It's Not Us, It's the Goldwater Institute That's Stupid

I used to think that the Goldwater Institute believes we're stupid, but with Noah Clarke's latest diatribe on bonds (for God's sake) proves they are the stupid ones. Where they come up with the ideas they espouse is anyone's guess, but the inanity with which they makes their points has gotten to where they are a risk to sound economic policy.

So here's Mr. Clarke's argument: Bonds are bad because they are used to pay for stuff that we can't afford to pay for now and that bonds are a hidden tax on the population. "Phoenix is addicted to bonds because they hide spending increases and the money needed to pay for them." "Although libraries and senior centers are great, bonding to pay for them is not. Bonds are just a hidden tax that grows over time and encourages the city to increase spending, extending its largesse to more and more special-interest groups."

Clarke mixes metaphors that somehow city bonds used to build infrastructure is like a family that cuts expenses to buy a home. They're not even close. The home families build cost about $200,000. The buildings and infrastructure cities build costs tens of millions. Families can get or change jobs. Cities cannot and even if they could it would likely take a referendum to make it happen. The only similarity is that these are a big-ticket expenses that must be paid for with future income. Just as families plan for it in their budgets, cities plan for bond payments in much the same way.

Bonds have been used by cities across the country everywhere to build needed facilities and state law and accounting practices set reasonable limits to the amount of debt cities can take on. Bonds aren't used for current expenses, business trips or salaries. They're used to build stuff like "libraries and senior centers." They are legal tools that allow municipalities to support a growing population. As an economist, Mr. Clarke should know better, but it's pretty clear he doesn't.

Where's Goldwater's complaining about Federal bonds? You know, those little savings bonds we want kids and families to buy? Those things we have China buying in boat loads to keep our economy afloat? Where's their outrage? Nowhere, that's where. What complete hypocrisy.