Annals of Personal Fiscal Responsibility

by Tom Bozzo

The McCains, poor little rich debtors:

Mr. McCain and his wife had at least $225,000 in credit card debt and… Mr. Obama and his wife had put more than $200,000 into college funds for their daughters.

The bulk of the McCains’ obligations stemmed from a pair of American Express credit cards that are held in Cindy McCain’s name. According to the disclosure reports, which present information on debts in a range rather than providing a precise figure, Mrs. McCain owed $100,000 to $250,000 on each card.

Another charge card, held by what was described as a “dependent child,” had also accumulated debts of $15,000 to $50,000. In addition, a credit card held jointly by the couple was carrying $10,000 to $15,000 in debt, the filing indicated, at a stiff 25.99 percent interest rate.

Via BoingBoing, where Cory Doctorow points to Jon Taplin making the point that it might just pay the McCains to pay off those balances. (See also Coberly from last week.)

My own thoughts are pulled in two directions (angle of incidence indeterminate).

For one, a family member’s experience trying to divorce a full-service brokerage revealed that the business model there depends on having clients who are too rich to be bothered by having a few percent of their wealth siphoned off annually. (Since some commenters don’t get the connection, remember McCain’s economic platform contends it would be bad for the economy if we increased the marginal rate of taxation on income the rich can evidently afford to waste. Not to mention that there have already been efforts to frame the race as between Straight-Talking Man of the People John McCain and U. Chicago Elitist Barack H. Obama.) Discussion point: Should we prefer having private firms soak the rich for profit over having the government soak the rich for public purposes?

For another, the report that the McCain’s are paying a penalty interest rate gives me some faith in soulless corporations. This goes to another family member’s experience billing Delaware’s Old Money for children’s clothes in the relatively distant past (meaning before credit-card lending surpassed chemical manufacturing as the state’s dominant industry). Those families graciously accepted the bills; it was just considered unseemly to expect them actually to pay the bills on any particular schedule. Presumably, we’d need to know more about the McCains’ pattern of delinquency to know whether 25.99% APR nevertheless reflects VIP treatment.

Update 6/17/08: Reader Jefff points to this Huffington Post article that points out that the interest rates on the main AmEx debts are 0%. The disclosure lists the maximum amount owed over the reporting period, so the logical conclusion is that Cindy McCain sometimes runs up Very Large Charges in the course of a month and pays them off. The Chase card with the 25.99% interest rate is a small head-scratcher; a couple grand in needlessly incurred interest may be chump change to the McCains, but tells me how much Cindy cares about the poor little people of the world, and any food bank anywhere would be glad to see the money. Her main debts appear to be associated with the Hensley & Co. Citation Excel.

While the details of the disclosure are complex (get it here), it is clear enough that the McCains or their financial advisors basically haven’t heard of low-cost mutual funds. (See thought #1, above.) In particular, while the children are loaded, they’re also making an elective contribution to the overhead at JPMC.