First off, of course, there's the federal government. Our magnificent partisans in Congress, and putative non-partisans in the vast bureaucracies, work hard to make it easier for local governments to go further into debt. Our general tax policies, for instance, encourage government ownership of big projects over private ownership. How? By taxing the latter but not the former. This was once considered something of a problem, but Edwards has noticed a shift:
The tax advantage for municipal bonds also creates an incentive for private groups to lobby government officials to issue debt on their behalf. In 1986, Congress tried to clamp down on this problem by imposing limits on the issuance of tax-exempt "private activity bonds." But in a series of tax bills since then, Congress has reversed course and embraced economic micromanagement by creating additional types of tax-favored private purpose debt.
Nearly a quarter of all public debt, the Bureau of the Census tells us, is "public debt for private purposes."
And then there are the helpful moneylenders, whose industry journal The Bond Buyer is, as Edwards puts it, "full of stories on the latest Wall Street methods to help officials put their jurisdictions into debt." Why? They collect the interest. Taxpayers pay it.
There are many reasons to oppose accumulating debt. Reason Numero Uno? It's usually just another way of imposing taxation . . . just shifting the burden of payment into the future. As Edwards puts it, it only seems to "make sense for governments to finance capital projects with debt, as private businesses often do. But in practice, when politicians are given the power to issue debt, they have an incentive to issue far too much because it allows spending without the political constraint of having to tax current voters."
Further, as anyone struggling to pay off three or four credit cards knows, just keeping up with payments makes budgeting more painful than usual, as huge chunks of one's income (revenue) get soaked up in debt maintenance. Why anyone would encourage local and state governments to increase their debt is beyond me. And yet, debt has gone up in most states, in most localities.
But not all. As Edward points out, "[g]overnments in a few states, such as Idaho and Wyoming, issue very little debt and seem to do just fine."
So it is possible to restrain the politicians. It has been done, and done successfully.
Indeed, to do just that — and more — citizens in a number of states with the initiative process are this season advancing Stop OverSpending measures designed to control government growth, including the growth of debt.
The key to success is, first, not to accept at face value promises made by politicians. Of any party. Or none. (After all, the candidate I mentioned at top, he's not running as an Independent to oppose bi-partisan betrayals; he's just figured out that he doesn't have to belong to a party to do what they do!) Politicians will betray us whenever they can get away with it.
We need teeth to bite back when they do.
And those teeth must bite at politicians of both major parties as well as those who proudly proclaim independence . . . and then go about increasing our dependence on government.
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