Although most Americans could recognize the cruelty of holding children responsible for debts, a particularly misunderstood and unthinkably cruel kind of debt which has begun to plague American children at ever increasing alarming rates. By some of the best estimates about half a million children are carrying debt for their parents or relatives. This kind of debt could be called identity transfer debt. Cynics who think debtors are entitled losers would mislabel these kids as the victim of identity theft at the hands of evil parents. Unfortunately, when combing through the qualitative data an even bleaker picture emerges. While in some cases irresponsible parents steal their children’s identities, in many parents or other close relatives and caregivers use children’s identities, sometimes even with their knowledge to keep a family financially afloat during a crisis that would otherwise have them homeless.
In some cases the perpetrators of this debt identity crime are unsophisticated immigrants who do not realize they will make hard their progeny’s future. Consider the case of Ana Ramirez as reported in the Huffington Post. Her mother was a recently divorced low income woman with children to support and a job as a cleaning lady. Like many low income people she already had bad credit. Faced with impending financial doom, she borrowed using her daughter’s social security number to get into a house. She may have saved the family homelessness or time with an abusive father but the story does not give clear details about those circumstances; the story focuses on how she ultimately ruined her daughter’s credit. Women like her daughter will be dealing with a low credit scores for years that will haunt them every time she applies for a job, and possibly even when they try to get education.
Every article I read covering the phenomenon of identity transfer debt paints parents who put debt in children’s names as evil criminals. But imagine that you and your children faced potential homelessness…I personally don’t have to imagine. I remember from my own childhood the absolute panic and fear of my mother at financially difficult times. I remember her screaming about the possibility of losing our house and everything we had. I remember the kinds of choices she made to keep a roof over our heads as a working single mother. There was never really money around for adequate childcare so she would have us sit in the waiting room during her medical appointments. One time she refused anesthesia for a surgery she needed, so she could drive me and my sister home to avoid paying a cab fare; then drove us with tears streaming down her face. My mother was meticulous and driven to see her children succeed. If it took going through surgery with no anesthesia for us to have adequate food, books and shelter, she would do it. But I don’t think this level of sacrifice is reasonable to expect from every parent if we are going to punish the children for their parent’s lack of it.
Right wing neoliberals want us to look at the problem of identity transfer debt as the result of a bunch of bad decisions of individual people. But really, this problem is just as much about a bunch of bad collective decisions in American society. At this point, as Elizabeth Warren pointed out, the single best indicator of which women will go into financial collapse is which have a child. But financial collapse or not: the child is there and must be fed and housed. We are putting working parents between a rock and a hard piece of concrete: unbearable debt, or homelessness. Should we really be surprised some turn to throwing on more debt by any means necessary including putting it in their child’s name? Should we really be surprised that identity transfer debt skyrocketed at approximately the same time a lot of mortgages went into default and jobs were lost due to our poorly regulated financial system? Once we understand identity transfer debt holistically we can begin to understand how to take this problem apart. We need to understand why it is that American women go into financial collapse after children. While this is a tremendously complicated multifactorial issue; a few fixable culprits stand out. Lack of affordable adequate childcare options, and some of the most draconian maternity leave policies and practices in the entire world are among the reasons so many American women are financially doomed. Neoliberal policies have failed the American family, even if they have been theoretically positive for some individual well paid workers. At the lower part of the class spectrum, the results of our policy choices have been absolutely catastrophic. We have chosen as a society to incentivize a demotion of a lot of the working class down to the would-have-been working class. Financialized credit has become part of de-facto the safety net we refuse to provide. But this safety net is toxic. It is slowly tearing families apart instead of keeping them together. In the case of kids who are carrying debt to help their family survive they will enter the workforce at a distinct disadvantage as employers use credit checks to screen applicants. And just as horribly this plastic credit safety net has the tendency, if we analyze it by the logic of orthodox macroeconomics, to push up the cost of the very necessities poor families were so desperate to get they threw their kids into debt over them in the first place. This is not Marxist economics or some linear algebra based complex model’s projection; this is what you would get by either solving the basic supply demand curves on certain commodities with credit pushing up the demand or just looking at the historical data. The toxic bad-debt based bubble in housing prices that popped in 2008 is a perfect example.
But if we pull away the credit mechanism of survival for at risk families, what will we replace it with? We don’t have safe shelters and great programs for at risk families in every state. Costas Lapavistas has written about the idea of credit, in some kind leftist post capitalism utopia, as a quasi-public utility. For millions of American parents falling a hole of debt this is a very distant dream: the kids need to eat every five hours whether you spent through your paycheck or not and some academics at the SOAS are not coming to save us. Part of the real solution for the time being must be growing back stronger communities where money and credit circulate locally. We can’t simply, in good conscious, have academic discussions among leftists and simultaneously throw a generation of families under a train with the consolation that in twenty years after their kids’ lives are ruined, we may have devised a solution that does not involve usurious debt and poverty. Stronger local communities will not fix all our problems, but they are something we are not going to have to wait on the neoliberal state to give us permission for. Simply by raising consciousness about the incredible financial burdens incurred during American parenthood and how often it has pushed families to debt as the best of bad solutions, we can begin to be more empathetic, and help each other out. If we break away from the atomization induced by our choices, we will understand our communities more, and begin to fix them ourselves. Anyone who has lived outside of the US will notice how disconnected Americans are from each other and each other’s children. It’s time to get a little closer; whether by packing another kid into the carpool, mentoring a poor child, or simply trying to bring people in our communities together. We simply cannot afford to continue to do things the old way if we care about our future.
My personal credit score is very high in spite of having been a childhood debtor. For whatever
mistakes my mother made with me, including encouraging me take on debt as a
child, she never took on debt in my name. The story of how she hung on to her
dreams of seeing her daughters get terminatory degrees and her house in spite
of the same kinds of adversity parents who take out debt in their kids name is
not only a story of personal triumph. It is also a story of neighbors who were
willing to pitch in and help with childcare. It is therefore also a story about
the geographic luck of a neighborhood with demographics that favored immigrants
with dreams of upward mobility, respect for education, and less individualistic
mentalities than more assimilated Americans.
I am not a social scientist but I write my honest impressions
in part because of the hope that those inside the machines of social sciences
and policy making can take them and apply further analysis. If we truly
understand the mechanisms of each kind of childhood debt we can stop them. If
we let ourselves fall into the cheap superficial explanations of simple
criminality that pervade the media about identity transfer debt, we will try to
stop this with criminal justice. In my forthcoming blogging I will mention some
of how our current criminal justice system tends to push even more young family
debt.
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