As familiar as Americans are with the concept of credit, many of us, upon encountering a sandwich that can be financed in four easy payments of $3.49, might think: Yikes, we’re in trouble.

Putting a banh mi on layaway—this is the world that buy-now, pay-later programs have wrought. In a few short years, financial-technology firms such as Affirm, Afterpay, and Klarna, which allow consumers to pay for purchases over several interest-free installments, have infiltrated nearly every corner of e-commerce. People are buying cardigans with this kind of financing. They’re buying groceries and OLED TVs. During the summer of 2020, at the height of the coronavirus pandemic, they bought enough Peloton products to account for 30 percent of Affirm’s revenue. And though Americans have used layaway programs since the Great Depression, today’s pay-later plans flip the order of operations: Rather than claiming an item and taking it home only after you’ve paid in full, consumers using these modern payment plans can acquire an item for just a small deposit and a cursory credit check.

[Read: Why is there financing for everything now?]

From 2019 to 2021, the total value of buy-now, pay-later (or BNPL) loans originated in the United States grew more than 1,000 percent, from $2 billion to $24.2 billion. That’s still a small fraction of the amount charged to credit cards, but the fast adoption of BNPL points to its mainstream appeal. The popular embrace of this kind of lending system says a lot about Americans’ relationship to debt—particularly among the younger borrowers who made BNPL popular (about half of BNPL users are 33 or under). “We found that most of the people that use buy now, pay later either don’t have or don’t use a credit card,” Marco Di Maggio, an economist at Harvard, told me. He said that Gen Z was skeptical of credit cards, possibly because many of them had seen their parents sink into debt. Following the ’08 financial crisis, personal debt became a public bogeyman. The elimination of housing wealth for millions of Americans fueled a credit crunch, in which banks tightened credit standards and sharply curtailed their lending. Government agencies such as the Consumer Financial Protection Bureau also strongly discouraged overextension.  

“We have sort of indoctrinated younger borrowers in the idea that having credit-card debt is bad,” Anastasiya Ghosh, a University of Arizona marketing professor, told me. Ghosh’s research involves polling consumers about which method of spending makes them feel the most guilty. “Credit cards are always the worst,” she said. Conversely, when given the option between BNPL and debit, shoppers made no moral distinction. Even the most prosaic items were fair game for financing. Ghosh had assumed people would tend to reserve BNPL “for hedonic things that are harder to justify”—until a control group in one of her studies happily used it on groceries. “They felt absolutely nothing negative,” she said, “which blew my mind.”

Older consumers might see fractured payments on chicken thighs as a sign of financial precarity, but many young people find BNPL’s nuances liberating, Di Maggio told me. They perceive credit cards as encouraging a kick-the-can attitude toward debt, with interest steadily accruing from month to month. (Indeed, roughly 60 percent of credit-card holders don’t pay the full amount on their monthly bills, according to a McKinsey survey.) Traditional lenders profit from sustained delinquency, whereas most BNPL loan terms are fixed at six weeks. BNPL providers can offer zero-percent interest rates because they charge merchants three to four times the average credit-card processing fee. To many Gen Zers, that business model seems less risky than credit cards. It gives them a sense of security that the debt from a purchase won’t balloon from interest and hang over their heads forever.

The tendrils of those credit-card anxieties stretch all the way to Instagram and TikTok, where countless “debt success stories” feature creators digging their way out of credit-card bills. As the reigning king of product placement, Instagram is a crucial node in the BNPL network: #Afterpay is tagged in more than 1.6 million posts on the platform, most of them from brands and influencers hawking apparel. But Gen Z’s lifestyle gurus live on TikTok, where they articulate new modes of consumption in real time—distilling whole philosophies at incredible scale.

To a generation of borrowers, zero interest means free money, and the idea of paying down daily indulgences doesn’t faze many young consumers. “One thing about me? Ima Afterpay that shit,” says the creator behind All Things Naisa on TikTok, where she has more than 130,000 followers. “I don’t care if I have $40 million in my account. I don’t care if the cart came up to $6.74. Afterpay that shit!” The video has almost 180,000 likes. In another video, John Liang, a TikTok influencer with 2.1 million followers, presents the decision to use BNPL as one of pure reason. Standing in front of a green-screened Apple Store, Liang explains that by not paying the total price for a product upfront, he can invest the remainder of his money.

When I pitched this latter reasoning to Di Maggio, he said it made little sense economically and psychologically. He pointed out that investments don’t typically yield appreciable returns over just six weeks. And even if they did, most consumers who find an extra $20 or so in their pocket don’t think to buy stocks or bonds with it—they spend it on something else. A recent study he co-authored supports this notion, finding that BNPL use causes a permanent increase in total spending of about $60 a week, stretching the average household retail budget 30 percent. Another study found that, on paper, people who borrow from these financial-technology firms look as creditworthy as their conventional-banking counterparts, but “after they get the loan, they are much more likely to be delinquent,” Di Maggio said. BNPL delinquency rates are outpacing those of credit cards, and the companies have seen their valuations slashed in the face of waning interest from investors.

[Read: The resurrection of retail]

Many financial-technology firms frame their mission as one of inclusion—they say they’re building a bigger tent for America’s un- and underbanked, which include gig workers and young people with poor credit histories. Klarna, for instance, recently launched a “creator platform” to match merchants with influencers who have access to their target audiences. But because BNPL providers aren’t subject to the same scrutiny as banks (most of them engage in forms of lending not explicitly covered by the Truth in Lending or Dodd-Frank Acts), consumer protections are scant. BNPL programs increase the likelihood of borrowers dipping into their savings and incurring overdraft and other fees. And most of the companies don’t furnish credit-score-boosting data to agencies such as TransUnion, meaning that even if you use BNPL and pay on time, “you have thousands of dollars of debt on your balance sheet that nobody knows about,” Di Maggio said.

What companies like Klarna once characterized as paradigm-busting behavior—young people rejecting stodgy banks in favor of more freeing forms of finance—now looks like the crest of yet another credit cycle, a familiar note in the motif of American consumption. As with young credit-card holders, BNPL users under 25 have the highest default and delinquency rates. If credit dries up in a broader downturn, they are at risk of losing access even to those programs. Meanwhile, they may find that their reliance on these parallel lending methods, which only glancingly intersect with the conventional credit ecosystem, has hobbled their credit history at the worst possible time.

The new debt, in many ways, is exactly the same as the old debt. On TikTok, a small cadre of folks is starting to inch toward denunciation. The opening line of one finance influencer’s video last month: “I’m gonna explain to you why you should never use the buy-now-and-pay-later feature.”

Arizona State University professor Glenn Gaesser loves Monty Python so much, he researched the possible health benefits of one of their funniest skits. The positive results caught him off guard, "It took me half a century to come to this, all right!?"

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If you were hoping that a razor-thin majority in the House was going to moderate the behavior of congressional Republicans and create some sort of platform for governing, you are about to be disappointed. GOP House leaders have told us what to expect, and we should take them at their word.

But first, here are three new stories from The Atlantic.

What the rioters in Brazil learned from Americans Maybe don’t unleash the Kraken. “I saw horrific things when I played in the NFL.” Curiouser and Curiouser

Although 2022 was, overall, a good year for democracy, I did warn back in late November that the authoritarian right was regrouping and that there would be challenges ahead in 2023. And here we are: Brazil has now endured its own version of a January 6 insurrection (the rioters were even egged on by American seditionists); Russia’s Vladimir Putin and his obedient poodle, the Belarus dictator Alexander Lukashenko, are conducting joint military drills near Ukraine, according to Belarusian state TV; and the Republicans have, after 15 rounds of voting and a possible shady deal with its crackpot caucus, taken control of the U.S. House of Representatives.

There are some on the center-right who are hoping that the GOP has learned its lesson, and will restrain its fringe and finally leave Donald Trump behind. Ross Douthat, for one, wrote over the weekend—in a column that was hopeful to the point of fantasy—that the fight over the House speakership was “the old world come again,” a return to “the G.O.P. ancien regime with all its dysfunctions, stalemates and futility,” and that Trump, although “hardly finished,” has lost much of his grip on the party.

Good luck with all of that. A more authoritative voice, the new House Majority Leader Steve Scalise, also had a few things to say. The new House Republican majority, he tweeted on Sunday afternoon, would move in its first week to pass legislation to defund “the 87,000 new IRS agents,” establish a committee on the “weaponization of the federal government against citizens,” end Strategic Petroleum Reserve oil sales to China, and, in a nice flourish, hold “woke prosecutors accountable.”

The new House Judiciary chair, Jim Jordan, will lead the committee on “weaponization,” virtually guaranteeing that its hearings will turn into a festival of prancing nonsense that is unlikely to do very much but enhance Jordan’s visibility while he tears into U.S. intelligence and law-enforcement agencies at the expense of American national security. (Jordan has also dropped unsubtle hints that he intends to impeach Joe Biden.)

Meanwhile, Jordan’s fellow leader in the Coalition of the Unhinged, Paul Gosar, also tweeted on Saturday that Republicans “will conduct a real investigation into J6. The effort to attempt a coup between traitor Gen. Mark Milley and [Nancy] Pelosi will be reviewed and exposed.” This, apparently, is a reference to when Pelosi, as speaker, called Milley, the chair of the Joint Chiefs of Staff, two days after January 6 because she was concerned that Trump might try to start a war as a diversion from his election loss. (She wasn’t alone: Trump’s secretary of state, Mike Pompeo, among others, reportedly had the same concern. So did I.)

I doubt that most Republicans in Congress actually believe that the most senior military officer in the United States is a traitor. And yet, they all remain quiet—because under the GOP’s rules, any one member can move to vacate the speaker’s chair and start the whole leadership fiasco all over again, and that includes Gosar, the dentist from Arizona turned conspiracy-obsessed crank who now sits in the People’s House.

But Gosar’s gibbering raises the larger question of what else McCarthy might have agreed to while he was slicing up his political soul like a pound of cheap olive loaf. We’re in the dark—and so are many members of Congress, apparently. Punchbowl is reporting that the rules package, the first order of business about how the House will run, contains a secret three-page addendum—some sort of deal between McCarthy and his fellow Republicans that the rest of the members have not seen.

Meanwhile, Trump is taking credit for getting McCarthy the speaker’s job. And rightly so: McCarthy himself is thanking Trump. The former president, according to Politico, did not insert himself in the struggle in the House at the last minute; rather, some of the Republicans called him, and when he spoke with the recalcitrant legislators, in this account, he “tore them a new asshole” over their opposition to McCarthy. Shortly thereafter, one of the holdouts, Representative Andy Biggs of Arizona, changed his vote to “present,” which lowered the number of votes McCarthy needed to win. Matt Gaetz—who in any rational Congress would be a man of no account—therefore was able to stand firm by continuing to vote “present” and thus handing the gavel to McCarthy with a minority of the votes cast by the entire House.

Of course, the Senate and the White House remain in the hands of Democrats. This fact could make the House GOP even more prone to performative nuttery, because most members know that most of the time, indulging the fringe is unlikely to have real-world legislative consequences. If Biden continues true to his political form, he’ll likely ignore most of what goes on in the House. Biden is 80 years old; his political career spans a half century of American history, and the antics of the extremists will probably remain in his peripheral vision, if he notices them at all. (The exception here is Jordan, who has made noise about going after Biden’s son Hunter. But even if those hearings take place, they are unlikely to have any major impact on policy over the next few years.)

The good news is that most of the U.S. government remains in the hands of functional adults. The bad news is that the House is headed down the rabbit hole to its own Wonderland, where things will become “curiouser and curiouser,” and its members will have to placate their extremists by believing “six impossible things before breakfast” every day.

Related:

Speaker in name only If Cormac McCarthy interpreted the humiliations of Kevin McCarthy Today’s News At least 1,200 protesters have been detained for questioning after supporters of Jair Bolsonaro rioted in the Brazilian capital yesterday. The Georgia grand jury investigating efforts by Trump and his allies to overturn the 2020 election has finished its work and will now issue a report to recommend whether the district attorney should pursue indictments. The Campaign Legal Center, a nonpartisan watchdog group, filed a complaint accusing Representative George Santos of New York of campaign-finance violations. Dispatches Up for Debate: Readers weigh in on the risks of sports.

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Evening Read (Smith Collection / Gado / Getty; The Atlantic)

What Squirrels Taught Me About Life After Divorce

By Kelly McMasters

Noah likes to feed the squirrels naked. I don’t know if he does it this way when I am not here. But like clockwork on the weekend mornings we spend together, the squirrels will start to tap on the window. And Noah will rise from the bed as if responding to a baby monitor. He will stumble to the kitchen, grab a handful of unsalted almonds from a jar in the cabinet, return to the bedroom, and crack the window an inch, popping the almonds out one by one so they land on the sill in a line.

The squirrels live in the saw-whet owl nesting house he bought and placed on the corner of his fire escape. For a few hours each morning, they pad back and forth across the windowsill, balancing on the black steel ribbons of the landing, waiting for him to put out breakfast, then second breakfast, then snack. If no almonds are waiting for them on the sill, the squirrels will knock loudly on the window until he wakes up.

Read the full article.

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Read. “For the Child(ren) I Cannot Carry,” a new poem by Cynthia Dewi Oka.

“I want you to know that there were moments staying / was easy. That I do not regret any of my wishes, even when / I have denied them.”

Watch. I Didn’t See You There (airing on PBS tonight and available to stream until 2/8), a film that depicts, with hypnotic realism, life from the perspective of a disabled person.

Play our daily crossword.

P.S.

My wife and I have been doing some television archeology, digging up old shows that we didn’t notice or watch attentively when they first appeared. We recently started binge-watching The Newsroom, Aaron Sorkin’s HBO series about the workings of a fictional cable-news organization and the (mostly) noble people who work there. The show, which ran from 2012 to 2014, is uneven but often compelling television, though maybe I’m biased because I very much like Jeff Daniels (who plays the chief anchor, Will McAvoy) and Sam Waterston (the network president, Charlie Skinner). But like Sorkin’s masterpiece, The West Wing, it is full of implausible and showy moments where each character periodically stops to deliver a long speech by … well, by Aaron Sorkin.

I don’t know how true to life The Newsroom is; I’ve never worked in one. (Matthew Yglesias wrote earlier today of his admiration for The West Wing as a show that reflects some realities in Washington; I think he is wrong. That show is Veep.) But there is an unsettling prescience to The Newsroom—which took many of its plots from actual events almost in real time—about politics and news and entertainment, and how all of them became indistinguishable in a country that doesn’t care about reality or government or decency or much of anything else. The Newsroom ended its run just as the GOP won full control of Congress, and two years before Trump arrived at the White House—events I suspect would have challenged even Sorkin’s creative powers.

— Tom

Isabel Fattal contributed to this newsletter.