Poor down, middle class to go

Remember when John Edwards talked about "Two Americas," and the Republicans (notably the Bush-ies) accused him of engaging in "class warfare"?

Well, we all knew that class warfare pitted rich against poor, but it was unclear where the middle class fit in.
Now we know.

The new bankruptcy legislation passed by the Senate and applauded by the President is a direct shot at the middle class. Under this new legislation, it is harder for people to file for Chapter 7 bankruptcy, which would erase many of their debts. Many of these people will be forced into Chapter 13 bankruptcy, which requires them to continue repaying their debts under a strutctured payment plan.

So what? If they owe, shouldn't they pay? The Republican patrons of this bill focused on the small number of filers (less than 5% by one account) who use bankruptcy as a shield to avoid obligations that they are able to meet or brought upon themselves by reckless disregard for the consequences of their actions (e.g. gambling debt). They failed to mention that more than 60% of people who file for Chapter 7 bankruptcy are people (most WITH health insurance) who have a debt primarily made up of medical bills for unexpected illnesses or injury which their insurance only covered partly. Many of them have lost their jobs through no fault of their own and, thanks to our marvelous economy, have been unable to get new jobs... and new health care.

But, what difference does it make? If they really can't pay, then they won't pay, even if their debt isn't wiped out. What's in it for the businesses trying to collect? What's in it for them is houses and cars. Under the old system, people could shield their homes from being "liquidated" into assets to pay off their unpayable debt. Now, it's easier for banks or other lenders to seize property if debts aren't repaid. So, if you fall unexpectedly ill after you lose your job through no fault of your own (by the way, don't worry about this if you are the CEO of a large company... when they lose their jobs because of their own poor performance, they get multi-million dollar severance packages) and have to pay your medical bills out of pocket, you'd better hope that you don't get a new job. Because if you do get a new job, your health insurance won't cover your previously incurred bills, and if a judge decides that you can afford to pay $1,000 per month, you can't file for Chapter 7 and it's more likely that you'll lose your house.

Who owns a house and is going to be filing for bankruptcy? The poor? No, it's the middle classes! "Wait," you say, "Don't the rich go bankrupt, too? We hear about it all the time! They have houses." Yes, they do. They also, however, tend to have what's referred to as "business debt" as opposed to personal debt (like to a credit card company), and "suprise!", business debt isn't covered under the new law. So they can go ahead and get all of their bazillions of dollars of debt wiped out and keep their mansions and Mercedes, while the middle classes are signing over their 2 bedroom single-family-dwellings and Hyundais to the lending institutions... owned by the mansion dwellers.

As Yoda might say, "begun, the class wars have." What nobody expected was that the middle class would be so flagrantly targeted. Two Americas? How about Three?

- "Greed, for lack of a better word, is good."