Obama Knows Firsthand About Consumer Debt

By Michelle Singletary
Sunday, June 29, 2008

Far too many people are buckling under the strain of running a household as consumer prices rise, home values decline and banks tighten up on credit. There's such financial distress across the country because of mountains of personal debt that any new president will have a difficult time trying to fix the deep-seated problems.

So do John McCain and Barack Obama, the presumptive presidential candidates, understand the financial hardship of the people they seek to lead in the White House? Can they effectively tackle the issues that are dragging down the economy?

Democratic Sen. Obama carved out some time for me recently to discuss how he would deal with our economic crisis. His Republican counterpart, Sen. McCain, has yet to respond to repeated requests for an interview.

Here's what the candidates are increasingly facing. Every day, I get an e-mail from someone who is either struggling with a job loss; massive credit card, medical or student loan debt; or the prospect of losing a home. Others ask for advice to help make their money last until the end of the month.

I can assist some folks with suggestions on how to better manage their money. But I don't have all the answers that will help them make the money they earn stretch as far as they need to cover all their expenses.

"I live paycheck to paycheck now and won't be able to save like I should," one custodial worker in Delaware wrote to me recently. "I already work two jobs. I've already cut back on everything including food. I know all the right things to do, but sometimes you have to live with doing the wrong thing just to live."

The wrong thing for many has been going deeper into debt.

"I am close to $70,000 on about six to eight credit cards with interest rates from 9 percent to 25 percent," one reader from Cambridge, Mass., told me. "I need some relief."

Another wrote: "I am a 36-year-old single mother. I need to know how is it possible to save money when my bills are more than my bring-home pay. I don't splurge on anything and the clothes we purchase are from thrift stores. Please tell me how can I get ahead if I'm always behind."

These people are representative of the thousands across the country that the presidential candidates will hear from on the campaign trail. The policies of the winner will help determine how the United States turns the corner in this crisis and how the economy performs in the years ahead.

My conversation with Obama began with a discussion of the housing crisis. Obama said his plan is to create a $10 billion foreclosure prevention fund. He said he would underwrite the fund in part with penalties assessed on lenders who act irresponsibly and commit fraud. It would not help people who were speculating or who lied on their mortgage applications, he said.

"I'm interested in making sure people [get help] . . . who are working hard but just found themselves underwater as a consequence of some of these deceptive practices or a lack of clear consumer information," Obama said. "We have to do our best to keep them in their homes. Not just for them but for the community as a whole.

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