Government-sponsored credit card wat?

Slate right now has an interesting piece out advocating for what they affectionately call the O-card- a government-issued credit card. FTA:

But instead of cracking down on companies that treat their customers poorly, why doesn't the government just offer a credit card of its own? After all, government regulation may help, but it's unlikely to solve the problems of the credit industry—namely, spiraling interest rates coupled with rising defaults. Obama likes to talk about constructive alternatives. Why not offer an O-card? With his face on it?

Hooooooooooly shit this could end poorly. They mention that many European countries have the same system in place but boy are we different. As they even mention, the European relationship with credit cards is much different from the current American love affair. They also mention that the government already backs home loans, car loans, student loans, and a bunch of other forms of credit that people have needs for- again, THESE THINGS ARE DIFFERENT (not that Fannie Mae and Freddie Mac did such a great job with these other types of loans either).

That aside, there are at least social policy goals behind government-sponsored home loans (leaving aside the fact that these goals may have gotten us into the financial crisis in the first place)- what are the goals behind the O-card? Allowing consumers to fall even farther into debt? Slate's even awkward about this, saying that they're not looking for people who would fall so far into debt that they'd default- FTA:

The caveat: You'd have to be supercreditworthy to get a card. The government doesn't want to have borrowers behind on payments; if they defaulted, taxpayers would have to pick up the tab. (Fannie Mae and Freddie Mac had higher standards than other lenders, too.)

What? How does that make any sense at all? Let's create this huge government credit card company, set it up with interest rates that would bankrupt the rest of the industry, and then only let the rich use it? Not only does that defeat the purpose of the whole exercise, it actually cripples the rest of the system- it leaves the actual credit card companies with the deadbeats and bums that aren't willing or able to pay their bills on time! Again, credit card debt is different from home loans or car loans or even student loans. Very few people have the capacity to go out and buy a car or a house on a whim when they're not financially able- but anybody can go use a credit card to buy a new pair of jeans. The average household has $8300 in credit card debt, and I'd wager that a boatload more aren't able to pay it on time each month .

The Consumerist blog comments have a really good summation of the reason this is terrifying in the first place.

Hmmm...a credit card that won't be bankruptable (as federal student loans are not now) issued by a lender who can garnish my wages if I don't pay? No thanks.

(via Slate via Consumerist, picture via Consumerist)