Bankrupting of the United States Bonds (Build America Bonds Increase Debt Burden at Record Pace)

Real Clear Markets ^ | 03/17/2010 | Steve Malanga

[SeekAndFind]

In January the U.S. Treasurer, Rosie Rios, traveled to Dallas to join local officials at the construction site of a new convention hotel being built with money raised through Build America Bonds. The purpose was to celebrate the success of the so-called BABs, which are federally-subsidized bonds created by the 2009 stimulus package.

Of course, what no one at the Dallas "celebration" pointed out is that the $388 million in BABs that the city floated with federal aid were necessary because no private developer would cough up the money for the risky project. In fact, local officials wanted to build the controversial hotel because years of frenetic, publicly financed convention center construction by cities had saddled the country with much more meeting space than it needs, and now meeting planners are telling cities they must to ante up money for additional amenities, like new subsidized hotels, or risk losing business.

This is what passes for success in Washington these days, where apparently any level and manner of publicly subsidized debt for any kind of dubious project is considered a home run.

"There's nobody that I know who does not view the Build America Bonds program as an enormous success with the possible exception of one person," John Buckley, majority chief counsel for the House Ways and Means Committee, told a rapt audience of state treasurers in Washington recently. The one critic that Buckley was referring to is Iowa Sen. Charles Grassley, who has objected to the big fees that Wall Street firms have been getting for underwriting BABs.

But the real objection to BABs is far more substantial. These bonds are enabling our already overburdened states and cities, which heaped on debt at a record pace in recent years including back when they were running budget surpluses, to pile it still higher, even as their budgets now groan under bulging debt payments. Moreover, at a time when private firms are scrambling for investment, BABs just further the misallocation of resources already characteristic of municipal finance by luring money away from private investment and into grand (and often misguided) government building schemes that can't attract private capital.

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[jessduntno]

“This is what passes for success in Washington these days, where apparently any level and manner of publicly subsidized debt for any kind of dubious project is considered a home run.”

As the Deemocrats steamroll through the US only the Tea Party can stand up to them...Let’s Roll...and stop the madness...the Deemocrats need to be Deemed out of Office in 2010...