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This post first appeared at TalkPoverty.org.
Before we even get started, we need to discuss the headline. America does NOT punish people for anything, let alone for being poor. This is absurd on its face, as if America is an entity with a singular consciousnesses, setting out to purposely trip up poor people. Instead, America is a country, with no emotions, thoughts, or sentience. It is a geographic region organized by political and cultural features. It does not think, feel, hate, or smile.
In fact, America is a unique political experiment in self-governance, created on the principles of liberty and self-determination in the context of Christian morality. If ever there was a place where people of every status and walk of life could work hard and make something of themselves, America is it.
It is totally offensive for the author to assert that America punishes the poor.
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This past weekend, I was part of a panel discussion on MSNBC’s Melissa Harris Perry with New York Times reporter Michael Corkery, whose reporting on the rise in subprime auto loans is as horrifying as it is important.
In what seems a reprisal of the predatory practices that led up to the subprime mortgage crisis, low-income individuals are being sold auto loans at twice the actual value of the car, with interest rates as high as 29 percent. They can end up with monthly payments of $500 — more than most of the borrowers spend on food in a month, and certainly more than most can realistically afford. Many dealers appear in essence to be setting up low-income borrowers to fail. (We have never understood this assertion that banks want people to fail. Why? What possible good is it for the bank to not collect peoples' installments and thus ending up repossessing the car? The bank loses money!
Also, note how innocent, and apparently stupid, people are being taken advantage of by eeevil salespeople and banks. It's as if poor people are being rounded up door-to-door by dealerships and being forced to buy cars.
This past weekend, I was part of a panel discussion on MSNBC’s Melissa Harris Perry with New York Times reporter Michael Corkery, whose reporting on the rise in subprime auto loans is as horrifying as it is important.
In what seems a reprisal of the predatory practices that led up to the subprime mortgage crisis, low-income individuals are being sold auto loans at twice the actual value of the car, with interest rates as high as 29 percent. They can end up with monthly payments of $500 — more than most of the borrowers spend on food in a month, and certainly more than most can realistically afford. Many dealers appear in essence to be setting up low-income borrowers to fail. (We have never understood this assertion that banks want people to fail. Why? What possible good is it for the bank to not collect peoples' installments and thus ending up repossessing the car? The bank loses money!
Also, note how innocent, and apparently stupid, people are being taken advantage of by eeevil salespeople and banks. It's as if poor people are being rounded up door-to-door by dealerships and being forced to buy cars.
Rather than people being responsible for their own choices, even their bad ones, in typical Leftist fashion someone else is always to blame. And because people need to be protected from themselves, in steps government to rescue them from their own consequences.)
Dealers are also making use of a new collection tool called a “starter-interrupter device” that allows them not only to track a borrower’s movements through GPS, but to shut off a car with the tap of a smartphone — which many dealers do even just one or two days after a borrower misses a payment. (So in order to protect their asset, dealers are shutting down vehicles owned by deadbeats who aren't paying their bills. What exactly is the problem?)
One Nevada woman describes the terrifying experience of having her car shut off while driving on the freeway. (The source of this anecdotal claim is here. We sincerely doubt that this really happened, for the simple fact that loan companies would not jeopardize human lives, let alone the valuable asset tthey are protecting.)
Dealers are also making use of a new collection tool called a “starter-interrupter device” that allows them not only to track a borrower’s movements through GPS, but to shut off a car with the tap of a smartphone — which many dealers do even just one or two days after a borrower misses a payment. (So in order to protect their asset, dealers are shutting down vehicles owned by deadbeats who aren't paying their bills. What exactly is the problem?)
One Nevada woman describes the terrifying experience of having her car shut off while driving on the freeway. (The source of this anecdotal claim is here. We sincerely doubt that this really happened, for the simple fact that loan companies would not jeopardize human lives, let alone the valuable asset tthey are protecting.)
And repossession of their cars is far from the end of the line for many borrowers; they can be chased for months and even years afterward to pay down the remainder of the loan. (In other words, the asset has depreciated below the amount owed on the vehicle, and the duly-executed, voluntary purchase agreement was violated by the purchaser. The purchaser is, surprise, still obligated to pay the money they owe. Again, what exactly is the problem here?)
Predatory subprime auto loans are just the latest in a long line of policies and practices that make it expensive to be poor — something I saw every day representing low-income clients as a legal aid attorney. (Actually, it is expensive to be stupid, and expensive to lust after a new car that you can't afford.)
Low-income individuals are much more likely to be hit by bank fees, such as monthly maintenance fees if their checking account falls below a required minimum balance — balances as high as $1,500 at leading banks such as Bank of America and Wells Fargo — not to mention steep overdraft fees. (Apparently poor people are unable to shop for a bank that treats them well.)
For the more than 10 million US households who lack a bank account, check cashers charge fees as high as 5 percent. This may not sound like much, but consider a low-income worker who takes home around $1,500 per month: She’d pay $75 just to cash her paychecks. Add in the cost of money orders — which she’ll need to pay her rent and other bills — and we’re talking about $1,000 per year just for financial services. (The financial ignorance on display here is astounding. And just as astounding is the implication that poor people [i.e., code for blacks and Hispanics] are incapable of managing their own affairs, so they need massa government to watch over them. This sort of soft racism is demeaning and insulting.
Check cashing organizations are providing a service for people who need them, and they deserve to be paid for their services. It is a voluntary arrangement between them and their customers, and if their customers can find a better deal, well, that's the beauty of the free market. People do not need to be rescued from their own choices!)
Whether or not they have a bank account, very few low-income families have emergency savings, (It must be surprising to the author that poor people are poor.)
and more than two-thirds report that they’d be unable to come up with $2,000 in 30 days in the event of an emergency expense such as a broken water heater or unexpected medical bill. Out of options, many turn to payday loans for needed cash. Jon Oliver, host of Last Week Tonight, (Whaaa? This guy is a comedian!)
gave this important issue perhaps the best treatment I’ve seen in some time, detailing how families who turn to predatory payday loans can end up trapped in an inescapable cycle of debt at 400 percent annual interest. (Again, people make bad decisions. They shouldn't make them. Period.)
Then there’s the rent-to-own industry. Through weekly installments, low-income families with bad credit or no credit can end up paying as much as two and a half times the actual cost of household basics like a washer and dryer set, or a laptop for their teen to do his homework. (Yes, rent-to-own is expensive. Why? Because the person who has the item may mistreat the item or break it. The item is collateral. If it is rendered valueless, then the rent-to-own store is out their money.
Predatory subprime auto loans are just the latest in a long line of policies and practices that make it expensive to be poor — something I saw every day representing low-income clients as a legal aid attorney. (Actually, it is expensive to be stupid, and expensive to lust after a new car that you can't afford.)
Low-income individuals are much more likely to be hit by bank fees, such as monthly maintenance fees if their checking account falls below a required minimum balance — balances as high as $1,500 at leading banks such as Bank of America and Wells Fargo — not to mention steep overdraft fees. (Apparently poor people are unable to shop for a bank that treats them well.)
For the more than 10 million US households who lack a bank account, check cashers charge fees as high as 5 percent. This may not sound like much, but consider a low-income worker who takes home around $1,500 per month: She’d pay $75 just to cash her paychecks. Add in the cost of money orders — which she’ll need to pay her rent and other bills — and we’re talking about $1,000 per year just for financial services. (The financial ignorance on display here is astounding. And just as astounding is the implication that poor people [i.e., code for blacks and Hispanics] are incapable of managing their own affairs, so they need massa government to watch over them. This sort of soft racism is demeaning and insulting.
Check cashing organizations are providing a service for people who need them, and they deserve to be paid for their services. It is a voluntary arrangement between them and their customers, and if their customers can find a better deal, well, that's the beauty of the free market. People do not need to be rescued from their own choices!)
Whether or not they have a bank account, very few low-income families have emergency savings, (It must be surprising to the author that poor people are poor.)
and more than two-thirds report that they’d be unable to come up with $2,000 in 30 days in the event of an emergency expense such as a broken water heater or unexpected medical bill. Out of options, many turn to payday loans for needed cash. Jon Oliver, host of Last Week Tonight, (Whaaa? This guy is a comedian!)
gave this important issue perhaps the best treatment I’ve seen in some time, detailing how families who turn to predatory payday loans can end up trapped in an inescapable cycle of debt at 400 percent annual interest. (Again, people make bad decisions. They shouldn't make them. Period.)
Then there’s the rent-to-own industry. Through weekly installments, low-income families with bad credit or no credit can end up paying as much as two and a half times the actual cost of household basics like a washer and dryer set, or a laptop for their teen to do his homework. (Yes, rent-to-own is expensive. Why? Because the person who has the item may mistreat the item or break it. The item is collateral. If it is rendered valueless, then the rent-to-own store is out their money.
Rent-to-own stores have certain substantial financial risks, which show up in the agreements they enter into. And again, these are voluntary agreements. If someone wants a TV, and this is the way they choose, then they also choose to enter the contract.)
Grocery shopping can bring added costs too. For families who can’t afford to buy in bulk, the savings Costco offers are out of reach. (*Sigh* Can you imagine? Supposedly it is unjust that people who can't afford to shop at Costco! It's unfair that they can't get bulk discounts!)
And for those without a car, living in low-income neighborhoods without a convenient supermarket, it’s either cab or bus fare to haul groceries back, or swallowing the markup at the neighborhood corner store. (Convenience is now a civil right, as is lower prices at the corner store...)
And then there’s the issue of time. Something I heard about frequently from my clients when I was in legal aid was how much extra time everything takes when you’re poor. Many told of taking three buses to work and back, and spending as many as five hours in transit to get to and from their jobs every day. Those who needed to turn to public assistance to make ends meet would describe waiting at the welfare office all day long simply to report a change in their income. (This is almost starting to sound like a parody. Apparently it is also a civil right to live close to your work and have shorter lines in welfare offices.)
Also worth noting is the criminalization of poverty and the high costs that result. In a nationwide trend documented by the National Law Center on Homelessness and Poverty, a growing number of states and cities have laws on the books that may seem neutral — prohibiting activities such as sidewalk-sitting, public urination and “aggressive panhandling” — but which really target the homeless. (The classic Anatole France quote comes to mind: “The law in its majestic equality forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”)
Arresting a homeless person for public urination when there are no public bathroom facilities is not only a poor use of law enforcement resources, it also sets in motion a vicious cycle: The arrested individual will be unable to afford bail, as well as any fees levied as punishment and non-payment of those fees may then land him back in jail. (Like we said, this is starting to read like a parody. Apparently a person ought to be able to urinate in public because it is unfair that public toilets are not available. You see, it's our fault for wanting smaller government, because the poor deserve to not pee on the sidewalk. The poor are noble beings simply because they are poor. Through no fault of their own they are in dire circumstances. Normal morality or law shouldn't apply to them. They should be able to steal. They deserve housing and cars and TVs under exactly the same terms as those who are better off.)
In an extreme example, in the state of Arkansas, missing a rent payment is a criminal offense. If a tenant is even one day late with the rent, his landlord can legally evict him — and if the tenant isn’t out in 10 days, he can wind up in jail. (As is typical, Leftists find an extreme example and make it the rallying cry for universal action because it must be a systemic problem. However, from the actual report: "Arkansas is the only US state where tenants can end up as convicted criminals because they did not pay their rent on time."
You see, the act of renting an apartment is a voluntary contract with mutual agreement to the terms. The tenant is offering a pre-agreed amount of money at specified intervals in exchange for the right to occupy someone else's property. If the tenant violates the agreement by not paying the money, or not paying it by the agreed time, the owner of the property has contractual remedies and applicable law, both of which can be invoked. That is the nature of contracts and the law.
The tenant has legal and contractual responsibilities. It is the tenant that is at fault for failing to conform to them.)
In yet another penny-wise and pound-foolish trend, states and localities are increasingly relying on enforcement of traffic violations — as well as fines and fees levied on individuals involved with the criminal justice system — as sources of revenue. (Sounds like a government problem.)
Grocery shopping can bring added costs too. For families who can’t afford to buy in bulk, the savings Costco offers are out of reach. (*Sigh* Can you imagine? Supposedly it is unjust that people who can't afford to shop at Costco! It's unfair that they can't get bulk discounts!)
And for those without a car, living in low-income neighborhoods without a convenient supermarket, it’s either cab or bus fare to haul groceries back, or swallowing the markup at the neighborhood corner store. (Convenience is now a civil right, as is lower prices at the corner store...)
And then there’s the issue of time. Something I heard about frequently from my clients when I was in legal aid was how much extra time everything takes when you’re poor. Many told of taking three buses to work and back, and spending as many as five hours in transit to get to and from their jobs every day. Those who needed to turn to public assistance to make ends meet would describe waiting at the welfare office all day long simply to report a change in their income. (This is almost starting to sound like a parody. Apparently it is also a civil right to live close to your work and have shorter lines in welfare offices.)
Also worth noting is the criminalization of poverty and the high costs that result. In a nationwide trend documented by the National Law Center on Homelessness and Poverty, a growing number of states and cities have laws on the books that may seem neutral — prohibiting activities such as sidewalk-sitting, public urination and “aggressive panhandling” — but which really target the homeless. (The classic Anatole France quote comes to mind: “The law in its majestic equality forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.”)
Arresting a homeless person for public urination when there are no public bathroom facilities is not only a poor use of law enforcement resources, it also sets in motion a vicious cycle: The arrested individual will be unable to afford bail, as well as any fees levied as punishment and non-payment of those fees may then land him back in jail. (Like we said, this is starting to read like a parody. Apparently a person ought to be able to urinate in public because it is unfair that public toilets are not available. You see, it's our fault for wanting smaller government, because the poor deserve to not pee on the sidewalk. The poor are noble beings simply because they are poor. Through no fault of their own they are in dire circumstances. Normal morality or law shouldn't apply to them. They should be able to steal. They deserve housing and cars and TVs under exactly the same terms as those who are better off.)
In an extreme example, in the state of Arkansas, missing a rent payment is a criminal offense. If a tenant is even one day late with the rent, his landlord can legally evict him — and if the tenant isn’t out in 10 days, he can wind up in jail. (As is typical, Leftists find an extreme example and make it the rallying cry for universal action because it must be a systemic problem. However, from the actual report: "Arkansas is the only US state where tenants can end up as convicted criminals because they did not pay their rent on time."
You see, the act of renting an apartment is a voluntary contract with mutual agreement to the terms. The tenant is offering a pre-agreed amount of money at specified intervals in exchange for the right to occupy someone else's property. If the tenant violates the agreement by not paying the money, or not paying it by the agreed time, the owner of the property has contractual remedies and applicable law, both of which can be invoked. That is the nature of contracts and the law.
The tenant has legal and contractual responsibilities. It is the tenant that is at fault for failing to conform to them.)
In yet another penny-wise and pound-foolish trend, states and localities are increasingly relying on enforcement of traffic violations — as well as fines and fees levied on individuals involved with the criminal justice system — as sources of revenue. (Sounds like a government problem.)
In Ferguson, Missouri, the city relied on rising municipal court fines to make up a whopping 20 percent of its $12.75 million budget in 2013. Ability to pay is often ignored when it comes to these types of fines and fees, leaving individuals stuck in a cycle of debt long after they’ve paid their debt to society. While debtor’s prison was long ago declared unconstitutional, failure to pay can be a path back to jail in many states. (Simple solution: Don't break the law.)
It’s good to see the New York Times, Melissa Harris-Perry, and others paying attention to these injustices. But that’s just the first step. If we are truly interested in building an America that is defined by opportunity, we must commit to enacting public policies that support rather than impede upward mobility.
The views expressed in this post are the author’s alone, and presented here to offer a variety of perspectives to our readers.
Rebecca Vallas is the Associate Director of the Poverty to Prosperity Program at the Center for American Progress. You can follow her on Twitter @rebeccavallas.
It’s good to see the New York Times, Melissa Harris-Perry, and others paying attention to these injustices. But that’s just the first step. If we are truly interested in building an America that is defined by opportunity, we must commit to enacting public policies that support rather than impede upward mobility.
The views expressed in this post are the author’s alone, and presented here to offer a variety of perspectives to our readers.
Rebecca Vallas is the Associate Director of the Poverty to Prosperity Program at the Center for American Progress. You can follow her on Twitter @rebeccavallas.
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