Our Nation’s Credit Card

Recently, I’ve noticed a tendency among everyone’s favorite denizens — web commenters — to make facile but elaborate analogies between the national debt and their personal credit card bills. But whatevs: when you read some random anonymous typer’s earnest explanation of how the debt ceiling is the precise equivalent of your college-age daughter’s MasterCard limit, you always have the option to assure yourself, “Well, it’s the Internet. Anyone can say anything” and move on with your day.

But now our president, too, has adopted the trope — for instance, last night in his latest speech on the Great Debt Ceiling Impasse of 2011, in which he stated:

For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation’s credit card. …

Now, every family knows that a little credit card debt is manageable. But if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy.

A presidential speech is a bit less easy to dismiss than so many stray Internet comments, and a bit more suggestive of some genuine cultural trend. So. Let’s trace this out. Obviously sovereign debt is not really meaningfully comparable to credit card debt, for any number of reasons. (For one thing, unlike your college-age daughter’s MasterCard limit, the United States debt ceiling is self-imposed. And that’s just among many, many other and more substantive reasons.) Why, then, has credit card debt — along with consumerism metaphors more generally — become such a dominant trope in the public discourse around U.S. fiscal policy?

While we’ll have to wait for future cultural historians to provide definitive answers, part of the answer must be the expansion of consumer credit beginning in the 1970s and accelerating until the economic collapse of 2008. This is not to say that Americans didn’t take on personal debt before — see, for instance, General Motors, which, the better to sell automobiles, pioneered modern consumer credit with the establishment of GMAC in 1919 — but before the 1970s, I cannot imagine any president making casual references to “credit card debt,” much less extended analogies, because, as late as the 1970s, few Americans would have been able to relate. (Unless I am wrong, dear readers? Please, correct me if I am wrong.)

This changed in the Carter and Reagan years, in part because of changing banking practices and technologies, and in part because of stagflation. In his book The Seventies, historian Bruce J. Schulman explains the shift in generational terms:

Depression babies—people who grew up during the 1930s—possessed a certain approach to life, a certain suspicion about good times, a thriftiness, a tendency to reuse tea bags and never throw anything away. The Great Inflation produced its own generation, altering Americans’ relationship to money, government, and each other.

First, Americans developed radically new attitudes toward credit and credit cards. In 1973, when Dee Hock, creator of the Visa card, installed his computerized authorization system, credit card spending totaled nearly $14 billion and was growing at a brisk but not outlandish clip of about $3.5 billion a year. But over the next decade it roared ahead, reaching $66 billion by 1982, almost a fivefold increase.

Credit cards made it easier for Americans to borrow, but plastic was not the only reason, or even the main reason, for the broad cultural shifts in attitudes toward spending and debt. Credit cards just provided an easy way to borrow more. In 1975, for instance, credit card debt hovered around $15 billion, but total consumer borrowing reached an astounding $167 billion. Credit cards did not turn thrifty Americans into frenetic borrowers. The Great Inflation did.

Until the 1970s, there had been a generalized resistance to credit and debt. Borrowing remained tainted, a sign of moral weakness. Thrift had long been the great American virtue … But with double-digit inflation, thriftiness became just plain dumb.

By 2007, to take just one data point, “83.5 percent of families headed by a person under 35 were in debt, whereas only 31.4 percent of families headed by a person over 75 were in debt.”

In one sense, then, it’s not surprising that Obama and his speechwriters have started appealing to the credit card trope to explain fiscal policy to taxpayers and voters. In fact, I suspect that many readers will find my argument here banal, and my extended discussion of this point unnecessary: obviously, the majority of Americans, though they may not be versed in the workings of U.S. Treasury bonds, can readily understand what it means to get a Visa bill in the mail. (Or a student loan or mortgage statement.)

But I think it’s important to denaturalize, and historicize, our metaphors. Otherwise, we might forget that they are just that: metaphors. Taken too literally, the credit card analogy perpetuates the notion that federal deficits are simply a matter of insufficient discipline — that we just need to cut back on our sushi takeout, like so many college-age daughters. In the midst of a recession, in the midst of two seemingly never-ending wars, at a moment when our social safety net risks shredding, fiscal policy is both more complicated, and more morally charged, than that. (For that matter, as Elizabeth Warren could tell you, in the non-metaphorical world credit card debt itself is more complicated than that.)

Then too, the analogy works both ways: it’s not just about Obama translating the national debt into a credit card balance; Americans seem also to be reading their credit card balances into the national debt. That’s the only explanation I can think of for why raising the debt ceiling, previously a routine congressional function, has suddenly spurred a national freakout. Today’s Americans have inherited both our parents’ willingness to borrow, and our grandparents’ valorization of saving. We all have student loans, credit card balances, and mortgages to pay; and yet, on some level we all feel that if were just a bit more responsible, we wouldn’t. In that sense, the panic over the national debt may well be, in no small part, a collective projection of so many families’ concerns about their own debts. As David Graeber, anthropologist and historian of debt, put it recently in the Washington Post:

The peculiar willingness of American families to accept, at a time of 9.2 percent unemployment, that our real problem is the need to cut government spending to balance the budget can only be explained as a classic example of magical thinking (I’m an anthropologist, I know magical thinking when I see it): perhaps if we can balance our collective budget, I will be able [to] balance my family’s budget too.

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