No, Florida Isn’t a Model on Payday Lending

In any given year, 12 million Americans take out a payday loan, which often comes with a triple-digit annual interest rate. And, as four out of every five of these borrowers aren’t able to afford these usurious rates, millions end up saddled with unsustainable debt.

But like a hydra that just keeps regenerating, payday lenders often spring back when states try to rein them in. Take Ohio, for example. After 64 percent of Ohio voters—and a majority in 87 of the Buckeye State’s 88 counties—voted to ban payday lending in 2008, lenders just rechartered themselves as mortgage lenders under state law, despite not making any home loans. And after payday loans were banned in Arizona, lenders switched over to making pricey car title loans. This struggle to regulate lenders at the state level is one of many reasons why the federal Consumer Financial Protection Bureau (CFPB) is working on a proposed rule to curb payday loan abuses.

Unfortunately, some members of Congress from Florida are defending lenders in their race to the bottom. Last year, the entire Florida Congressional delegation, with the exception of Rep. Thomas Rooney (R-FL), sent a letter to the CFPB’s Director Cordray arguing that new rules are unnecessary because Florida’s regulations are “among the most progressive and effective in the nation.” Recently, they went one step further, when twelve Floridians in Congress—seven Republicans and five Democrats—sponsored the so-called Consumer Protection and Choice Act. This bill would block CFPB’s actions for two years.  It would also exempt states from having to adhere to the new CFPB rule if they model their own laws on the Florida regulations. Ten other members co-sponsored the bill, including two Ohioans who apparently missed the results of their state’s 2008 referendum.

If Florida were indeed a model state on regulating abusive lending practices, this legislation might make sense. New York, for example, has a 25 percent interest rate cap, and state officials have also aggressively pursued lenders that try to skirt the law by making illegal loans over the Internet. Indeed, 14 states and the District of Columbia have similar rate caps that protect consumers from dangerous loans. The Pentagon is also a model: under the Military Lending Act, loans to servicemembers and their families are capped at 36 percent annually. But Florida’s annual interest rates average 360 percent, and payday lending drains an estimated $76 million a year from the state’s economy. That’s hardly “progressive and effective,” nor is it a model we should aspire to replicate nationwide.

Indeed, the Florida regulations that some in Congress want other states to follow, such as a 24-hour cooling-off period prior to taking out another loan, by and large don’t work. 85 percent of Florida borrowers take out seven or more loans a year, and almost two-thirds take out at least a dozen loans. That suggests a product that makes financial distress worse, not better. In the words of one Florida borrower from Daytona Beach, “I would take out a payday loan for emergencies and it would take me an entire year to pay it back. I would have to juggle all my other bills, causing more problems than I had in the beginning.”

While the CFPB’s proposed rule is yet to be announced, it will undoubtedly go farther than states like Florida in stopping these kinds of debt traps. It should require lenders to determine whether the borrower is actually able to pay back the loan—a common-sense approach that can stop financial problems from cascading down the line. And it should ban a lending practice that amounts to legalized pickpocketing: repeated automatic withdrawals from a borrower’s bank account as soon as funds are available, even if the borrower has more important bills to pay. These actions would make it harder to exploit vulnerable borrowers and also complement states’ authority to cap interest rates.

Americans want something done about the payday lenders that are taking money out of the community and causing great financial distress. In fact, every time the issue has gone to the polls—in Ohio and Arizona in 2008, and Montana in 2010—responsible credit has won. It’s time for members of Congress to listen to the will of the people and make it harder for their vulnerable constituents to get ripped off.


First Person

I’m an Ordained Minister and I Support Abortion Access

Tomorrow marks the forty-third anniversary of Roe v. Wade, the Supreme Court decision that made safe and legal abortion available to people across the country. As we write speeches glorifying this milestone in our collective history, we must remember and honor the advocates that made it possible for women and families to decide when to have children. We also must reflect very deeply about the future of that right and about the people who are already denied its benefits. This is especially true for those of us who are people of faith.

Since Roe over four decades ago, the Religious Right has used the emotional juggernaut that is their rhetorical reach to shift the focus away from the health, security, and freedom of women and families. Instead, they propagate a narrow and misguided morality that seeks to control women’s bodies without concern for the needs in their lives and to embed a shaming narrative about abortion into the national psyche. Anti-abortion activists have employed these twin strategies—limiting access and shaming women—relentlessly for over 40 years. Unfortunately, in many ways they have been successful.

The first and likely most corrosive victory of that strategy is the Hyde Amendment, passed in 1976, three years after Roe. Hyde, which was framed as a compromise bill that stopped short of a full ban on abortion access, restricted the use of public funds for abortion. However, author of this amendment Representative Henry Hyde, was very clear about his motives around the compromise:

“I would certainly like to prevent, if I could legally, anybody having an abortion, a rich woman, a middle class woman, or a poor woman. Unfortunately, the only vehicle available is the [Medicaid] bill.”

Unable to make abortion illegal for all women, Hyde settled for a targeted assault on the options available to poor women. This attack set the stage for the ongoing strategy that Hyde’s acolytes have used ever since. Instead of directly contesting the legality of the issue, anti-abortion activist-legislators have tried to restrict access, availability, and affordability to ensure that abortion is legal only in theory for millions of women.

In many states, the anti-abortion movement has successfully constructed roadblocks to access, such as requiring women to have an ultrasound and look at the image before having abortion or mandating that they attend counseling services. Other legislators have sought to shame minors seeking abortions by limiting or erasing their rights to privacy. Still other anti-abortion legislators have pursued targeted regulation of abortion providers (otherwise known as “TRAP” laws) in the hopes of enacting regulations so burdensome that providers will be forced to close. These efforts to limit access to safe abortion services have been enormously successful.

The clock has turned back in a most vicious way.

On the forty-second Roe anniversary, a commentator said, “we no longer have the health crisis of women dying in ‘back alleys.’” Just one year later, that statement is not completely true, particularly for people of color and poor people, like a rural Tennessee woman who has been charged with attempted murder after trying to abort a fetus with a coat hanger. And in other states, women are making unsuccessful abortion attempts of the sort Roe supporters had hoped to eradicate. The clock has turned back in a most vicious way.

And, as some faith voices have supported each of these attacks, some people have been given the impression that all people of faith are against comprehensive health care that includes abortion services. But, what is often obscured is that, before Roe, faith leaders who understood the necessity of family planning in the battle against poverty were in the trenches helping women access safe abortions before legal abortion was available. Because of the desire for human flourishing—present in every faith tradition—progressive faith leaders are still driven to ensure women can access the care they need as opposed to shaming them for their health care decisions. Despite amplified voices suggesting the contrary, many people of faith still broadly understand full-spectrum women’s health care as a primary tool for the building of healthy communities. And, reproductive justice advocates understand a woman’s faith as inseparable from the rest of her lived experiences and attend to spiritual health as seriously as they do all other identified needs.

We will only be able to truly celebrate Roe when all women have access to abortion services without the stigma and judgment of others. For these reasons, as we pause to reflect on this forty-third anniversary of Roe v. Wade, progressive people of faith must raise our voices in support of the women in our faith communities. The time for staying publicly silent has long passed. Instead, if we care about women of color, low-income women, and families whose fates are too often at the mercy of anti-abortion politicians, we must be bold in our challenge to faith narratives that shame and blame. We must fill the public sphere with language of love and kindness rather than judgment and ire. We must stand up for women of faith because seven in ten women who seek abortions report a religious affiliation. Some of them will look to us for guidance. We owe them our support, our love and our voices in protection of their lives. We must not fail them!



How the Department of Labor Could Help Fix the Retirement Crisis

Half of working-age Americans aren’t confident that they will have enough money to retire—and they have reason to worry, given that the typical American has only $3,000 in savings. Unsurprisingly, low-income workers are even less likely to have money set aside for retirement.

The picture is even more sobering for seniors and people of color. People of color account for 41 percent of the 55 million people without retirement accounts. On top of that, they are more likely to live in poverty as both working-age adults and seniors. Without money to draw on from their retirement (African-American and Latino  families have, on average, zero in liquid retirement savings), they are far more susceptible to the ills of senior poverty, which can include everything from multiple chronic conditions to heightened mortality rates and food insecurity.

Fortunately, there is some good news on the retirement security front. The Department of Labor recently released a set of proposed rules that, if adopted, would make it possible to help millions of low-wage workers build up a retirement nest egg. These rules pave the way for states to adopt retirement programs that automatically enroll all workers into individual retirement accounts (IRAs).

People of color account for 41 percent of the 55 million people without retirement accounts.

How will automatic retirement savings help? Well, one big reason low-wage workers have lower savings is that their employers are less likely to offer any sort of retirement plan. Indeed, workplace access to retirement plans has declined by almost 20 percent since the turn of the century as employers have sought new ways to cut costs. At the same time, evidence routinely shows that when plans are offered, many workers take advantage of them—particularly when employers automatically enroll their workers. Studies indicate that participation rates can reach 90 percent with automatic programs, creating a huge vehicle for protecting and growing workers’ savings.

Inspired by these trends, California, Oregon, and Illinois have developed state-sponsored proposals over the past few years that would establish automatic savings plans for workers in their states. However, these programs will only be effective if they pass federal muster by incorporating certain protection mechanisms—and the proposed rules allow just that.

The recent DOL action allows states to implement these important programs. As David Mitchell and Jeremy Smith of the Aspen Institute recently wrote, the new rule proposed by DOL would “give states new options for expanding coverage while at the same time reducing the burden on employers.”

This important development for retirement security deserves high praise, which is why members of the Tax Alliance for Economic Mobility submitted a letter to the DOL yesterday that strongly supports the proposed rules. The Tax Alliance, co-chaired by the Corporation for Enterprise Development (CFED) and PolicyLink, is a national coalition of advocates, researchers, and experts focused on reforming tax programs that do not work for low-income households and communities of color.

These state auto-IRA programs won’t completely fix the retirement crisis, but they will allow more low-income workers to access benefits normally reserved for the rich. Currently, the bottom 60 percent of earners are lucky to receive $200 in federal retirement tax benefits, while the top one percent receive approximately $13,000 from these same programs. But as the signers of the Tax Alliance letter wrote, the proposed rules are a “major step toward expanded retirement security options for low- and moderate-income workers.”

While low-wage workers in California, Oregon, and Illinois have reason to be optimistic, excitement should spread far beyond the handful of states that have already developed these auto-IRA programs. This action by DOL will encourage more and more states to design retirement programs that work for their citizens. And while masses of savings won’t accrue overnight, these state programs can begin to chip away at the racial wealth divide and retirement crisis facing over 100 million people living in or near poverty.


First Person

I Served 11 Years in Prison. This Is What I Learned.

Last week I attended a presidential forum in Des Moines with nearly 1,000 grassroots activists from across the Midwest. The focus of the event was on a real economic recovery—one that creates economic security for struggling Americans and invests in underserved communities.

I felt it was important to be there. I wanted to ask candidates how they would reform a criminal justice system that is ripping apart our most vulnerable communities, especially communities of color. What would they do to redirect public funding to support—not strangle—opportunity for people of color? How would they reverse the barriers faced by the 650,000 people released from prison every year?

The issue of how to invest in our struggling communities is one that all candidates—regardless of party—need to address. Yet, for all the debates, forums, stump speeches and glad-handing, not enough of them are talking about it.

I know firsthand how a lack of hope and opportunity desiccate once-thriving families and communities.

I grew up on the South Side of Chicago during a time when parents, including my mother and father, could find work on the docks or in the factories that dotted the skyline. Our neighborhood was vibrant and solidly working-class. We had a good life. Then, one by one, the factories closed. My parents and the parents of my friends were all laid off.

There were so few people working it seemed like every day was a federal holiday. With every passing year, during the 1970s and 80s, I saw the lights dim in my community. In a short time, we became defined by unemployment and poverty, and then drugs—first heroin, and then crack cocaine. As a young man, I saw the hustlers, pimps, and drug dealers flashing their money, nice cars, and trendy clothes. Their lifestyle represented the only glitter I saw in the neighborhood. So, at an early age, I became a hustler too. I used drugs and committed identity theft to pay for my habit.

It caught up with me and I served 11 years in state and federal prison. While there, I saw countless 17-, 18-, or 19-year-olds who were sentenced to decades in prison for drug crimes. And once you are in the system, it is designed in a way that keeps you in. It is a vicious cycle where the odds are stacked against you, every door is closed, and any small mistake sends you right back.

Any small mistake sends you right back.

It starts with the exorbitant fees and rates that incarcerated people have to pay for things like talking on the phone to stay in touch with family. It continues when people get out—often they cannot even go back home to their families because of “one strike and you’re out” policies that prevent people with criminal records from living in public or subsidized housing. Too many young men end up couch surfing just to keep a roof over their heads at night.

And then there is the job search. When I was released in the mid-1990s, the only work I could get was as a dishwasher. Eventually, I found a second job as a telemarketer. Both jobs paid minimum wage. It is nearly impossible for people coming from prison to get re-established if they can’t get a decent job at a decent wage. You can’t pay all those fines and restitution earning poverty wages.

I now live in Dane County, Wisconsin—home to Madison—where I work as an advocate for the formerly incarcerated. I see the prison system as a form of genocide as I watch hope drain from people who are permanently tagged as “felons.” It’s no wonder they don’t feel they are part of America.

We need to re-invest funds—not toward more police weapons and militarized gear that are used to threaten our communities—but toward programs that create opportunity for people and their relatives who have been scarred with convictions. We need to remove barriers that keep formerly-incarcerated people from working or living with their families. We need to identify the types of jobs available to incarcerated people and prepare them for those jobs.

I was a smart kid growing up. I learned that my people had little chance at a legitimate good life. But I hope all the presidential candidates recognize that we need an America where our young people hope for bright futures, rather than think that the best they can do in this world is not be killed.



Paul Ryan’s Forum on Expanding Opportunity Won’t Expand Opportunity

This past weekend, in my congressional district, Speaker of the House Paul Ryan and South Carolina Senator Tim Scott hosted a presidential candidate forum titled “Expanding Opportunity.”  This title reflects the longstanding attempt of House Republican leaders to frame the inequality debate as one in which, as Ryan noted in 2014, Democrats focus on “equality of outcomes” while Republicans focus on “equality of opportunity,” which their favored policies are supposedly more likely to bring about.  Speaker Ryan attempted to make a similar assertion at Saturday’s forum, noting: “We now have a safety net that is designed to catch people falling into poverty when what we really need is a safety net that is designed to help get people out of poverty.”

While I disagree with the Speaker’s attempts to dismantle Social Security and Medicare, which partially equalize outcomes by preventing seniors from falling into poverty, I wholeheartedly reject the assertion that trickle-down economic policies would do more to advance equality of opportunity than a middle-out approach.

It is sadly appropriate that the forum took place in Columbia, South Carolina, an area with some of the lowest socioeconomic mobility in the country.  According to the Equality of Opportunity Project, a child raised in the bottom fifth of the national income distribution in the Columbia area has just a 4.2 percent chance of rising to the top fifth, making it one of the worst places to grow up poor in America.  If right-wing policies expand economic opportunity, why hasn’t South Carolina, with right-wing policies prevalent throughout state government, seen the benefits?

The reality is that the Expanding Opportunity forum, while perhaps well-meaning, must not distract from the fact that trickle-down policies—and the Ryan budget in particular—would severely constrict opportunity in numerous ways. Consider the following:

  • In order to take advantage of opportunity, one must be healthy. The Ryan budget would cut Medicaid by hundreds of billions of dollars and send the funds to the states as block grants, putting life-and-death decisions in the hands of state governments. South Carolina is one example of a state government that has thus far made the choice not to expand Medicaid under the Affordable Care Act, despite an estimate that such a decision would result in the premature deaths of nearly 200 South Carolinians every year.
  • Ryan’s budget would double down on this opportunity-crushing, lethal agenda by repealing the Affordable Care Act, stripping health care away from millions who have gained coverage in the marketplaces or through the Medicaid expansion.
  • Similarly, while working one’s way out of poverty is difficult under the best of circumstances, Ryan wants to make it even harder by drastically cutting nutrition assistance so that those striving to rise above the poverty line don’t have enough to eat.
  • High quality pre-K expands opportunity for a lifetime. But the House Majority refuses to support universal pre-K and would cut hundreds of thousands of Head Start slots.
  • Opportunity is virtually impossible without access to educational resources. But the Ryan budget reduces funding for education by an amount equivalent to 3,600 schools, 13,000 teachers, and nearly 1.6 million students.
  • In the 21st century knowledge-based economy, a college education is essential to career opportunities. But the Ryan budget would cut Pell Grants by $370 million, making college even less affordable for poor students.
  • For many Americans, job training and employment services are vital opportunities to gain the skills necessary for a productive career and to find jobs using those skills. But the Ryan budget would take these services away from 2 million people.
  • The Equality of Opportunity Project found that, by the time they reached adulthood, poor children whose families received a Section 8 housing voucher earned nearly $2,000 a year more than children raised in public housing projects. But the Ryan budget threatens to take this opportunity away from 100,000 families.
  • The same Equality of Opportunity Project study found that poor children whose families received an experimental voucher to move to low-poverty neighborhoods earned nearly $3,500 more when they grew up than those raised in public housing. But in 2014, 219 House Republicans, including Speaker Ryan, voted to stop an Obama Administration effort to create similar opportunities on a wide scale.
  • Republicans and Democrats agree that children born from unintended pregnancies are particularly likely to struggle for economic opportunity. But the Ryan budget would eliminate Title X Family Planning funding, which averts approximately one million unintended pregnancies every year.

As much as Speaker Ryan might want to talk about expanding opportunity without caring about inequality, it has been shown repeatedly that societies with more inequality also have less opportunity—a relationship known as the Great Gatsby Curve. If Speaker Ryan and the House majority are truly committed to making opportunity more equal, they should take steps to increase the minimum wage, expand paid sick leave, and target resources to persistent poverty communities. We could start with my 10-20-30 proposal, which Ryan appeared to be open to when I testified before the House Budget Committee in 2014.

Even the few positive proposals that some members of the House Majority support—such as bipartisan criminal justice reform—would not come close to making up for their broader agenda, which constricts opportunity for low-income families while cutting taxes for the rich by trillions of dollars.  Forums like the one held in South Carolina are good for gathering input but outcomes are needed to lift people out of poverty.