Debtsylvania
There is no doubt that Governor Ed Rendell is an advocate of big government. He has presided over a massive expansion of state government intrusion into our lives. Were it not for the General Assembly, which has at least nominally and on occasion opposed him, state government would have grown even faster.
Like a magician who keeps your eye focused on one object while performing a trick with another, the Governor touts the passage of recent state budgets without tax increases (although he proposed them), while at the same time he has encumbered the state with massive amounts of public debt. Campaigning for the governorship in 2002 then-candidate Rendell claimed the state’s debt load was too small and that the borrowing capacity of the commonwealth should be tapped. It is one campaign promise he has kept.
Debt is generally considered to be a bad thing, except when it is secured by fixed assets or used to expand the ability to generate revenue. In our personal lives a home mortgage, while debt, is a good thing because it helps us to acquire an appreciating asset. At the same time, using a credit card to buy groceries would be considered to be bad debt, because the asset quickly disappears while the debt remains on the books. Likewise, businesses that incur debt to acquire fixed assets, such as new equipment, are using their borrowing capacity as a prudent tool. Borrowing money to pay taxes, for example, would be a symptom of a business in trouble.
There are appropriate reasons for governments to incur debt. Buildings, emergency services equipment, and highway construction are several legitimate uses. These are hard, fixed assets that would provide benefit to taxpayers throughout the time frame in which the debt is repaid. In the case of buildings and bridges, the benefits would last far longer than the repayment of the cost.
The Rendell Administration though has performed the government equivalent of buying groceries with a credit card. Billions have been borrowed, not for fixed assets, but to further social engineering and political goals. For example, $1.5 billion was borrowed for so-called “economic development” projects. Under this program the state government picked the “winners” and “losers” and invested our tax dollars in politically favored enterprises. Surveys by the Lincoln Institute of Public Opinion Research found that a solid majority of business owners and operators think the program was a waste of money, saying they would rather have had tax cuts and less government regulation.
Likewise billions have been borrowed and spent for programs with the lofty sounding titles of “Growing Greener” and “open space preservation.” Laudable goals, perhaps, but are they really areas in which government should be spending our money? Now, the governor wants $850 million for his “Energy Independence Fund.” Would not lower taxes and tax credits be a better way to spur energy innovation rather than indebting taxpayers and spending the money on unproven technologies?
How out of control is the governor’s deficit spending? The Commonwealth Foundation for Public Policy Alternatives recently calculated that Penn’s woods is $110 billion in debt – amounting to $36,000 in debt for every family of four in the state. And, state government is poised to borrow billions more.
That state government is placing an onerous debt burden on us, our children and our grandchildren should be cause for dread alarm by taxpayers. Yet, Governor Rendell continues to preach the gospel that our debt load is lighter than 23 other states so we should borrow more. “Citizens should not take comfort in looking at how debt-burdened other states are;” argues Matthew Brouillette, President of the Commonwealth Foundation, “Governor Rendell’s defense of more borrowing ‘because everyone else is doing it’ is as foolish as an individual running up credit card debt to keep up with the Jones.”
And, to make matters worse. There is the additional cost inflicted on taxpayers by financing today’s budgets with borrowed money. Every dollar borrowed will require two and a half dollars in future tax money to repay when the costs of bond issuance and interest payments are factored into the equation. Governor Rendell is literally mortgaging our future, and ensuring massive future tax increases to pay for his spending spree.
Given that more than two years remain in Governor Ed Rendell’s term, and that much of his ambitious social agenda still awaits legislative attention, you can be assured that more borrowing and more debt lies ahead. And that will happen unless taxpayers engage in the process and convince their elected representatives in the General Assembly to stop enabling Rendell’s spending addiction.
