MY CALCULATOR DOESN’T HAVE ENOUGH DIGITS
$100,000,000,000.00 (I think that is a $100 Billion). This is the figure I have heard bantered around for a massive ‘infrastructure’ bond measure for California. I need help from some financial experts now. My understanding is that a bond is, in essence, a loan. We float bonds out there for immediate cash. Then, like with any other kind of loan, we make incremental payments on the loan over a period of time (like with a home loan, you typical spread the payments over 30 years). Of course, the interest on the loan adds up considerably, so that by the time you have paid off the
principle borrowed (in this case, supposedly that "MEGO" – My Eyes Glaze Over – number above) you also have paid out a huge amount in interest as well. I have no clue what the annual payments would be on an additional $100 billion in bonded indebtedness would be for California taxpayers. But it has to be significant. I just don’t understand how we can afford to do this when we have this massive structural deficit.
I was pressed into duty (willingly) as a surrogate speaker on behalf of Proposition 76, the Governor’s "Live Within Your Means" initiative. The NUMBER ONE point I made over and over was the need for California to resolve its structural deficit, and to do so by getting in control over over-spending, not by increasing taxes. So, I am thoroughly confused about this massive borrowing scheme?
This is the equivalent of having an overdrafted checking account, and empty savings account, and a ton of credit card debt – then, going out an securing a huge line of credit on the equity in my house for home improvements. So my house will be in better shape, but now my family financial situation is even more in shambles, as I try to make payments on the home loan when I was already upside-down.
Well, hopefully someone will reach out to me and explain this to me. Because, I just don’t get it. Perhaps there is a structural reform component that is being proposed with this bond measure? Where somehow we are going to reduce our ‘family’ obligations (ie…cut spending) enough to eradicate the structural budget deficit and have the necessary ‘cushion’ to afford payments on floating the largest bond measure in the history of California (and probably any state).
I think somebody owes it to me, and every other member of the Proposition 76 speakers bureau to send some talking points…
Have a great day!
Aloha from the Big Island.
Jon
PS: Continue to send in your observations, thoughts, tips, and more. Also, if you know how I can get a hold of Carly Fiorina, please let me know.