“I don’t think there will be a default,” an e-mail correspondent told me. “Anyway, I hope no one in our government would let that happen.”
Someone said, on a blog, “We would not have these problems if the people in Washington followed the rules our local ones do. The county, township and city and the schools district can’t pass budgets that are not balanced.”
Someone in a gathering declared, “I don’t think the state can pass budgets with deficits, like Congress does. The borough can’t.”
Well. yes, the rules are different. And the rules at the federal level have allowed our country to wade into deficit spending, in many administrations. The last POTUS to wade out was Clinton. There were budget surpluses, in fact. Not that we paid off the national debt, and started fresh.
Does that mean the United States will default on its loans? I don’t think so. Will the U.S. dollar be devalued, with catastrophic results for us? Again, I doubt it.
“We have to live within our means,” someone comments in a lettitor. “Government should have to do that too.
Um, well, yes. Some of us live within our means—by borrowing. Some of the debt is secured. A bank holds a mortgage on the house; the repo guy could reclaim the car or truck if we miss too many payments too long. Then there are the credit card balances. Within our means? Do we owe more than we have? Are we upside down in our homes? Are we paid ahead, with ample savings, or spent ahead, with crushing debt?
There is the debt the local governments have. Some borrowings are short-term notes; some are bond issues that take decades to pay off, whittling away at multi-million dollar totals. Total up all the debt payments over the life of the bond issue, and you will see what that “capital project” really cost us! Lots more than the price publicized at the time it was approved.
School districts’ budgets are on display right now, in their “proposed form.” Some will be changed before their final adoption in June; some will be enacted pretty much as we see them. They are balanced, as law requires. That is, expenditures total the same as funds projected to be available—quite a lot from the state, but not as much as in some years.
Our school district has included some surplus, every year I checked in a quick poke through files. This created a bit of slack in the budget, in case a bad year or an emergency need came along. Using, but not replacing that, will help the school system through one lean year, when the state is being parsimonious.
There is more money in another fund, earmarked for capital projects or major building needs.
Shunting some school income into such funds and sequestering it from “program” or regular school spending needs is useful for helping public school systems get positioned for extensive renovations, or new construction, or additions. Just by sitting there, it builds momentum for a PlanCon project. But you should know my PlanCon rant by heart,
The money placed in those restricted use funds might be freed, for actual instruction-related or “general fund” uses might be freed up, somehow, according to some school officials.
Meanwhile, do look at that proposed budget, if you get a chance. See whether debt service is in second place, as the next to largest category of what local and state taxpayers will pay for in the coming fiscal year.
Balanced budget, yes. Living within its means—our means--? Yes, more or less as many of us do. Borrowing, paying off what we borrowed, keeping our heads above water. School districts are supposed to live within their budgets, and spend only what has been appropriated by the board. And the nation is required to spend only what has been appropriated.
Like other levels of government, the United States has debt. Among ten countries evaluated by TIME as to debt and probability of default, we have lots of debt—in an amount nearly equal to our GDP—but we are least likely to default. About 31 percent of our debt is owed to foreign creditors. Other nations owe up to twice their GDP—Japan owes 204 percent (but most of it to its own people and institutions). Some owe far more to foreign creditors.
Our foreign creditors want to see our country come to terms with paying down the debt, and that would take some increases in revenues. Those who would not be harmed by tax increases could be asked to pay what they used to.
Big money interests that are lobbying frantically and funding politicians in an all-out effort to maintain, and even expand, the enormous inequity in our tax system, constitute the real threat to our recovery. Their thinking, if it prevails, courts default.
I don’t think Congress will let that happen. At some point, even obsessive self interest must give way to a broader concern for the nation’s economic stability, now and for generations to come.
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