Kevin Drum recommends David Brooks’ column on America’s seduction by the culture of debt and then says “I doubt that I’d end up agreeing with Brooks 100% about how to address this problem.” I actually tend to think that Brooks (and Drum) are overstating the problem somewhat, but Brooks’ proposals seem like good ideas to me:
Foundations and churches could issue short-term loans to cut into the payday lenders’ business. Public and private programs could give the poor and middle class access to financial planners. Usury laws could be enforced and strengthened. Colleges could reduce credit card advertising on campus. KidSave accounts would encourage savings from a young age. The tax code should tax consumption, not income, and in the meantime, it should do more to encourage savings up and down the income ladder.
The idea of trying to establish some kind of non-predatory mechanism that would soak up some of the demand for “payday loans” seems especially promising to me.
UPDATE: Let’s also put a bracket around “tax consumption, not income.” There are a ton of different ways that could be done. Some of them are decent ideas, and others (things like the FairTax, for example) are very bad ideas and one doesn’t really know what Brooks has in mind here. Needless to say, completely redoing the tax system would be a complicated undertaking on a very different scale than enhanced credit counseling.