Decades-long infatuation with financing our spending
Sheila Bair, who served as Chairman of the Federal Deposit Insurance Corporation for five years through the financial crisis, has completed her term. In a weekend op-ed in the Washington Post, she urges America to rid itself of its addiction to financing consumption and “growth” with debt. This is the core requirement for America to become financially stable again and to return to “real” growth. From Bair’s Washington Post oped:
Now that I’m stepping down, I want to sound the alarm again. The common thread running through all the causes of our economic tumult is a pervasive and persistent insistence on favoring the short term over the long term, impulse over patience. We overvalue the quick return on investment and unduly discount the long-term consequences of that decision-making.
Our decades-long infatuation with financing our spending through ever-growing debt, in the private and public sector alike, is the ultimate manifestation of short-term thinking. And that thinking, particularly in business and in government, is actually getting worse, not better, as we look for solutions to put our economy on a sounder footing.
Will pension transparency shake muniland?
Joan Quigley of the Bond Buyer is reporting on how proposed guidelines to place unfunded pension liabilities alongside other liabilities has shaken up municipal governments. It’s really just a proposal to clean up balance sheets and get the real numbers out where people can understand them. Many governments have buried these giant, problematic numbers deep in the footnotes. This proposal from the Governmental Accounting Standards Board would force the dirty laundry into the sunlight. From the Bond Buyer:
Currently, many governments disclose pension information in the footnotes to their financial statements and generally only report the contributions they are required to make in a given year, as well as what they actually paid.
“Recognition in the financial statements alongside other liabilities such as outstanding bonds, claims and judgments, and long-term leases, will clearly put the pension liability on an equal footing with other long-term obligations,” the board said in an overview released late last week.
Pennsylvania will open the kimono
The best thing a government can do is make its dealings public so that interested citizens can have a chance to understand where their taxes are going and journalists, whistleblowers and researchers can have the raw material to examine the actions of a government. Many eyes make for better oversight. The Pittsburgh Post-Gazette reports that Pennsylvania is building a website that will give access to state financial information:
Starting in 2013, residents will be able to search a single website and find out how much their senator’s secretary earns, or the amount spent to repave a highway, what agency that money came from and who beat out their brother’s construction firm for the contract.
MSRB to join Twitter
Effective today, the Municipal Securities Rulemaking Board (MSRB) will begin using Twitter to further disseminate to the public updates on municipal market regulation, as well as information about municipal market transparency and the MSRB’s Electronic Municipal Market Access (EMMA) website.
The MSRB’s twitter feed, @MSRB_News, will be periodically updated with municipal market news so followers can stay informed about key developments that could affect investors and municipal entities in the $3.7 trillion municipal bond market.
New York Times: The Cost of Austerity
Center on Budget and Policy Priorities: Promoting State Budget Accountability Through Tax Expenditure Reporting
Fox Business: Whitney’s New Muni Bond Doomsday Call
Bond Buyer:Cuomo’s Tax Cap Wins the Day
Government Technology: Report: 75 Percent of Minnesota Tech Agency Staff Furloughed
Government Technology: Washington State Shrinks IT Department’s Head Count