But because of the new conservatism that is spreading rapidly I am now seeing more and more stories like this one which actually "pumps the brakes on debt proposal". The leaders are now worried about growing the debt base at a time when tax payers are getting more and more cash strapped.
The article is very revealing in several ways. First, there is a public debate about taking on new debt, not just back room scotch and cigar handshake between corrupt cronies. Second, the new conservatives want to give the people the say and put it to a vote. Third, they talk about paygo instead of the debt+interest consume before you earn model.
The article also shows that the pendulum swing is a process. Two of the more liberal council members argued that "not all debt is bad and the council has voted on these debt proposals every year in December yet never received the type of opposition that it is currently". Wow, those are great arguments for going into debt, huh? First off, not all debt is bad but all government debt is in fact bad. That's because the only good kind of debt is that which is used to increase production which will support a consumption that will pay the debt off. Prechter calls this self -liquidating debt.
Note that this means that if enough production is already available, taking on more debt to increase production even though demand to pay for it is not increasing is not good debt. But the debt taken on by governments is largely of the consumptive variety, akin to taking out a loan to go to Disneyland. For example, building parks and creating bridges and roads to places where not many people live, improving the luxury of the courthouse and police station, creating fancy sports facilities, creating light rail systems that NEVER pay for themselves and always cost overrun 2x, etc.
I really should do a complete post on when and how debt is appropriate because there is a valid time and place and mechanism which makes the "not all debt is bad" statement true. But in lieu of that let me summarize here:
- No debt should ever be allowed that increases the money supply.
- No debt should ever be allowed for government. Sometimes the government will have emergencies like the storm blew the courthouse away. In that case, a special tax assessment is warranted, not the taking on of debt. Some will not be able to pay their share and a lien will be put on their property in that event. Banks will then be invited to bid on these liens with the proceeds taking the place of the obligatory tax assessment. Thus the government still gets its money but the debt is carried by the people, not the government. In this way 100% transparency is maintained and people will fight like Hell if bullshit assessments are made instead of saying "I don't care what they do as long as it doesn't cost me anything today".
- Banks should be able to issue loans to the best and brightest of us so that those people can move forward more quickly than they would otherwise be able to do if they had to earn the money to implement their idea. Funds for these loans must come from certificates of deposit or other long term savings which the owners of that money have voluntarily entered into an agreement with the bank on. The money given to the bank is an investment that the owner of the money is entrusting to the bank to make a return on. If the bank invests foolishly, the owner of the money gets defaulted on by the bank. Banks that do this get a bad rep and banks that do too much of this go and are replaced by a smarter bank that does not lose people's money and which pick smart investments so that people get the expected return on their investments. In this way the right the productive people of society get the right amount of money in order to drive progress, the savers are rewarded for being savers by getting good rates of return, and banks are not used as legal ways to loot the taxpayer. Sorry, under this system we might never see some of the stupid toys and other useless gadgets that are developed now just because the money is available.
It really is that easy. Anyone who attempts to make it more difficult is either stupid, ignorant, brainwashed or corrupt. Period.
Two council members in particular, Jeff Sparks and J. Ross Lacy,
strongly vocalized their opposition to the debt proposal arguing that
it is fiscally irresponsible to issue debt of this size during a time
when Midland residents are facing an economic downturn. In addition,
Sparks and Lacy showed concern for issuing the debt without voter
approval. “[We need] to give taxpayers a say in this and let them
decide. Not just the seven of us up here,” Sparks said.
Sparks also discussed utilizing the city’s 4B tax to pay off a number of the proposed projects on a “pay as you go” basis, rather than accumulating new debt and interest. The 4B tax is a quarter-cent sales tax issued in 2000 by the City of Midland solely to pay off the Scharbauer Sports Complex. While the facility is scheduled to be paid off in 2023, it can be paid off in spring 2016 without an early payment penalty fee. The council has expressed interest in repurposing the 4B tax and placing it on May’s ballot. Sparks, who would like to repurpose it specifically for roads and parks with a ten year sunset clause, recommended the council wait to issue the new debt until a decision on the 4B tax is made by voters. Should it pass as a repurposed sales tax for roads and parks, at least 9 million of the 22 million in recommended projects could be paid for without having to take on additional financial liabilities.
The two council members in favor of the Tuesday’s debt proposal, John B. Love and Scott Dufford, argued that not all debt is a bad thing. Dufford, who has served on City Council since 2001, explained how council has voted on COs almost every year in December, yet has never received the type of opposition that it is currently. However, with massive debt proposals such as this taking place hardly a week before Christmas, it’s no wonder they get such little attention from residents and media.
- See more at: http://www.empowertexans.com/around-texas/midland-city-council-pumps-brakes-on-debt-proposal/#sthash.v9ytP9iP.dpuf
Sparks also discussed utilizing the city’s 4B tax to pay off a number of the proposed projects on a “pay as you go” basis, rather than accumulating new debt and interest. The 4B tax is a quarter-cent sales tax issued in 2000 by the City of Midland solely to pay off the Scharbauer Sports Complex. While the facility is scheduled to be paid off in 2023, it can be paid off in spring 2016 without an early payment penalty fee. The council has expressed interest in repurposing the 4B tax and placing it on May’s ballot. Sparks, who would like to repurpose it specifically for roads and parks with a ten year sunset clause, recommended the council wait to issue the new debt until a decision on the 4B tax is made by voters. Should it pass as a repurposed sales tax for roads and parks, at least 9 million of the 22 million in recommended projects could be paid for without having to take on additional financial liabilities.
The two council members in favor of the Tuesday’s debt proposal, John B. Love and Scott Dufford, argued that not all debt is a bad thing. Dufford, who has served on City Council since 2001, explained how council has voted on COs almost every year in December, yet has never received the type of opposition that it is currently. However, with massive debt proposals such as this taking place hardly a week before Christmas, it’s no wonder they get such little attention from residents and media.
- See more at: http://www.empowertexans.com/around-texas/midland-city-council-pumps-brakes-on-debt-proposal/#sthash.v9ytP9iP.dpuf
Two council members in particular, Jeff Sparks and J. Ross Lacy,
strongly vocalized their opposition to the debt proposal arguing that
it is fiscally irresponsible to issue debt of this size during a time
when Midland residents are facing an economic downturn. In addition,
Sparks and Lacy showed concern for issuing the debt without voter
approval. “[We need] to give taxpayers a say in this and let them
decide. Not just the seven of us up here,” Sparks said.
Sparks also discussed utilizing the city’s 4B tax to pay off a number of the proposed projects on a “pay as you go” basis, rather than accumulating new debt and interest. The 4B tax is a quarter-cent sales tax issued in 2000 by the City of Midland solely to pay off the Scharbauer Sports Complex. While the facility is scheduled to be paid off in 2023, it can be paid off in spring 2016 without an early payment penalty fee. The council has expressed interest in repurposing the 4B tax and placing it on May’s ballot. Sparks, who would like to repurpose it specifically for roads and parks with a ten year sunset clause, recommended the council wait to issue the new debt until a decision on the 4B tax is made by voters. Should it pass as a repurposed sales tax for roads and parks, at least 9 million of the 22 million in recommended projects could be paid for without having to take on additional financial liabilities.
The two council members in favor of the Tuesday’s debt proposal, John B. Love and Scott Dufford, argued that not all debt is a bad thing. Dufford, who has served on City Council since 2001, explained how council has voted on COs almost every year in December, yet has never received the type of opposition that it is currently. However, with massive debt proposals such as this taking place hardly a week before Christmas, it’s no wonder they get such little attention from residents and media.
- See more at: http://www.empowertexans.com/around-texas/midland-city-council-pumps-brakes-on-debt-proposal/#sthash.v9ytP9iP.dpuf
Sparks also discussed utilizing the city’s 4B tax to pay off a number of the proposed projects on a “pay as you go” basis, rather than accumulating new debt and interest. The 4B tax is a quarter-cent sales tax issued in 2000 by the City of Midland solely to pay off the Scharbauer Sports Complex. While the facility is scheduled to be paid off in 2023, it can be paid off in spring 2016 without an early payment penalty fee. The council has expressed interest in repurposing the 4B tax and placing it on May’s ballot. Sparks, who would like to repurpose it specifically for roads and parks with a ten year sunset clause, recommended the council wait to issue the new debt until a decision on the 4B tax is made by voters. Should it pass as a repurposed sales tax for roads and parks, at least 9 million of the 22 million in recommended projects could be paid for without having to take on additional financial liabilities.
The two council members in favor of the Tuesday’s debt proposal, John B. Love and Scott Dufford, argued that not all debt is a bad thing. Dufford, who has served on City Council since 2001, explained how council has voted on COs almost every year in December, yet has never received the type of opposition that it is currently. However, with massive debt proposals such as this taking place hardly a week before Christmas, it’s no wonder they get such little attention from residents and media.
- See more at: http://www.empowertexans.com/around-texas/midland-city-council-pumps-brakes-on-debt-proposal/#sthash.v9ytP9iP.dpuf
Two council members in particular, Jeff Sparks and J. Ross Lacy,
strongly vocalized their opposition to the debt proposal arguing that
it is fiscally irresponsible to issue debt of this size during a time
when Midland residents are facing an economic downturn. In addition,
Sparks and Lacy showed concern for issuing the debt without voter
approval. “[We need] to give taxpayers a say in this and let them
decide. Not just the seven of us up here,” Sparks said.
Sparks also discussed utilizing the city’s 4B tax to pay off a number of the proposed projects on a “pay as you go” basis, rather than accumulating new debt and interest. The 4B tax is a quarter-cent sales tax issued in 2000 by the City of Midland solely to pay off the Scharbauer Sports Complex. While the facility is scheduled to be paid off in 2023, it can be paid off in spring 2016 without an early payment penalty fee. The council has expressed interest in repurposing the 4B tax and placing it on May’s ballot. Sparks, who would like to repurpose it specifically for roads and parks with a ten year sunset clause, recommended the council wait to issue the new debt until a decision on the 4B tax is made by voters. Should it pass as a repurposed sales tax for roads and parks, at least 9 million of the 22 million in recommended projects could be paid for without having to take on additional financial liabilities.
The two council members in favor of the Tuesday’s debt proposal, John B. Love and Scott Dufford, argued that not all debt is a bad thing. Dufford, who has served on City Council since 2001, explained how council has voted on COs almost every year in December, yet has never received the type of opposition that it is currently. However, with massive debt proposals such as this taking place hardly a week before Christmas, it’s no wonder they get such little attention from residents and media.
- See more at: http://www.empowertexans.com/around-texas/midland-city-council-pumps-brakes-on-debt-proposal/#sthash.v9ytP9iP.dpuf
Sparks also discussed utilizing the city’s 4B tax to pay off a number of the proposed projects on a “pay as you go” basis, rather than accumulating new debt and interest. The 4B tax is a quarter-cent sales tax issued in 2000 by the City of Midland solely to pay off the Scharbauer Sports Complex. While the facility is scheduled to be paid off in 2023, it can be paid off in spring 2016 without an early payment penalty fee. The council has expressed interest in repurposing the 4B tax and placing it on May’s ballot. Sparks, who would like to repurpose it specifically for roads and parks with a ten year sunset clause, recommended the council wait to issue the new debt until a decision on the 4B tax is made by voters. Should it pass as a repurposed sales tax for roads and parks, at least 9 million of the 22 million in recommended projects could be paid for without having to take on additional financial liabilities.
The two council members in favor of the Tuesday’s debt proposal, John B. Love and Scott Dufford, argued that not all debt is a bad thing. Dufford, who has served on City Council since 2001, explained how council has voted on COs almost every year in December, yet has never received the type of opposition that it is currently. However, with massive debt proposals such as this taking place hardly a week before Christmas, it’s no wonder they get such little attention from residents and media.
- See more at: http://www.empowertexans.com/around-texas/midland-city-council-pumps-brakes-on-debt-proposal/#sthash.v9ytP9iP.dpuf
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