While banks are still being persecuted for lending too much and not lending enough, too many still are getting money they shouldn’t. Case in point, a San Diego school districtIn 2008, voters had given the district permission to borrow more money to finish its modernization, and they had received a big promise from the elected school board in return: No tax increases… the district got creative.
With advice from an Orange County financial consultant, the district borrowed the money over 40 years in a controversial loan called a capital appreciation bond. The key point for the district: It won’t make any payments on the debt for 20 years. …
“We could have authorised more taxes, it would just have been breaking the promises we made to the community,” said school board member Todd Gutschow.
This works great if you plan on dying within 20 years, but otherwise it’s not very smart. As Reason writers Veronique de Rugy and Nick Gillespie write in The Hill, neither party is working honestly to tackle the nation’s fiscal issues, in large part because it doesn’t sell to voters. I see a train wreck, and so the sooner it happens the less disastrous it will be.
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