One of the few things on which just about everybody can agree during this election season is that our elected officials in Washington, DC have taken on too much debt on our behalf. Voters part company on what to do about it, but most agree it’s a problem that’s not going away. Deciding to borrow money at the government level is so easy; rates are extremely low and the pain of repayment is left to someone else. I just finished reading Roger Lowenstein’s excellent 2009 book, While America Aged: How Pension Debts Ruined General Motors, Stopped the NYC Subways, Bankrupted San Diego, and Loom as the Next Financial Crisis. It provides a sobering portrayal of how many seemingly expedient decisions can in aggregate lead to catastrophe.

I live in Westfield, New Jersey, a town of around 30,000 people, easy commuting distance west of New York City. We are currently facing our own debt choice. It’s not an existential issue, but it illustrates at a grass roots level how the ethos of consumption today creates problems for tomorrow. Westfielders are about to vote on a $16.9 million bond, the proceeds of which will be used to finance two separate projects: 1) roof repairs on a number of school buildings, and 2) installing a lighted turf field (we already have two).

No doubt few Westfielders have any clear concept of what this new indebtedness means to them personally. The numbers governments at all levels spend are often abstract at an individual level. But a clear perspective can be gained by comparing this amount with the $24 million annual property tax revenue collected by Westfield. The proposal is therefore to borrow an amount equal to two thirds of our property taxes. Every property owner will consequently owe an amount equal to this proportion of their annual property tax bill, and in strict financial terms the equity in their home will be reduced by the amount of this obligation. If the money is invested such that Westfield is $17 million more attractive as a place to live, the difference may be made up. But I wonder how many people would willingly vote for this additional personal debt obligation versus those who might approve a somewhat abstract $17 million collective borrowing. It’s just so easy to vote to approve such things if they’re not translated into personal terms. This is how as a country we’ve arrived at a point awash in debt. Roger Lowenstein told his story well, as he always does.

The vote is on September 24th. I shall vote no. We shall see, on a micro basis, whether the fiscal standards we wish our elected officials in Washington DC would follow are the same standards we apply at a local level.

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