An article in The Atlantic magazine sees a major generational divide opening up.
As a liberal graduate student and a conservative professor, we rarely see eye to eye on politics. Yet we agree that the generation war is the best frame for understanding the ways that the Democratic and Republican parties are diverging. The Democrats are rapidly becoming the party of the young, specifically the Millennials (born between 1981 and 1996) and Gen Z (born after 1996). The Republicans are leaning ever more heavily on retirees, particularly the Silent Generation (born before 1945). In the middle are the Gen Xers (born between 1965 and 1980), who are slowly inching leftward, and the Baby Boomers (born between 1946 and 1964), who are slowly inching to the right.
Today, the older generations have a lock on political power in Washington. House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell are members of the Silent Generation. So are Joe Biden and Bernie Sanders, who lead in nearly every poll of the 2020 Democratic primary. President Donald Trump and the median senator and representative are Boomers. Of the nine justices on the Supreme Court, two are from the Silent Generation and six are Boomers. Yet the median American is 38—a Millennial.
Over the past year, the Democratic Party’s geriatric leadership has begun to feel the ground moving beneath its feet. For decades, moderate Democrats have kept a tight grip on the party’s platform. The 2018 midterm elections were a watershed. Boomers and members of the Silent Generation still make up more than three-fifths of the party’s House members and hold all major leadership roles. But newly elected members—including 14 Millennials and 32 Gen Xers—are driving the conversation on policy, from Ocasio-Cortez’s Green New Deal to a recent resolution to withdraw support from Saudi Arabia’s war in Yemen.
But there are cross-generational alliances around progressive issues. Sanders and Ocasio-Cortez have just jointly sponsored legislation that puts a cap on credit card interest rates and seeks to put payday lenders out of business.
ALEXANDRIA OCASIO-CORTEZ will announce her first major bill today, in partnership with Vermont Sen. and presidential candidate Bernie Sanders. It’s something Sanders has proposed for many years: a 15 percent interest rate cap on all consumer loans, which would reduce what many Americans pay on their credit cards and effectively eliminate the payday loan industry.
The bill is called the Loan Shark Prevention Act, and it’s only two pages long. It includes language that would prevent lenders from adding fees to “evade” the interest rate cap and sets penalties for violators, including a forfeiture of all interest on the illegal loans.
“Today’s loan sharks wear expensive suits and work on Wall Street, where they make hundreds of millions of dollars in total compensation by charging sky-high fees and usurious interest rates,” Sanders and Ocasio-Cortez said in a statement accompanying the plan.
The real consumer savings from the Loan Shark Prevention Act would come from other short-term, small-dollar loans, which in an age of precarious finances at the low end have become commonplace. Payday loans carry annual percentage rates as high as 667 percent.
At a time when 40 percent of Americans don’t have $400 on hand for an emergency, demand for short-term loans would still exist. But if nobody will lend to such families at 15 percent, how will they cope? Will they go from loan sharks in three-piece suits to actual loan sharks?
The answer, to Ocasio-Cortez and Sanders, is postal banking, which several Democratic presidential candidates have endorsed. Letting the nation’s 31,000 post offices issue simple bank accounts and even short-term loans would solve numerous problems, particularly for the over one in fourhouseholds who have little or no access to banking services, which lead them to use high-cost alternatives. Returning to a postal banking system, which as many as 4 million Americans enjoyed when it was in place from 1911 to 1967, could promote financial inclusion, save billions of dollars for vulnerable populations, and help modernize and stabilize the postal system — a nationalized entity written directly into the Constitution — in an era of electronic communication.
Let’s see how the Democratic party leadership, always seeking to cozy up to Wall Street, responds to this bill.