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Why The South Should Tackle Debt As A Public Health Issue

We are used to thinking about debt rather myopically.

In fact, the idea of debt as a large public expenditure tends to hold a spectacular (and I’d argue rather outsized) sway over our public discourse.

Meanwhile, a significant number of our elected leaders remain concerned about the relative fiscal health of our nation — even as they continue to support new massive investments in our country’s infrastructure.

At the same time, we’ve just been through one of the most harrowing public health crises in over a century and it’s very en-vogue to look at other issues through the lens that has monopolized our attention for the past nearly two years.

Nevertheless, here’s my pitch: Let us ditch the hand-wringing over our intangible national debt. Let’s spend generously (as Congress seems to be catching on) and help poor and middle-class individuals tackle real, human debts.

Financial hypertension

Let’s call them the “3AM debts.” The ones that keep us up at night:

These debts hit differently in the South.

When it comes to credit card debt (and associated penalties), nine of the ten most burdened states are located in the South. Families making the median household income in the South would need over eighteen months to pay off their balances in some states.

Auto loan debt alone grew by over 50 percent from 2003 to 2017.

To tackle debt properly, we must recognize its fundamental duality in American society.

Most Americans cannot afford to live debt-free. Debt is how daily needs get met. It’s a high-risk mode of survival.

At the same time, debt can serve as a means for building wealth. Think of well-chosen mortgages and efficiently-managed student loans.

On the other hand, out-of-control credit card debt, predatory lending, and college loans that don’t lead to a well-paying career can put major dents in one’s economic wellbeing.

Restorative debt relief

The moral imperative for debt relief as reparation is already well-known.

The question of “what do we owe each other?” has essentially evolved into the more complicated question of “how do we address historical debts today?”

Long-held constructs such as the achievement gap in education are more recently being reframed as “educational debts” accumulated over time through structural discrimination that must now be tackled within our classroom and even beyond our schoolhouse doors.

Black and Native farmers (along with Hispanic and AAPI peers) have already been afforded billions in compensatory debt relief by the Biden administration as part of the coronavirus relief package.

Cities such as Asheville, NC and Evanston, IL have already begun rolling out reparations programs in the form of housing grants and the sale of city-owned land to finance wealth-building initiatives.

Serious proposals have been put forth for closing the wealth gap forced upon Black Americans by generations of racist policies ranging from canceling consumer debts and eliminating bank fees for Black citizens to offering interest-free mortgages and loans in Black communities.

In some cases, we’ll need short-term fixes akin to masks and social distancing such as consumer-level efforts to prevent and eliminate debt in the near-term for many households.

Over the long-term, we’ll need a bold, equity-focused policy agenda that protects citizens from wealth-stripping practices while holding institutions accountable for reducing debt among communities.

With some smart policies and a galvanized public ready to reduce their debt burdens (and a little luck), we could see debt ratios dropping as quickly as COVID-19 hospitalization and mortality rates did once we started taking the pandemic seriously.

With that public health framing, it’s not hard to see a pathway out of debt for the Southern communities.

From Triangle Business Journal, December 9, 2022.

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