Nel's New Day

June 14, 2014

‘A Fighting Chance’: Elizabeth Warren’s Thoughts on the Rigged System

fighting chanceMen complain how women take everything personally. Elizabeth Warren makes that a good thing. For the past four decades, she has taken the problems of the poor and the middle class of this country very personally. She’s fought against unfair bankruptcy, concealed bank practices, and now excessive interest for student loans.

Warren’s newest book, A Fighting Chance, is far more than her personal story about her family and political campaigns. Throughout her book about how the middle class is trapped in a vise of debt, she shows that she is a person determined to help desperate people in this nation.

Warren grew up when employers could refuse to hire her because she was pregnant—or just because she is a woman. She married and had children early, and her husband—as most men in society at that time—thought it was her responsibility to be sole caretaker of both him and the children. Yet she managed to earn a law degree from Rutgers. Part of her success in education, according to her book, is that education was much cheaper then. She attended a state commuter college and paid $50 a semester for tuition. Now a state college can cost $15,000 a year for instate students.

 

Her original title of the book, Rigged, shows that U.S. politics gives control to plutocrats and bankers at the expense of most of the people in the nation. She writes about this issue in clear, simple language instead of the vague, ambiguous, wordy “fed speak” that most people high in the economic leadership use. Past Federal Reserve chair Alan Greenspan said about his use of fed speak: “You soon learn to mumble with great incoherence.”

One joy of A Fighting Chance is the lack of mumbling. With clarity and common sense, Warren delivers her message of giving everyone in the country a fair chance. Early in her teaching career, she taught a class on bankruptcy at a time when textbooks didn’t cover the new 1978 Bankruptcy Reform Act. In doing her own research on the law, she learned that almost 90 percent of people declared bankruptcy because of a job loss, a medical problem, or a family breakup, not because of bad choices.

Passion about the subject of bankruptcy led Warren to write a book about it and talk to groups about the law. That led her to become an advisor to lawmakers, giving her the opportunity to advocate for vital updates that allowed desperate people to get relief from their debt. Through this advocacy, she met such greats as former Sen. Edward Kennedy (D-MA), whose seat Warren now occupies in the U.S. Senate.

As Maura Casey said in her review:

“She’s mad as hell, and many readers will be, too, by the time they finish this book. Warren explains how the financial crisis was preceded by congressional and court decisions that shredded public protections for high interest rates and predatory banking practices during the 1980s and ‘90s. ‘Gradually [the bankers’] strategy emerged,’ she writes. ‘Target families who were already in a little trouble, lend them more money, get them entangled in high fees and astronomical interest rates, then block the doors to the bankruptcy exit if they really get in other their heads.’”

Her next project was to give the financial world transparency for everyone. Warren knew that as long as financial industries kept consumers and voters ignorant, that banks and credit cards could charge whatever fees and interest rates that they wished. The same ignorance on the part of consumers led to eight times as many bankruptcies in 2010 over 1980 and caused these same people to lose their homes at a enormous rate. Thanks to her support from such luminaries as Rep. Barney Frank (D-MA) and a Democratic president, a new agency, the Consumer Financial Protection Bureau, created a simpler way of looking at financial contracts. Credit card agreements are now one page, and mortgages use understandable language.

elizabeth_warren_graduates-620x412Republicans made a major mistake when they refused to make Warren the head of this agency. Because of this loss, she ran for Senate against a popular incumbent—and won. Her current crusade is to put student loans on the same footing as bank loans.

Banks pay less than 1 percent in interest, giving them a subsidy of $83 billion a year that they stash away instead of helping people with the funds. Students pay nonnegotiable rates of over 8 percent, in a time when mortgages are under 4 percent.

The bill allows students to take out government loans at 3.86 percent interest and let existing borrowers to refinance their current loans down to that lower rate. It also proposes that the $5.1 billion loss each year through refinancing would be off-set by $7.1 in new revenues from a surcharge tax on millionaires to ensure that they pay at least 30 percent of their income in taxes.

Warren said:

“We put the plan to pay for it right on the table. No gimmicks or smoke-and-mirrors. We said that when the government reduces its profits on student loans, the money should be made up by stitching up tax loopholes so that millionaires and billionaires pay at least as much in taxes as middle class families.”

As Warren told the Boston Globe:

“It’s a basic question on our values. Does this country protect millionaires’ and billionaires’ tax loopholes? Or does it try to help young people who are just starting their economic lives?”

This past week, GOP senators filibustered her bill on student loans and temporarily killed it. She obtained 56 votes to overcome the filibuster: that’s six votes over a majority of the Senate but not enough for the filibuster policy that mandates 60 votes. There were actually 57 votes to close the filibuster, but Majority Leader Harry Reid changed his vote to no so that he could bring up the bill again. Thirty-eight GOP senators voted to protect the 22,000 millionaires/billionaires.

Warren never quits. She’ll be back with the bill again. And she’s got help. A few hours after the bill was blocked, Chuck Schumer, the third-ranking Democrat in the Senate, told Jon Stewart on The Daily Show:

“You can refinance your home, you can refinance your car, but the federal government doesn’t allow you to refinance your college loan if you’re paying too much. Why shouldn’t we do that? We’re gonna keep going at it. We’re going to bring this bill up over and over.”

Businesses and local governments can also refinance loans for a lower interest rate.

High interest on the $1.2 trillion that over 40 million people owe in student loans hurts the country’s economy. Most of them cannot buy cars and homes, causing fewer jobs to make and sell these. Dropping the interest rate would put billions into the economy and billions into the government coffers through tax revenue.

The GOP couldn’t even come up with a rationale justification for voting against the bill. Minority Leader Mitch McConnell (R-KY)  said, “The Senate Democrats’ bill isn’t really about students at all. It’s really all about Senate Democrats. They want an issue to campaign on to save their own hides this November.” At the same time, the Senate Finance Committee has approved a measure to cut taxes for the wealthy that cost $8 billion a year with no offset.

Warren has an answer for McConnell. She’s headed to Kentucky to campaign and fundraise for his opponent, Alison Lundergan Grimes.

Although much of the book is about policy and law, it is a very personal book as Warren writes about how she developed her value system. She grew up poor and always has an eye on the dollar. It is that background that makes her valuable in her fight for the people struggling against a rigged system. She has lived their lives. And she understands how all these lives, rich and poor, are interconnected.

“There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: You moved the goods to market on roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory…. Now look, you built the factory and it turned into something terrific, or great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid that comes along.”

Warren’s  weapon throughout her achievements is her call for transparent systems. As she says, “When you have no real power, go public—really public. The public is where the real power is.” After the GOP blocked her bill, she said:

“I think it is time to come back louder than ever. I think it is time to show up at campaign events and town halls and ask every single Republican who voted against this bill why protecting billionaires is more important than giving our kids a chance to pay off their loans. I think we need to ask, and ask again, and ask again.”

That’s what Warren is doing in Kentucky, and it’s great advice. It might give the people of the United States a fighting chance.

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1 Comment »

  1. More power to Warren!

    Like

    Comment by Lee Lynch — June 14, 2014 @ 9:36 PM | Reply


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