Tags: government | spending | debt | interest

Interest Payments Crowding Out Government Services

By    |   Wednesday, 24 Sep 2014 08:07 AM

"Buy now and pay later" business strategies are coming under increased scrutiny as government agencies crack down on several industries with questionable business practices. For-profit colleges that rely on student loans are one example.

Recently the Consumer Financial Protection Bureau announced plans to increase oversight of car dealers. Regulators hope to prevent consumers from becoming overwhelmed by interest costs.

No one seems to be watching out for governments. In 2014, federal, state and local governments paid more in interest than they did to protect citizens through police and fire services. Transportation budgets also received less funding than interest payments did.

Governments are similar to some consumers and have been binging on debt for years. Both government representatives and some recruiters at for-profit colleges describe debt as an investment in the future. The truth is there are some good reasons to take on debt, but some debt obligations simply create financial hardships. Now that governments are borrowing in part to pay interest on older loans, they could be forced to reduce vital services in order to pay for wasteful spending that occurred years ago.

Consumers who are stretched too far often stop spending money they don't have and focus on paying down debt. Governments don't seem to respond the same way. They seem to ignore the cost of interest when detailing their budget shortfalls. They focus on what services they will be forced to cut today in order to pay for the bad decisions of the past.

Government spending is on an unsustainable path and taxes will need to go up as interest rates rise. The road ahead simply cannot be maintained with the current fiscal realities and the economy will suffer as taxes rise to fund governments at all levels.

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MichaelCarr
"Buy now and pay later" business strategies are coming under increased scrutiny as government agencies crack down on several industries with questionable business practices. For-profit colleges that rely on student loans are one example.
government, spending, debt, interest
290
2014-07-24
Wednesday, 24 Sep 2014 08:07 AM
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