Congresswomen Anna Paulina Luna (R-Florida) and Alexandra Ocasio-Cortez (D-New York) are pushing a bad idea: they want to cap credit card interest rates.
This not-so-novel idea has developed since the late 1970s, when personal and national debt, inflation, and economic malaise raged. This bad policy move resurfaced because those bad indicators rose again. President Trump floated the idea during his third presidential campaign. US Senator Josh Hawley (R-Missouri) openly favored this policy during his 2024 reelection bid. I was sick to my stomach when I heard this offer.
Let’s assume the best intentions for all parties pushing Luna-AOC’s misguided bill. Credit card debt in the average American household is at an all-time high, with one estimate at $1.2 11 trillion. Yikes! If you spent one million dollars a day from the day Jesus was born to today, you still would not have reached one trillion. The current federal government is running two trillion-dollar annual deficits, and the national debt is rushing past $36 trillion. Credit card debt sucks (literally and figuratively), and anyone compassionate person wants to help others avoid or break free of usury, for sure.
However, no matter how rapacious or usurious one may judge the credit card companies operating in our country, it’s not as though the credit companies or the banks are shoving these debt burdens onto American consumers. The American people are charging up their lives, and the debt burden is crushing them out of their own free will. They chose to take on the debt and needed to pay it up. Frankly, this whole discussion reminds me of raving over the student loan debt crisis. Voters on the GOP side—and even some of the remaining common-sense Democrats—resisted the notion that the United States government should unilaterally forgive student loan debt for millions of borrowers across the country. To be principled and consistent, we must resist the notion that punishing credit card companies will alleviate the pain of indebted American consumers.
Capping interest rates on credit card companies will not help the average Joe, anyway. Let’s say Luna and Cortez get their wish and force the credit card companies to limit their interest rates. If the federal government imposes a cap, many American citizens will lose their credit cards entirely. It’s a privilege, not a right, after all! Whether we like it or not, credit card companies offer their service to make a profit. They will foresee a public that keeps charging, now coupled with the moral hazard that they won’t have to pay high interest. Understandably, the card companies would decide to abandon the credit card business or limit their services to those who not only charge big but eventually pay back on time. Because Congress inadvertently took away available credit, desperate consumers will run to payday loan firms or, worse yet, resort to loan sharks.
Recommended
You cannot help the poor by punishing the rich, and you cannot help the indebted by punishing the creditor. Congress can discuss policies that have enabled control of the credit card market. Even then, the answer to a monopoly is more economic liberalization, not more government restrictions.
Yes, big banks have played fast and loose with their clients, and Big Business has been part of the Big Woke Mess that corrupted our country and culture, especially since the Obama Administration. But the answer to this moral collapse is no more government power. Giving power back to the people means restoring responsibility to the people, too. The best way to help the working classes, to tame the perverse excesses of political elites, and to restore power to the people is not with economic illiteracy and fanciful economic interventions, which all sound good but only fester problems. The way forward is more financial freedom and minimal regulation that enforces contracts and respects the natural rights of individuals and businesses alike. It also means expecting those who racked up the debt to pay it back or work with private (even charitable) interests who are willing to step in and assist.
It’s particularly disturbing that Rep. Luna calls herself not only MAGA but a vocal member of the Freedom Caucus, as well. Since when did freedom include more government strictures to limit economic opportunities? Since when did freedom mean advocating for everyday citizens not to absorb the consequences of their decisions, learn from bad decisions, or improve their actions and choices for the future?
This resurfaced debate over a very bad idea reveals the dark side of the emerging populist conservatism working its way through our current politics. Instead of telling the people the truth—and that includes telling them to take responsibility for their own actions—some MAGA politicians, along with their progressive counterparts, want to blame “the system, Big Business, the government, etc.” for their crises. Four years ago, we had populist-leaning conservatives suggesting that there is a “conservative case” for the minimum wage (there is none). Steve Bannon still talks about slamming larger businesses with higher taxes, as though that will help the working man—but if the capitalist has no money to invest, how will he hire?
True freedom cannot be “freedom from consequences.” Look, I have experienced my fair share of credit card debt. However, I did not break free of the debt cycle through someone else buying my way out of it. I had to cut out lots of spending I didn’t need, learn to live within my means, and then save up for what I wanted.
Ultimately, I understand why Luna jumped into this economic folly along with AOC and her coterie. Trump talked about it on the campaign trail; therefore, anyone wanting to show off their MAGA credentials will fall in line. But Trump has a canny knack for replacing bad ideas with better ones. Congressmen must show the same wisdom and discernment … and remember that fiscal discipline, not nice-sounding ideas, is essential to MAGA.
Join the conversation as a VIP Member