Debt Lessons From Mecklenburg County
As the world turns, the creditors continue to line up for their interest payments. In Greece the lenders let the politicians borrow money to spend on their current pet projects and continued to lend them money for more pet projects until Greece cannot repay the loans. This was not a difficult situation to foresee. Something similar happened in Mecklenburg County.
Not so many years ago, George Higgins sat on the Board of County Commissioners and often voted the single NO in a 8-to-1 vote. His was an opinion of less government, which was not shared by other elected politicians. In 1996 he was joined by three other fiscally conservative Republicans and one moderate Democrat. The next year Joel Carter came out as the front man on a Pay As You Go plan that was touted as the Carter Plan. Behind the scenes were Joe Miller and myself of Citizens For Effective Government and Harry Weatherly, who was head of the Mecklenburg County Finance Office.
Citizens For Effective Government was a group of business minded men and women, formed in the 1980s, whose focus was the efficient use of taxpayer funds. In a manner of speaking they were of the Tea Party mold, expecting government to be frugal with the taxpayer’s earnings. They had come together over concerns of wastefulness in government expenditures. Members were a regular feature at Charlotte City Council and Board of County Commission meetings, giving speeches on topics of economy, waste, excess borrowing and similar issues. They were a force for fiscal sanity in local government, but still, by the time Carter presented a plan to stop borrowing, the county had accumulated excessive debt which the bureaucrats and their supporters had every intention of making larger.
This is the problem nationwide but it was easy to see locally. In fact it was so easy to predict the future of debt in Mecklenburg County in 1997 that our predictions were accurate to within 5% even 10 years later. The county was on a borrowing-and-spending spree that didn’t slow down until the economic collapse of 2008, twelve years later. The reason for that growth in debt was simple, is easily understood, and has not changed even today. The people who lend the money (financial institutions) work in cohort with those who spend the money (lawyers, construction companies, supply companies) in a strong political coalition which goes by the name of the Charlotte Chamber of Commerce.
Their program was to spend taxpayer’s money on capital projects that the taxpayers didn’t need, but which would give projects and income to Chamber members. Specifically the building program of the Charlotte Mecklenburg Schools was a cash cow for everyone except the taxpayers. Building unnecessary schools, making unnecessary renovations, not running a responsible maintenance program and borrowing money for items that should have been included in each year’s operating budget, were all methods of transferring funds from the taxpayers to the big builders, the lenders and their associates.
With a change in details and names, this is the exact same program that has so many governments in economic difficulties today. Locally, we slowed down a bit but the progressive/liberals in power on the County Commission saw fit to increase taxes this year in order to continue the process of transferring funds from the taxpayers to the friends of big government, and this is how government debt should be viewed. It is the process of turning the taxpayers into indentured servants.
Each year as the taxpayers work months to pay their tax bill, one should pay attention to the three things taxes pay for. The first is the basics government should supply: police, defense, roads, courts and prisons. The next is government supplies that aren’t necessary, but that we want: schools, parks, social services, medicare, and social security. All of these are on a cash basis. The third thing is interest on the debt. This only pays those who lend money. As there is very little chance of ever paying off the debt then interest can be considered a perpetual transfer of money from the working class to the moneyed class. Further, it is never considered that there is anything wrong with this picture; we are always told we MUST pay the principle and interest. Well WHY? Why don’t we just stop paying the interest? Give them their principle back but no interest.
The answer will be no, but this ‘no’ is from the same people who put us in debt to start with. Because the moneyed people have worked with government, which they influence entirely too much, to put us in debt, they are certainly not going to approve of not paying interest. It is a simple process actually: convince the people that debt is a good thing, that the government should borrow today to have things which only borrowing will give them. And then borrowing each year becomes normal, so the debt becomes larger and the interest payments with it. In the meantime the people are constantly told to be honest and pay our debts. But, if you’re paying attention, those who lend are not honest and upstanding. They use every trick in the book to improve their position at the expense of others. The banks bounced checks charging methods are one of the most underhanded. And it is they, in coordination with government, politicians and bureaucrats, who are the ones who caused the Great Recession, got rich on lending and are still getting paid their millions in payroll, but the taxpayers, who too many of can’t find work, who are having difficulties making ends meet, are still supposed to pay the interest on the debt. Yet since those who lend the money are in coalition with those who control government, we are told we must pay the debt and interest first.
By using government to force the people to pay interest on the debt, the financially well off have a safe place to put their money and get to use the legitimate force of government to make the people pay. So each year, they get their interest payment while the taxpayers can barely make ends meet. And the taxpayers can’t get out of debt because the people putting the taxpayers in debt are the same people who force them to pay. Yes, indentured servitude is a perfectly applicable term.
It is a curious turn of events but, as we are starting to see, has a bad end.
We need your help! If you like PunditHouse, please consider donating to us. Even $5 a month can make a difference!
Short URL: https://pundithouse.com/?p=7338
