Could T-Bills become unsolvent? That seems impossible. You are talking total collapse here?
I thought they were GAURANTEED by the constitution - we can cut so many other things in government that are NOT gauranteed before those will be risky eh? Like SS, veterans pensions, school spending - etc etc.
californiarepublic.org
Regardless of the merit, or lack of, of the current tax, the process puts voters in charge of making the final decision, and reaffirms the doctrine that not only should taxes be imposed through the consent of the governed -- the basic premise of Proposition 218 -- but that those same citizens have an inherent right to withdraw their consent.
And while it is the fate of taxes, not bonds, that is to be considered by voters, the process illustrates a very important difference between the obligation that comes with taxes and that associated with bonds.
Taxes do not represent a long-term commitment. Although taxes may seem to be set in stone, with sufficient citizen unrest, taxes can be cancelled at any time by elected officials or by voters through use of the initiative.
Bonds, on the other hand, are almost always an inviolable long-term obligation. Those who purchase bonds are guaranteed repayment by the "Impairment Clause" of the U.S. Constitution. For local bonds, payment is assured to creditors by placing a lien against all property within the sponsoring agency's jurisdiction.
For some taxpayers, being asked whether they would prefer to pay for taxes or bonds, the question is akin to being asked which finger they would prefer to have broken -- all of the options are unpleasant. Still, the vast majority recognize that some taxes and bonds are a necessary evil to pay the cost of a civilized society. But, given the choice of funding a project through ongoing tax revenues or bonds, taxes are almost always the better choice, because, as the residents of Watsonville are showing, voters have the option to change their minds. |
