The Student Debt Crisis

Student debt is a very real crisis in America and a growing concern in nations like the UK. When I graduated from law school in May 2013 I had borrowed a staggering $138,943. This original principal amount paid for my total cost of attendance, which included: tuition, fees, and housing. It should be noted; I even had a graduate program scholarship worth several thousand dollars that reduced the amount I had to borrow.

The intensity of a professional degree makes working during the school year very difficult. The summers are reserved for unpaid internships, which are the number one way students land jobs upon graduation. After all, the goal of this highly expensive education is to end up practicing law and making enough money to repay said debt.  

Unlike many students, I managed to graduate from my undergrad debt free with the aid of scholarships and summer jobs and had even saved enough to travel Europe for the summer after commencement. Additionally, I not only earned an LL.B. degree, but also two LL.M.s, which means my total cost of attendance on average, per year, was less than $30,000. I do not mind repaying what I borrowed, but the hyper interest and fees the government levied seems outrageous to say the least. Not to mention it being a super tax on poor students who borrowed to improve their lot and their family’s lot in life. See tax burden chart for Delta County.

Sitting two and a half years after graduation, my debt burden has grown to $231,930.[1] Difficulty with the bar exam and the lingering effects of the financial crisis on the legal services industry has made finding a job in law incredibly challenging. The tenuous realities of the economy were noted when the Federal Open Market Committee (FOMC) opting to keep the Fed rate at 0%-0.25% - where they have been for the seven years since the financial crisis.[2]

While it may seem insane, the interest rates on my student loans range from 8.5% to 9.5%. Tack on fees and that is how the principal has grown by 60% in 2.5 years! As of 8 Dec. 2015, even the bank prime loan interest rate was 3.25%.[3] Although the Federal Reserve has no direct role in setting the prime rate, many banks choose to set their prime rates based partly on the target level of the federal funds rate--the rate that banks charge each other for short-term loans--established by the FOMC.[4]

The Fed has kept interest rates low to making capital easier to acquire. While student interest rates are over 10-times higher than the Fed rate, the fact that the loans are originated from a government lender has made raising the capital to earn a degree much easier.

Unlike other loans, student loans cannot be included in a bankruptcy. This means that if a graduate encounters a financial hardship, such as long-term unemployment, health related hardships, or general changes in the industry or world which effects entering the labor force, there is no recourse for restructuring and setting aside certain obligations. It should be noted, that law does permit setting aside some student loan obligations for permanent disabilities which did not exist at the time of the origination of the loan.

The Fed’s goals are maximum employment and an inflation rate of 2%.[5] The FOMC looks to any Federal Unemployment Rate of 5% or less per annum as full national employment. This is regardless of the Labor Force Participation Rate, which sheds light on the discouraged workers and long-term unemployed who are no longer filing for unemployment benefits.

Congress has created income-based debt repayment schemes to help those who are struggling to make the minimum monthly amounts. While this scheme has helped reduce the monthly repayment costs, the interest continues to accrue at an alarming rate. This is harmful to the borrower, because the reason for borrowing was because the borrower was poor. Maintaining high rates of interest for the term of the loan means an original $138,943 loan over a 30 year period means $281,648 will have been paid in interest. However, the repayment scheme for those facing financial hardship is even worse, as forbearance rolls unpaid interest into the principal. Thus, my Dec. 2015 re-adjusted student debt obligation of $231,930 will turn into $702,070 over a 30 year period, with $470,140 being additional interest. All in all, an original principal amount of $138,943 will, over a 30 year term, generate $751,788 in interest income for the U.S. government.

The other scheme Congress has is what is called the 10 year plan. This plan allows for debt forgiveness to occur after 10 years of working for the government or a non-profit entity. The policy purpose being that these jobs pay less than the private sector and would be challenged for the debtor to repay the burden. The other policy idea is to encourage smart, but non-wealthy students to earn graduate and post-graduate degrees. For forgiveness to be effective, in addition to the above, there must be 120 consecutive minimum payments made to the Department of Education.

For example, my Department of Education minimum payment is set at $2,760 per month. Assuming I follow the 30% Rule[6], the economic idea that a maximum of only 30% of a person’s income should go to rent or mortgage payments, I’d need to earn at least $4,667, presuming my rent was near the Denver, Colorado average of $1,400 per month.[7] This seems entirely doable, since that would be $56,000 per annum. After subtracting $33,120 for the yearly student loan minimum repayment and $16,800 for total rents, also don’t forget taxes, which between state and federal would be about $11,356. Add these three items up and each year you are going in red by at least $5,276. All this assumes you are not eating, commuting, having to buy clothes, or pay for emergencies.

The reality is that a person would need to earn over $100,000 in their government or non-profit job for ten years to survive financially. Even at $100,000, a borrower in my shoes would really just be surviving, as utilities, food, heath expenses, clothing, costs of children or dependents, insurance, etc. adds up very quickly, even if you are as frugal as someone who survived the Great Depression.

A problem for many policy makers is what if a young person goes off to law school or med school or engineering or business school and wants to come back to a poorer, rural region to serve the legal or medical or business needs of a small community. This debt burdened professional is not working for the government or a non-profit, thus one repayment play is off the table. Yet, should these communities be entitled to professionals who would serve the needs of that region? Often debt saddled student-borrowers are forced to work in the cities, leaving a void in poor, rural areas, where incomes wouldn’t be high enough to make payments, live, and support a family. 

I would like to see a plan that throws back the obligation to the original principal amount, then ties repayment to income and the Fed Rate. Considering the policy that student loans help smart, but poor students achieve careers in the learned professions which in turn helps elevate families to higher income brackets, thus leading to more tax generation. It is also a matter of fairness not to use forbearance provisions to hike up the aggregate repayment amount. High interest on loans is essentially a tax on poorer students who had to borrow to attend professional schools. The interest also punishes hard work and success by rewarding these borrowers less than their wealthier cohort who may make less, but would have more disposable income to spend, adding to the national GDP. Creating ways to allow for greater social mobility is a good idea; however using these methods to punish those who seek a better life seems highly unethical.

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[1] U.S. Dept. of Education, Loan Servicing. Navient-SallieMae Account of Matthew Soper. 29 Nov. 2015 Print.

[2] Neate, Rupert. “Federal Reserve keeps interest rates unchanged but hints at December rise.” The Guardian 28 Oct. 2015. Web. 7 Dec. 2015.

[3] Federal Reserve System. Selected Interest Rates -- H.15. 8 Dec. 2015. Web. 9 Dec. 2015.

[4] Federal Reserve System. FAQ – Credit, Loans, Mortgages. 2 Aug. 2013. Web. 9 Dec. 2015.

[5] Neate, Rupert. “Federal Reserve keeps interest rates unchanged but hints at December rise.” The Guardian 28 Oct. 2015. Web. 7 Dec. 2015.

[6] See: http://www.bloomberg.com/bw/articles/2014-07-17/housings-30-percent-of-income-rule-is-near-useless accessed 9 Dec. 2015.

[7] See: http://www.denverpost.com/business/ci_29013199/average-metro-denver-apartment-rent-drops-5-downtown accessed 9 Dec. 2015.

Funding the government: taxes

Federal Personal Income Tax

Tax Bracket	Married Filing Jointly	Single
10% Bracket	$0 – $17,400	$0 – $8,700
15% Bracket	$17,400 – $70,700	$8,700 – $35,350
25% Bracket	$70,700 – $142,700	$35,350 – $85,650
28% Bracket	$142,700 – $217,450	$85,650 – $178,650
33% Bracket	$217,450 – $388,350	$178,650 – $388,350
35% Bracket	Over $388,350	Over $388,350

*Standard deduction: $5,950

State of Colorado Personal Income Tax

4.63% of Federal taxable income

Medium household income (Delta County, Colorado)^[1]

$40,451

How much will you owe if you earn the average in Delta County?^[2]

	High school Graduate (35% of Delta County)	Bachelors Degree (11.71% of Delta County)	Masters Degree (3.6% of Delta County)	Doctoral or Professional Degree (1.8% of Delta County)[3]
Gross monthly income:	$2,402	$3,772	$4,806	$6,083
Gross yearly income:	$28,820	$45,260	$57,670	$73,000
Standard deduction:	($5,950)	($5,950)	($5,950)	($5,950)
Taxable income:	$22,870	$39,310	$51,720	$67,050
Colorado income tax liability (4.63%):	($1,059)	($1,820)	($2,395)	($3,104)
Federal income tax liability 10% bracket:	($870)	($870)	($870)	($870)
Federal income tax liability 15% bracket:	($2,126)	($3,998)	($3,998)	($3,998)
Federal income tax liability 25% bracket:	(-)	($990)	($4,093)	($7,925)
Net income (after taxes):	$18,815	$31,632	$40,364	$51,153
**After personal income taxes, money is spent on: food, mortgage/rent, utilities (ie water, sewer and electricity), insurance (ie health, automobile and home), gas, maintenance (ie car/truck, home), clothes, et cetera. In Delta, a sales tax of 7.9% is assessed on most purchases.

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^[1] Combination of what everyone under one roof earned in Delta County during FY 2010. There are 30,900 people who live in Delta County. The current unemployment rate is 10.9% and 53% of Delta County is in the workforce.

^[2] Digest of Educational Statistics, September 2010, adjusted for 2010 US census findings in Delta County, State of Colorado, See: http://nces.ed.gov/programs/digest/d10/tables/dt10_391.asp for full table. Accessed 8 May 2012

^[3] Per cent of Delta County’s population, who has attained a certain educational level, see: http://www.citymelt.com/county/Colorado/Delta-County-CO/Education.html. Accessed 8 May 2012

Thoughts on revolutions, violence and civil resistance

This week saw US President Barak Obama on The Tonight Show with Jay Leno talking about the re-election campaign, Libya, the economy et cetera. Mr Obama said, “[...] it only cost us a billion dollars” to kill Libyan leader, Col Muammar Gaddafi, the county’s dictator of the past 42 years. [1] A billion USD in taxpayer resources seems like a might high figure to eliminate one person?

Yesterday, Andrew McCarthy, writing for the National Review, published an article entitled – ‘Our Libyan Adventure: Gaddafi’s dictatorship was preferable to an Islamist Libya’. [2] This prompted a series of questions – firstly, should the US have been involved in Libyan affairs. Secondly, should the Obama Administration have dedicated tax dollars to a conflict on foreign soil? Thirdly, did the Obama Administration usurp the power of Congress as protected under Art I, § 8 of the US Const? Fourthly, was supporting a Libyan revolution in the best interest of the citizens of the US? Fifthly, should foreign, third-party states, be involved in the domestic affairs of a sovereign nation state?  Lastly, must revolutions involve some sort of violence, or can non-violent, civil resistance be sufficient to cause a change in governments?

The last question seems very intriguing, must all revolutions involve violence? What is a revolution? Thomas Jefferson viewed a revolution as when the governed no longer consented to the government. In otherwords, the social contract must be breach by the government to legally justify the governed to rescind the contract and dissolve the bands with tie the two together. If the governed proclaimed such grievous contractual violations of rights and liberties to their government and their government agreed and either dissolved the government voluntarily or renegotiate the terms of said social contract, and then there would be no need for a revolution, a peaceful change of government would have occurred. This is symbolically what happens in the US when a new president is sworn into office, succeeding another of an opposing political party, and the peaceful transfer of power is achieved.

What happens if a leader refuses to give up power? Worse yet, that leader has the backing of the military, the ruling aristocrats, and the religious clerics? When said leader breaches the social contract by no longer having a regard for the welfare of prosperity of the citizenry, legislating unjust laws, and the treasonous acts of the government become self evident, then the people have an obligation to dissolve the social contract and create a new government with the consent of the governed. If that government refuses to give-up power peaceably, then a revolution has begun. Despots, dictators, tyrants tend not to relinquish authority without a fight. Sometimes a little tear gas or consenting to demands with overt a full blown revolution and save the fight for another day. Other times the revolutionary movement begins to grow, protesters take to the streets, mobs break-out, sometimes the revolutionaries are peaceful, other times they are not.

The level of violence may differ from person to person, reader to reader, and survivor to survivor. A gun shot to a passing tourist may seem horrific, compared with massive war which lasts six years. One type of revolutionary may use arms and force to invoke the terms, whereas another type of revolutionary may be pious, a pacifist, engaging in “non-violent” civil resistance. The strategy of the two revolutionaries may be similar, to encourage the government to quell and suppress the uprising with the full force of law, perhaps undue force in enforcing civil order and rest.

In an era of global media, revolutions are less violent, but there are going to be some forms of major resistance and struggle in order for a revolution to be a revolution. Leaders on the revolutionary side have learnt how to be "pacifists" and compel the international community to rescue the people by formal or informal measures – eg military and/or diplomatic pressure. This pressure can be very difficult to overcome, especially if the leader is hedging all bets that the military or aristocrats in society will continue to support the government. The international community views such actions as a call for humanitarian intervention or pre-emptive self-defence. The argument is logical, if a leaders thinks nothing of killing his/her own citizens, then they probably won’t think twice about killing the people of another nation. It can be difficult to persuade other nations to become involved in the domestic affairs of state. There needs to be a foreign-national interest. For example, Italy adamantly opposed all military intervention in Libya, as Libya was the largest supplier of crude oil to Italy. However, once it appeared the current regime (Col Gaddafi) couldn’t survive, then all bets were off and it became time to look for winners and losers and back the revolutionaries who would be most sympathetic to Italian-Libyan relations and business.

I don't really consider a change a revolution, as a revolution means one side objects adamantly. This is why political scientists distinguish between social and political revolutions. A leader of a social revolution would be called a ‘change agent’. Dr Martin Luther King, Jr would be described as a change agent, not a revolutionary. A revolution is about the consent of the governed and the US didn’t change governments or administrations period known as the Civil Rights Movement. There were elements of the Movement which embodied a political revolution, such as bloody Sunday in Alabama. While the sit-ins and protests were a non-violent form of civil resistance, the reaction of the government authorities is what the revolutionaries were banking on for success. Images of African Americans being pulled out of Soda Fountains by white cops, police shooting at peaceful demonstrators, and the National Guard being used to enforce segregation were broadcast around the globe and the American states. How "violent" does something needs to be to be "violent"? Newspapers published photos of such atrocities and pretty soon the social change had occurred to allow for the politics to follow suit.

Revolutions are not merely won by the governed challenging the government authority, they usually involve foreign money and influence. In Egypt (2011), India (1947) and South Africa (1994), the US funnelled millions and millions of taxpayer resources into military aid, covert ops, political and diplomatic pressure, bribes, shaping media perception, logistics, communications, and allied support. Many Americans view these as good uses of tax dollars, as the regimes were replaced with ones favourable to the US and American business. The US has also failed miserably in attempting to influence revolutions using the aforementioned tactics; these include: Cuba, Iran, Guatemala, Congo, Brazil, Iraq, Chile, Argentina, Cambodia, and Venezuela. In foreign affairs a government strategies to advance their national interests abroad, sometimes the plan works and other times is becomes a deficit write-off under the discretionary budget heading.

In 1776, it was considered by the fledgling, King Louis XVI, in the French national interest to provide naval and financial support to the American rebels, in their revolt against the European hegemonic power of Great Britain. As someone once said, “The enemy or your enemy is your friend.” Should France have made such an investment, especially in light of the recession in Europe at the time? Probably not, as history has shown us that that is what contributed to the French Revolution. Foreign wars are usually economically good at first, but become a drain on the domestic economy when they continue unresolved for a substantial period of time. It should also be noted that The Netherlands and Spain also provided financial and political support for the American colonists. Both kingdoms probably looked to the US as a future trading partner, along with enjoying seeing the most powerful military in the world take a beating from some backwoods farmers across the Atlantic.

Revolutions are dangerous and should not be widely encouraged, but there are times which demand for action to be taken, to cut the stings which attach the people to those who reign over them. The people are then free to choose a new government, by delegating rights and responsibilities to an authority and exchanging ultimate freedom and liberty for the rule of law and an ordered society.

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^[1] Obama, Barak. ‘Interview with Jay Leno’, televised on NBC’s The Tonight Show: 25 Oct. 2011 < http://www.nbc.com/the-tonight-show/video/tuesday-october-25-2011/1364618/> accessed 26 Oct. 2011.

^[2] McCarthy, Andrew C. “Our Libyan Adventure: Qaddafi’s dictatorship was preferable to an Islamist Libya”. National Review: 27 Oct. 2011 <http://www.nationalreview.com/articles/281414/our-libyan-adventure-andrew-c-mccarthy?pg=1> accessed 28 Oct. 2011.

Vote No on Prop 103: Bad for business, won't improve education

Proposition 103 seeks to amend the Colorado Revised Statues by increasing individual and business income tax by nearly 8% (from 4.63% to 5.00%) and the sales and use tax rate will be increased by over 3% (from 2.93% to 3.00%) for five years. The proposition would require additional tax revenue to be spent on public education. The fiscal note indicates revenue of nearly $3 billion.

The proposition is bad because it fails to direct the legislature on what aspect of “public education” the revenue is to be allocated. Public education is broadly defined to include everything from pre-schools to colleges and universities, along with libraries and museums, not to mention community education. In addition to the definition difficulties and the lack of direction as to allocation of resources, the proposition also fails to offer a plan as to how an increase in revenue will improve education.

Raising taxes on the middle class during tough economic times is not the answer to our state’s and our nation’s lag educationally speaking behind the rest of the world, most notably the EU nations, Japan and South Korea. Students should learn to spend more time in the libraries reading and teachers should be empowered to actually teach. Parents are the third party in the ‘educational contract’ and need to encourage their children and explore the world of knowledge in literature, science, the arts, history, geography, civics et cetera.

Unemployment in Colorado is officially hovering just under 10%, the local unemployment rate is slightly lower. However, a study by the Economics International Corporation suggests consumer spending and business investments will decrease as a direct result of the proposition 103 tax hike, leading to circa 30,500 jobs being eliminated by fiscal year 2017. Such incriminating evidence is allegedly why Governor John Hickenlooper is unwilling to publicly support the proposition.

Election Day is Tuesday, 1 November 2011. Ballots must be received in the County Clerk's Office by 7:00 PM.

It's time to simplify the tax code & reduce governmental spending

With over 30,000 pages in the UK tax statutes it is time for parliament to tackle the ever burgeoning and convoluted mechanism for growing the governmental Leviathan and redistributing wealth. What modern social states like Britain and France and even the United States fail to grasp is that one must create wealth before you can re-distribute it.

Some argue that since paying taxes, by sheer definition, is inherently unfair, then the net should be cast wide to speed the pain equally. In other words, taxing or creating fees, surcharges, tariffs or levies for everything from income to interest earned from a bank account or building society; from tobacco and alcohol to bread and cheese; and from corporation tax to inheritance (death) tax.

The UK saw its highest tax rate in 1966, when the Labour government of Harold Wilson ushered in a 134.25% tax rate. This outraged George Harrison of The Beatles, who was affected the 95% super-income tax bracket, that he composed the music and lyrics for the ‘Taxman’, as a form of revolt. The Beatles band recorded the song in April and it was released in the album, ‘Revolver’ in August 1966.

 Tolly's UK Yellow Tax Handbook 2010 being burnt in protest

Many criticise the Thatcher-Major era as being ‘soft’ on taxing the rich and giving away government assets to private industry. The critics fail to acknowledge the quantitative data. The highest income tax bracket was 98%. Stated differently, for every £1 a person earned, 98p was going to the government. Today, the highest income tax bracket is 50%, which took effect in assessment year 2010 and catches individuals earning over £150,000 per annum. Under the New Labour government of Tony Blair, much of the neoliberalist economic policies of the Thatcher-Major governments were continued. This led Labour MP, Peter Mandelson to coin the term “Neo-Thatcherism” to describe the economic policies of New Labour.

Neoliberalism is a school of modern political theory which stresses market-driven approaches to economic and social policy, based on neoclassical theories of economics, which advocates efficiency of private enterprise, liberalization of free trade and open markets, and encouraging consumer free choice, individual thinking, and private enterprise. The tenets have frequently been a topic of conversation at Bohemian Grove. The ‘Washington Consensus’ is considered the theory’s definitive statement. International organizations such as the International Monetary Fund (IMF), World Bank, and World Trade Organization, along with regional trade associations such as the North American Free Trade Agreement (NAFTA), Association of Southeast Asian Nations (ASEAN), the Southern Common Market (MERCOSUR), and the European Union (EU) have endorsed the general principles of the theory.

National tax policy should encourage innovation and efficiency. Jobs must be created, at the core is build and maintain a strong and vibrant middle class, which broadens the tax base and brings stability to volatile global markets. The UK tax statutes are so complicated that while everyone in society gets caught by the tax ‘net’ burden, the lofty weight of a growing public sector places high demands to grow the public coffers. Government must learn to do more with less. A focus should be on prioritization of national policy objectives and efficiency placed at the heart of society’s vision and mission. An athlete performs best when he/she is in lean and well trained. Likewise, a government who learns to operate on less is able to understand the benefit of competition and getting quality.

One of the most efficient governmental organizations is the EU, which operates on a relatively small budget and meagre staff, yet the data they produce is unprecedented when comparing to national governments. An example is a student who is living on a shoe string budget is able to do far more than a professional paid a monthly salary. Why? The student understands the value of every pound-sterling and looks for the cheapest option (eg- riding the bus as opposed to the train, sleeping in a hostel compared to a 5-star hotel, et cetera et cetera). If governments operated in the same manner, more money would be in the hands of the private sector to grow the economy and allow citizens more options with how to live their lives.

In protest of the UK’s and US's confusing and convoluted tax policy, I took part in a tax act protest, where students burned their tax statutes in protest. Please join me in supporting a simplification of the tax statutes - the first step towards creating a more just British or American society.

Thoughts on Economics: Coke Index & the free market

Perhaps living in the city of Adam Smith, who wrote the Wealth of Nations in 1776, the year my forefathers signed their names to a declaration to King George III declaring their intentions to sever ties with the colonizing power, has sparked an interest in economics and the interaction with law. Prior to Christmas 2010 I was in Marrakesh, Morocco and met four students from Malaysia, who, were finishing their degrees in London, respectfully in medicine, economics and international trade. Our conversation on a train ride to Rabat sparked my interest in the Coke Index, which was promulgated in the affirmative by two of the four. First, I will explain the index and then contemplate UK tax law with a comparison to the health care. This latter point was prompted by recent discussions with fellow course mates about the Republicans in the US House of Representatives voting last week to repeal “Obamacare” (US National Health Care Act (H.R. 676)), which is the American version of socialized medicine, signed into law by President Obama in 2010 and set to take effect in 2014.

The Coke Index is a variation of PPP (purchasing power parity), an economic theory of long term equilibrium exchange rates is based on the relative price levels in two different countries. The theory has an absolute and a relative model. In the former, the purchasing power of different currencies is equalized for a given good. Whereas the latter is the difference between the prices, in say a can of Coke, between country A and B. The difference in the inflation rates will be more or less equal to the percentage of appreciation or depreciation in the exchange rate. The Coke Index can therefore give you an on-the-ground indication of the “real exchange rate”, because you know that a can of Coke costs $0.50 in Denver and 5dirhams in Marrakesh. According to XE.com the exchange rate is $1.00 = 0.12149 Moroccan dirham, so the “real exchange rate” is actually a little worse than quoted, as the can of Coke actually cost $0.61. Where the Coke Index breaks-down and becomes subject to volatility is in the arena of non-traded goods and services, in other words, I could have purchased a haircut for the same value as a can of Coke or hired a driver for a similar price. The Economist popularized the “Big Mac Index”, which I personally reject as the magazine is a bit too pretentious and arrogant for my tastes, though it is the exact same principle. Both the Coke and Big Mac Index are criticised in developing countries because those two goods are seen as luxury items. Coke is less so, as it is found even in the most rural of regions – according to Jessica Stern’s book, Terror in the Name of God, members of al-Qaida and the Taliban always served Coke as an aperitif. All this said, a 1,5 litre bottle of water in Marrakesh cost me the equivalent of £0.04 – a bit shocking since a similar bottle would cost between £0.34 and £0.65 in Edinburgh! I still drank a lot of Coke, because a medical doctor (single & female) I befriended said Coke kills any bugs which might have been on the Moroccan food – good advice – I didn’t get sick!

In regards to tax law in the UK, I have been reaking Tolley's Yellow Tax Handbook 2010-11 and Revenue Law: Principles and Practice. These books, along with lectures indicate the UK-US comparison is actually not that much differnt as far as revenue collected per capita, The US still has over-all lower taxes, but not by as great a differnce as existed in the 1980s. The textbook authors seem to insinuate Americans perceive themselves as paying fewer taxes and receiving fewer benefits, though the lecturer of the course commented that Americans contribute slightly less (when considering federal and state income tax, plus sales tax and property taxes), but receive tremendously fewer benefits. I almost stood up and said, “I’d gladly pay minimal taxes and receive limited equivalents.” Though I can tell my Republican ideology doesn’t exactly flow with the average Brit. The largest tax increase in American history was signed into law by President Obama in 2010 - the National Health Care Act - which binds all citizens into a single federal scheme (in my opinion usurping the concept of dual-federalism and the autonomy of the states) Europeans love the concept of 'free health care' (though if they thought about it, they are paying for it and even if it is less than most American insurance plans, the quality of service, expertise and facilities are considerably behind the US). Take all the factor which create value and Americans have BMW plans compared (using the auto analogy) Vespas in the UK. Cost wise, there should be a more affordable plan, but it should also carry a linear equivalence as far as value. I wouldn’t expect to buy a real BMW at a Vespa price, nor would I suspect the showrooms look similar. Yet both should take me from point A to B. I also dared to say that the free market should guide these prices and services, not the government – I was called a few cute and short names for what seem to be rather reasonable ideas. Much of my reasoning comes from observing how my fellow law students act at an “open-bar”, as opposed to a “cash-bar”. They’re sloshed in the former instance and reasonable in the latter (mind you, they’re British, students and in the faculty of law – all of which have high drinking propensities).

Good stewardship starts at home, not in Washington

Good stewardship starts at home, not in Washington. The citizens of Delta approved a bond ballot issue, in November 2009, to raise the city’s indebtedness ceiling to $30 million, with repayment of that debt maxing out at nearly $69 million. These new indebtednesses will be generated from “the issuance of revenue bonds from the city-wide capital improvement fund.” A bond is an indebtedness and an indebtedness has to be re-paid.

Proponents of Delta’s Main Street bypass suggest the constructing of a multi-million dollar, 1.6-mile long road and bridge, will provide an alternative route for semi-trucks, allow emergency and police an entrance to North Delta during times of train delay, and provide faster access for consumers wishing to take their dollars from Main Street to Montrose or Grand Junction. The drive for urgency from the bypass supporters is a November State-wide ballot initiative that if passed, would prohibit municipalities from bonding beyond a 10-year period. The revenue bonds carry a 20-year payback time.

The voice of good stewardship, fiscal responsibility, and respect for the economic times we live must be supported. Liberal spending and overzealous borrowing, coupled with a downturn in the economy is what has gotten this county in the mess it currently faces. For example, last week’s Delta County Independent reported, Delta’s unemployment is once again on the rise (now above 8%), foreclose rates continue to go up (1 every 2 days), and actual real estate values are going down (mean value down over $25,000 per home). The Delta School District has been very fiscally responsible approach by trimming their fat and eliminating 17 FTE teacher positions. The North Fork coal mines, have about a 20-year max load left, are struggling to survive governmental bureaucratic regulations.

The economic signs indicate Delta’s municipal sales tax revenue will go down significantly, thus rendering the debt servicing schedule dubious at best. One of the provisions included in the voter approved bond ballot issue was that, “no increase in city taxes to pay such debt.” As tax revenue deceases, Delta’s debt service remains a constant, thus requiring the city to decrease services, increase fees, or privatize such tax draining entities as the golf course. None of these alternatives appears to be a viable solution, thus a future ballot issue should be expected.

Realistically, Delta is looking at $27 million in capital construction costs and a debt service to tax payers of at least $30 million over a period of 20-years. Proponents say some of this cost can be alleviated through DOLA grants, city reserves, and cuts in government spending. This argument is defeated by the mere fact that State grand funding has been denied, city reserves are low due to “progressive” spending, and current council has shown little inclination to practice fiscal responsibility.

The bond ballot issue specifically states the new debt is “for the purpose of enhancing safety conditions for those persons parking and shopping downtown”. The proponents of the Main Street bypass fanatically use the analogy of a semi-truck carrying oil, wrecking in downtown Delta, while a train is crossing Main Street, and causing a catastrophic fire. The analogy is rooted in such scare tactics that those perpetrating it should be ashamed. The reality couldn’t be closer to the truth. Since Delta’s founding in 1882, there have been no major trucking accidents of the scope and calibre which proponent fear. Semi-truck drivers are some of the safest on the road, as high industrial safety require drivers to maintain a clean CDL. A simple solution to the problem surrounding semi-trucks and Main Street would be to pass an ordinance requiring all vehicles over a certain weight to remain in the left-hand land between a certain set of mile-markers. A few signs and the force of law would keep trucks away from store fronts and cars parked on Main Street; maintain a constant, safe and efficient flow of traffic, along with costing the tax payers a few thousand dollars, instead of several million dollars.

A few years back a home burned to the ground while a fire truck was caught waiting for a train. An event like this, while unfortunate, is a fact of life. Governments seek to eliminate all risks to create a perfectly safe world – the concept of “too big to fail” is a perfect example of a government program deemed to eliminate risk a horrific consequences. Bad things happen to good people and that is life, however mitigation of risk through safety measures should be within our public means. A less costly alternative to the ones the proponents advocate is a fire and ambulance sub-station in North Delta. Another idea advanced is to partner with the hospital to offer medic-vac services which would be able to responder faster than an ambulance, with an annual cost equivalent to the controlled maintenance of a bridge and debt service. Safety concerns are a very real issue and should not be ignored. Conversely, economic considerations of rising unemployment, lay-offs, and businesses hardly making a profit, along with predicted declines in tax base revenue should be acknowledged.

We cannot continue to spend more than we make (this is especially true for governments). The modified Main Street bypass plan includes 2-lanes, instead of 4-lanes; 4 stop lights, a bridge over the railroad tracks and is 1.6-miles in length. No data exists on how much “safer” Delta citizens will be with a multimillion dollar debt. Tough economic times call for out-of-the-box thinking to produce creative solutions. This letter has attempted to demonstrate how good stewardship can start right here in Delta and be as a beacon on a hill to show Denver and Washington how problems can be tackled and solved without placing future generations under the burden of an indebtedness which must be repaid.

See: Delta County Independent