A Poverty Creating Bill

CNN Story

The new bankruptcy bill that is poised to become law is a terrible idea for everybody except the credit card companies and the lawyers.

The most interesting thing about the debate on the bill has been how completely unsuccessful the Democrats were in connecting macroeconomics issues to everyday life.

As a practical matter this bill means that:

1. Bankruptcy lawyers will be more costly.
2. Your bankruptcy case will be judged on the basis of IRS formulas.
3. You will have a hard time wiping out all of your debts.
4. The credit card companies can come in and contest your repayment plan in a chapter 13 case.

As a result, more people will be unable to support, feed, and shelter their families.

Since we no longer have a decent social safety net in this country, people made poor by the bankruptcy law will not have the kind of government assistance that they could count on in the past.

Apparently, our country has become a cold hearted place and the specter of families out on the street is not enough to move our elected leaders. So, maybe a little Keynesian macroeconomics will help. By creating an impoverished and enslaved class of people, this bill will create an perpetual underclass of people who cannot pay for their basic needs. If consumers are the engine of the economy, shifting money away from consumers and creating a class of people who effectively can't consume will slow the economy.

We may be forced to wake up from our credit card dreaming, and it's not going to be a beautiful world we wake up into.