Turning the Kaleidoscope on Debt Relief: What APD can Teach Us about How and When Politics Works

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.