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Credit Socialism

In May 1991, Risa Kugal, a fortyish New York woman who said she was unemployed and supported by her mother, appeared at court in Brooklyn. She was there, as James Grant tells us, to have $75,000 in credit card debt wiped off the books under Chapter Seven of the federal bankruptcy code. She owed $18,000 on five Citibank cards, more than $17,000 on three American Express cards, and smaller amounts on a host of accounts like Macy's. Her assets, she said, were $750.

The bankruptcy process is supposed to be long and arduous, but Judge Conrad B. Duberstein takes less than seven minutes, on average, to forgive the profligate and stick the federal government's thumb in their creditors' eyes. Kugal, unusually, was questioned on how exactly she had come to owe so much money on credit cards. "1 used one to pay off another," she answered, and was promptly cleansed of her obligations. Another bankruptcy judge, Marvin Holland, hoped Kugal didn't feel bad. He announced: "I don't want anybody to leave this court feeling uncomfortable, guilty, or ashamed. You should walk out of here with your head held high. You should feel proud." This is a microcosm of America. Holland's message is sent by Washington, D.C. to all its clients, from welfare bums to S&L bandits. How have we come to this?

There are two official schools of thought on the 1980's: the left-Clintonian, which condemns the decade...

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