Wednesday, January 28, 2015

Walker's Wisconsin borrows just like they do in DC

In Wisconsin, we've become used to “fiscal conservative” Scott Walker constantly crying Tea Party tears about the U.S. debt, an example of which is when Walker said people who believe the feds will continue to fund Medicaid were living in an “alternate universe” last August. You may ask "How does our federal government pay its bills when it spends more than it has coming in?" It borrows it, usually through the selling of Treasury Notes and Treasury Bonds, and we've generally had plenty of interest from bidders, regardless of the amount of deficit that we have to pay off (which, by the way, is much lower than it was 5 years ago).

Knowing this makes Walker's "concerns" about the federal debt all the more, because Walker's own budgets at the state level have also relied on borrowing and increased debt back here in Wisconsin. More evidence of this came out this week, as the Wisconsin DOA announced it would offer up over $279 million in new borrowing to pay for various agency expenses. Doubly interesting is the fact that the bids for this offering close on February 3, the same day that Walker is expected to present his 2015-17 budget.

And despite Walker's brown bag campaign of 2010 that claimed state government shouldn't spend more than it takes in, his four years in office show otherwise. If you look at the recent history of the state’s indebtedness, General Obligation debt has leveled off in the last two years, but is still higher than when Walker took over in early 2011.

Outstanding G.O. debt, Wisconsin
Dec 2009 $6.223 billion
Dec 2010 $6.823 billion
Dec 2011 $7.379 billion
Dec 2012 $8.015 billion
Dec 2013 $8.028 billion
Dec 2014 $7.857 billion (according to last bond disclosure)

Also not mentioned is the fact that Walker has heavily relied on borrowing to pay for projects in the Transportation Fund, as nearly $1 billion of such borrowing was in the 2013-15 budget, (provision 4 in this document) with $416.5 million of that was borrowed just to allow the Transportation Fund to pay for everyday operations, (i.e. not tied in to any specific project). It is a big reason why the Transportation Fund’s debt service is scheduled to increase by $9.5 million in this fiscal year, and the DOT's budget request projects an additional $36.5 million in the next 2-year budget.

Don't construe that take as me being against the concept of borrowing in general. If something has to be done and interest rates are low, it’s not a bad strategy (if you're not keen on raising taxes). Given that the strengthening dollar and plummeting budget deficits have helped to reduce the benchmark 10-year Treasury bond below 1.8%, it sure seems like 2015 would be a time to do that, before interest rates and inflation rise again.

But to do this otherwise sensible strategy is in direct conflict to Walker’s trying to sell nationwide about how he’s "a fiscal conservative more responsible than those people in D.C." (note: this is not an actual Walker quote, but it's probably similar to the line of BS he'll try to spin to the rubes in Iowa). Walker’s track record in Wisconsin shows a very different story from that meme, and it seems likely that borrowing would be one of the ways that he’ll try to close his self-inflicted deficit in the current and future budgets. Let's see if the national media picks up on something that Starfuckers, Inc. won't talk about.

1 comment:

  1. Hi Jake,

    Few things I've had to deal with had distracted me. When I pull things together I have more on the budget, but for now here is a great sports stadium site's (Field of Schemes) take on the Bucks Stadium:

    Dr. Morbius