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Urban Rhythms

The Big Payback

By Wiley Hall III | Posted 2/20/2002

State Sen. Clarence Mitchell IV (D-Baltimore City) is under investigation by a legislative ethics committee for a $10,000 loan that he obtained five years ago from three Baltimore businesspeople. The questionable transaction was first reported by The Sun Jan. 31. According to the paper, the loan has not been repaid, and it was not reported to the Joint Committee on Legislative Ethics until after the details of the story were reported. Mitchell insists he has done nothing wrong.

A couple of things about this story leap out at you. The first is its timing. A few short weeks ago, Mitchell made headlines when he threatened to bolt the Democratic Party in protest of the governor's legislative redistricting plan. The senator later backed down on his threat, but not before he antagonized the powers that be. Under those circumstances, it was all but inevitable that Mitchell would be investigated by someone.

Whistle-blowers, finger-pointers, and people who rock the boat always end up paying a price for their impudence. That's why such acts of defiance are so rare. I don't know how this happens. I certainly don't subscribe to any conspiracy theory; I don't think Democratic leaders are working in collusion with Sun reporters. I just know that the system always manages to protect itself. Mavericks always get spanked. And when you make yourself a target, someone nearly always ends up shooting at you.

The second thing that jumps out from the newsprint is the news that the 39-year-old senator from West Baltimore has financial problems. The Sun reported Feb. 12 that Mitchell "has been sued a half dozen times over the past five years for failing to pay tens of thousands of dollars in debt." A portion of his salary as a state senator is being garnisheed to help repay a $434,874 debt he and three family members owe from a failed business venture, according to the paper.

In the very recent past, news that a public official is having trouble making ends meet has presaged the fall of some promising careers. The late Jacqueline McLean, the former city comptroller, comes to mind. It's the proverbial shoe: First comes news that a politician is deep in debt, then allegations of corruption follow.

Yet it is important to remember that indebtedness is not, in and of itself, corrupt. Mitchell joins millions of ordinary people who are just one paycheck away from financial ruin. It is unfortunate that his problems occur within the context of scandal. He might otherwise be in a better position to understand the plight of the little people.

In early February, the U.S. Senate's Banking, Housing, and Urban Affairs Committee, chaired by Sen. Paul Sarbanes (D-Md.) heard testimony that most Americans don't know the first thing about managing their personal finances. The panel heard, for example, that nearly half of those between the ages of 18 and 34 admit that they're living beyond their means. It heard that family debt grew by 42 percent between 1995 and 1998, and that the average household owes more than $8,000 in credit-card bills alone--three times the figure 10 years ago. And it heard that 1.3 million people filed for personal bankruptcy last year, up 8.8 percent from the previous year.

Managing one's personal affairs has grown more complex than the average person can handle, Treasury Secretary Paul O'Neill testified.

"I recall a time, not so long ago, when for a large number of Americans, mortgage rates were fixed, savings went into a bank passbook account, consumer goods were bought on a cash-only basis, and pensions all had defined benefits for retirement," O'Neill said. "Today, mortgage financing comes in a variety of packages, credit-card use is universal, and savings investment vehicles range from CDs to mutual funds to individual stocks to annuities."

He might have added that not very long ago, the prevailing social mores stressed values such as frugality, living modestly, saving over conspicuous consumption. We live today in an age defined by the adage, "If you got it, flaunt it. If you don't got it, perpetrate."

Sarbanes' committee heard witness after witness call for programs that promote financial literacy, beginning in school and on up into adulthood. Those proposals make a lot of sense, although I can imagine a scenario where the curriculum for such programs is shaped by the lending industry and investment brokers, which have a vested interest in promoting their wares.

But financial literacy begins with a reorganization of priorities. Clarence Mitchell IV appears to exemplify this rule. Officially, the $31,500-a-year job of Maryland state senator is a part-time gig, but legislating appears to be Mitchell's only employment. And among the high-flying attorneys and real-estate agents and big-shot businesspeople who serve in Annapolis, $31,500 is chump change. It's all about living within your means, which is hard to do when everyone around you is living larger.

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