Tuesday, December 1, 2015
IN MY OPINION (Column)
Voters Are Starting to Grasp the Debt Crisis
By JON COUPAL
The former head of the United States Government Accountability Office (GAO) has estimated that the national debt is a staggering three times as much as usually publicized. Rather than $18 trillion, the actual number is around $66 trillion.
News reports about government debt at all levels are now more frequent and increasingly alarming. There is little doubt that this is due to the fact that the debt crisis is actually getting worse.
But it might also be a reflection of a greater awareness on the part of citizens and the news media that debt is a real danger. For those of us who have been warning about government debt for decades, this greater awareness is long overdue.
Understanding all the ramifications of public debt isn’t easy. As to the magnitude of debt, former California legislator and now congressman Tom McClintock used to refer to “MEGO” numbers (My Eyes Glaze Over) meaning that citizens really can’t be expected to comprehend the vastness of numbers—like $66 trillion—with so many zeros behind them.
And it isn’t just the amount of debt that is confusing. In addition to voter approved bonds, normally referred to as “general obligation” bonds, there are a myriad of debt instruments pushed by powerful special interests including revenue bonds, “certificates of participation” and a host of other esoteric instruments created for the purpose of avoiding voter approval.
Other government debt isn’t even reflected by bonds or other instruments. The hundreds of billions of dollars of unfunded pension obligations in California is most certainly debt that ultimately will have to be repaid by taxpayers. And as columnist Dan Walters with the Sacramento Bee just noted, California had to borrow $10 billion from the federal government for the state’s Unemployment Insurance Fund which remains insolvent even though we are told by the political elites that California is in the midst of a vibrant economic recovery.
So why is it, given the complexity of issues related to government debt, that the public is starting to pay attention? First, high profile municipal bankruptcies in Vallejo, Stockton and other cities have wreaked havoc on both taxpayers’ wallets and on public services. There is widespread belief that even Los Angeles itself will be unable to avoid bankruptcy. Second, both the media and taxpayer advocacy groups like Howard Jarvis Taxpayers Association have successfully used the Public Record Act to secure far more detailed information than has been available in the past about employee pay and benefits, including lavish pension benefits. The disclosure of this information has spurred voters to start wondering why our services are second rate while public employee compensation is so high.
Third, both private organizations and public entities have vastly improved data bases easily accessible on the internet making these complex issues a little easier to understand. For example, Controller John Chiang has just created a new website called Debt Watch to provide voters with more information about the various bond issuances.
But perhaps the biggest factor in the renewed attention of citizens on debt is personal experience. The 2008 recession left millions with underwater mortgages. Nothing focuses attention like a crisis that hits someone right between the eyes. Government debt in the trillions of dollars is difficult to understand. Not being able to pay one’s mortgage is a lot easier to grasp.
Copyright 2015, Metropolitan News Company