Opinion: Insurance Companies – No Good Deed Goes Unpunished (…or, “You Gotta be ****ing Kidding...”

One of the reasons that I began writing is because as an information and news junkie, I would often come across items on the newswire that seemed to garner very little coverage. What’s more, I simply cannot stand the way people tend to view news items through the prisms of their ideological beliefs. In objectively learning about what goes on around us, I find the old adage to be very true; to be forewarned is to be forearmed. Take insurance companies for example. I think most people have a love-hate relationship with them. They’re a necessary evil, but given some of their practices and policies, it’s hard to understand why their favorability rankings in the court of public opinion don’t find them sandwiched in between those of a child molester and dung beetle (personally, if it were for the law, I probably wouldn’t carry insurance on my automobile). Some insurance companies seem to go out of their way to prove how much they can rub the public (and their clients) the wrong way.
Remember the American International Group, better known as AIG? A few years ago (4 to be exact), the multibillion dollar insurance and financial services company was headline news. The reason? AIG was one of the “too-big-to-fail” financial institutions leading the near-collapse of the American (and world) financial markets due to then-commonplace excessive risk-taking with mortgage-backed securities that it had insured through credit-default swaps. On the brink of collapse due to decisions it made, AIG received a courtesy-of-taxpayers government bailout in the form of loans to the tune of some $180 billion plus dollars…at a little-more-than 14% rate of interests. AIG made news the following year when it announced that it had planned to pay executives—the same “best and brightest” that had been at the helm when the company nearly ran itself into the ground—bonuses totaling over $160 million in the wake of having received government money (as an aside note, it was later reported that Democratic Senator Christopher Dodd of Connecticut had received $160,000 from employees of AIG, who amended the bailout legislation to allow the AIG bonuses).

Well, AIG is in the news once again. If you haven’t heard, the company, having just finished paying off the government last month, is seriously considering suing the federal government over the effects of the low-interest loans on its shareholders. Yes, you read right. AIG is suing the same government which rescued it out collapse! On Wednesday of this week, the company’s board of directors will discuss and vote on whether it will join a 25$ billion shareholders’ lawsuit against the government. At point is not the fact that the bailout was not needed in order to save the company, but that lawsuit

contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation" ("Rescued by a Bailout, A.I.G. May Sue Its Savior").

And as AIG contemplates whether or not to bite the hand that fed it in order to satisfy its stockholders, millions of Americans haven't been reimbursed one cent for their contribution to the collective billions they’ve lost in home values, investments, and retirement savings linked to the same industry practices which nearly drove the country’s market economy into the toilet. When companies exhibit such audacity, it’s hard to believe that there are some Americans who can defend unregulated market and/or company practices with such a straight faced blind devotion to treat-the-consumer-anyway-we-want market economics.
But when it comes to the insurance industry, AIG does exist in a vacuum when it comes to favoring shareholders over clients and customers. As I was watching the news the other day (where my inspiration came for this piece in fact), I happened across a piece spotlighting a Staten Island, New York couple who found out the hard way how shady some insurance companies are.
Back in October, Dominic and Sheila Traina lost their home to super storm Sandy. Luckily, the Trainas had evacuated their home prior to the arrival of the storm. But a neighbor who had stayed behind told the couple that the wind from the storm had blown their roof off their 2-story home. However, their insurer of record, Allstate, has alleged that the damage to the home was due to the storm’s tidal surge. In other words, Allstate says that flooding caused the damage. Instead of reimbursing the Trainas for the full loss of their home, the insurance company offered $10,000…which the elderly couple has rejected in lieu of hiring an attorney and fighting to receive full compensation under their policy. However, Allstate has stated that it encourages “our customers to consider flood insurance to protect themselves in ways that would not be covered under a homeowner's policy.”

In a damned-if-you-do-damned-if-you-don’t twist to the story, the couple said they previously had flood insurance, provided by the U.S. government's National Flood Insurance Program, but that their payments proved to be more than the reimbursement amounts they received for previous incidents, so they cancelled that particular coverage (which is not a good idea if you live on a flood-prone plain. If one chooses to reside in area where nature tends to act a bit fickle, then it behooves there individuals to purchase the appropriate insurance coverage).

But in the Trainas case, the insurance company decided (I assume inadvertently) to add insult to injury; the company has used the couple’s damaged home in one of its television spots. In learning about what the Trainas were going through in New York with their insurance company, the logical part of myself considered the possibility that what that couple went through in the wake of the disaster was an aberration…a single instance of poor planning on the part of insurance policy holders.
But I found another policy holder in the Sandy-devastated region of the Northeast was treated with similar apparent contempt by the same insurance company, Allstate. After homeowner Jason Crea's house was totaled in Hurricane Sandy, he was paid the grand sum of $37.74 after the cost of the $1,000 deductable was factored in for his losses. In protest of the paltry sum offered to him by Allstate, he created a sign in an effort to shame the company into reconsidering its settlement.

According to the home’s owner,

When I bought the contents policy, I explained to [Allstate] that I have a lot of expensive stuff in the basement. They just smiled and took my money. The thing they didn't bother mentioning, and what was in the fine print, is that the basement isn't considered a room in the house (“Sandy Homeowner Gets $37.74 in Insurance for Destroyed Home”)

The bottom line is that the contents of Crea’s home were not covered by his policy. In all fairness, Crea should have read his policy more carefully…after all, Allstate is a business whose primary goal is a profit motive. But in taking the money after he had given the insurance agent the verbal caveat, the company appears to have misrepresented the policy holder’s policy. In fact, if you performed an internet search, using the name of your insurance company followed by the word, “sucks” (e.g., “_________sucks”), it would become apparent that there are far more dissatisfied people when it comes to insurance companies than there are people who are content, whether the policy is one covering health, property, or automobiles (although a few of the instances seemed to be more griping than not, many of those sample grievances I read appeared to have an air of legitimacy.
In all the recent public discourse about how certain politicians “hate business,” how companies “are people” (for the sake of applying the law), and about the “contribution” of “job creators” to the greater good, people on any side of these arguments tend to forget that in the end, businesses are not about creating jobs, creating customer satisfaction (at least not beyond that required to maintain a continual flow of customers), or even about promoting Free Market values. Insurance companies like AIG and Allstate are just like all businesses...they are all about maximizing profits, while minimizing losses. If your family benefits economically along the way of this regime, that’s fine and dandy. However, that is not their primary purpose…their interests are strictly self-serving and motivated by economics, not gallantry. Insurance companies may have their benefits, but they are every bit as self-serving as any other industry. Unfortunately, many of us don’t take notice of this reality until the moment we expect (insurance or any other) companies to treat us like “fellow human beings” (remember, companies are “people” under the law) when it comes our needs and/or interests.  And it's only the extremely rare company is above biting the hand that feeds them.

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Citizen Protesters, or Ideological Spin Doctors? Part 1

It’s been said that the road to hell is paved with great intentions. This caveat is true, whether we choose to ignore it with regard to the decisions we make as the heads of our households, or with consideration to the social and political policies we choose to follow. Perhaps no single recent policy decision illustrates this better than our choice to go to war in Iraq, a decision which has run up a tab of some $700 billion dollars to date, a death toll of over 3000 American soldiers, and a cost to the country’s global image and credibility which will no doubt take years to repair…all with the intention to protect the country from the perceived dangers of a “rogue nation” with “weapons of mass destruction” in a post-9/11 world. In the time since the rationale given the American people for going to war was proven incorrect, the criticism for this costly venture has been limited to political posturing, what amounted to token investigations resulting in no particular blame, and [the] hundreds of publications revealing how in hindsight pre-war intelligence was both wrong and wrongly interpreted.
In yet another policy intention—this one questionably so—a segment of the American people have (and their leadership) have opted to only now concern themselves with the amount of spending that the government engages in on our behalf.
This past Saturday, tens of thousands of mostly conservative marchers gathered, marched, and rallied in Washington DC against the policies of the Obama Administration with regard to the spending it has employed in its effort to shore up the ailing economy, as well as its proposal to revamp access to health care for the uninsured.
In and of itself, there is nothing wrong with marching and protesting as a way to illustrate to our leaders that the American people speak with one voice; its what led the way toward the signing of civil rights legislation and the country out of the quagmire of the Vietnam War. However, it seems the opponents of progressive policy have learned how to take the tool of mass street rallies often employed by progressives, and use it to project the image that they represent the desires of the American people. These so-called “Tea-Partiers” and other conservative anti-tax activists march with the goal of influencing the government to start limiting spending. Not an altogether bad goal considering the national deficit is $10 trillion and growing.
But for many reasons, these “protests” lack either the credibility or the nobility of a true expression of the collective American will (as exemplified by either the 1963 March on Washington or the anti-Vietnam war protests of the late 60s & early 70s). Consider the lack of broad spectrum ideological representation. Are we to believe that these mostly conservative activists and voters represent the will of all (or even most) Americans? Where are the ethnic Americans who believe that the government is overspending in these protests? The Democrats (or their leadership in substantive numbers)? The Liberals…the Moderates? How about those without insurance who feel that government spending is spending too much in the name of the public interest? Considering that there are somewhere between 30-40 million of them, its hard to believe these individuals represent a cross-section of the American electorate.
But during the television interviews of these protesters over the weekend, many seemed to go out of their way to assert that they represented mainstream Americans, and that they were not “fringe” Right-Wingers. Indeed, there were many protesters present representing many age and geographic differences, some with their children and even pets in tow. Strictly speaking, this is true…these are indeed mostly Middle-Class Americans, many who have no economic stake in the companies and business which benefit directly from the bailouts and spending the government has used to prop them up during this economic downturn. However, it’s a good guess that these individuals are probably and overwhelmingly not among the Americans who voted for President Obama (or any Democrat for that matter) in the first place, so it’s a little hard to believe that they are being objective about the reasons for why the government seeks to infuse large businesses with federal funds. One look at the protest signs carried to Saturday’s rally is proof positive that their motives and fears are more ideologically motivated rather than borne of a measured consideration of need.

A group of anti-tax protesters from Saturday, September 12 (take particular note of the signs, indicative of the ideological bents of their political--not populist--position)

Do I believe that government spending is out of control, of course. But what should be of concern is the selective memory of the protesters as well as their propensity to engage in a revisionist view of reality as they justify their opposition. This in turn calls their intent into question.
What's funny is that only now do Conservatives find alarm in the government’s “rampant level of spending,” when it was former President Ronald Reagan who initiated the era of big spending in the modern era of government.

The fiscal shift in the Reagan years was staggering. In January 1981, when Reagan declared the federal budget to be "out of control," the deficit had reached almost $74 billion, the federal debt $930 billion. Within two years, the deficit was $208 billion. The debt by 1988 totaled $2.6 trillion. In those eight years, the United States moved from being the world's largest international creditor to the largest debtor nation (“Reagan Policies Gave Light to red Ink,” The Washington Post, June 9, 2004). http://www.washingtonpost.com/ac2/wp-dyn/A26402-2004Jun8?language=printer

For conservative leaders who support deficit spending, it didn’t seem to be a real issue as long their political party was the one in power and engaged in tax cuts with no commensurate cuts in federal spending spent. Indeed, former Vice-President Dick Cheney validated this as much when in 2002 he was alleged to have said that "Reagan proved deficits don't matter" in regards to former President George Bush’s economic stimulus policies.

To Be Concluded...

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Politics & The Art of Bullsh...

As I was watching the various Sunday morning talk shows, I was struck with an unexpected feeling for the appreciation of the humor I often find in politics. Indeed, if not for the way politics impedes the passing of practical legislation based on the needs of the people rather than ideology-peddling and power-politics one-upsmanship, I would find the “process” to be downright hysterical. Take for example the aforementioned Sunday morning talk shows.
As I was watching CBS’ Face The Nation, it was kind of difficult to keep a straight face as the White House’s National Economic Director Lawrence Summers struggled with host Bob Schieffer’s query as to how insurance giant—and the recipient of taxpayer-funded bailout money—American International Group (AIG) could justify its intent to distribute $165 million of the money in bonuses to its employees, both past and present. The individual bonus amounts varied, with payouts ranging from $1,000 to a single $6 million “bonus.” And as if that were not insulting enough to the American taxpayer, 11 of the bonuses recipients are no longer employees of the industry pariah.
The overall bailout of individual financial institutions was part of both former President Bush’s and current President Obama’s plan to deal with the meltdown in the lending and financial industries. But as this latest outrage of financial company excesses came to light, it was obvious that the Obama Administration has been forced to put a spin of justification on AIG’s actions. According to Summers,

"If we simply throw up our hands, refuse to deal with any of this, we'll have the kind of financial catastrophe that we saw after what happened at Lehman Brothers,…[Treasury] Secretary Geithner has negotiated very forcefully with AIG. He has done everything that is legally permissible for the government to do to limit the payment of bonuses. But where there are contracts, binding contracts that were entered into long before the government put any money in to AIG -- we're not a country where contracts just get abrogated willy-nilly."

http://www.joost.com/097top0/t/Face-The-Nation-3-15-09

Predictably, Summers defended the “right” of bailout fund beneficiaries to use the money pay contractual obligations by citing that such a practice was a way for American companies to retain the “best, brightest, and most talented” employees. Yeah…I too thought that was quite the humorous (if not ironic) defense of such an unethical move considering that these “best and brightest” made incompetent decisions which, in addition to driving AIG to near-liquidation, resulted in the company’s recent posting of the largest quarterly loss ever recorded by a company.
What Summers obviously didn’t want to admit is that there were two distinct possibilities underlying the decision were at work here. First, the ball was dropped when it came to crafting regulations regarding the use of the bailout money given to recipients. One has to ask where was the foresight to attach stipulations to the bailout money that would have prohibited any recipient from doing what AIG had decided to do (these bonuses were paid out this past Friday, by the way). Such requirements wouldn’t be all that unusual in the grand scheme; bankruptcy judges modify and even abrogate altogether contracts in the name of repaying creditors. And all of the major automobile makers are currently in negotiations with the United Auto Union, attempting to re-negotiate the terms of their contract in order to save both American jobs and the companies staffed by union members. But in a logical defense—and setting aside the cynical observation that in politics, nothing happens without reason or purpose—it was hard to imagine that any American company would have the brass pair to even considered doing what AIG has done. And this leads to the second possibility that given the signs that AIG and other financial institutions were in trouble due to their greed in trying to capitalize on the open-season atmosphere of the housing bubble, was the possibility that AIG would use taxpayer money to pay out undeserving bonuses known by those who made the decision to prop up the insurance giant? I didn’t envy Summers’ job of administration spin doctor for one second; how could I when I was having so much fun watching him sweat out a defense for the legality of AIG’s actions in front of millions of people?
Going from the ridiculous to the sublime, I decided to flip over to NBC’s Meet The Press, preparing myself this time for some serious political discourse. Imagine my surprise when the theme of trying to make the ridiculous sound sane continued on the network famous for its peacock. In one of those great universal ironies, CBS’ network competitor had a representative of the opposing party on the hot seat. This time, it was Minority Whip and Republican Eric Cantor (R-VA).
Cantor and many Republicans have complained about the cost and the level of spending anticipated by the recently passed and implemented financial stimulus package championed by the Obama Administration. Particularly, they’re concerned with how much such spending will add to the growing federal budget deficit. Many point out the many earmarks stuffed into the stimulus plan inserted by lawmakers from both parties in order to fund pet projects in their local districts as examples of “out of control” deficit spending. Granted that pork spending has always been a concern (and should be outlawed), what I found amusing was the timing of this sudden “concern” about fiscal conservatism.
As host David Gregory rightfully pointed out, Republicans who voted along party lines for former President Bush’s military spending during the early period of the nation’s military action in Afghanistan and later in Iraq had no such qualms about ballooning the deficit then. Consider this exchange between Gregory and Cantor:


MR. GREGORY: Where was all the concern about fiscal conservatism and reining in spending from you and your Republican colleagues during the Bush years?
REP. CANTOR: Well, well, listen, David, if you're asking could we have done better, absolutely. If you're asking us did we blow it in terms of restoring fiscal sanity into this system, absolutely. But that doesn't give now the Democrats in power in this town to go in and repeat the mistakes that perhaps we may have committed in the past. You know, you look at this budget, how can it be that they claim that they're balancing the budget when they are doubling the debt, when they are increasing the deficit to record levels of a trillion, seven hundred billion dollars this year? How is it that, that that is a fiscally sane plan? We've got to remember...
MR. GREGORY: Did you oppose President Bush's budgets that increased the deficit or the debt?
REP. CANTOR: Well, David, we were in a time where I think the priority then was to make sure that we could deliver the money for our troops. And I joined along with Democrats on, on the other side of the aisle as well as my colleagues on mine to say the most important thing we needed to do at the time was to support the efforts of our military to insure our national security.
MR. GREGORY: So it was OK to, to support deficit spending at wartime, but it's not OK now during an economic crisis, when Warren Buffett calls that the equivalent of Pearl Harbor?

Visit msnbc.com for Breaking News, World News, and News about the Economy

Such policy flip-flopping occurs all the time in realm of politics, and such talk shows provide the forums by which astute and politically savvy individuals such as Summers and Cantor attempt to paint themselves and their political persuasion as the guys in the white coats, while maligning their ideological opposites' stances. And sadly, political independents, aligning themselves with neither ideological pole, stand idle and accept such transparent politicking as the way of things. If not for realizing the earnest consequences resulting from this verbal three-card Monte, I would have broken out in full laughter watching.
The problem I have with this weekly airing—nightly if you’re addicted to such shows on CNN or the Fox News Channel—of such ideological smoke and mirrors tends to, without fail, obscure the facts behind the issue(s) at hand. And in a nation of time constraints, where individuals are forced to rely on political bullets and soundbites for their information on important issues, that makes for a dangerous combination. Moreover, the large numbers of politically apathetic and individuals too lazy to research an issue affecting their lives from all angles is what drives these political monsters. Knowing this is how the dynamics of political disinformation works, politicians have a moral responsibility to put aside such politicking and inform the public along the lines of facts, not ideologically-driven rhetoric; if they were true statements rather than opportunistic, power-driven ideologues, they would make the effort.
Citizens too are complicit as cogs in the political bullsh** machine. People must take it upon themselves to both make themselves informed electors, and to insulate themselves from such issue-obfuscation (In fact, a strong argument can be made that part of the reason that so many printed newspapers are folding is because people don't take the time to buy a daily paper and inform themselves of issues which affect their lives).
People love to complain about their government and the officials we elect to represent us. But too often, they wilfully allow the selfish ambitions and ideological agendas of those same representatives to be the sole motivations for the legislation they impliment in our names.
Whether they succeed or not in this endeavor, we cannot continue to complain about self-serving polticians and policies until we start making better choices in who we elect, whether we choose or not to hold these individuals to a standard of accountability, and how much we choose to inform ourselves to the facts of the issues.

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The Good, The Bad, & The Ugly

With all the hubbub about potential financial meltdowns, skyrocketing unemployment numbers, and questionable wars taking up space front and center in the daily headlines, many of the news stories pushed into our peripheral vision are those which speak about who we are as a society…about where our individual and collective priorities lay. The following points represent what I call, The Good, The Bad, and the Ugly of our modern times.


The Good - For those of you who regularly watch any of the daily network news programs, or who pay a visit to Beyond The Spectrum’s sister page on You Tube, you have undoubtedly noticed what a black eye Wall Street and other financial institutions have given themselves of late. With hat-in-hand, many of these institutions came begging to the federal government for an infusion of taxpayer money meant to provide stabilize as a result of their bad business investments, chief among them loaning money to risky borrowers en masse. At the same time, the CEO’s and other high ranking employees of these financially teetering institutions were giving themselves multi-million dollar bonuses and other perks of excess.
However, flying under the radar of cloud of bad news was the very good deed of New York City Mayor Michael Bloomberg. A self-made millionaire, Bloomberg, according to the most recent release of The Chronicle of Philanthropy, the donated some $235 million dollars of his own money to over 1,200 different charities in 2008, making him the most single charitable donor in the United States. So we tip our hats off to His Honor. It’s nice to see that there is still some humanity left among America’s financially blessed.

http://www.nytimes.com/2009/01/27/nyregion/27bloomberg.html?_r=1&sq=philanthropy&st=cse&scp=2&pagewanted=print

The Bad – Actually, two stories tied notoriety for this category, both coming from Michigan. The first is the death of a 93-year-old man; not an unusual expectation given his advanced age. However, it is the manner of death that is most telling about what our priorities as a society. Mr. Marvin Schur (I prefers to use his full name and title, at least to preserve some dignity in the face of his ignominious passing), according the Oakland County Medical Examiner, froze to death in his Bay City, Michigan home a few days after having his home’s electrical consumption limited by the local power utility for $1,000 in unpaid bills, not totally unexpected (again) due to his advanced age and limited income.
According to the neighbor who found Schur’s body, “his furnace was not running, the insides of his windows ere full of ice the morning we found him.” I guess America consumes not just it’s young.

http://news.yahoo.com/s/ap/20090126/ap_on_re_us/frozen_indoors

The second piece of bad news from the state which currently has the highest unemployment rate (and as if it could tolerate more bad news) was the idiotic ruling by the state’s Court of Appeals. In a case brought by Lansing School District middle school teachers, the court ruled that disciplinary actions taken against students are [exclusively] within the school local school board. The case is based on the actions of the local board who failed to expel students for assaulting teachers by throwing chairs at them; they were simply suspended and allowed to return some time afterwards. For those who criticize the effectiveness of our public schools for preparing our children academically to compete in a globally-integrated and competitive economy, consider the conditions they are forced to work under.

http://www.freep.com/apps/pbcs.dll/article?AID=200990128052

The Ugly-Finally, the soap opera that has become Illinois politics is finally over. Late yesterday, the Illinois House voted to impeach now ex-Governor Rod Blagojevich. Days before yesterday’s action, the disgraced Blagojevich had gone on a Hail Mary PR blitz in an effort to save his job. Accused of attempting to sell now President Barack Obama’s former Senate seat, he had hired a Tampa-based PR firm—the same one contracted by social pariah and suspected wife murderer, former police sergeant Drew Peterson—to create a campaign designed to win over American sympathy in the face of then-mounting calls for him to step down. Perhaps what made his ill-conceived media blitz to alter his public image ugly was his protestation that his “persecution” put him in the same company as “Nelson Mandela, Martin Luther King, and Ghandi.” Furthermore, there was the “revelation” that he was going to offer the seat to talk show queen Oprah Winfrey, which even Stevie Wonder could see she was never going to accept, but opted to select another high-profile African-American, Roland Burris to replace Obama). But upon looking at the debacle objectively, unseen was the apparent pattern of invoking high profiles African-American names in his attempt to gain public favor. I submit the reason for this was due to African-Americans’ sense of undying loyalty to the Democratic Party as well as their sense of forgiving and [re-] embracing unsavory types.
After his acquittal in the mid 1990’s former football great O.J Simpson was cheered and embraced by the black community; he even traveled around the country, speaking at predominantly black churches. Michael Jackson was given the same treatment after his acquittal of molestation charges, and, in like fashion, was well-received at black churches. In a more related example, ex-Washington D.C. mayor Marion Barry was re-elected and re-embraced by the people of the overwhelmingly black and Democratic nation’s capital, despite having been convicted of federal charges related to his often-seen video tape of his smoking crack in a hotel room with an undercover informant. Clearly, Blagojevich has not only been watched over the past couple months, but he has been watching as well.

http://abcnews.go.com/US/story?id=6723687&page=1

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Since We’re Bailing Out…

I suppose it’s somewhat symbolic that I have started writing this particular piece at 4 minutes to midnight on December 31. So as we leave what’s left of 2008, its hard not to reflect back on what has been a tumultuous year—something of a criminal understatement—in the financial world, culminating in scandals and bailouts.
In the coming year, not only can we anticipate more financial upheavals, but also attempts by state and local governments to stem this all-but-fated turmoil. But with all the talk bailouts, transfers of public funds intended to prop-up various failing institutions, and (possibly) embattled homeowners facing an avalanche of foreclosures, it seems that we are overlooking another possible candidate for a bailout: overburdened college graduates saddled with student loan debt.
Now before any of you Shelby Steele clones or Ayn Rand wannabes decide to slap me with the oh-so predictable label of “Socialist,” I am not talking about a wholesale bailout of everyone who’s ever taken out a student loan and failed to pay back this legal and moral obligation up to this point in time. What I’m suggesting is providing some relief to those who are being victimized by this current and unprecedented era of rapid changes in the marketplace that would have anyone hard-pressed to keep up as they struggle to survive.
Admittedly on the surface, this sounds like a ridiculous idea. But given the changing economic tides (and fortunes) of the nation, individuals—and families by extension—already fiscally fatigued from fighting the combined assault by the rising costs of consumer prices, loss of employment (due to off-shoring of labor/rapidly changing market trends), taxes, credit availability, and mortgage difficulties, are desperate for relief from just trying to stay in the shadow of the American Dream.
I’m not talking about helping to bail out irresponsible homeowners with risky credit ratings who shouldn't’t have been allowed anywhere near a mortgage application to begin with. What I’m suggesting is a morally sound level of financial assistance in the form of hardship-based debt forgiveness for those of us whom—it turns out—were sold a bill of goods insofar as the value of a college degree as it relates socioeconomic advancement. This is particularly true for those of us reared on the lower rungs of the socioeconomic ladder who find ourselves waiting tables, sweeping floors, substitute teaching, or similarly and/or chronically underemployed instead of benefiting from an education meant to move us past our humble beginnings.
What I’m talking about specifically is a case-by-case analysis of each student in debt. Any debt relief should be contingent upon the total amount owed, the average annual income of the student since graduating college in relation to expected earning potential (all things being equal, only those who've actually graduated would be eligible, and even then, dependent on the aforementioned requirements), and an assessment of any and all honest attempts to make regular payments.
One form of a bailout for student loans recipients could be a graduated schedule, similar to the type used in one of the various repayment plans already in use. The level of forgiveness could be based on anticipated overall employment trends in relation to the likelihood that the debtor could conceivably find employment on a level which would enable both repayment the loans as well as afford modest level of living. In extreme cases, such as a history of chronic unemployment/underemployment, cutting the unpaid balance would go a long way toward helping those already struggling to make ends meet.
Exempt from this plan would be those individuals who have been fortunate enough to parlay their college experiences and degrees into career success. Also exempt would be those in with specific degrees that lead to immediate professional and semi-professional careers, such as teachers, social workers, nurses, and the like.
Agreed bailouts are a slippery slope. But if we're going to talk about bailing out individuals with risky credit ratings being given loans on houses they couldn't afford in the first place, and lenders, many of who employ executives with salaries which afford them over-the-top lifestyles and—unwarranted in many instances—golden parachute severance packages routinely running in the multi millions of dollars from these same bad loans, then why not help those of us who were only trying to make an honest go of things?
The mostly ideologically-based arguments against bailing out institutions such as the automobile manufacturers and lenders (with financial implications for the nation as a whole) and of individuals (such as those struggling with failed mortgage and student loan recipients) are somewhat predictable. One such argument is that students irresponsibly borrow money for college knowing that these loans are backed by government guarantees and the assumption that it (the government) will never run out of money. This unlimited availability of funds is what is believed to contribute to rising college costs, and a resulting lack of cost controls.
This argument assumes that people are predictable, which like the marketplace, they are not. Every bit player throughout every institution along the chain of economic production is hard to predict. That includes bankers who may risk making bad loans to risky debtors, company executives making bad business decisions, and the lowly worker trying to obtain a semblance of some part of the American Dream. Somewhere along this chain, people decide they want to move up both socially and economically and enroll in college with the hopes of doing so. Most sensible people, knowing full well that they must work to earn a living, know that they have to work in the repayment of student debt with their aspirations of living better. But again, people are not predictable…from the fickle job interviewer to those making the decision to move their companies offshore to lessen their labor costs.
In recent years, this unpredictability in both people and shifting economic market/employment trends has reached critical mass, culminating in what a recent piece by CNN.com revealed as a “record number of unemployed college graduates seeking work” (See “Have Degree-And Pink Slip.” http://money.cnn.com/2008/12/05/news/economy/degreed_workers/index.htm?postversion=2008120514)
Harder to understand is why such a suggestion for debt relief, considering that it would benefit the Middle Class (the group whom politicians love to pander to) the most has not even been given the benefit of a trial balloon to test its receptiveness by the American public? Probably because, like the notion of universal health care, it would receive almost overwhelming support from all but the most ideologically intransigent of die hard Free-Marketeers. Harder still is why even staunch conservatives wouldn’t be receptive to this idea, since most are always quick to articulate how fair it is to “put money back into the pockets of hard-working Americans?
If you look at it logically, student loan debt relief for those whose academic success has failed to translate into socioeconomic upward mobility would benefit the nation as a whole. We wouldn’t have to lower taxes, and have services suffer as a result. And struggling student debtors not forced to cough up anywhere up to several hundred dollars a month in a likewise struggling economy would be freed to spend scarce dollars on more items of necessity, which would halt the anticipated bloodbath of retailers expected to close in 2009 due to record-setting abysmal sales of this past holiday season. Lastly, such a gesture would go a long ways toward eliminating the cynicism that the average American harbors toward the government’s seeming favor to help out Big Business and the well-heeled at the expense of the average hard-working Little Man.
As I look up at the clock, it’s now 1:01 am…America, do you know where you priorities are? Here’s to the possibility of a progressive 2009.

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