Bonds Are a Scam -- Vote NO On All Bond Props (mortgage, house)

[Full-Blooded American]

I certainly hope nobody here is voting yes on any of these bond issue scams. These sorts of propositions not only require the debt they incur to be repaid eventually, but the interest on the debt needs to be paid down as well -- in other words it would be cheaper to simply increase taxes than to enact yet another state bond. This madness must end. For crying out loud would you people please stop passing these damn things? The term 'bond' does not mean "money that falls out of the sky and has no cost of borrowing." Stop it, stop it I say. Just say NO to all bond initiatives. Or don't vote, or vote in somebody else's state. Thank you.

[Widowmaker2k]

Signed.

[sonarrat]

Co-signed, and I'd give you rep if you weren't voting yes on 8. sorry!

[ImRandy]

I wouldn't call them a scam. I don't think there's really an attempt to deceive but I'm with you. I don't know why people vote for them.

[sav858]

What do you expect when it takes a 2/3 majority to pass a tax increase? And thank you Prop 11 of that BS!

CA needs to fix some serious fundamental problems b/c these bond initiatives will never end under our current system.

[krudmonk]

Originally Posted by sonarrat

Co-signed, and I'd give you rep if you weren't voting yes on 8. sorry!

Yeah, this guy's post and status don't exactly agree. But if you call him out on it, you're a bigot.

[jschek]

Originally Posted by Full-Blooded American

I certainly hope nobody here is voting yes on any of these bond issue scams.

<sarcasm>
Oh, come on, we need to be competative with the Federal government. Our state debt is just a fraction of the federal debt. You don't want us to look like chumps, do ya? Or are you just one of this fiscally responsible radicals floating around the forums.
</sarcasm>

Originally Posted by Full-Blooded American

These sorts of propositions not only require the debt they incur to be repaid eventually, but the interest on the debt needs to be paid down as well -- in other words it would be cheaper to simply increase taxes than to enact yet another state bond.

I will disagree with you just a bit here. You are correct, we would have to pay back the debt with interest, but raising taxes is not necessarily cheaper.

First, if you raise taxes too high, you hurt economic growth which is generally accepted as a bad thing. (What is "too high" is a major point of contention among parties).

Second, the longer you take to complete a project, the more it costs. An incremental tax-increase might not raise enough money to finish a project in the most efficient time possible. Taking 5 years vs 8 years to finish a project could cost a lot of money due. Take bridges for example--cost of steel and concrete goes up every year. An extra 3 years could increase your costs 15-25% just due to raw materials. And if those 3 years is a booming construction market, the cost of labor will shoot up as well.

Third, inflation can counter-acts some interest and reduce the effective rate a bit. It doesn't eliminate the interest, just reduces its net cost. They tend to include a pretty good explanation in the voter guide. It's very much like the folks who took out a mortgage on a house 28 years ago. They borrowed $50K to buy a house that's worth $500K today, and are still only paying $300/mo. Keep in mind that $300/mo in 1980 was worth a lot more than $300 today.

I guess you could say they were fiscally irresponsible because they should have waited until they got a raise (or saved up the money) and paid cash... or they should have built the house one piece at a time and pay for it as they go.

That said, we probably have enough bond-debt for now... and a lot of the debt we have isn't for improvements, it's for day-to-day operating expenses. Maybe we should pay off some of that debt before we go build a bullet train or whatever other pork project they're asking for this year.

Mmmm... bacon.

[Full-Blooded American]

Originally Posted by jschek

Third, inflation counter-acts interest.

Not always. The "bankers" who issue these bonds do it to make money, and it's a good bet that they have enough inflation insulation worked into their cap rate formulas so that they come out ahead on these things. The minute most of these "bankers" start caring about the status quo of CA, I'll eat my HP-12C.

[jschek]

Originally Posted by Full-Blooded American

Not always. The "bankers" who issue these bonds do it to make money, and it's a good bet that they have enough inflation insulation worked into their cap rate formulas so that they come out ahead on these things. The minute most of these "bankers" start caring about the status quo of CA, I'll eat my HP-12C.

Hmm... Good point. Maybe I should should say "inflation can counteract some interest". Interest rates may appear slightly higher than they effective are.

[chuck22b]

I'm voting No on everything but 1A. I think it has potential.

-chuck22b