• U.S. States Revive Debtors’ Prisons

    July 31, 2014 // 13 Comments »

    A sordid feature of 19th century Victorian life was the debtor’s prison.

    People who could not pay their financial debt simply went to prison, punishment for not being wealthy. The point was often muddied, as from inside jail a person could most certainly not earn any money to pay off the debt, though one supposes the rich chortled knowing those who stiffed them suffered for the act. It was kind of a thing to do back then. The prisons, chronicled most famously by Charles Dickens among other Victorian crimes against a just society, were a step from Roman and Greek days when debtors could become the actual bonded slaves of the people to whom they owed money.

    Debtor’s prisons were from Colonial days through the early 1800s a feature of American life, until enlightened societal views (yeah, slavery took a bit longer to sort out) and new bankruptcy laws pushed them from the scene. State-by-state the practice of locking people up to punish them for owing money generally faded; Kentucky did away with it in 1821, still-business friendly Virginia dragged its feet until 1849. Between 1970 and 1982, in a series of cases, the Supremes did away with the practice once and for all as a violation of the 14th Amendment’s equal protection clause. Until now of course.

    Until Now of Course

    More and more states have revived the debtors prison, albeit in a specific form, locking people up for failure to pay court costs and fees. Like so many other things in America, shortfalls in budgets are made up not by raising taxes (or heaven forbid, fiscal prudence) but by new arrays of costs and fees paid by people in the criminal justice system. We are not referring to fine or penalty (ex. speeding ticket=$250) here, but to that thing the judges say on TV– “Guilty, with a fine of $300 and court costs. Next case please.”

    The new costs can be dizzying. The Brennan Center at New York University reports:

    Some jurisdictions have haphazardly created an interlocking system of fees that can combine to create insurmountable debt burdens. Florida has added more than 20 new fees since 1996. In 2009, the Council of State Governments Justice Center found that a “sprawling number of state and local fees and court costs that state law prescribes as a result of a criminal conviction amounts to a nearly incomprehensible package. In 2009, North Carolina instituted late fees for failure to pay a fine, and added a surcharge for being placed on a payment plan. Jurisdictions in at least nine states charge people extra fees for entering into payment plans, which are purportedly designed to make payments easier.


    The Problem(s)

    Leaving aside the not insignificant question of the morality of imprisoning people for debt (an issue that was supposedly resolved years ago), we note that no country incarcerates a higher percentage of its population than the United States. At 716 per 100,000 people, according to the International Centre for Prison Studies, the U.S. tops every other nation in the world (insert “American Exceptionalism” comment). The United States has about five percent of the world’s population, but 25 percent of the world’s prisoners. Prisons are already overcrowded in most places, so on the face, creating new reasons to put people in jail seems a bad idea.

    Of course the idea of debtor’s prison also impacts more exactly the people who need more impacting less, the poor. People with money pay the fees and go home. People without money go to jail. In hard-hit Huron County, Ohio in 2012, twenty percent of all arrests were for failure to pay fines. By coincidence, Huron County has a poverty rate above twenty-six percent.

    But Shouldn’t People Pay Their Debts?

    The governments’ case is as predicted. “When, and only when, an individual is convicted of a crime, there are required fees and court costs,” said Pamela Dembe, of the First Judicial District of Pennsylvania. “If the defendant doesn’t pay, law-abiding taxpayers must pay these costs.”

    She’s right of course. When people don’t pay their fees and court costs, it is indeed the taxpayer who ends up paying. But not in the way you might think. Locking up debtors costs money. The U.S. as a whole spends some $39 billion a year on locking people up. There are also incalculable collateral costs, such as families left without a parent. But really, it is about money. The costs to states of locking people up are significant– it costs an average of about $47,000 per year to incarcerate someone in California.

    Now sure, Charlie Manson in Super Max and Poor Old Joe in the county lockup do not cost the same, but then again, logic isn’t always the winner: The Brennan Center reports that there are inmates in Pennsylvania who are eligible for release but are kept in prison based on their inability to pay a $60 fee. The daily cost of confinement is nearly $100 per day. In 2009, Mecklenburg County, North Carolina jailed 246 debtors who did not pay for an average of four days. The county collected $33,476 while the jail terms cost $40,000 — a loss for the county.

    Stop Making Sense

    So we are left with the question of why. Debtors’ prisons in the U.S. were declared unconstitutional, but states have re-implemented them anyway. A person locked up can’t earn money to pay the debt. And most significantly, it ends up costing many jurisdictions more money to punish someone for not paying than they would have “spent” just forgetting the debt. So why do states do this? To be fair, many states do not, and some that do often try and work out some sort of payment plan first. OK, good enough.

    Now this may all be for the best. On the streets, nobody is overly concerned about providing food, medical care and shelter to poor people; outside they’re lazy, don’t want to work, nip at the public tit and all. Why, it would be socialism to help them after all. However, inside the prison system they all get food, medical and dental care, all tucked in a warm bed. Our society is apparently more ready to care for a criminal than for a citizen down on his luck.

    The reality in America is that far too many people go to jail as punishment for not paying the fees and court costs incurred finding them already guilty of something else. One is left with a tough conclusion: we are more and more a crude, course society on path towards some sort of feudalism, where the rich (if ever brought to court at all) pay their money and walk out, while poor people are punished for no valid reason. We as a society want to set examples, clear the streets of our lowers, punish those who aren’t able to pay the government for giving them their day in court. That’s who we are now. And you better pay your bills.



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    Poverty is Profitable: 1 out of 3 U.S. Consumers in Debt Collection

    July 30, 2014 // 4 Comments »



    A new report by the Urban Institute and Encore Capital Group’s Consumer Credit Research Institute shows 77 million Americans– 35 percent of those with files at a major credit bureau– have a debt in collection.


    Nevada has the worst record, with 47 percent of consumers with a credit file showing a debt in collections. In twelve other states, including Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, New Mexico, North Carolina, South Carolina, Texas, West Virginia as well as the District of Columbia, more than 40 percent of residents with a credit file have a bill in collections. In some smaller areas, the in-collection number is as high as 61 percent.

    The report also shows that 1 out of 20 Americans hold debt that is “past due,” i.e., more than one month delinquent, though not yet in the collection process. Collection usually kicks in after 180 days past due.

    Meanwhile, about 22 million Americans make so little money that they do not have credit files.


    Poverty is Profitable

    But as you can expect, there is always someone profiting from poverty.

    For example, in another area of debt, writing checks that exceed the amount in an account (bouncing a check), often in hopes of creating faux credit planning on money to flow in before the check is actually cashed, American banks collect $30 billion a year in overdraft fees.

    Collection companies can be seen as a great investment. The companies buy debt cheap and collect high. For example, Bank A itself has no interest in chasing a person for, as an example, a $1000 overdue payment. That’s not the bank’s core business, banking is. So they sell it to a collections company for say 10 percent, or $100. If the company can get back from the consumer anything more than the $100, that’s profit. It can be a lot of profit– one hyper-successful company boasts of a 239% return. A more typical return on investment for a collections company is 20 percent, a nice profit in itself.

    In 2010 agencies collected about $40 billion from consumers. Business seems good: there are 4,100 debt collection agencies in the United States, employing nearly 450,000 people, and the industry expects to grow by 23 percent over the next three years. The Association of Credit and Collection Professionals, the industry’s largest trade association, spent more than $660,000 on Congressional lobbying over three years.

    So Stop Spending. You Don’t Need that Big Screen

    The average American holds $15,000 in debt, about half of that on credit cards (though others put the credit card number at about $4000.) But more significantly, the national averages for mortgage debt are $154,365 and for student loans, $33,607.

    A common statement at this point regarding those credit cards is “So stop buying things you can’t afford, especially with high interest rates. Duh.” While there are no doubt people who misuse their credit to buy frivolous things, credit cards are to many in the middle class what pay day loans and pawn shops are to the poor: easy to access money for daily needs when there are no alternatives.

    However, according to an analysis of spending from First Data, a major payment processing company, Americans increasingly used credit to purchase food and other everyday necessities. “During the month studied we saw consumers reducing the growth of their discretionary spending at retail merchants and increasingly resorting to credit for necessities,” said a statement. Spending in clothing stores, restaurants and bars declined, while credit spending at general merchandise stores, including value retailers and discount stores, increased.


    BONUS: Some 46 million Americans receive benefits from the Supplemental Nutritional Assistance Program, what food stamps are now called. Hmmm… More than 1 out of 3 Americans are indebted, and about 1 out of 6 are dependant on the government to eat. Why, you’d almost think that was a strategy of control or something. But, naw, couldn’t be.



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    BREAKING: BoA Mortgage Broker Seeks Asylum at my House

    May 3, 2012 // 5 Comments »


    BREAKING NEWS – My Bank of America mortgage broker, who is blind and thus in charge of assessing properties for the Bank, sought asylum in my home. He told me he fears persecution, imprisonment and even physical beating if I return him to the Bank.

    The Bank of America, meanwhile, who holds my mortgage, told me to turn him over, so I had to. I’ll spend the rest of the news cycle trying to make this seem better than it actually is. Being in debt sure cuts back on your options.


    P.S. The man on the far left of the photo is State Department Legal Adviser Harold Koh. Dude, the 1970’s called and wants its hair style back. The other guy holding Chen’s hand is US Ambassador Gary Locke. No one knows why Koh and Locke decided to wear matching ties for this event, but it appears to be the only aspect of the fiasco that the State Department properly coordinated.

    Also, activists in Bahrain, Saudi and other countries the US has to suck up to, you’re also on your own.



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    Posted in #99Percent

    Here a billion, there a billion…

    October 13, 2011 // Comments Off

    … And pretty soon you’re talking real money. No one is really sure exactly how much the war in Iraq actually cost the United States (in dollars; in prestige and our good name, well, priceless). Estimates vary by a trillion dollars over/under and there is a whole web site with a spinning dollar amount to check. The Army has lost a bunch of the receipts, and some stuff was paid for with Paypal, and then the credit card got stolen and…

    Anyway, since most of the American troops will be leaving Iraq over the next few months, and because shipping charges are so damn high, it is cheaper for us to leave behind most stuff we brought to Iraq. We’re saying it is all being transferred to the Government of Iraq, but in fact we’re really just leaving most of it the same way you left the old couch behind when you blasted out of that off-campus apartment without paying the last month’s rent.

    The always-prescient Dan Froomkin on HuffPo has the story. Dan tells us:

    With just over two months until the last U.S. troops are currently due to leave Iraq, the Department of Defense is engaged in a mad dash to give away things that cost U.S. taxpayers billions of dollars to buy and build. The giveaways include enormous, elaborate military bases and vast amounts of military equipment that will be turned over to the Iraqis, mostly just to save the expense of bringing it home. “It’s all sunk costs,” said retired Army Maj. Gen. Paul Eaton. “It’s money that we spent and we’re not going to recoup.”

    Check. War is a bad investment. Hear that Cheney– we aren’t going to recoup that investment. Iraqi oil did not, now officially, pay for the war.

    When the Iraqis take over a Forward Operating Base they also get the things that go with it, such as containerized housing units, water and fuel tanks, air conditioning units, generators, refrigerators, porta-johns, beds and mattresses, office equipment, fences, dining facilities and so on. According to Lt. Col Melinda F. Morgan, a Pentagon spokeswoman, excess defense items worth $70.5 million have been turned over to the Iraqis, with more, worth about $40 million, to go. U.S. forces have also given the Iraqis non-excess military items worth $47.7 million.

    Let’s see, that adds up to a jazillion dollars including shipping and handling. Luckily, the Chinese have loaned us their Dad’s VISA card, so it’s cool, right? Maybe not says HuffPo:

    I’m thinking about the size of what was wasted there, and thinking about how what we spent in Iraq was all borrowed. In a crazy way, what we left in Iraq was our good credit rating.

    Oops. Everyone, please write your Congressperson and demand that the defense budget not be cut. Not one penny. They’re gonna have to replace all that stuff left in Iraq before the next war, and that is going to be expensive. Demand Congress not fund, well, everything else. Whatever, our country is so screwed.

    Read the whole article if you can stand to on Huffington Post.



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    Posted in #99Percent