In the pursuit of prosperity, we have 'Maxed Out'

The American dream of easy credit has become a nightmare, this writer insists.

By Marilyn Gardner

from the April 3, 2007 edition

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"Charge it" may be one of the most enticing phrases in the English language. Who needs cash – or even a modest bank balance – when your wallet is bulging with plastic? After all, the bill won't come until later, and there's no need to pay in full each month.

That faulty reasoning, perpetuated by the mushrooming "financial services industry," has spawned another phrase that is anything but reassuring: Maxed Out. It's the perfect title for filmmaker and writer James Scurlock's astute indictment of the credit industry – and the perfect warning for what he sees as a society headed for trouble.

It begins innocently enough – an overdraft here, a missed payment there. But faster than you can say "late fees," the penalties snowball. Add more purchases to the balance, and soon a cardholder can be saddled with unmanageable debts. For some, bankruptcy becomes the only option.

Scurlock calls this maxing-out a "bear trap," and he finds plenty of places to cast blame. He points one finger at the increasingly unregulated banking industry. How, he asks, can banks keep lending to people who can't afford to repay them? Americans rationalize that banks would not extend them credit unless they could handle it. Yet banks make far more money teaching people to spend than to save.

Congress becomes another target of Scurlock's ire for passing the Bankruptcy Reform Act in 2005. The law makes it sometimes impossible to discharge debts. Yet studies show that divorce, medical emergencies, and job loss are the primary reasons for financial devastation. Middle-class Americans, single mothers especially, are among those hardest hit by bankruptcy reform.

Even the Oval Office is complicit. Scurlock chides President Bush for dismissing the federal debt as "numbers on paper" and criticizes Vice President Cheney for claiming that "deficits don't matter."

As proof that debts do matter, Scurlock offers a parade of real-life examples. He interviews a husband whose wife drove her car into the Ohio River after she ran up tens of thousands of dollars on her credit cards. Suicide, he notes, is particularly high among those with crushing debt.

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