Ballooning Government Debts

A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz "All democracies institute programs for current voters and shift the debt to future workers, even the unborn. Social Security, Medicare, prescriptions drug benefits for seniors are prime examples in America." Many U.S. States are battling public debt. Steve Forbes believes that the Obama's stimulus money to these States has only delayed their 'moment of truth'. Governor Chris Christie of New Jersey is praised by Forbes for reeling the spending back to 2006 levels and trying to negotiate with the public employee unions. "Under-funded public employee retirement and health care contracts are a major portion of the debt."

This Republican (Christie) got a Democratic legislature to cut the new fiscal year's budget to a level below that of four years ago. He enacted a cap on property tax increases, and the state's top income tax rate is 17% less than it was under Christie's predecessor. Now this no-nonsense governor has declared war on the bloated pensions of government bureaucrats. "I know there are some public workers who aren't happy about it today," said Christie. "But ten years from now, when you have a pension to collect and health benefits to collect, you are going to be looking for my address to send me a thank-you note."

Washington State's Union Tax: William McGurn breaks down in the Wall street Journal the State of Washington's public employees union's initiative to create new taxes:

... that would mean a new 5% tax on individuals earning more than $200,000 a year and couples earning more than $400,000. An additional 4% would kick in for individuals earning more than $500,000 and couples making more than $1 million. Here's a better way of putting it. By taxing others, these unions want to insulate the governor and the legislature from having to make difficult choices about what the government should fund and what it might cut back.

There are inherit dangers when we put off the debt to future generations. What will the Federal Government do when entire U.S. States become too big too fail? "New Jersey is facing a terrible scenario of defaulting on government bonds and the inability to honor contracts." These proposed new taxes and tax increases only delay the inevitable.

Ultimately, because of government's propensity to over spend, the State of Washington will have a worse day of reckoning. Just as California, Greece, New York, Ireland and many other democracies are having ugly days of reckoning recently.

Remember, all government debts, local to federal, is an unpaid tax that will be the burden of future generations. Reference:

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