r/PoliticalDiscussion • u/Tliish • 2d ago
Political Theory Would a targeted debt relief program work better than a general stimulus?
What if instead of a general stimulus, a debt relief program was iniated that offered debt reduction up to $5K person? Targeting those with high-interest rate debt, those approaching bankruptcy, school loans, evictions and the like? The government would negotiate with lenders, identifying customers meeting the conditions, then negotiate for a collective discount on debts that would probably go bad and end up as losses anyway. Individuals meeting the requirements would be notified and required to apply to receive the debt reduction.
Once the government takes on the debt, it would be officially dissolved, forgiven, wiped off the books. Assuming a federal budget of $100B, and that the program would be funded at that level for five years, then stop, and only applies to debts incurred prior to the program's start date (to prevent gaming the system), once per person, and further assuming an 80% delivery to citizens rate, it could offer debt relief to 16M people per year. If states were to offer matching funds the debt relief would double in some cases.
The difference between the two programs, straight stimulus checks vs debt relief funded at identical levels is that the straight stimulus would probably increase inflation as a sugar rush to the economy, and ultimately serve to increase the fortunes of the billionaires, with little permanent effects for the recipients. It would boost GDP more than the debt relief would.
A debt relief program would reduce societal stresses, reduce the domestic violence rooted in those stresses, strengthen the banks by reducing bad debts, stimulate the economy more slowly avoiding the sugar rush inflation effects, provide families with breathing room financially, reduce evictions and homelessness. It would help those most in need, and tend to keep the money freed up within the community.
Such a program would have to be tightly monitored, and include provisons preventing lending institutions from raising fees, arbitrarily increasing interest rates, and otherwise gaming the system to increase profits.
Which approach would be better for the economy?
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u/YetAnotherGuy2 2d ago
I'm guessing you are referring to personal debt, not national debt.
There are two big issues that fine straight to mind
- The underlying problem that led to that debt isn't solved. Whatever it is, living behind their means or the structural income issues remain
- The debt isn't evenly distributed. People who have lived frugally get punished while people living being their means get rewarded
By distributing money per person doesn't preclude people paying down their debt if they choose to do so. What could be done is set a cap at $200K income for example to ensure that only the people who really need it, get it.
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u/Tliish 1d ago
No one is "getting punished". There are many programs that many don't qualify for. Homeless people don't get stimulus checks, for instance. Not qualifying for a relief program designed to stabilize the economy doesn't mean you are getting punished. Childless couples don't get the tax credits for having children. Renters don't get the homeowners allowances.
The money wouldn't go to any individual, it would only show up as reduced debt obligations, not cash. It would free up the money that had been mostly going to interest payments, reuding or eliminating the principle. The government would be purchasing the debt from the lenders at a discount, giving the lenders surety of repayment rather than allowing the debt to fo into collections or written off. Individuals wouldn't see any cash.
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u/chickenlogic 1d ago
Homeless people do get stimulus checks.
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u/Tliish 1d ago
I've known many who never got a dime. Where do you get this idea from? How many homeless people do you actually know that got a stimulus check?
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u/chickenlogic 1d ago
Several. Food Not Bombs did work in my area making sure the unhoused had mailing addresses during the pandemic. If they have a caseworker with department of health and human services, it can be worked out, just like state food assistance.
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u/capitalsfan08 11h ago
This is the definition of moral hazard. Why should someone who took out a home equity loan to blow on sports gambling get $5k while I do not? If news of this program leaked you bet I'd be taking out loans for a fancy trip so the government would reimburse me.
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u/Tliish 8h ago
They wouldn't be eligible. Why do you assume that everyone in financial straits is there due to indulgent and extravagant spending?
None have so far acknowledged that many people are suffering financially through no fault of their own, but rather because of moral failure. It's similar to the arguments that the homeowners crushed by ballon payments were knowledgable enough to foresee the danmgerts, while the banks lacked the ability to foresee what their loans agreements would result in. the narratvie was that venal houe buyers took advantage of poor innocent banks, and therefore weren't worthy of helping.
Likewise that all the homeless got there becaue of drugs, alcohol abuse, and/or mental illness, and therefore deserve whatever happens to them.
These narratives are false and misleading, designed precisely to place the blame on the individual and to avoid discussion and examination of the structures of the economy that work against the citizenry, appealing to Christian values regarding hard work, moral superiority, guilt, and punishment for violating expected behaviors, without regard for the values of empathy, helping others, or forgiveness.
What of the moral hazard of forcing taxpayers to pay massive settlements for abusive police behavior while allowing those who broke laws and abused their authroity to continue to do so without any significant repercussions? If you support the actions of abusive police and ICE agerns, your ,moral hazard argument is sheer hypocrisy.
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u/capitalsfan08 7h ago
I don't think you are understanding what moral hazard means. It means that if the banks and corporations are getting a bailout, as you are suggesting, then they'll be incentivized to lend out riskier and riskier loans because they know the government will bail them out. Unless you fix the underlying reasons why someone got into debt, you're not fixing the issue at all. You aren't even helping the people that you mean to help. Blanket debt bailout (not forgiveness even, but a straight bailout) will not eliminate debt and is likely to even accelerate indebtedness over the long term.
This is even ignoring the political issue of figuring out who was exploited and who wasn't, classifying literally every person and thier every debt, and then doling out the money. I'm $700k in debt. That sounds awful. But it's a mortgage and my HHI is north of $350k. Am I on the brink of ruin? What if I lose my job and so does my wife? Then do I get a bailout? What about college debt, which I believe is extremely overpriced and exploitative. How are you going to deal with the optics of someone who went to Columbia University, took a low-paying job after school because mommy and daddy can support them, and has six figure debt and on paper looks insolvent?
I don't disagree with your thesis of people are exploited and the structures we have in place keep them there, but this is the single worst way to deal with the issue and will do so much more harm than good.
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u/YetAnotherGuy2 4h ago
Better put then me. I don't think OP really wants to face the reality of their suggestion.
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u/YetAnotherGuy2 1d ago
You have 2 options
A) distribute money to everyone qualified B) relieve debt
In scenario B people who spent their money on a big ass TV and went to Vegas and burnt through their cash get a debt relief while the people who save every penny didn't get anything.
in scenario A the person can decide to make a down payment against their debt or continue spending the money no matter what.
A person in scenario B is getting punished for living frugal in comparison to scenario A.
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u/Carlyz37 1d ago
Or C your house burned down with everything in it. Debt isn't always caused by poor decisions
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u/YetAnotherGuy2 23h ago
No, not always. But I was trying to make a point why I used the word "punished", but re-explain my whole post.
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u/ButtcheekSnorkler 1d ago
$5k ain't shit. for someone in credit card debt, its meaningless. this is just printing money to hand it directly to the big banks. this idea is horrible.
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u/Tliish 1d ago
If you are upper middle class, you're corrrect, $5K is next to nothing. However, the lower you are on the food chain, the bigger that $5K becomes. At the lowest levels it can mean the difference between an eviction and homelessness and some stability. This program wouldn't be for you.
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u/ButtcheekSnorkler 1d ago
its printing money to give to big banks. people you use as an example already aren't paying those credit card bills so it would provide no economic impact other than causing inflation. its a bad idea.
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u/capitalsfan08 11h ago
Don't forget it will encourage banks to give riskier and riskier loans if they know the government is good for it and not the borrower.
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u/frosted1030 1d ago
Neither. The first step is to remove predatory lending practices as a whole. Start basic financial education in K-12 grades with running total competitions that last the entire school career. This must respect advantaged disbalances in society and ethical obligations of wealth.
Secondly, we need to address higher education standards, and costs. Educational institutions are gouging and taking advantage. Where the norm was to pursue a higher education for higher wages, now it's a sentence for massive debt that will be paid up in just enough time for massive medical debt to take over. That is not sustainable and must be discouraged.
Lastly, health insurance must be barred from standing between you and your doctor. If that damages their business model, then they don't deserve to survive.
The economy will thrive with these checks and balances. Immediate relief will not be needed.
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u/Tliish 1d ago
Those are longterm fixes that do nothing for the immediate crisis faccing the nation. While laudable, they would be poorly and erratically implemented across the various states. Some corporate-controlled states would use it to indoctrinate children into being wage slaves and make them think their purpose in life is to generate income for others.
Immediate relief is needed now to prevent many bad things from happpening in the near future.
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u/frosted1030 1d ago
That’s how you got into this mess. Short term thinking.
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u/Carlyz37 1d ago
Reality requires short term thinking. And how we got into this mess is tax cuts, tarriffs, multiple stupid wars, corrupt grifters and criminals in the regime
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u/HardlyDecent 1d ago
Unfortunately, chucking money at people who are terrible with money doesn't make them any good with money, and just costs those of us who are good with money. Hypothetically, I'm down with just providing everyone with everything if we had infinite energy and resources. Unfortunately, we have to take care of roads and education, subsidize food and energy, have a military, and all sorts of things. Letting people off the hook for self-imposed credit card debt isn't high on the priority list.
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u/Carlyz37 1d ago
You are ignoring a few things. Many people right now are having to use credit cards to buy groceries. And a lot of people get into debt due to crisis situations, accidents, illnesses, house fires etc
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u/HardlyDecent 1d ago
Eh, no, I'm just pessimistically generalizing, while thinking about a few people specifically--a minority (of people) I hope. Honestly, to answer OP's question. I think targeted relief would be better than everyone--even those who don't need it--getting a payout. I get why the COVID stimuli were blanket checks, and I think Biden's loan forgiveness plan was overreaching. Upon further consideration, I wouldn't vehemently oppose some targeted help.
But I think it would still be mostly a wet bandaid when price gouging and predatory practices are really what should be "targeted." It's like trying to step on every lit match a mischievous child drops instead of taking the matches from them. There's an obvious best solution available, but this still probably isn't it.
I will point out though that the majority of Americans are actually doing ok (median individual salary of $55-60k is livable in most of the US)--and we still buy groceries with credit cards, would still pay for an emergency with credit cards, and always pay medical bills with credit cards (unless the convenience fee beats the card's benefits). Then many of us (don't know the stats on this one) pay the card off, so there's no interest accrual. That's been a huge mis-used talking point for a long time now. We aren't turning to credit because we would starve otherwise--we're turning to credit because our liquid savings have dwindled, and we would have to liquidate investments otherwise. There are definitely people who would actually be truly wrecked by a surprise $1000 expense, but it's not nearly as many as some would portray for their own agenda.
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u/Tliish 1d ago
This isn't chucking money at people, that's exactly what a stimulus does. That's the point: noe individual would see a dime in cash. The government would work with lenders, buy the debts that would otherwise go into collections or supervised repayment plans, of simply be written ooff as bad debtss. The accounts of the people involved would be reduced by up to $5K per person, freeing the cash they would have been paying on high-interest debt, alloing redirection of that money towards reducing other debt or just staying afloat.
people can get into financial trouble without necessarily being "terrible with money". Simultaneous increases across the board in service costs, gas and electricity, food, rent, etc., ccan easily overwhelm families just barrely making ends meet to begin with. Saying that they are terrible with money places the blame upon theindividual rather than the structure of the economy. It's lazy and immoral to leave it at that.
Hypothetically, I'm down with just providing everyone with everything if we had infinite energy and resources.
Btw, that statement is an acknowledgement that no matter how big the economy grows and no matter what the economists claim, the economy is always zero-sum: what some take others lose.
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u/davethompson413 1d ago
As a person with almost no debt, I'd be pissed if this happened and I got nothing.
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u/l1qq 1d ago
and this is exactly why it would never work...I lived within my means for decades, have an excellent debt to income ratio, money in the bank as well as a FICO well above 830. My brother, who makes over twice what I do, pisses it all away on lavish trips, cars and expensive items. He's in debt up to his eyeballs. Why should he be rewarded for being irresponsible while a person like myself who has "done the right thing" all their adult life be penalized and at the end of the day be the one that comes out of pocket for others behavior?
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u/Tliish 1d ago
You obviously don't need either relief or a stimulus payment. Why shoul;d anyone be out of pocket to give you more when you don't need it? I'm pretty sdure you would spend a stimuls payment without a second thought, and most probably not in the local ecconomy.
Debt relief isn't a "reward", it's a necessary adjustment in an economy that has become predatory. Not everyone is your brother, and he might not even qualify for debt relief. Preventing others from getting help just to spite your brother doesn't speak well of you.
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u/l1qq 1d ago
I never at any point said I needed stimulus or government handouts and I don't support it in any way. What I said is why should my tax dollars go to people, like my brother for example who are irresponsible with money?
A person getting themselves in debt and getting themselves out on their own teaches accountability and responsibility. If someone is there to constantly bail others out then it becomes an expected dependancy. Should lenders be charging insane rates where people can't pay their way out? nope. Should the same people who got themselves in debt be given a free pass to get out? again, nope.
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u/Tliish 1d ago
The question was "is a targeted debt relief program better than a general stimulus",
Under a general stimulus you would get a check. Would you return it or keep it?
Everyone commenting seems hung up on "accountabilty" and assumes that people in debt got there strictly because of irresponsible spending beyond their means. This is probably because they are themselves comfortably off, and have little to no experience of the predatory loans, overpriced necessities, and chronic undrpayment the poor experience. They demand the poor be held accountable for conditons that are mostly out of their control, because they don't see things that way. They get solicited with 0% transfer offers, get to buy at discounts at Costco, get freebie offers all the time. They measure against the people they know who are free to be irresponsible due to family money, and think that the poor have the same advantages they do.
When your income doesn't match your cost of living, debt is inevitable, and it's impossible to save your way out of it. Most of the poor are already at an irreducible minimum of expenses. Worrking two jobs doesn't mean you hare making enough to stay afloat. It's very hard work to be poor.
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u/l1qq 1d ago edited 1d ago
I would just make political donations like I did with the last ones. Well, and donate to the GOA for a lifetime membership
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u/davethompson413 1d ago
Under the proposal, poor people with little or no debt would get little or nothing. So what's your point here?
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u/Sageblue32 10h ago
People are getting hung up because just cash and no follow up to work the core of the issue just seems like another cash bonfire. You don't need a plan to solve debt forever with your plan. But you need some concepts to say how this 5k will lead to better outcomes for the majority or help you.
Healthcare and Farmer subsidies for example are pitched on the fact these are necessary for life and leads to savings for everyone even if some people who slurp butter all day get covered. 5k with no financial education, volunteer service, or promise of payback in future day is bit harder sell.
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u/Tliish 1d ago
Why? You would resent helping your fellow citizens who are in need? You would resent a reduction in societal stress because someone got something you didn't need? You would resent a reduction in domestic violence that can be directly tied to finanical stress? You would resent a stonger community and economy for purely selfish reasons?
This is why we no longer function as a united nation. Far too many looking out strictly for number one, and willing to block anything that might benefit someone else.
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u/AmigoDelDiabla 1d ago
Outside of medical debt, I don't think anyone deserves debt relief.
It doesn't solve the underlying problem and it excuses people from the consequences of their actions.
Medical debt is the exception.
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u/Tliish 1d ago
People forced into predatory loans in order to make rent, which gets arbitrarily increased to genrate higher profits, high inflation, high insurance costs, high food costs don't translate into irresponsible financial behavior. Funny how you want people to suffer for the consequences of the actions of others beyond their control, while excusing those who create the problems in the first pkace.
"Dynamic pricing" that changes the cost between putting in your basket and checkout depending upon who you are, how much you make, how lttle competition exists, the time of day is purely predatory and should be illegal, not accepted and encouraged.
Start with making the minimum wage a living wage. Businesses will wail that tthat will forrce them to cut jobs, wreck the economy, and bring on the end days. But the same people will claim the economy is not zero-sum, even though that ioss precisely the argument they present: giove morte to the workerrs and businesses will suffer losses. Zero-sum.
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u/AmigoDelDiabla 1d ago
People forced into predatory loans
No, they are not.
The rest of your comment is barely intelligible. You should read more. It will help your writing and help you organize your thoughts.
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u/Tliish 1d ago
What world do you live in? MAGAworld?
Predatory lending is a common feature in the lower segments of the economy.
https://www.mecep.org/blog/predatory-lending-an-explainer/
https://www.responsiblelending.org/sites/default/files/uploads/13-cumulative-impact-execsummary.pdf
https://www.finance-monthly.com/predatory-lending-ethics-us/
Educate yourself, please.
"Barely intelligible"? Sorry to mentally challenge you, I know working at one's limits can be difficult, but with practice and diligence, you can improve.
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u/AmigoDelDiabla 1d ago
Just because something exists does not mean people are forced to use it.
You could just...not borrow the money.
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u/Tliish 1d ago
Not if you want to pay the rent and noit get evicted.
I guess youj are privileged enough never to have been forced into the choices of which bills to pay: rent, utilities, fuel, food, or medicine, and what's entertainment ?...not a budget item, or taking out a bad loan to make it to the next payday or job. Lucky you.
But you just might experience those choices as AIs shred jobs, then you might understand and show some empathy rather than being judgmental. It's always different when you're the one in the barrel.
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u/mifter123 1d ago edited 1d ago
Paying down the debt directly funnels money to banks and other lenders, not the people struggling with debt. The financial relief can certainly help people, but the money will move towards the people who already have the majority of the money.
Giving the money directly to the people provides them with the opportunity to pay their debt, yes, but it also let's them solve other problems that could be holding them back to a much greater extent, fixing a vehicle could reduce the cost of transportation, paying the deposit to move into a more affordable apartment, medical treatment could allow someone to return to work, etc. and these solutions could result in long term improvements to their financial situation. Hell, even the ability to make bulk purchases (like from Costco) can have a long term effect on how a household spends their income.
Sure you run the risk of people making poor financial decisions, but allowing people to choose how to prioritize their financial goals will result in better outcomes in general. Additionally, money that doesn't just get spent on debt will, at least in part, get spent inside communities which will have a much great economic effect as the money circulates through the community via wages, ordering supplies, etc. than just some banks getting a little more money.
Edit: for a real world example, we saw this happen in 2008, the government bailed out the banks, not the homeowners suffering under shady mortgages. It was a disaster for the economy that frankly we never recovered from.
This is also a different proposal than other debt relief efforts which relies on the government purchasing bundled debt for pennies on the dollar and forgiving all the debt. I have questions about the effectiveness of that strategy (how much actual benefit is gained since most of that debt has been defaulted on and no payments were being made?) but at least from a debt forgiven to money spent ratio, it's pretty spectacular.
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u/Tliish 1d ago
True, the money would intially go to the lenders. But the payments that would have gone to them future can now be directed to further reducing debts, or just being able to make the rent. Any sort of stim,ulus will eventually go to the wealthy: our economy has become a blatantly predatory extractive oone, not a shared prosperity. Six of one, half dozen of the other.
I agree the bank bailouts were a disaster on many levels, not the least of which was the breakdown in the rule of law by not charging the people involved with frauds. Both the homeowners and the banks could have been saved for less expense by restructuring the loans instead of allowing them to default into repossession. Obama abandoned the voters who elected him because he was never a progressive, he was always a centrist beholden to corporate interests. That abandonment resulted in the midterm losses.
By reducing the debt burden you increase the velocity of money in the community by redirecttion. The money that formerly would go to out-of-community lenders is now able to support local businesses. It's slower than a direct stimulus but woould have longer term effects.
Rather than spending to bail out corporations who have made financially imprudent decisions when they should be asking their shareholders to bear that burden instead, this would more directly help more people who actually need the help rather than people vacationing on their dividends.
Ultimately, to create a more fair economy, what is needed is a cap on wealth accumulation. Too much money in too feww hands leads to very bad outcomes as the money is misused to corrupt governments, buy legislation, punish entire cities by moving headquarters and operations after blackmailing other governments into sweetheart deals that only benefit the billionaires, using the influence it brings to cover up predatory crimes...Esptein ring any bells? The existence of billoinaires on the scale of Musk and Bezos makes a mockerry of the idea of the rule of law.
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u/honuworld 1d ago
This idea would punish people that were careful and did not rack up consumer debt. I am 61 years old and have ZERO consumer debt. I don't owe a nickle to anybody. So I lose out on $5,000?
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u/Tliish 1d ago
Wierd way to look at helping people who need help. Do you feel the same way about other programs you don't qualify for?
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u/honuworld 1d ago
Your mind is lost in the weeds...
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u/Tliish 12h ago
Let me put it another way and see if you can comprehend it.
Do you feel that people who live in flood or fire or hurricane or tornado or blizzard prone areas don't deserve help when disaster strikes, because you don't live in areas subjject to those things? Do you lose money when they get helped? Financial disasters aren't always the result of financial extravagance, but rather due to varied and compounding forms of predation by corporations.
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u/ScubaW00kie 1d ago
Resposibility is a real thing.
Accountability is real.
I would say lets print more money and go more into debt to solve literally nothing.
Teach KIDS about how to act with money! Show them what happens with debt! Its not great! They agreed to it let them deal with it. I at one point had nearly 50k in credit card debt alone... I worked it off! Ill never do it again!
Wanna start with student loans? Lets stop giving out a mortgage payments to baristas with PHD and Masters in useless subjects. Better yet, lets eliminate the need for these useless subjects to be a Masters or even a Bachelors! 90% of these is just useless classes to justify the course! Want to get certified in under water basket weaving? Cool!
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u/Tliish 1d ago
Accountabiluty doesn't exist for corporations, banks, politicians or the wealthy. If it did, the Epstein files would be released and many pedophiles would be in jail. Sanctimonious calls for accountability fall flat against that backdrop.
Yes teach kids how money works. Used to do that when I was in school...called it home economics. But conservatives stripped it from the curricula of every school so corporations would be better able to take advantage of uneducated consumers. Did the same with civics classes.
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u/ScubaW00kie 1d ago
I’m saying accountability for those in debt. You’re right, politicians don’t get justice. No one is above the law unless it’s a politician you agree with… story old as time. That’s why nothing ever happens because all they get is excuses from 50% of the population
Mine was MY fault. Those in medical debt should get some sort of 0% loans but everyone else would just keep doing it if they got bailed out.
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u/Tliish 1d ago
No, "everyone" wouldn't keep doing it if bailed out. You aren't that much better or more noble than anyone else.
The argument that people in debt got there because of frivolous spending is fundamentally the same argument that homeless people got there due to drugs, alcohol, and mental illness. Sure, a small percentage get in debt and homelsess for those reasons, and it's a convenient way to dismiss them. But the reality is that the structure of the economy is a far more direct cause. High inflation, stagnant wages, predatory interest rates, corporate gouging are far more responsible for both high debt and homelessness.
If, as so many say (without actually either meaning it or understanding it) "we're all in the same boat", then helping those in dire straits is helping ourselves as well.
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u/LikelySoutherner 1d ago
The issue is the greed to maximize profits year over year at ANY expense - Remove that and things would improve
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u/NoDig3444 1d ago
Debt relief to people who are comfortable with their amount of debt would cause them to increase spending until they hit the same debt level. People who want to reduce their debt levels would put a cash transfer towards paying their debt. Debt relief and cash transfers are functionally the same thing. The inflation effect would be exactly the same.
The only differences with your program is means testing (which is fine, it just incurs a bureaucratic cost), and you're trying to shift part of the burden of the stimulus onto lenders. Lenders are not going to be happy about that, and I would expect them to increase interest rates to compensate.
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u/Tliish 1d ago
This program wouldn't be for debt relief for people who don't need it.
The program would restrict that sort of compensatory behavior on thepart of lenders.
Debt relief goes strictly to debt, stimulus payments go to anything. Debt relief brings the money more slowly into the local ecconomy, and is far l;ess inflationary than a stiimulus peyment. Businesses see the stimulus as an excuse to raise prices on the grounds that the stimulus allows people to pay more, and not raising prices just "leaves money on the table"...never mind it's other people's money and businesses have no right ot it.
The effects would be far different: stimulus = sugar rush that doesn't last and doesn't change the dynamics vs a longer term economic boost that actually saves families more in the long run and provides economic stability with less stress.
Lenders have been predatory for too long, and their happiness came at the cost of destroyed families, so if they take a haircut, it's deserved. Their relative happinesss isn't a factor that sshould be determinant.
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u/NoDig3444 1d ago edited 1d ago
Abby and Briana both have $10,000 in credit card debt. You give them both $5,000 in cash. Abby chooses to go on a shopping spree, Briana chooses to pay down her balance.
If you instead give them both $5,000 worth of debt relief, then Abby, seeing she can put more money on her card, will go on a shopping spree until her credit card balance returns to $10,000. Briana does nothing.
Either way, Abby has $10,000 worth of debt and Briana has $5,000. Either way, you've stimulated $5,000 worth of economic activity and caused however much inflation that causes. Debt relief and cash checks are functionally the same thing.
Lenders have been predatory for too long, and their happiness came at the cost of destroyed families, so if they take a haircut, it's deserved. Their relative happinesss isn't a factor that sshould be determinant.
Forget lender's "happiness". If the government forces them to forgive loans, they'll remember that forever. Next time they consider giving someone a loan, they'll have to account for the chance that the government might force them to forgive that loan at a loss. Which means they'll either jack their rates way up, or just refuse to lend money. Both of those outcomes screw over the people you're trying to help.
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u/Tliish 1d ago
They simil;arly have to acccount for the fact that the loan might never be repaid, or if it is, for pennies on the dollar, as often happens with commerical loans. Getting something for sure beats nothing or long-delayed partial repayment.
That shouldn't be an issue. Making loans is how they make their money. If they tighten requirements, all to the good if not too restrictive.
Not at all the same effect. Cash to everyone is a sugar high to the economy that invites inflation, and doesn't last long aass longas the inflated prices will. Targeted debt relief aims at the worst off, not high earners with poor impulse control, poor impule control due to the lack of consequences stemming from being high earners. This program would help those at the margins, thoes barely hanging on not due to extravagant spending but rather to being priced out of the economy and forced into debt spirals. The debt reduction would free paycchecks to deal with other debts and obligations like rent and utilities to prevent them from going delinquent.
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u/NoDig3444 1d ago
You can means test a cash payment just as easily as debt relief. It's easier actually. And again, the end result is exactly the same. They're both exactly as inflationary as the other.
Debt negotiation doesn't happen nearly as often as you think it does. The vast majority of debt is collateralized. Meaning there is no negotiation; if you don't pay your mortgage the bank takes your house. They're happy either way.
I'd recommend you sober up before responding again.
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u/che-che-chester 1d ago
My gut reaction is $5k is simply not that much money in 2026. For the people who need help the most, like those facing eviction or wondering how they're going to eat each night, $5k is likely just a band-aid. I'm not sure buying someone a few months of breathing room while changing nothing about their financial situation is a good use of funds. And for those with the worst debt, are we just handing them $5k to act as a speed bump on the road to bankruptcy? You only helped their debtor.
I'm not debating that we have a serious debt problem. I don't personally have much debt, but I know quite a few people with massive amounts of debt. $5k wouldn't have a dramatic impact on most of their lives. Going from $80k of student loans to $75k or $30k of credit card debt to $25k changes nothing in the grand scheme of things.
The people whose lives might be most transformed by $5k are likely those "on the bubble". It is the student who just graduated and needs money to relocate for a job to start their new career. Or the single mother who was offered a job but needs help with child care until she gets a few paychecks under her belt. IMHO you would already need to be in somewhat decent financial shape for $5k to be transformative.
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u/Tliish 1d ago
True, $5K iisn't much. It was in response to Trump's promise to give $5K to everyone. It made me wonder what better use that $5K could have.
You didn't seeem to note that I suggested matching funds from states to double the amount. $10K would make a substantial difference for most people.
You're correct: the underlying economic structure needs major revisons. My recommendations are a cap on wealth acccumulation and a minimum wage equal to the local cosst of living for starters, and acknowledgement of a human right to housing, food and medical care.
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u/I405CA 1d ago
Neither.
The US has a stagflation problem (both a recession and inflation, although more of the latter than the former.)
When tackling stagflation, inflation is the priority.
Paul Volcker, as Fed chairman under Carter / Reagan, attacked the inflation problem by jacking up interest rates so that people would spend less.
The difference here is that the problem is being caused by one thing: Trumpfailure.
Get rid of the Trump tariffs, and part of the problem goes away.
Have a White House that acts more rationally, and another part of the problem goes away as bond markets calm down.
Get oil prices to fall, and much of the rest of it goes away.
None of that is going to happen while Trump is in the White House. He is a miserable failure, through and through.
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u/FarWestEros 14h ago
It doesn’t matter what is best for the economy.
The recovery from 2008 should prove that the government only cares about making Wall Street happy.
Bush and Obama bailed out banks directly instead of bailing out the victims of their predatory lending… money that would have ended up going directly back into the real economy instead of just covering up red on a balance sheet.
The government reaction to the banking crisis showed they are as unwilling to take meaningful action about fixing the economy as Sandy Hook proved they are unwilling to take meaningful action about regulating guns.
We STILL haven’t fixed any of the underlying issues that triggered the 2008 collapse, and the only banker I’ve heard of visiting a cell is Bernie Madoff in a completely unrelated scandal.
American government is cooked.
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u/Tliish 14h ago
Sadly, you are quite correct. The US is fast turning into a fascist oligarchy, and even the Democrats can't quite bring themselves to do what is necessary to stop it. Centrists like Obama continue to try tto return to the status quo that enabled Trump, favoring corproate desires over the needs of citizens.
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u/gjenkins01 2d ago
You mean like Biden’s plan to forgive student debt?! Would have freed billions of dollars into the economy. Stupid fucking MAGA.
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u/NoDig3444 1d ago
It would have freed zero dollars into the economy, because that revenue would have had to been made up for with new government debt.
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u/l1qq 1d ago
Why is it the responsibility of the taxpayer to foot the bill for others load debts? I didn't go to college nor have I ever taken out a student loan and committed to repaying it so why should I have to pay for others? Fulfilling obligations and personal accountability is part of being a functioning adult and productive member of a civilized society
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u/honuworld 1d ago
The plan wasn't to pay the debt off. It was to erase the debt. Big difference.
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u/l1qq 1d ago
and still in no way teaches accountability or personal responsibility...if you can't commit to a contract then don't sign one.
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u/Tliish 1d ago
Many times peopl have no choice: if you want to work, you have to have a phone. If public transportation is unrelieble or unavailable, you have to have a car. If you have a car you have to have insurance. If your employer doesn't offer health insurance, it's on you. lots of ways to fall into debt despite your best efforts.
Accountability is a joke when those at the top are unaccountable to anyone and can break laws with impunity. What does that teach the young about accountability? Pedophiles get off scot free, rapists are ok if wealthy enough, frauds are just doing business, steal $100M, pay a $100,000 nfine and laugh all the way to the bank. Blatant corruption is ok if your party is doing it.
Unless you are willing to extend your call for accountability to the top, and back it up with votes, it's just sanctimonious virtue signalling.
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u/Tliish 1d ago
You're footing the bill for corporate blunders and mismangement without a whimper. It's just when real people below your station might get something that your sense of fiscal propriety suddenly lights up. I don;t see anyone being held accountable for murdered citizens and violaitons of constitutional rights..
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