The Oct. 7 New York Times reported that "Consumer debt was $1.6 trillion in July, more than double the $763 billion 10 years ago, according to the Federal Reserve. This year, households are using 14.35 cents of every dollar of their disposable income to pay interest, compared with 12.35 cents in 1995."

Our newspaper of record has part of the story about America’s consumer debt. What’s missing? Fed figures don’t account for indebtedness from leases, rent-to-own contracts, pawn loans and "payday" loans, according to Robert D. Manning, author of Credit Card Nation (Basic Books, 2000).

“The Office of the Comptroller of the Currency has reported estimates of payday loans but they are simply extrapolations,” Manning said. “The rent-to-own industry has estimates on the average revenues per store (about $500,000 per year) while the pawn industry is also simply estimated. The problem is that most of the clients have been low income so there has been little interest in enumerating this segment of the financial services industry.”

Americans on the lower rungs of the income ladder are politically disposable. It follows, then, that their financial fate is of little importance to circles of power in U.S. society.

During the 1990s, credit-money strengthened consumer demand in America. This helped the nation’s economy to expand.

This growth didn’t bring equality, however. “The wealthiest 1% of households control about 38% of national wealth, while the bottom 80% control only 17%,” Lawrence Mishel, Jared Bernstein and John Schmitt wrote in The State of Working America 2000–2001.

Now, the U.S. economy is contracting, with employers shedding jobs left and right. Weakened markets for U.S. exports mean rising layoffs for American manufacturing workers. Firings are extending to the service sector, where job growth had been strong. People just aren’t shopping the way they used to. And who can blame them?

Before Sept. 11, the inability to repay debt was placing American workers in harm’s way. During January-March 2001, workers nationwide were a majority of the 367,000 bankruptcy cases, up 17.5 percent from first-quarter 2000.

What can indebted workers do during the current economic downturn? On one hand, they can spend less on housing, transportation, health care and education. Maybe this will allow them to maintain repayment of their debt. On the other hand, buying less increases the slowdown. Consumption spending accounts for two-thirds of the U.S. economy.

The fall in the purchasing power of workers has always been the undoing of the capitalist economy. Conspiracy theory? Hardly, just economic reality, buried beneath mounds of indoctrination from the education and communication systems.

Meanwhile, indebted Americans are struggling as U.S. politicians are bailing out the aerospace industry with public funds for aid and loan guarantees. And aerospace workers? They are getting fired. This decreases their take-home pay. For them, scraping money together for shopping and repaying debt can be double trouble.

Indebted Americans who fear being fired can also turn their eyes to another example of whose bread gets buttered first in tough times. The U.S. steel industry is seeking duties or quotas on steel imports. President Bush is sure to approve this protection now that the U.S. International Trade Commission has ruled in favor of American steel makers.

The president praised the virtues of free trade and open markets at the recent 2001 Asia-Pacific Economic Cooperation summit in Shanghai. Chalk up another triumph of image over reality.

If U.S. politicians can protect big business, they can craft policies that meet the needs of indebted Americans in their time of financial trouble. If not now, then when?

Seth Sandronsky is an editor with Because People Matter, Sacramento’s progressive newspaper. E-mail: ssandron@hotmail.com

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