The 1 Percent Indifferent to Their Indebtedness
Most Americans, the 99 percent, feel the pressure of indebtedness. When they owe a friend a buck, their conscience bothers them until they’re square. They pay their bills, working second jobs if necessary. They meet mortgage obligations even when underwater.
That’s why there was a deficit Super Committee. Americans don’t like debt, including bills owed by their government. It weighs on them, even when it’s borrowing by Washington to create jobs and speed recovery.
But for the majority of millionaires – the 1 percent — incurring debt does not evoke anxiety. They’re numb to the feeling of responsibility that indebtedness induces in the 99 percent. They believe they owe nothing to their country or society despite all they’ve gained. They feel no duty to repay America for creating the environment that enabled them to amass all that wealth.
Thus the Super Committee failed.
The committee was searching for $1.2 trillion over 10 years. The Bush tax cuts, which disproportionately benefited the rich, cost $2.8 trillion over the past decade. But the 1 percent obstructed a return to the pre-Bush-balanced-budget-era tax rates and would sneer at the mere suggestion that they pay the much higher marginal rates the wealthy accepted after World War II to settle those government debts. In fact, Republicans on the Super Committee actually proposed additional tax cuts for the rich.
More breaks for the wealthy would require slashing social safety net programs for the 99 percent — Social Security, Medicare, Medicaid, Head Start, child nutrition. It would mean no funds to create jobs and boost the economy. The result would be less money to build highways, refurbish bridges and renovate schools.
That’s okay with the 1 percent because they feel no obligation for those social responsibilities.
Elizabeth Warren, the former Harvard Law Professor and Special Adviser for the U. S Consumer Financial Protection Bureau, tried to explain debt to the super-rich:
“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 your goods to market on the 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 that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a 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 who comes along.”
In addition to paying forward, the 1 percent also is obliged to pay back. That’s because the tax break Bush handed them contributed significantly to the national debt that the Super Committee failed to resolve.
The rich didn’t create the entire federal deficit. And the 99 percent are ready to pay their part, just like they feel compelled to meet their personal debts.
The behavior of the 99 percent during the mortgage crisis best illustrates their morality on the issue of repayment generally.
In the midst of the recession near the end of 2009, as home values relentlessly declined, more than third of all mortgage holders found themselves underwater – meaning that they owed more on their houses than they were worth.
Although financial advisers told mortgage holders who were underwater by hundreds of thousands of dollars that they should walk away from their houses in their own economic self-interest, only a tiny number, estimated at less than 5 percent, chose to deliberately default and dump the loss on the bank.
University of Arizona law professor Brent T. White, writing about this phenomena, said the high moral standard of the average American mortgage holder is key to this. In a law review article, he cited a study that found more than 80 percent of homeowners regard the act of strategically walking away from a mortgage contract as unprincipled. White contrasted the values of individual homeowners with those of the big banks:
“Unlike lenders who seek to maximize profits irrespective of concerns about morality or social responsibility, individual homeowners are encouraged to behave in accordance with social and moral norms that require individuals keep promises and honor financial obligations.”
Political, social, media and financial institutions all convey a clear message to home owners, White said, that it is a borrower’s moral responsibility to pay his debts.
That message is not, however, as clearly directed to the 1 percent. Some of them have gotten it. The 200 who signed on as Patriotic Millionaires for Fiscal Strength and who asked Congress and the Super Committee to increase their taxes understand they have a debt to America and seek to honor it.
The debt-shirking remainder, though, and the purchased politicians who support them, are as unseemly, unethical and dishonorable as deadbeat parents.