My friend Jon Fleischman has opined today that Governor Arnold won the debate on bonds. I beg to differ. It does not take a genius to know the infrastructure needs of the State, if one lives here. Nor does a take a genius to know that we cannot afford any more significant general obligation debt. It simply takes an ability to add and subtract. Nor does it take courage to propose massive borrowing. What was most disappointing about the bond debate is that not enough legislators came forward and told the truth about whether we can run a structural deficit, as we are now, and heap more debt on top of an unbalanced budget. We simply can’t, and in this debate we didn’t make that argument at all.
The people of the State seem to have a better grasp of this than Arnold does. If in fact the Democrats killed this deal they did us all a favor. At some level we need to make a strong case for balancing our budget, not spending more year over year, and applying surplus revenues to projects on a pay as you go basis. This is only a realistic strategy if you tell the truth to the voters over and over again – we cannot afford more borrowing against a deficit budget, and we cannot tell the truth when we say that this borrowing will not result in tax increases. The minute there is an economic downturn we will need tax increases to pay for this borrowing. Its a fact (no matter what the US Chamber says in its ads). Arnold didn’t win any debate on this. He actually didn’t even approach the main subject – we can’t afford the bonds right now.