Explain to me just how a balanced budget works. Yea, I know

it SOUNDS like you ann't spend any more than you have, but that can't be right. Many of the States have balanced budget amendments but are nnow n deep debt. How did THAT happen?

I'm just curious because of all the BS being bandied about by the Pubs to get a Fed. BB.

Take Texas. It's officially in debt because a lot of local bond projects are sort of sponsored by the state. Except for a bit of cancer research, though, all Texas debt is for buildings and roads and other kinds of infrastructure, paid for by dedicated tax revenues to pay off bonds authorized by public referendum. My kid went to a school built in 2009; my neighbor's teenager goes to a school built in 2006; I'm about to start work at a school building largely renovated and augmented in 2007-08. None of these were state funded, all were guaranteed by bonds, the Texas state government, I don't think, is responsible for them even if they default; yet all of them show up as Texas state debt.

I don't know if it's Texas or Calif. (or some other state I've lived in) but local governments can't issue their own bonds. They apply for permission from the state, who keeps track of the bond requests. Then the state sells the "portmanteau" bond and administers it. Money for all the various projects is collected locally around the state, sent to the state, duly apportioned, amalgamated, and then sent to the bond holders as dividends or in a call.


What's missing between "balanced budget" and "debt" is "deficit." There's no operating deficit in the state budget or in the bonds; or if there is one in the bond administration it's temporary and transient (or a really serious problem that causes default in short order).

The other thing that's missing is infrastructure: Like burgers is "manufacturing" under *, so "Pell grants" and teacher salaries are "infrastructure" under Obama. Most state debt is for asphalt, steel, and concrete, not just to make payroll or provide monetary benefits to people. There are exceptions (hence "most"): California has a huge stem-cell initiative, Texas has cancer research.

The problem with a "federal bond" like that is there's no provision for it, unless Congress sets it up. It gets around balanced budget amendments because they're constraints on the legislature and the operating budget; the people can still vote on a bond issue, imposing taxes on themselves for X years, to build (or fund) something very specific. It's not something the legislature moves off budget.