American Paradox: It’s Never Been Cheaper for Cities and States to Borrow Money...And They Refuse to

[question everything]

(snip)

Plunging global interest rates have made borrowing cheaper than ever. But instead of spending on aging roads, bridges and buildings, many state and local governments are scaling back. New government-bond issues have dropped to levels not seen in the past 20 years.

(snip)

As a share of the economy, state and local governments are investing less in capital projects than they have since the early 1980s, according to Commerce Department data. Last week, Hawaii became the latest state to pare new highway construction after legislators turned down a gas-tax increase. In May, California transportation officials announced a 28% cut to construction plans between now and 2021. New public-sector borrowing in the state last year dropped almost 40% from 2009.

Florida officials went five years without approving any new borrowing by the state’s main construction program for public schools and universities despite a long list of projects. When the legislature and governor finally signed off on new borrowing again in March, they limited the new debt to $275 million, down from $1.4 billion in fiscal 2007.

(snip)

Wall Street executives are calling for investments in infrastructure. J.P. Morgan Chase & Co. CEO James Dimon cited a “need for good, long-term infrastructure plans” in a letter to shareholders this year, echoing economists’ sentiments... State and local governments are carrying about the same amount of debt as they were when they emerged from the recession, in part because tax revenue has been slow to rebound.

(snip)

A McKinsey Global Institute study released in June found the U.S. should boost infrastructure spending by 0.7% of its gross domestic product between now and 2030 to meet transportation, water, power and telecommunications infrastructure needs. Doing so this year would mean roughly $129 billion in new spending.

(snip)

Many states require a voter referendum before taking out new loans. That means political considerations often matter more than interest rates when governments consider a new round of borrowing.

More..

http://www.wsj.com/articles/american-paradox-its-never-been-cheaper-for-cities-and-states-to-borrow-money-and-they-refuse-to-do-it-1470562203

[tonyt53]

1. People complain about bad roads, but want somebody else to pay for them.

Same with sewer plants and water treatment plants. Toss in crumbling schools too.

[happydaze]

2. Most people are strapped up to their asses.

The avg amount on people's cc again is about $10,000. People need a damned raise and a job thats stable, full time, and has benefits.

And last I looked, the wealthy haven't paid in their fair share, but they would be the most likely to benefit from state and local municipalities going into debt to cover building contracts.

The whole damn thing is a load of rubbish. The banks are borrowing at 0% interest and may go negative from the Fed, and then loan the money back at interest to the American citizen thru bonds and make an interest from borrowing.

The Fed Reserve is a racket, right along with Wall St.

[LanternWaste]

5. Most popular excuse... found on bumper-stickers everywhere

"Most people are strapped up to their asses."

Most popular excuse... found on bumper-stickers everywhere. May have even been used during FDR's first few months before people realized that taxing can assist a nation, assist a nation's infrastructure, assist people getting jobs, assist people getting homes, etc., regardless of the other trendy and popular bumper-sticker about the Federal Reserve-- looks good on t-shirts as well.

[happydaze]

9. Yes, and under former admin, taxing the wealthy at a progressive tax rate also helped a lot.

AND the fed govt would hire directly from the people. It's now very compartmentalized into private contracts that don't do enough to insure that those jobs being made are safe, good, paid well, come with benefits, or aren't subsidized out to undocumented or foreign guest workers to undermine labor wages, while giving the wealthy business owners more money in their bank.

[LanternWaste]

10. You're moving the goalposts from the original premise.

You're moving the goalposts from the original premise.

[happydaze]

13. I'm addressing the reality of the situation in America today.

We have wealth and income distribution at rates that were equal or surpassing when we had the Great Depression. Along with this phenomenon, we essentially have a govt that is bought or part of the wealthy establishment. They are selling the country out and harming a ton of people.

It goes back to the feeling that much of the system is rigged and only a few are truly having an "American Dream" experience. I think it's why many people distrust a tax hike to pay more for what they aren't perceiving as much or a good deal for the money.

Let the wealthy pony up. Try to end as much corruption as we can thru essentially legalized bribes to elected officials. End the revolving doors. And insure that the benefits truly do benefit societal needs.

[question everything]

6. And can these people who are "strapped up to their asses"

afford to be late to work because a bridge collapses, or a road is blocked because it is too dangerous?

Infrastructure is the best job generator that there is. It calls for different levels of skills, it generates wages and salaries that, eventually, be pumped back into the local economy and, most important, cannot be shipped off to China or India.

[happydaze]

8. Yes, but lets create a progressive tax structure again... there are billions being stolen from us

[SCantiGOP]

3. It could help Clinton

Carry Utah and Nevade by bleeding off Morman Trump voters.

[procon]

4. Its beyond stupid.

The ancient infrastructure of most cities is crumbling away and in need of being updated with modern 21 century replacements. The citizens demand improvements, but are apoplectic at the very idea that the new construction isn't free. No new taxes is their motto, just take the money away from those people we don't like... you know the ones (wink-wink). Don't borrow money, even if it is practically a gift, because that's what those dang, tax and spent libruls to, and we ain't like them.

So the cities continue to fall apart, we keep diverting emergency funds to do all the quick -- and expensive -- patches to keep the water flowing, the roads passable, contain the leaks at the schools, and shore up the bridge, until the next public service fails.

[OhioBlue]

7. A lot of the spending by local governments in past decades

was met with matching funds or by leveraging State and Federal dollars. The Federal programs have been cut drastically over the years and in Ohio, local Government funds and avenues of revenue for local governments have been reduced by the State (thanks to Gov. Kasich) which has a direct effect on the spending that happens at the local level for infrastructure projects.

[Sen. Walter Sobchak]

11. It's part of a much bigger picture

borrowing today is indeed quite affordable, but none of these jurisdictions are really in the position of being a prudent miser taking on affordable debt for a wise investment. They're already cracking under the strain of existing debt and other obligations.

There is also the boondoggle issue.

This thing got funded and built:


I call it "The Crystal Cathedral for Street Preachers"

It shouldn't have been. Stupid infrastructure projects discredit essential ones and stupid ones are in endless supply.

[Initech]

12. It wasn't necessarily a stupid project.

Other than Union Station in LA there really isn't a central train hub anywhere between LA and San Diego. And the Amtrak station that was already in place in Anaheim was useless to begin with and was in dire need of replacement. Of course it is stupid without any lines other than going to and from LA - San Diego - Santa Barbara, so I will give you that.