Election California '06: Bonds are Bad

Twenty years ago, the average American spent 110 percent of his/her income. The primary culprit? Credit cards, plain and simple. Why wait until you can afford to buy something when you can have it now and pay it later, taking as much time to pay for it as you want?

Today, the average American now spends 120 percent of his/her income.

What's my point? That's pretty much how bonds work. The government sells bonds to investors who will buy them with a promise that the government will pay them back along with additional interest. Need money? Sell more bonds. That means cash on hand, and you can pay it back in smaller amounts over a period of time.

California government is worse than the average American. Much worse.

Between 2000 and 2004, California voters have approved bond initiatives totaling over $57 billion. That means the California government borrowed $57 billion over four years, and is paying that back to the bond buyers with interest. So when you have that state income tax withheld from your paycheck, a bigger part of that money is going to pay the interest for those bonds. Ouch.

Next month, California voters are going to be looking at a series of bond initiatives that promise to make our highways safer, our roads less crowded, our air cleaner, our ports more secure, homes cheaper to buy, our classrooms less crowded, our water systems rebuilt, and our waters cleaner. And we can have it now. All we need to do is sell an additional $42 billion in bonds, and all of that will be ours. Sounds nice, doesn't it?

I see two problems with this sale, and both of them are huge.

Problem one: there's no guarantee that the government will ever, ever do what they say they will do with the money they want. For example, do you know one reason why gasoline in California is so expensive? Gas tax. California pays the third highest tax per gallon of gasoline in the country. Where is that money supposed to go? Improving the state's highways. Yet despite the third highest gas tax in the nation, California ranks 43rd in per capita spending on highways.

Still trust the California government to use the money the way they say they will?

Problem two: the debt load on the California taxpayer will almost double because of the additional bond load. That means our children and grandchildren will be saddled with the load of paying off this bond debt.

See why bonds are bad?

That's why I will be voting "no" on any initiative that has the word "bond" in it.

Peace.