For the Balkinization Symposium on Emily Zackin and Chloe Thurston, The Political Development of American Debt Relief (University of Chicago Press, 2024).
Julie Novkov
Debt
is an important part of the American
economy. In the second quarter of 2024, the aggregate household debt balance hit
$17.76 trillion dollars, having grown by $3.7 trillion since the end of 2019. Of
this debt, 3.2% of this debt was in some form of delinquency, and in the second
quarter of 2024 alone, around 136,000 people had bankruptcy notations added to
their credit reports.[1]
The emergence of a determined movement to seek debt relief for federally funded
student educational debt has seen political success, twice securing regulations
forgiving some portion of these obligations, but the regulations have faced
stiff and successful resistance in court. In 2023, the Supreme Court
invalidated the first effort authorized under the HEROES Act as beyond the
scope of that Act’s regulatory authorization.[2]
And on August 9, 2024, the Eighth Circuit upheld a district court injunction
against the Biden Administration’s SAVE plan, which would have lowered payment
amounts, stopped the accrual of interest, and forgiven some loans in as little
as ten years.[3]
Yet despite this recent flurry of interest, for many decades the United States
has seen little broad mobilization around debt relief, and the current popular
movement centering on student debt struggles against claims that the debt
relief sought is unfair, rescues frivolous or foolish borrowers, and threatens
to undermine honored norms of responsible personal financial management.
In their wonderful new book The Political Development of American Debt Relief, Emily Zackin and Chloe Thurston use the tools of American political development to trace how the federal and state governments have addressed the problem of debt relief across US history. Most casual observers readily acknowledge the importance of debtor politics in the Revolutionary Era and the Founding, recalling both the US inheritance of a common-law system that punished indebtedness and the struggles over indebtedness that sparked Shays’ Rebellion and partially motivated the formation of the US Constitution. Discussion of debtor concerns then crop up around financial panics, but political movements for debt relief receive little independent analysis beyond broader considerations of class politics, populism, and the developmental trajectory of US political economy.
Zackin
and Thurston tell a fuller and more nuanced story, the threads of which weave
together and re-illuminate several important developmental concerns. The book
can be read in multiple registers: as an analysis of the importance of farm
politics in US political development, as a specific reading of the development
of cooperative federalism, as a puzzle about when and how popular movements
emerge, and as a thoughtful critical analysis of the relationship between
cultural framings and political mobilization. Upon finishing the book, I am
left with worthwhile questions about how expanding the analysis of identity
politics in American political development might enrich our understandings of
how, when, and where statebuilding happens.
Zackin and Thurston join a robust literature
addressing how the politics of farms and farming have contributed to critical debates
and turning points in US history. Many scholars investigating the US welfare
state and its development have emphasized the distinction between deserving and
undeserving denizens and how this distinction has driven the construction and
implementation of support.[4]
As Zackin and Thurston illustrate, farmers have very frequently succeeded in
defining themselves as worthy of relief; their narrative underlines both the
perception of “farm debt as productive and farmers’ insolvency as the product
of forces, such as droughts or falling crop prices, that are well beyond their
control” and the highly effective mobilization efforts that farmers have
undertaken at different points in US history, from the very beginning to the
farm foreclosure crisis of the late 20th century. As they
illustrate, “indebted farmers repeatedly organized to insist that government
redistribute the risks associated with debt in the turbulent economy of the
day.”[5]
As
they explain, successful agrarian organization to support debt relief began at
the state level in the antebellum era, but further mobilization shaped the
expansion of American sovereignty into the west through settler colonialist
practice and homestead exemptions from bankruptcy adopted in mid-nineteenth
century reforms shored up white landowners’ interests. The first permanent
bankruptcy legislation at the federal level, the Bankruptcy Act of 1898, was
strongly influenced by agrarian interests networked within Democratic and
Populist circles. And the New Deal legislative response to the Great Depression
incorporated farmers’ self-presentation as deserving debtors, taking steps to
protect them from foreclosure and displacement. Throughout this analysis, the
authors attend both to the rhetorical and argumentative strategies and to the
political and partisan strategies that farmers used to influence policy. They
show convincingly that farmers’ ability to cohere and mobilize politically left
them in a more advantageous and powerful situation than individuals burdened by
consumer debt. This analysis dovetails effectively with Patricia Strach’s All
in the Family, which describes how discourse around families has helped to
achieve federal policy gains, particularly through using the trope of family
farms.[6]
Considering individual bankruptcy through modern eyes,
we tend to think of Chapter 7 or Chapter 13, or if we are thinking about
farmers, Chapter 12. All bankruptcies, both personal and corporate, proceed
under the federal bankruptcy code and fall under the jurisdiction of federal
bankruptcy courts. The constitution’s contracts clause, barring the states from
altering contract obligations, and the bankruptcy clause, which empowers
Congress to pass uniform bankruptcy laws, seem to contemplate an immediate
federal presence in this policy sphere. Zackin and Thurston show, however, that
early constitutional struggles over bankruptcy played out in the states as
Congress withheld its hand. The aforementioned agrarian interests were highly
successful in leveraging political authority to secure debt relief through
state legislative action. The Supreme Court partially curbed this behavior in
an 1819 ruling, but in 1827 confirmed that states would have latitude to protect
debtors prospectively. State legislatures nonetheless continued to pass
retrospective emergency relief laws, which faced almost universal rejection by
state courts under the federal contract clause.
Zackin
and Thurston explain the brief federal forays into bankruptcy regulation prior
to 1898, highlighting Congress’s reinterpretation of the constitution in 1841
to empower emergency oversight and regulation. This foundation eventually
morphed into a perceived need for permanent institutionalized national capacity
that then fostered administrative statebuilding in the form of federal
bankruptcy courts at the turn of the nineteenth century. They show that the
choice not only to manage bankruptcy federally but also to lodge this
administrative capacity in courts formed a training ground for generating
specialized expertise, resonating with the rise of pragmatism and legal realism
in the early twentieth century.
This
story joins a growing narrative that identifies major moments of national
statebuilding well prior to the New Deal era and traces the structural legacy
of these early elements of a national state. As with the rapid national
creation of a federal immigration regime, the rise of bankruptcy courts and
experts both met a perceived moment of crisis caused by lack of capacity and
grounded the shift of regulatory authority into national hands. These findings underline how cooperative
federalism evolved in early America. They also show that attending to the
timing of national statebuilding can help to explain differences in the
structure of institutions that developed before the transformation of administrative
power in the 1930s.
Zackin and Thurston seek to explain political
development, but their book also provides interesting insights into political
mobilization and its limits. This thread weaves through the other threads, as they
explain how some groups of debtors were able to achieve positive outcomes through
collective action. They emphasize that successful mobilization, even in the
face of an adverse legal environment, depended on the political and partisan terrain
that allowed for effective pressuring of state legislatures in the early
antebellum era and Congress later on. White farmers were regionally
concentrated in the antebellum era and their creditors were often in other
states, which enabled them to press for reform successfully both through
legislative demands and direct action. Zackin and Thurston note that temporary
national voluntary bankruptcy relief came in part through agrarian mobilization
and its links to settler colonialism. But as they acknowledge, race was always
a mediating factor in policymaking. The grassroots cross-racial agrarian
movement that briefly flourished in the wake of the Civil War could not secure policies
that would promote Black landowning. Debt relief instead helped to reinstate Black
economic subordination by protecting threatened white landowners. Their
analysis also highlights the benefits and drawbacks of focused mobilization,
which left consumer debt outside of the narrative of appropriate debt relief.
The analysis of mobilization contributes to our
understanding of how cultural and political forces can facilitate change and
limit its scope. Resisting the simple explanation that uneven relief policies
derived from the ability of some debtors to portray themselves as deserving
while others could not, Zackin and Thurston instead explain how developmental
forces, politics, and mobilization interacted to facilitate policymaking
successes for some debtors at some times while other debtors struggled to find relief.
For instance, during the Great Depression, they note that while debtors of all
varieties were struggling, policies addressing debt for farmers arose from a
different political source than those for wage earners. Midwestern farmers could
rely on a tradition stretching back to the antebellum era of providing debt
relief not just because of their desert but also as a public good, which
enabled them to deal themselves into the conversation. In contrast, “the
architects of the wage-earner amendment were not wage earners themselves but
primarily creditors, large employers, and bankruptcy officials, eager to
prevent indebted wage earners from escaping their debts.”[7]
As they note, unions, which provided a cohesive voice for many other concerns
of wage earners and were able to secure a voice in national policy processes in
this period, did not press for protections, perhaps because they opted instead
to embrace and advocate for consumer credit. These pathways reinforced cultural
narratives about deserving and undeserving debtors that in turn constrained the
political landscape going forward. This reading helps to set up the authors’
explanation for why, when Congress revived the idea of consumer debt relief in
the late 1970s, the organizations that might have been expected to represent consumer
debtors’ interests—unions, civil rights organizations, and women’s groups—did
not demand representative incorporation in the conversation.
Overall, this provocative book raises useful questions
about how the formation of political identities and their persistence over time
can influence political development and statebuilding. The book illustrates two
sides of the same coin: agrarian interests that were able to crystallize a
political identity that remained flexible but stable enough to generate
political leverage over generations, and individuals experiencing other forms
of indebtedness who could not rally around a unified identity with powerful
positive cultural resonance. American political development has generated an
illuminating body of work explaining how development incorporates concerns
around and mobilization by identity-based groups, most notably people of color,
women, and sexual minorities. These insights can carry over to address other
identities and the cultural and political processes that drive identity
formation, as Zackin and Thurston do with agrarian and consumer debtors.
Observing
recent events while reading this book raises the question of whether student
debtors might be coalescing into a concentrated and stable identity-based group
that can reframe the cultural valence of their debt and press for political
reform. Likewise, attempts to construct a cohesive taxpayer identity have sometimes
broken through, supporting a wave of initiative-based tax cutting in the western
US beginning in 1978. One might also fruitfully trace the evolution of
evangelical Christianity as an overtly political identity that has bolstered both
left- and right-wing politics in the United States, noting the relationship
between its political valence, race, and region. And the MAGA movement’s
followers seek to forge a stable and persisting identity that could ultimately last
beyond Trump.
The
counter-story of how and why possible identity-based political groups did not
form is also instructive in executing the more difficult task of identifying political
failures attributable in part to a lack of identity-based mobilization or its
foreclosure from above. Black activists hoped to mobilize around identities as
voters in the period following the Civil War, but southern resistance and
terror stripped not only the right but the realistic possibility of mobilizing
the identity by the early twentieth century. Youth activism in the United
States has had an uneven history, with young voices often drowned out or
appropriated by those arguing on their behalf. Americans advocating for
non-automative transportation have tried for many years to build a cohesive and
politically effective coalition but have had only modest success.
Overall, these considerations come back to the book’s excellent work in understanding both political outcomes and political possibilities. The specific story that Zackin and Thurston tell about the politics of debt relief has a lot to say about American political development more broadly. It does so by demonstrating that APD shines when used to weave together considerations of cultural constructions, political mobilization, federalism, constitutional evolution, and the impact of statebuilding.
Julie Novkov is the Dean of Rockefeller College of Public Affairs & Policy at the University at Albany, SUNY. You can reach her by e-mail at jnovkov@albany.edu.
[1] Federal
Reserve Bank of New York Research and Statistics Group, “Quarterly Report on
Household Debt and Credit,” Quarterly Report (Center for Microeconomic Data,
New York Federal Reserve, August 2024), 1–3.
[2] Biden v. Nebraska (Supreme Court 2023).
[3] Missouri v. Biden, No. 24-2351 (8th Circuit Court of
Appeals August 9, 2024).
[4] Theda Skocpol, Protecting Soldiers
and Mothers (Cambridge, MA: Belknap Press, 1992); Michael Katz, The
Undeserving Poor: From the War on Poverty to the War on Welfare (New York,
NY: Pantheon, 1989); Anne Schneider and Helen Ingram, eds., Deserving and
Entitled: Social Constructions and Public Policy (Albany, NY: SUNY Press,
20024); Joe Soss, Richard Fording, and Sanford Schram, Disciplining the
Poor: Neoliberal Paternalism and the Persistent Power of Race (Chicago, IL:
University of Chicago Press, 2011).
[5] Emily Zackin and Chloe Thurston, The
Political Development of American Debt Relief (Chicago, IL: University of
Chicago Press, 2024), 23.
[6] Patricia Strach, All in the Family:
The Private Roots of American Public Policy (Stanford, CA: Stanford
University Press, 2007).
[7] Zackin and Thurston, The Political
Development of American Debt Relief, 94.