Debt is deceptive. It promises things beyond one’s income. The promise is that if you commit to a future obligation your resources will allow you to both service the debt and at some point, pay it off.
This notion is rather extreme. We simply do not know what the future holds. For the individual or family, you don’t know when a large expense will be forthcoming or if an unforeseen catastrophe will occur.
So, what about government debt? Government has a huge appetite. It never stops growing.
The current discussion of the county’s new $256 million debt obligation is a case in point. It seems that projections have been made about the future of the county. The county will grow so the income to the county, taxes, will increase. This assumes, according to news accounts, that everything will be the same, that nothing will change. Is this realistic?
We are told there is a crisis in county school infrastructure. Doesn’t government always have to create a crisis of some sort to justify increased government largess? Does anyone think the school system will ever quit asking for more money? (Why do the public schools go into debt for capital projects, while the many private schools have to raise money in capital campaigns?)
But can we accurately know that this is the only government crisis that will happen in the next five years, the time period the county will not be able to issue more debt/bonds? This is beyond the realm of knowledge.
You must look at history. COVID came. Banks fail. Periods of economic depression are real and largely misunderstood. Floods come. Tornadoes come. Roads collapse or become a huge waste of commuters’ time and create more pollution. Other infrastructure may suddenly deteriorate. Population growth may falter for largely unforeseen reasons. A new law, regulation or tax may be enacted by the federal government that greatly increases cost. (Think WWTA.) Wages and thus costs will increase. Inflation is policy. Seemingly small, needed things go up in price, making the aggregate expense significantly greater.
The local government has only two possibilities, like a family, for growth. It may increase income, or it must increase debt. In a family, if you can’t afford something, you tighten your belt. In some cases, like purchasing a home or a car, families will sometimes go into debt. But how often do we experience “buyer’s regret”?
But the correlative is that all debt reduces your options to spend on other things. So, families will buy a less expensive or used car or eliminate costly vacations or trim their eating out budget so that they may have the funds they need to pay for predictable obligations, like utilities.
Debt is a beast. It does suck your resources. It is easy to go into debt, it is another thing to get out of debt.
The arguments about government debt have continued from our founding fathers to the present day. Some say government should spend what it doesn’t have, others say it should stay within its revenue. But the appetite of government grows and debt increases.
Taxpayers, the ones who fund the city and county income, deserve more. There are always, always unintended consequences. The city and county fathers are entrusted to look at these things with the greatest attention.
We don’t know what the future holds, so any commitment to debt is a bet, however calculated, on a future with no unforeseen happenings either to the income or to the predictable expenses.
Debt may give the appearance of solving a problem, but the future is unpredictable. There is such a thing as too much debt. Wisdom listens and learns from past experience. Tread softly.
Doug Daugherty