Yet, while feelings about debt’s effect on their own lives were mixed, poll respondents were much more unified in doubting its value for society overall. Just 39 percent agreed that “personal debt provides a path to achieving the American Dream by making it possible for people to borrow against their future earnings,” while a solid 56 percent majority said that “personal debt creates an obstacle to achieving the American Dream by encouraging people to spend beyond their means.” Baker, the sprinkler installer from Michigan, is firmly in the latter camp. “A lot of people try to keep up with their neighbors, cover wants before their needs,” he laments. “Even in debt as I am, I could go to the store right now and pick up a flat-screen [TV] and a Blu-Ray and a PlayStation.” The affluent were much less likely to see debt as an obstacle, but otherwise the belief that it created more problems than benefits for society was widespread.
That conviction is evident in another stunning result: Three-fourths of those polled said they believed they personally would be better off if they carried “no debt by paying off all your loans right now.” Just one-fourth accepted the idea that debt made them better off by allowing them “in effect [to] borrow from your future income.” On that ringing declaration, the views of whites and minorities, the young and the old, those with and without college degrees, and even the wealthy and the poor varied little. Jared Quincy, a lawyer in Herriman, Utah, eloquently expressed the aspiration inherent in that finding. “I think too many people confuse the American Dream with ‘I can have whatever I want’ and believe debt is a pathway to having whatever you want,” he says. “I would submit that the American Dream is self-determination, and enslaving yourself to creditors is no way to self-determination.”
Most Americans may not be able to achieve that ideal (83 percent reported holding at least one form of debt), but many are looking to steer their lives in that direction. When asked whether the economic downturn had required them “to cut back on spending on things such as clothing, vacations, and dinners out in order to pay down your debt or not acquire any new debt,” more than three-fifths said yes, while only about one-third said no.
Families earning at least $100,000 annually were somewhat exempt from that consensus (although 42 percent of them say they have cut back), but it encompassed virtually everyone else; even a majority of families earning between $75,000 and $100,000 say they have retrenched. “Our personal experience with debt is that it’s a millstone around the neck,” says Dan Olson, a business analyst for a health care firm who lives in Minneapolis. “We’re not exactly excited about the debt we’ve got, and we’ve been having conversations about spending less, spending less.”
There was a somewhat greater, but still not profound, difference across class and racial lines when respondents were asked how the downturn had affected their investment decisions. Nearly two in five said that the slowdown had required them to cut back “on saving and investing” for retirement or their children’s education; an almost equal percentage said that it hadn’t changed their investing decisions; and the remaining fifth said that the slowdown had instead encouraged them to “save and invest more for the future.” Not surprisingly, upper-income families were much less likely than their lower-income counterparts to say they had cut back on investing. But, just as on the questions about spending, the differences between the attitudes of whites and minorities or between blue- and white-collar whites were relatively modest.
Even those differences virtually evaporated on the broadest question about how the United States should deal with its public and private debts moving forward. The poll asked if the economy would be helped or harmed if government and individuals all tried to simultaneously pay down their loans and reduce spending—the simultaneous deleveraging that divides economists. Just 29 percent worried “this would hurt the economy” by reducing consumption (the view shared by most liberal and even many mainstream economists). Meanwhile, a resounding 61 percent said that it would “help the economy as it would create more savings that could be invested to create or expand businesses” (the view advanced by most conservative economists). That consensus held, virtually unshaken, across lines of race, education, and income.
The consistent preference expressed in the poll for reducing debt—both individually and collectively—suggests that, like the Depression, the Great Recession could have a lasting impact on how today’s Americans borrow and spend throughout their lives. At the least, it’s clear that the fierce downturn has triggered a profound moralistic streak in millions of Americans that equates debt with profligacy, and profligacy with an erosion of the discipline required for economic success, both individually and as a nation. Put simply, for many Americans, debt has become a four-letter word.