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Are we broke yet? Another day and we're deeper in debt!

There has been a lot of discussion on debt recently at the federal, state, and city level. But our blogger asks, "Does public debt really matter?"

It has been reported that the US federal debt is increasing at a rate of $4 billion per day, or about $11.50 each.

Questions are being posed as to whether the debt ceiling should be raised, or whether the government could actually be in default this August.

But does debt really matter?

Many of us have found out the hard way in personal situations, but are governments exempt from the trauma of default or bankruptcy?

Federal debt service is reported as about 10 percent of revenue. By contrast, as consumers, we are `allowed', typically to have debt service somewhere between 28 percent and 40 percent if we expect to borrow more money. We are most likely familiar with our credit score.

So, some of the debate is focused on the annual interest payment ($200 billion) rather than the debt itself ($14.3 trillion) . The problem seems to be that since the federal government borrows about 40 cents for every dollar it spends, it would have to `borrow' the $200 billion..it can't do that without either reducing spending or raising the ceiling.

In the June issue of ARRP magazine, the editor refers to comments by Alexander Hamilton (the guy on our $10 bill) that public debt is not a bad thing -"the price of liberty" - but the accumulation of debt is "perhaps the natural disease of all governments."

The editor goes on to say that Hamilton insisted the government should repay its debts:"The creation of debt should always be accompanied by the means of extinguishment,"  Hamilton wrote in 1790.

Our city has a significant public debt. I encourage you to learn more about this. We know that services have been reduced to balance the budget. The budget includes provision for debt service, and for principal repayment. You may know the the city exceeded its legal debt ceiling in 2009. Loans and bonds are coming due. I encourage you to attend June 6 City Council meeting, during which there will be an update of the long term debt reduction plan, and a discussion ofa proposal for a Local Revitalization Financing (LRF) bond issuance. There will also be a report from the Neil Walter Co.

For more details, go to the City's web site, and search for council packets www.cityofup.com Then make your own decision if Hamilton was right in convincing our nation to take out `its first loan..a grand total of $19,608.81 in February 1790 (ARRP magazine).

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Ken Campbell September 12, 2011 at 03:59 AM
It is being reported in the News Tribune that the State will be `short' another $1 - 2 billion when the latest quarterly report comes out later this week.. Any guesses how much UP will be short?? My guess is instead of being `balanced', our actual will also be `leaning' just a bit into the red..cuts will likely be needed in services to keep on track for debt payments on town center project... The city was again above its debt limit in 2010 (as was the case in 2009). You may also know that bid requests are out for additional work on the the Town Center project as a result of the bonds being sold as part of the LRF. During my campaign for city council, I have pledged to be very disciplined in the financial aspects of our city..I need your support!
Ken Campbell October 31, 2011 at 08:28 AM
The State is going looking fo another $2 billion or so... Wenatchee is looking for a State loan of $42 million to avoid default on its bonds for it's arena.. http://thenewstribune.com/2011/10/29/1885030/officials-seek-42m-state-loan.html#storylink=misearch Will University Place be able to repay its $1 million loan this December??
Howard and Barbara Lee October 31, 2011 at 06:25 PM
Wenatchee is lucky to have Cashmere as a close neighbor! I wonder if the Cashmere financial institution who loaned our city $1million, when local banks wouldn't, has a drive through window? Howard
Ken Campbell June 17, 2012 at 08:19 PM
Read Mayor's 2012 report on City's financial stability here.. The City will be another near 12 % underwater with latest assessments, but this report claims no `legal or financial obstacle' to refinancing 2013 bonds. Perhaps the City could share their financial advisor's wisdom with all the underwater homeowners in our community who have a lot of obstacles to refinance!! http://cityofup.com/Media/file/CityClerk/ElectronicPackets/06-18-12/Item12-FinancialStability.pdf
Ken Campbell September 04, 2012 at 10:41 PM
Well..$16 trillion - we are now truly another day older and deeper in debt!http://www.usdebtclock.org/
Howard and Barbara Lee September 05, 2012 at 01:23 AM
I know a financial instiution in Cashmere that might find refinancing a $16 trillion loan very exciting. That's a lot of apples! Howard
Brent Champaco September 05, 2012 at 01:43 AM
Get it? Apples. Wenatchee. Cashmere? :)

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