding high after high and crest after crest.

In point of fact, the Dow Jones Industrial Average now stands at record levels.  It's a bumper crop!  A jackpot!   A total economic turnaround from those disastrous days after the 2008 crash!  Look!  Stock values have more than doubled, with the Dow going from sixty-eight hundred and change to over fourteen thousand.

Things are awesome!

Only, they aren't.   The Dow, as even a math-challenged minister such as myself can easily observe, does not empirically measure the health of an economy.  It measures one thing: A price-weighted index of 30 stocks in United States dollars.  

What we know is that these stocks now cost nearly twice...in United States dollars...what they did in 2008.  Are there significantly more jobs?  No, not particularly.  Is there a revolutionary new force driving real economic growth?  No, there's not.  Job growth has been meh.  Incomes for all but the very top are flat, and the average household income has been falling.

What there has been a great deal more of over the last five years is money.  For five years, we've been printing money...in the form of the Fed buying bonds.   We've been doing that to the tune of $85 billion dollars every single month.

And so the exuberance on the part of Wall Street traders at the continuing surge of stock prices seems peculiar to me.  Would we be celebrating if the price of milk had doubled?  Or the price of gas?  Why should we similarly celebrate if the price of entry into the Capitalist Cornucopia has doubled?

In the absence of any significant increase in production or improvement in the real economy, what appears to have happened is a simple absorption.  We've printed money, and that money has gone directly into capital markets.  Given the absence of material growth, dollars are worth less, which means the number of dollars required to purchase stock is higher.

I cannot see any other logical way to interpret what I'm seeing.

Meaning that taste in your mouth is not cake.

The Fiscal Cliff

Over the past few days, I keep stumbling over the term "fiscal cliff" as I read through the business and political news.  It's surfacing everywhere, and it's primarily used to describe two related events.

First, there's the automatic repeal of the Bush-era tax cuts.  Second, barring any meaningful movement on deficit reduction, there will be major, mandatory, and significant reductions in government spending, up to and notably including military spending.

In the business media and in the general press, this is being cited as a reason to ring alarm bells.

We're approaching the cliff!  If we go off the cliff, we'll destroy our economy!  Something must be done!   Turn!  Hit the brakes!  Turn!  Go back!   Concerned defense industry folk and contractors and the financiers who sell and hold US debt are beginning to freak out a little bit.

And yet we're not turning.

Nothing is being done, because the divided Congress elected by divided America is inexplicably divided.

Here, I confess to find myself confused.  Sure, we're approaching what looks like a cliff.

But to my eyes, we're not approaching it from the top.  We're approaching it from the bottom.  It's the side of the deficit hole we've dug ourselves into, that deep pit of false and unsustainable growth.

The "cliff" is nothing more and nothing less than what we need to do to get out of debt as a nation, or at least reduce debt to manageable levels.

We'd not be going over the cliff.  We'd be starting to climb up it.

That's probably why the financial and political classes seem so alarmed.

Deficits and the New Detroit

I hate debt.

When it comes to my household, I'm close to compulsive about not spending money that our family doesn't have.   We have one credit card, which we pay off completely every single month.  We buy our humble/practical vehicles with cash.   The one debt we do have is our mortgage, which was a big stretch 10 years ago but now feels manageable.  We live well, and want for nothing.  But our "well" is always ever-so-slightly below our means.

This makes me feel completely out of sync with the trajectory of my nation.  As Greece erupts in riots and strikes and outrage over austerity measures taken to try to shore it up financially, I can't help but see our national inability to confront our fiscal profligacy as precisely the same thing, writ large.  Eventually, we're going to have to fall back to a sustainable position.  It's inevitable.  Inescapable.   We can muck around with debt limits and putter around the edges of the problem to our heart's content, but the road we're on leads only one place.

And ultimately, when the debt hits the fan, the place it will hit hardest is my own home town.   Washington DC, with its increasingly dense suburbs and its sprawling exurbs, is one of the few places in the country where home prices have remained stable or consistently risen over the past several difficult years.   There's only one reason that I can see for this.

The money that we as a nation have borrowed to "jump start" our economy has tended to settle here in the Nation's Capital.  Much of the money that we as a nation have borrowed to fund our wars has also landed here.    If you want to be a global power, wealth will be drawn to the center of that power, even wealth that is only borrowed against our collective good credit.  That's the way it's always been, and just 'cause we choose our "king" doesn't mean we get a pass from that hard truth.

Because of that wealth, the area is filled with civil servants, who aren't the faceless bureaucrats that demagogues like to attack, but tend to be..well..bright, civic-minded, and hard working.  Our neighborhoods are also filled with military and Homeland security personnel and a vast array of DOD and other federal contractors.  That financial base provides the foundation for a thriving local service economy.

If America does what it will need to do to get things back on track, then things here are going to get more difficult.  Even if it's a sane balance, with cutbacks matched with a return to a pre-Dubya tax base and a focus on preserving our national commitment to care for the last and the least, the impact of right-sizing our budget will be felt here more intensely than anywhere else.

As I drive through the insane congestion and endless development in our over-busy region, I often find myself wondering what this will all look like twenty years from now.  Will areas of post-austerity DC be like Flint or Detroit, with vast sections of exurban overdevelopment crumbling and in decay?   Will the woodlands that were razed to build ticky-tacky-townhome communities and strip malls start pushing their way up through cracked parking lots and crumbled houses?

It's been strange watching the area grow so explosively since I moved here with my family in 1975.  It may be stranger still watching it fade.

The Higher Education Bubble

In a very slightly self-congratulatory way, the Washington Post's local section today affirmed what any inside-the-Beltway denizen already knows: we are the most educated region in the nation. Yeah, I know, y'all assume Washington is just a gray and sorrowful land in which soulless bureaucrats sit and fill out endless, pointless paperwork in tiny little offices like extras in Terry Gilliam's Brazil. And maybe we are.

But we do so because of our superlative levels of higher edufimicashun.

In the DC environs, 46.8% of residents have undergraduate degrees. 21.9% of us have graduate degrees. That beats every other region or jurisdiction in the country. This surfaces something of a puzzler. On the one hand, Americans who live outside the Beltway are fond of railing on the DC area. We are "those Beltway insiders." We are not "real Americans."

On the other hand, the goal of most Americans is to get what is increasingly viewed as a prerequisite for success: a college degree. That's your ticket to the good life, or so the story goes. It's a sign of attainment, of intelligence, and of stick-to-itiveness. By that standard, DC must be, by definition, the place inhabited by the most successful, driven, and capable Americans.

Only there's a problem with that, one that goes deep into an underlying dysfunction in our culture. There is, to my eyes, a problem with the whole "college as a prerequisite for life as a viable human being" thing. Undergraduate education, at least for me, proved profoundly useful. It was in my Religious Studies program at UVA that I began finding my way into a faith that could engage both my heart and my intellect. Seminary prepared me to go deeper, and to teach, and to preach.

But what my undergrad and graduate studies did not do was prepare me to work. Working prepared me to work. I learned the ethic that makes for successful work as a dishwasher. As a stock clerk. As a forklift-driving warehouseman. As a cabbie. I learned office skills as a fetch-and-carry intern. None of those things...not one of them...tapped into the knowledge I received as a student at Mistah Jeffahson's University. Or, frankly, in seminary.

Yet as our captains of industry offshore the industrial foundation that once provided blue collar workers with gainful, productive, lifelong employment, Americans are increasingly driven to attend college. You can't just work 9 to 5 on the line, and come home to your nice little house. There is no line. You need a degree to succeed. And so that becomes the goal, even if 1) it doesn't meet the broader needs of our society and 2) the number of jobs appropriate for a general college education no longer match the volume of graduates.

That cultural trend is, I'm convinced, is one of the primary reasons college education is growing so damnably expensive. It's a simple matter of supply and demand. With the collapse of our industrial base, the only jobs that can sustain our expected standard of living are for the educated. Knowing this, people are willing to undertake huge debt loads to finance their education.

Fueled by debt-driven spending, the costs of higher-ed soared, in the same way that housing costs soared. That was fine, though. You could pay off your loans over the years when that college degree reaped it's expected rewards.

Only, as anyone who knows anyone under 30 realizes, those rewards are now far from certain. The huge debt burden you undertook to get your English degree or your degree in Anthropology or Women's Studies or Architecture or Automotive Engineering gets you exactly nothing. The jobs for such souls aren't there. Nor, given the broader trends in the global economy, do they appear to be likely to return.

I find myself wondering if, at some point, people will realize this.

I Steal From the Poor, and You Can Too!

My wife and I have one credit card between the two of us. We have one other fallback card in the event something goes wrong with the first one, but 95% of our day to day expenses get slapped onto plastic. I use it for gas. For getting a soda at Sebbin Lebbin. For groceries. For pretty much everything.

Then, at the end of the month, we pay it off. Every last dime. In the nearly 20 years we've been a joint socioeconomic unit, we've paid credit card interest precisely twice, and that was just because we'd flaked out on paying the bill on time. We don't use our "credit." We just use it to make life a little easier. That's largely because incurring debt at obscene, usurious interest rates for day-to-day expenses is worth steering away from. And yeah, it is usurious. When bank CDs are paying out 2%, mortgage rates stand at around 5%, and interest rates for credit card debt are between 10 and 20%, that's taking advantage.

Here's the thing that gnawed at me this week. Our primary credit card is a "benefits" card, meaning we get a small percentage of our costs returned to us in the form of gift cards at a range of different retailers. Because all of our household expenses are channelled through this one card, that starts to add up, to the tune of several hundred dollars a year of free stuff.

Only, like most things in life, it isn't really free. Those benefits are, for most human beings, the thing that makes them look at a credit card bill that significantly exceeds their monthly income and say, "Awesome! Now I can get a $50 gift certificate to buy even more crap I don't need!" Those people ultimately get punished economically. They tend to be less educated, or young, or struggling.

So as I looked at the nice little benefits balance that's build up for us over the last few months, my reveries about new speakers or a nav system for our van were interrupted by the pesky voice of the Spirit. Where does the money that makes those benefits possible come from?

It comes from the single mom who maxed out her cards a year ago when her son broke his arm. It comes from the twenty something who dug himself into hock trying to live the lifestyle the world told him was his birthright, and now lives in mom and dad's basement while climbing a Sisyphian mountain of credit card debt, school loans, and a loan for that Camaro he thought might get girls to notice him. It comes from that family that two years ago went from two incomes to one, saddled with a mortgage they could no longer afford, with their savings burned through and plastic the last, razor wire rope slipping through their hands to as their hopes for the "good life" sail away into the darkness.

Those benefits aren't just given because I'm such a great customer. They're a tiny shaving off the top of a giant mountain of profit, repackaged as a little taster offered up by your local pusher. Enjoying them without falling into debt may well be my cut for being wise as a serpent. But for some reason, I no longer feel as innocent as a dove.

A Reasonable Decision in Our National Interest

There's been a tension here in D.C. lately that troubles me. Well, there've been many tensions, but this one bugs me more than about 74.375% of other issues. On the surface, it's a little budget thing, but it feels to my admittedly overtuned sensibilities like a harbinger of a potential future. Let me elucidate, and you can tell me if I'm being paranoid. I do tend to be that way, you know.

There is a disagreement rumbling around the community here in DC between the Department of Defense and the Congress. The Secretary of Defense is deeply aware of the major crisis that our national debt will eventually cause. Defense Secretary Gates is particularly concerned that the military will be impacted by this debt, and is pressing for some reductions in military spending. In particular, he wants pay increases and benefits for our troops to be limited to a level that's rationally sustainable. There are also several weapons systems that both he and top military brass want discontinued as cost-savings measures, like the development of an unnecessary new engine for the F-35 Joint Strike Fighter or building unneeded transport aircraft.

Arrayed against Gates and top military brass are our elected representatives in Congress. Congressmen and women want to be seen as Supporting Our Troops (tm), and have passed numerous laws increasing the mandated benefits for troops and vets and their families. That's a surefire way to get votes, kids. Surefire vote-getting way number two is to make sure that the defense contractors who have positioned factories and offices in their districts continue to produce the weapons systems that produce jobs for folks who vote.

They haven't raised revenue to pay for those expenses, of course. That would mean breaking their promise to Never Raise Your Taxes (tm). It's not one or two members of Congress who do this. It's the nature of the critter. This is just how our representative democracy works. It may also be how representative democracy finally fails.

I'm pretty progressive, and would unabashedly accept the label "liberal." But when I see this disagreement between our unelected military leaders and our elected representatives, I find myself thinking the military is willing to act in the national interest, and Congress is not. By focusing on their own electability and narrowly drawn local interests, our representatives are making decisions that will cripple us as a nation. This seems obvious. They only do this because we make them do it, of course, but we'd rather forget that. Top brass, well, they're making the hard decisions that need to get made. It's the way the military works. That I should have that response is telling.

What worries me, seeing this, is that eventually the debt will hit the fan. We might see massive cutbacks in spending coupled with an increase in taxes. This would be painful, but would preserve the integrity of our republic. Being the pessimist that I am, I doubt this will happen. We would never, ever, ever elect anyone who would do this. If someone slipped through and started making the changes necessary to turn our debt around, we'd run 'em out on a rail.

More likely, we'll eventually see some form of default. When that happens, things will get bad in a way that makes the market seizure of 2008-2009 look like salad days. In that atmosphere of genuine crisis, I can see...and to a certain extent, feel...the temptation to set aside a clearly broken system of governance for one that gets the job done. If it's an emergency, then emergency measures would need to be taken for the security and well-being of the nation. Would we trust Congress to do this?

Or would we, perhaps, see how patriotic and hard-nosed and well-organized the decisions made by our military leaders can be in a time of crisis? Why not turn things over to them for a while, you know, until things have improved?

I can see how people might think this was a reasonable decision in our national interest.

Debt

As I was growing up, my folks whispered a subversive, un-American, anti-capitalist idea in my ear. Not only did they teach it to me, they lived it out. That dangerous idea: don't live beyond your means.

Outside of having mortgage debt, they took out no loans. Period. Ever. They always spent less than they made. That meant a humble but functional home. That meant cars that were purchased not as status symbols, but as ways to get around. Those cars were often purchased used, and they were purchased with cash on the barrel head. That meant clothes that...well...might have been in fashion 15 years ago, when they were bought. College for the kids? That was saved for. Home improvements? Paid in cash, after saving for years.

A credit card was a dangerous thing. It...meaning the one and only card you allowed yourself to have...was to be paid off every month, and watched as warily as a bobcat in a nursery.

As best we can, my family has tried as best we can to stick to this approach to financing our lives, while all the while feeling a bit strange. It's just so out of touch with the way the world works. This is not the way we good capitalist consumers have been taught to live. Nor, quite frankly, is it the way that our governments do business.

That is, I'm convinced, why the world increasingly finds itself in such a financial fustercluck. When you can live large, charge after charge, eventually, inescapably, you'll drive yourself into personal ruin. When housing speculation feeds off of the false abundance of irrational subprime lending, suddenly homes are driven out of reach of the average family. When those loans fail, as they inevitably must, our entire financial system totters. When entire nations decide to live high on the borrowed hog of their sovereign debt, the system shakes even more. That shaking hasn't even really begun, kids. Endemic debt has this way of destabilizing societies, be they the ancient Hebrew people or our newfound global community. That's the reason debt was viewed so warily by the Torah. A society that allows indebtedness to run rampant..at any level...will eventually tear itself to pieces.

We conveniently forget, even in this putatively "Christian" nation, that our sacred texts never ever no not never teach that the false abundance of debt-driven living is something worth seeking.

Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay, your very bed will be snatched from under you.

I can't imagine that our comfy bed of debt will still be under us, as a nation, for very much longer.

Jesus Isn't Fair, Either

One of the themes that has echoed and re-echoed across this nation after our housing bubble went inevitably kerpop is that of fairness. Millions of folks bought houses that were utterly beyond their means, homes that were either too big or...more likely...whose value had been absurdly inflated by relentless churning speculation.

Those struggling homeowners soon found themselves deep "underwater," as their equity dried up and their income took a hit from the crumbling job market. It weren't just a few folks, neither. Last year, 2.8 million American households faced foreclosure, a rate that is on track to hit 3 million even in 2010. The sheer volume of collapse hasn't just stirred a government response. Banks, realizing that they can't manage or sell that many homes, have often been renegotiating the interest on the loans for these houses. But that hasn't always been enough.

This last week, some banks have started to reduce the amount of principal as well. Meaning, they're deciding, heck, remember that $475,000 townhouse you took out a jumbo loan to purchase in 2008 right before your wife lost her job? The one that's worth $275,000 now? Let's make that a $300,000 loan instead! It's the only way to keep folks in their homes, and while it's a desperation measure, it works best for the banks and for those who would otherwise find themselves out of a place to live.

For some of us who bought smaller and earlier, and who've never ever not once even come close to missing a mortgage payment, this can seem, like, TOTALLY unfair. We were wise. Diligent. Aware of market dynamics. Focused on living within our means. We saw the bubble for what it was, to the point of solemnly warning folks we knew not to buy at the peak of the market. And I did utter that warning, over and over again.

But the world is full of fools and dreamers, suckers ready to believe something that is obviously too good to be true. Why should they be rewarded or cut slack? They should bear the penalty of their stupidity. Moving their family of five into Grandma and Grandpa's basement for three or four years is the only way they'll ever learn to stop making dumb decisions. They made the bed. Let 'em sleep in it. Or on the street. Whichever.

Problem is, self-righteousness and an overdeveloped sense of what is and isn't fair have no place in the heart of a Jesus follower. That was, as I recall, the whole point of that little story he told about the laborers in the vineyard. That story, of course, had mostly to do with quelling the spiritual resentments of those who have always done what's right. We want to be rewarded, and we want our reward to be bigger than the reward of those who come stumbling into the Kingdom at the last moment.

As an ethic, though, it reminds us that Christians don't desire others to suffer. We are not to want others to be diminished or humiliated. Period.

If we find ourselves grumbling because someone is being given another chance, or forgiven a debt, then something has gone very very wrong with our faith. When we allow ourselves to want that suffering as just recompense for cluelessness, or want others to be cut down a notch or two because it's what they deserve, then the spirit of grace that lies at the beating heart of Christ is no longer within us.

Econopocolypse

I am naturally a pessimist. Always have been. When I was a kid, my mom's nickname for me was Puddleglum, after the relentlessly dour but redoubtable Marshwiggle from The Silver Chair. As I saw it then, being a pessimist had no down side. If things went badly, well, you right. If things went well, then things were cool and it didn't matter.

Problem is, that doesn't reflect our agency in a situation. Being convinced that things will go badly tends to demotivate most human beings. Focusing relentlessly on the negative has this unfortunate tendency to produce negative results. Yes, we're just "being honest." We're "telling it like it is." But we're also helping to define the direction in which actions will be taken. If all is inevitably despair and woe, then we may as well just sit around muttering moodily to ourselves and chainsmoking unfiltered Camels until the poo hits the fan.

It's true in church, where obsessing over the insurmountability of an issue can paralyze a community. You gotta have hope, seeing the best case scenario towards which we can direct ourselves as a reality that exists fully as a potential future. As my own wee kirk earnestly works to survive, I've starting fighting more against my innate grimness. I will be positive. We do have hope. Because we do. Because I do. Period.

Where I have more trouble is looking at the trajectory of our nation and seeing anything positive. As we fritter away the days, nothing...nothing...is happening to convince me that the United States will be a healthy, vibrant nation in the moderate-term future. We the people are divided and distracted, and that's a problem, because we the people are headed towards bankruptcy. America will default on it's debt, absent some sort of divine intervention. For all of the jabbering on the right about government being the problem, and how we'd be better off without it, the economic impacts of that on all of us will be catastrophic.

None of our leaders are willing to stand up and tell us the economic truth, not one. That truth is a pretty basic one: if you want something, you have to pay for it. But that's not really their fault. It's ours. We don't want to hear it. Politicians can't make the draconian cuts and tax increases that are needed. If they do, or even hint that they might, we run 'em out on a rail. It's the challenge of a representative democracy. This pattern has sustained for decades, and is without precedent in U.S. history. It spells trouble.

I was playing around this morning with a Budget Challenge game over at the website of the Concord Coalition. The Concord Coalition is a group with whom I feel considerable sympathy. They're fiscal conservatives who've been futilely ringing alarm bells about the debt for years. They crafted this little sim to educate folks about the difficulty of reducing the debt. It's no Modern Warfare 2, I'll admit. But it's still important. It's a little budget creation simulation that allows you to measure the impact of every major budget proposal on the debt, and to create your own budget.

Here's the rub. Play the game. If you reject every major budget proposal that increases the debt, and accept every viable option (my Canadian Army option is understandably not included) that reduces the debt, the debt still increases.

There is no escape. You can't win. The simulation is an economic Kobayashi Maru.

I do not find this reassuring. But perhaps I'm being too Puddleglummy. Tell me how you think our nation will get itself out of this mess. Show me the hope.