Friday, April 18, 2014
The 300,000 residents of Stockton, California, a short distance from San Francisco, are suffering under years of government overspending. Elected officials have promised generous pensions and free lifetime health care for municipal employees that the taxpayers can no longer afford. The city recently filed for bankruptcy, the largest U.S. municipality to do so.
Stockton residents are living under reduced fire and police protection. Public library and recreation budgets have been slashed. Bondholders, who loaned the city money when they purchased its municipal bonds, have seen their interest and principal payments halted. All the while, city officials have continued to pay the unsustainable pension benefits to municipal workers.
Click to read the Los Angeles Times article “Stockton Bankruptcy Can Move Forward, Judge Rules.”
Towns, cities, and states across America have borrowed roughly $4 trillion to fund road, bridge and port construction, and other public infrastructure projects. In planning their retirements, millions of senior citizens loaned most of this money to the municipal and state governments when they bought their bonds. Will seniors now lose these nest egg investments as more cash-strapped governments continue to pay for overly generous public sector pension and health care benefits instead of repaying their loans from bondholders?
Out-of-control government overspending hurts families across America. As more governments follow Stockton down the path toward bankruptcy, investors will likely demand higher interest payments for the increased risk of lending money to local and state governments. Higher interest payments push up the cost of municipal infrastructure projects. This means higher taxes for residents, pulling more money from the pockets of our families struggling through the worst recession in 70 years.
Whether in our community, state or nation, government overspending has saddled all of us and our children with ever higher taxes and mountains of smothering debt. Let’s hope our elected officials have the courage and wisdom to stop the bleeding, start paying down the debt, and reform unsustainable entitlements.
Bruce Poliquin is the former Maine State Treasurer and a 2012 Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a proud third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the State about the important issues facing Maine families and their jobs.