January 12th, 2012
jeff-rosenberg

The difference between responsible and irresponsible borrowing

In 2011, the MNGOP put our biennial operating expenses on a credit card. They took out $1.4 billion in debt, some of which will take 20 years to pay off. But that 20-year debt didn’t go toward paying for infrastructure that will last for 20 years. Instead, it went toward paying for our recurring operating costs. That’s the height of fiscal irresponsibility.

Over the coming months, we can expect constant complaints from the GOP about the Governor’s proposed bonding bill to put Minnesotans back to work. I guarantee you they will try to call it irresponsible borrowing. Like they’re ones to talk.

But there’s a massive difference between a bonding bill and what the GOP did last year. Bonding is responsible borrowing — spreading payments over a long time for infrastructure that will last for years, if not decades. What the GOP did is irresponsible borrowing — taking out a long-term loan to fund a two-year budget.

Let’s use an analogy from personal finance. Bonding is akin to a mortgage or student loans. For the majority of homeowners, a mortgage is responsible borrowing — it allows long-term payments for a permanent asset that would otherwise be unattainable.

To extend the analogy, last year the MNGOP did the equivalent of taking out a second mortgage to meet a year’s worth of bills. Next year, those bills will be due again. But since our state will already have its second mortgage, that won’t be an option again. In fact, it will be even worse — because now we have to pay that mortgage on top of our original bills.

When you hear the GOP screaming about fiscal responsibility this year, ask them exactly what their debt bought our state in the long term.

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