Debt Bombs All Around! When Do They Go Boom?

By Loudoun Insider

Ugh.  Boy am I pessimistic about our economic future.  On all levels.  Locally, we have an ever-expanding school system with a backlog of school construction needs, noisy parents expecting the very very best, and spineless politicians (for the most part).  Virginia is continuing to shortchange its economic engine in NOVA and defunding transportation evermore.  And nationally - baaaarrrrrfffff.  Underfunded entitlements are the game du jour.  Promise promise promise yet never identify how such programs will really be paid for in the future.  All while we borrow borrow borrow from nations that really don’t have out best interests at heart.  I don’t see much in the way of good times ahead I am afraid!


Comments

  • Let's Be Free says:

    Agreed. Personal savings rate for February released just today was back down to 3.1 percent after hovering around a more sustainable 5 percent in the heart of the recession (about a $250 billion difference annually). Good news is that less savings and more spending drives current economic growth. Bad news is that low savings rate indicates consumers are re-leveraging which makes them vulnerable to new economic shocks and reduces the flow of domestic funds available for investment (so more debt must be funded from abroad).

    ******

    Long-run prognosis, driven in part by the me-now, spend-now attitude of many/most of today’s adults and political leaders, is not good, not good at all. Promise everyone everything entitlement and re-distribution programs are not good for driving growth because they undercut incentives for productive economic activity and create new unfunded obligations which are little different from plain and simple debt. To get the government part of this thing straightened out we need politicians who are talented in things more than giving away other people’s money.

  • Cato the Elder says:

    No kidding. I’m getting ready to set up shop in Grand Cayman next year. Sayonara suckas!

  • Loudoun Insider says:

    I wouldn’t blame you, Cato. We are really heading for big time hardships in this country.

  • tx2vadem says:

    Wow, ya’ll are dark clouds. I thought pessimism was reserved for us Democrats. ;) Cheer up! We’ll deal with this deficit issue after the mid-terms. As long as we keep our higher education system the best in the world and we welcome skilled labor immigrants, we’ll be just fine. People will pay down their debt, and we’ll be back to conspicuous consumption in no time.

    If nothing else, the bankers will manufacture another bubble for us all to enjoy! =)

  • Leej says:

    tx2vadem here is a wake up call for you we don’t in the USA have the best education system in the world anymore. perhaps we have to much staff and not enough real teachers. But you are correct their will be another bubble there always is. ;-)

  • tx2vadem says:

    I wasn’t referring to primary or secondary schools, but higher education. We still get plenty of people applying for student visas every year to come here. What other country gets that?

  • Brian S. says:

    I have no problem with keeping our higher education system the best in the world, but it is critical that we focus attention on trying to bring the costs of higher education down. Schools with multi-billion dollar endowments are still raising tuition rates at twice the cost of living, even in this recession. It’s ridiculous. They’re as bad as the health insurance industry when it comes to ripping off their customers.

  • Tired of Good Ole Boys & Girls says:

    This post is so appropriate. Debt is the ticking timebomb both Federally and in Loudoun County. Given the expansion of the federal debt, we are dependent on China and the Arabian nations to buy our debt paper or we could be in big trouble. The USA should not be dependent on anyone but that is where we are. If China wants to screw the US then all they have to do is redeem their 1 trillion dollars in Treasuries they held. The opposite side of this equation is the US can ill afford to tick off China so we will turn a blind eye to poor quality imports, dumping of materials below market, and staying silent on the government’s abuse of its people.

    Locally, the debt burden is now about 18% of the total budget. The norm is considered 10%. So 18 cents of each tax dollar is now going to things already built. Mostly schools. Debt service is going up by $25 million annually. That is about 3 cents on the tax rate. At some point someone has got to say “we cant’t afford to do this” at least at the rate we have been going. Will we need to construct a school or two; probably. But we can’t keep building 3 or 4 schools a year and buying parks. Fiscal discipline demands saying no and understanding that not everyone can have it all. Hopefully, the next election will bring a board that understands this. I don’t think it is only Republicans that can do this. Lord knows we saw prior Republican boards that did not know how to say no. The future is now as far as I am concerned.

  • pgreer says:

    ASU and UA are prime examples of raising tuition constantly. Maybe they should not of built some of the buildings that are now EMPTY!!

  • Loudoun Insider says:

    Like I said – Ugh.

  • Paula says:

    What about York’s initiative to help fund the school CIP with cash with a $0.02 tax. Analogy – layaway more financially responsible than a credit card. I like the idea. Is it really a shell game as some suggest, or is it a smart budget strategy?

  • Elder Berry says:

    Very funny to see all the concern here now about debt when the 8 years of George Bush’s wars and tax cuts escalated our national debt like all get out.

    Very funny that the party that pushed property rights and outrageous development in Loudoun now is worried about the cost of schools that have to be built.

    Very funny that those who think conspicuous consumption is virtue now want to hide their Hummers under camouflage nets.

    The only way out of this mess is going to hurt bad. The question is, are we really prepared for it.

  • Brian S. says:

    Elder, Obama has added more to the debt in his first year and three months in office than Bush did during his entire 8 years. What we did during that time period was unfortunate, but it’s no excuse for Obama making it even worse.

  • Loudoun Insider says:

    Elder Berry, you better not be throwing me in that boat because I was never a fan of GWB or the last BOS. You should know that. And I’m prepared for it, but not many others are, least of which is anyone having anything to do with LCPS.

  • Dominican Bound says:

    Well, I’m finally convinced that Cato is right. I’m closing my business, dumping 56 people into the unemployment lines, and taking my hardearned money off to the Dominican Republic before it’s “redistributed”.
    I’ve been concerned for sometime about the future of the country. Seems like we were destined to repeat what the romans demonstrated centuries ago….that absolute excess creates sloths. And many of us know how that ended for the Romans.
    As I watch China creep up to assume it’s place as the world’s next sole superpower, and the obvious lurch by omama and company towards complete socialism, I’ve elected to get out while the getting is good. I’ve stuffed money outside the country for years in case some incompetent boob actually got elected, and it just paid off.

    The weather’s better, the scenery and the exchange rate makes it downright irresistable.My parting shot is that I hope every son-of-a-bitch that voted for this twit and his Congress enjoys a 50% jump in their tax rate. So long suckers.

  • Bellyaching Taxpayer says:

    Paula – I like the concept of York’s idea, but it’s too little and too late. They should have been paying cash for schools during his first 2 terms as chairman, but him, Burton and Kurtz blew the revenue windfall on the schools operating budget. What I would like to see now are cost-effective solutions like modular classrooms before they blow even more money on new schools.
    *
    Brian – State funding for higher education has been dwindling for years and took another hit in the recently adopted biennium budget. A lot of it has to do with more K-12 spending leaving less money for other things. Colleges don’t have a teachers union going to bat for them. Kids often graduate from college today with 6-figure debt! Let’s keep the big picture in mind. I’ve been on a lot of job interviews in my career and nobody has ever asked me what high school I graduated from. All that counts is the college diploma. Nobody gives a crap that you graduated from LCPS or FCPS. K-12 is just a stepping stone and more money should be directed to higher education.

  • Just don’t blame the banks coerced into taking TARP money – the taxpayers made a nice return on their investment (that is, not counting AIG and Fannie/Freddie).

  • Brian S. says:

    That’s my point, BT. When I’m done with my law degree, my accumulated debt for my undergrad, masters and JD will be around a quarter of a million dollars. It shouldn’t cost that much to educate a student. But the answer isn’t more aid to students. The answer is getting a grip on the exorbitant amount of money colleges and universities charge students nowadays. I know for sure there are a couple of classes I’ve taken where I really wish I could get back the $4k I spent on it because I ended up teaching myself.
    .
    At GW, the school has redesigned the damn food court almost once a year since I started there in 1995. The tuition has gone up at least 5% per year and our endowment has gone up significantly. Students are charged over $50k per year and I’ve been told (I was on the alumni association oard of directors for two years) that it takes at least $20k a year from the endowment for each student. That’s just ridiculous. Something has got to be done about higher education costs.

  • Loudoun Lady says:

    Brian, Most of the VA state universities (in the past 20-30 years) have turned into student social clubs. Huge rec centers with pools, saunas, internet cafes, 24/7 digital entertainment, and more food courts than most small cities. I’d love to know how much money is going to actual education vs recreational facialites.

  • Bellyaching Taxpayer says:

    Here’s a good article that can shed some light on exploding college costs:
    http://www.usnews.com/articles/education/2009/01/15/the-surprising-causes-of-those-college-tuition-hikes.html
    Every article I read stresses that the tuition “sticker price” is not what most students pay – only those who supposedly can afford it. As college has become less affordable, colleges have had to give more grants and scholarships based on need. They can afford to do so by jacking up the base tuition price that the “rich” students pay. Most students from northern Virginia will be paying the full tuition amount. It’s another way we subsidize the rest of the state!

  • Loudoun Insider says:

    What a joke – the worst is professors making well over $100k a year while teaching a couple classes each semester. Truly ridiculous.

Leave Comment