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Our debt is good, your debt is bad

Oh, the humanity!

For all the controversy over the national debt ceiling, here’s a surprise: Since 2001, the debt load in conservative Texas has grown faster than the federal debt.

Texas has been borrowing more than most other states, too. And local entities, from cities to school districts to transit authorities, have been piling up even more debt.

From 2001 to 2010, state debt alone grew from $13.4 billion to $37.8 billion, according to the Texas Bond Review Board. That’s an increase of 281 percent. Over the same time, the national debt rose almost 234 percent, with two wars, two tax cuts and stimulus spending.

The sets of numbers are not easily comparable, and not just because one is counted in billions and the other in trillions. National figures exclude some obligations, and the Texas total includes so-called conduit bonds, for which the state is not necessarily liable if the borrowers default.

Still, the trend is undeniable. While Texas lawmakers have refused to raise taxes — and often criticize Washington for borrowing and spending — the state has been paying for much of its expansion with borrowed money.

As the author says, that’s not necessarily a bad thing. Texas is a rapidly growing state, with a lot of infrastructure needs, and interest rates are ridiculously low. We should be incurring debt for this sort of thing, even if we stubbornly refuse to properly fund education. By the same token, the US should be doing a lot more of this, which is why you hear talk about an infrastructure bank every now and then, not that it would ever get past the teabagger-controlled House. And once you start this conversation at all, you have to ask why is debt so bad for the US if Texas is doing it? Good luck getting any kind of nuanced response from the slash and burn crowd. EoW has more.

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2 Comments

  1. John says:

    A better comparison would be a ratio measure such as debt/GDP or maybe debt/total budget. So using the latter, I think the State’s budget was $87B this yr (please correct me on that one) so that is 43%. Some type of metric to common size the numbers would be the good comparison. just my two cents

  2. Marshall says:

    Interesting article. Given the innumberable types of financings that both the State & Federal government enter into, it would take signficant analysis to determine which are truly direct obligations of either. Most conduit financings, for instance, declare on the front cover of their offering documents that the State has NO responsibility for repayment (other than some modest moral obligation that wouldn’t actually compel the State to pay up).