Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

[charliebrown]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

If you believe the numbers at http://usdebtclock.org/

About 3.9T dollars are paid in interest each year on 58T of debt. This is about 25% of GDP. I don't know which sectors of the economy pay more or less than this national average.

I know Reinhart and Rogoff say that 90% debt to GDP is a critical threshold. What about Ineterst to GDP, is there a tipping point there?

[Slimprofits]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

Look at Massachusetts! How long can it last? Is their high debt by any chance due to their health care system?

At least $5 billion of the debt is on the books of the MBTA, with at least $3 billion of that being related to the Big Dig project.

edit: Massachusetts Bay Transportation Authority

[dcarrigg]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

well it was just a hunch - but i do appreciate the comeback, dc - we already suffer from too much mis-perception brought on by the daily dueling headlines, so when we get some data that counters that, its quite helpful - altho i must say that i still get the impression that where the D-side of the aisle calls most of the shots, the numbers tend to be worse (why NH is suffering lately, despite a fairly big uptick in population, aka lots of MA (and RI?) residents voting with their feet, fleeing taxachusettes and moving into the north country, or at least to d'other side of the bor-dere: bienvenue au new hampshire! (ayuh - just remembah tho: you have to take yer own trash to the dump ;)

Hunches like that are good. I thought it was an interesting question. So I ran the numbers and graphed it to see for myself, and then I figured I'd share. Turns out there's almost no relationship (maybe a very weak one). But I wasn't sure until I looked at it.

But the more I look at the numbers, the more I think the biggest difference between the D and the R states is Medicaid. It's already 24% of all state dollars spent. And depending on how well the Affordable Care Act does at actually making sure states follow through, you may see a strange equalization in tax rates. But I'd guess the red states will fight to prevent the Medicaid expansion from working, and thereby their budgets from expanding.

The worst part about Medicaid is that in a recession, just when state tax revenue is drying up, more people land on Medicaid and costs go up.

If the ACA is going to mandate a Medicaid expansion for all 50 states, I say just take it federal at this point. At least if it were federal we could treat it a bit counter-cyclically.

But one way or the other, Medicaid is the elephant in the state budget room. And while everyone has their eyes fixed on pensions, Medicaid's growing - maybe expanding greatly in red states - and not going away.

It's probably the biggest story for state government in this and the next decade.

[dcarrigg]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

Hey, I just realized I got promoted!

[Thailandnotes]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

Back to the original numbers for West Contra Costa School District. Maybe my math is wrong, but on a loan calculator to get from 2.5 million to 34 million over a 26-year period, you have to plug in an interest rate of 53 %. The county cannot borrow money more cheaply? Several articles claim 200 other counties in California have agreed to similar CAB loans due to falling real estate tax revenue and limits imposed by Proposition 13. What does 53 % in the land of ZIRP mean?

In other regional news...

“Seeking to recoup almost $1 million, the Santa Clara County Board of Education has sued ex-Superintendent Charles Weis, who walked away from the luxury San Jose condo he bought with taxpayer money.

“When Weis retired in June, he said the condo was worth less than the $890,000 he paid for it in 2008 when he was hired, and he sought to hand the title to the school board. Under the terms of a loan from the school board, he wasn't required to make any payments until he left office or stopped using the condo, in the high-rise Axis building, as his primary residence.”

[dcarrigg]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

I think that's 10.6% or so in compound interest. $34,000,000=$2,500,000(1+x)^26

53% is the old I=PRT simple interest formula, which I don't know if anyone still uses in this modern age of miracles.

But this was like one of those adjustable rate mortgages where you pay interest only for the first few years anyways. So its formula will be more complicated.

Still, I'm not sure why the school district is taking on 26 year term loans or why it's taking anything at over 10%.

I actually think that if the district were getting an outright grant for $25,000,000 from the feds, that would be one thing. But to take out a $2.5M loan on those terms just to get access to a subsidized loan for an additional $25M is absurd. I'm sure the school will end up costing taxpayers about $100M by the time it's all said and done, $70M of which will go to interest. If these were the 1970s, that'd be one thing...but it ain't.

[c1ue]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

I know Reinhart and Rogoff say that 90% debt to GDP is a critical threshold. What about Ineterst to GDP, is there a tipping point there?

Yes, and we're already past it. Hence ZIRP forever.

Historical examples of collapse:

Argentina had a GDP of about US$264 billion in 2000, and was paying over US$10 billion in foreign debt interest. They paid $11 billion in 2001 then collapsed.

Still, I'm not sure why the school district is taking on 26 year term loans or why it's taking anything at over 10%.

Some people say you should never ascribe to malice, what can be ascribed to stupidity.

I personally think when something like this shows up, look first for a direct relationship between a board member and a bankster: either one IS a bankster, is married to a bankster, was paid by a bankster etc etc.

[Thailandnotes]

Re: Anybody seen an article on what percent of taxpayer dollars are being siphoned off?

I personally think when something like this shows up, look first for a direct relationship between a board member and a bankster: either one IS a bankster, is married to a bankster, was paid by a bankster etc etc.

That is my initial inclination, but the LA times reports that this type of loan is not uncommon, even though other states have made them illegal.

I'm amazed that none of the articles mentioned who is loaning the counties this money.

Here's a long article about Poway Unified School district.

"So, to be able to afford its debt payments 20 years from now, the total assessed value of property within the taxed area would have to quadruple...

"And there’s no chance of the district refinancing the deal. The loan contains a provision strictly barring the district from refinancing its debt...

"Of course, many of the residents who voted on Proposition C will be long gone by then. They’ll be dead, or living somewhere else."

http://www.voiceofsandiego.org/educa...a4bcf887a.html

The other thing is the schools are borrowing this money to modernize schools and build new ones. Decades from now just as the balloon payments are due, they will be needing to borrow money again to do the same.