National Debt Is Not The Only Debt

National Debt Is Not The Only Debt

The national debt has rightly become a topic of kitchen table discussion.  Average Americans wonder if they will bequeath to their children a nation awash in debt.  But the national debt is not the only debt crisis America faces, writes Forbes Magazine.  Municipal debt is higher than ever, and we cannot blame the politicians in Washington for that.

In fact, investors now hold $3.7 trillion of municipal debt.  For comparison, this is what our national debt looked like in 1991.  Our national debt is five times as much today.  And for some cities, the talk is not about how to manage their debt, but how they will ever get out of it.

Some cities have already solved their debt crisis.  Tyler, Texas once held $41 million in debt.  But they got out of it by approving a half-cent sales tax, then cutting property taxes by fifteen percent.  Tax hikes generally face skepticism, but city leaders were able to convince the citizens of Tyler that getting their debt under control was too important to postpone.  In addition, they attacked government inefficiencies through their Lean Six Sigma program.  They succeeded.  And in 2009, S&P gave the city of Tyler a rare AAA bond rating.

Obviously, all cities have different financial circumstances and the Tyler example will not hold for everyone.  Leaders, at the city level and at the national level, need to pursue creative plans to eliminate our debt.  The only question is “Will it be done by choice or by necessity?”

Read the entire article by Mark McDaniel at Forbes Magazine.

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