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By Jon Coupal
Back in 2010, then Chairman of the Joint Chiefs of Staff, Admiral Michael Mullen, said that “the most significant threat to our national security is our debt.” At the time, our national debt was “only” $14.3 trillion. Today, it is more than double that. Debt service ― payment of interest on the debt ― is expected to cost Americans $1 trillion annually. That amount is larger than our annual outlays for defense.
California has its own debt crisis but, unlike the federal government, it cannot print money. Instead, California reacts to high levels of government debt by spending more money, proposing more debt, and papering over the problem with opaque budget gimmicks.
If there is any good news, it appears that California voters are starting to appreciate the scope of the problem. The recent statewide bond measure to address homelessness, Proposition 1, barely passed. This was notable because the assumption among political observers was that it would easily pass given all the advantages it had: A sympathetic cause, a broad-based coalition of nearly all the interest groups, and the personal backing of Gov. Gavin Newsom and his prodigious fundraising apparatus.
Another stroke of luck for the governor and other Prop. 1 proponents was the fact that the election was held just prior to the release of a scathing report from the State Auditor questioning the effectiveness of the state’s expenditure of $24 billion over the last five years on the homelessness crisis. Had voters been aware that the state fails to track whether all that spending on the crisis is doing any good at all, Prop. 1 would likely have failed.
Proving that the close call on Prop. 1 hasn’t satisfied politicians’ appetite for more debt, Assemblywoman Buffy Wicks, D-Oakland, has introduced Assembly Bill 1657, which proposes a $10 billion bond to fund existing housing programs, including those funding rental and supportive developments, home loans and farmworker housing. Although the language of AB 1657 is a moving target, it appears to reflect the same infirmities as Prop. 1 including a lack of specificity in how the bond proceeds will be used and whether debt financing that takes 30 years to repay should be used for anything other than a “single work or purpose” as required by the state constitution.
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