For the last few weeks, the major news story around the United States was the debate in Washington, DC about the debt ceiling. Throughout a heated summer of wrangling, many people feared (and others hoped) that Congress would not reach a deal to raise the government’s debt limit (thereby forcing it to default on its loans). Those hopes and fears were laid to rest on August 2 when Barack Obama signed a bill, authorizing the government to increase its indebtedness by $2.4 trillion dollars.
At the same time, on a smaller scale, Long Island had a heated political/economic debate of its own. A referendum was placed before the voters of Nassau County, to authorize the county to go into debt (to the tune of $400 million) to build a new Nassau Coliseum, thereby keeping the NHL’s New York Islanders in the area. The funds would also be used to build a minor league baseball stadium, convention center, and other facilities in what people were beginning to call “the hub.” That referendum was defeated by a 57-43 percent margin on August 1.
It is quite ironic that these two votes occurred within 24 hours of each other. Although the scales of the issues were vastly different—I would not be surprised if some of my readers from outside the New York area are hearing about the Long Island vote for the first time—many of the core values are the same.
In both cases, politicians insist on operating on economic terms that would destroy a company operating in the private sector. Let us begin with the federal issue. Before the debt ceiling was raised, it was already at $14.3 trillion dollars. In case you are not a math whiz, that is $14,300,000,000,000 (looks like a pretty big number with all of those zeroes in there!). If you are a math whiz, that is 14.3 × 1012 dollars. I just want you to grasp the enormity of that number.
In more personal terms, that is almost $46,000 per American. As staggering as that number is, it may be a conservative estimate of the government’s indebtedness. In an article published by in the America First Party’s newspaper in 2007 (when I was that organization’s Press Secretary), party chairman Jonathan Hill observed that the government borrows money from funds that are allocated for Social Security (and other future obligations to pay current expenses. When that money is factored into the debt, the average American’s share skyrocketed to $166,000 in 2007 (and presumably much more today).
Yet, as a deal was reached to increase the government’s debt limit, the tradeoff was an agreement to find ways to make $2.4 trillion in budget cuts over the next ten years. This sounds noble, until one realizes that the current debt-ceiling increase is only expected to keep the government afloat through 2012.
Everybody seems angry about the federal deficit, but few people are willing to accept budget cuts on their pet programs and projects. And few in Washington have the guts to make the hard decisions. We can be certain that the federal deficit will continue to rise, Congress will want to increase the ceiling again within two years, and the promised spending cuts will be hidden by increased spending in other areas.
Virtually all experts on personal finance will tell you that the most basic principle of money management is this: You must spend no more money than you earn. This rule applies also to corporations. Amassing excessive debt that one cannot repay is a sure road to financial ruin. Too bad our elected officials do not get the message.
This is why the Nassau County vote relieves me. Do not get me wrong: I love hockey, and I hate the Islanders! But, as a lifelong fan of the New York Rangers, I enjoy having one of the sports world’s fiercest rivalries in my area. A Rangers/Islanders matchup may be the only thing more exciting than Game 7 of the Stanley Cup Finals.
The Nassau Coliseum holds fond memories for me. I attended New York Arrows’ indoor soccer games there circa 1980, took my son to the circus in the late 1990s, and enjoyed a Mannheim Steamroller concert there with my wife early in our dating relationship. I wish the arena could undergo a few renovations here and there to keep it open and keep the sports and shows on Long Island. If a minor league baseball stadium was built in the area, bringing a team to Nassau County, I would be in the stands.
However, the county’s plan showed just the sort of foresight that we have come to expect from elected officials. Nassau County has serious financial issues; the county budget is in such trouble that the state has set up an oversight committee (the Nassau Interim Finance Authority, or NIFA) to make sure they do not get even worse.
In spite of this, the county’s elected officials thought it would be a brilliant idea to borrow $400 million to keep a hockey team in the area. They promised that property taxes (among the highest in the nation) would only go up about $58 per year, and that the loan would be repaid by the arena itself; a portion of all Coliseum gate receipts would be paid back to the County.
However, let’s keep in mind that the New York Islanders have the lowest average attendance in the NHL: Over 1000 fans/game less than any other team, and over 7000 less than the Rangers (whose attendance figures are about average for the league). Sad to say, a team that was worth keeping in the area would be able to fund its own arena and not rely on the public dole.
Voters in Nassau County did not say they want the Islanders to move to another state. They simply do not want their tax dollars spent on a hockey team when there are other, more urgent fiscal needs facing taxpayers. Too bad our elected officials do not understand those basic financial principles that concern working-class voters.