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To: RC2

If the government issued debt the way a private company did, it would be OK. Debt issuance is a valid tool to fund capital projects with a life span exceeding the term of the note. As long as the debt has a sustainable dedicated revenue stream to pay it off, then a moderate “deficit” on an annual basis is a legitimate budget philosophy. For example, our town did a road expansion; the cost of the expansion was about 70% of our annual operating budget (excluding capital projects already funded). It’s not economical to pay for it out of current income, as the taxpayers cannot afford the hit, even if on a one-time basis. But spread out over 20 years when we get a road forever, bonding the road makes sense.

The federal government is issuing debt willy-nilly; it has no rational basis to what is being funded and is for all practical purposes, unlimited. I believe financial gurus have a term for that: “just plain nuts.”


33 posted on 03/08/2011 9:09:32 AM PST by henkster (Before we make any more "investments" we ought to be shown the prospectus.)
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To: henkster

I understand what you are saying but..........how many of those projects can be entered into at one time? One project with a pay out of 20 years is understandable. 5-10-20-30 projects is unsustainable without massive tax increases. They still have to be payed for, sooner or later. I’m not an economist but even I can see where we are going down a very slippery slope with our politicians.


47 posted on 03/08/2011 11:17:39 AM PST by RC2
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