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LETTER: “A bond is a fancy word for borrowing”

To the Editor:

Governor LePage has a habit of tactless and vehement speech, which has attracted the repeated (and repeated and repeated) attention of Maine’s media. Recently the Blaine House Brute said something so violent, so vile that our journalists and editors can’t even bring themselves to mention it: “A bond is a fancy word for borrowing money the state doesn’t have.”

I don’t bring this to your attention because I approve of such reckless rhetoric. Only because it is self-evidently true. Since the idea seems too complex for many people to grasp, let me try to put it in clearer, more accessible words: “A bond is just a word for borrowing money the state doesn’t have.”

There. Was that any help?

You see, if the state had the money to spend on good things, it would not borrow it. And if it borrows the funds, it must pay them back. Or rather, the taxpayers must pay them back. The money paid back, along with the interest we must pay to hire it, will not be available for good things in the future. It will all be paid to bankers and investors.

Standard & Poor’s rating service has announced it will not be downgrading Maine’s credit rating this year because it believes the positive effects from current policies offer assurance of sound budgeting in the future. Moody’s Investment Services also upheld Maine’s credit rating.

However, a recent column by a David Farmer, a former Baldacci administration official, advises us that: “It is past time that we stop caring about what Moody’s Investment Services and the other credit rating agencies have to say about Maine.”  Investors are a bunch of “hoodlums” and credit ratings are the “scam of all scams,” Farmer wrote. “Maine’s Constitution ensures that the state’s debt gets paid.”

There are two obvious objections to this tirade. First, taxpayers—not the Constitution—pay off the bonds. Maine’s Constitution is a pauper, without visible means of support, except the oath our elected officials take to uphold it.

Second, it doesn’t matter whether we care about rating agencies or not. It only matters that investors and bankers care. What they don’t care about are incandescent rants in Maine’s daily newspapers.

One thing to remember when hearing about all those good things that bonds will pay for is that the money will not be available for other, equally good things in the future. Nor will it be available to the taxpayers who must pay for the borrowed money.  Think about your credit card payments, if you have them.

When you hear cheery talk about how spending a $100 million of bond funds is going to create jobs, ask yourself: “Why we aren’t hearing demands for spending a billion or two?” Is it really that easy?

How many politicians talking glibly about public investments have any experience investing? Would you place your savings in the hands of the Baldacci, Piotti, Cain, and Mitchell Mutual Fund, Inc. Really?

Governor LePage points out that from 2002-10, our legislators authorized $725 million in bonds, but the Department of Labor shows only 54 net jobs were created during the same period. Does this tell us something? Anything?

When you hear of businessmen favoring bond issues, remember who gets to spend most of that money. Our DOT has nearly $1 billion budgeted for 2012-13, to be covered out of revenues. Sure, private contractors will profit from a few million more, but what difference will a few million more of bond money make?

The governor’s determination to set limits on further accumulations of debt explains his veto. I believe he is the only Maine governor to veto bond issues in my lifetime. The simplest, safest response to agitation for bond issues is to put them out for referendum and avoid both the responsibility and the resentment of special interests who hope to profit in one way or another.

There’s no better evidence of his claim that he is not a politician.

John Frary


Professor John Frary a former U.S. Congress candidate and retired history professor, a board member of Maine Taxpayers United and an associate editor of the International Military Encyclopedia. He can be reached at:


4 Responses to “LETTER: “A bond is a fancy word for borrowing””

  • Mike Travers:

    Why, that’s less than $13.5 million per job! A triumph by any government measure. It makes the people who thought $314 thousand for each Affordable Housing apartment was reasonable look like cheapskates. And if you think $13.5 million dollars is too much for the creation of one job, you’re probably one of those radical teabaggers!

  • Matt Sparrow:

    More baloney from “Professor” Frary.
    If you followed his tortured logic, businesses would not sell stock, or borrow money from their banks. Families would not get a mortgage for their homes but would “save up” until they could buy a house, meaning, of course that they would never own a home.
    It is totally naive to assume that all credit is bad. Our country was built on sensible borrowing and investing.
    To state otherwise ignores all of history and disingenuous.
    But of course, disingenuous is “Professor” Frary’s middle name.

  • Hey, Matt:

    Perhaps you should study the difference between the words voluntary and compelled.

  • When the bonds are presented to the taxpayer to vote, there is sometimes a promise that approval of the bond by the taxpayer will result in more federal funds for Maine but there is never a mention of the amount of dept that Maine currently owes and how much the bond will increase that dept per taxpayer. It couldn’t be more biased and it is right there on the ballot, probably composed by our legislature who so loves to spend our money on transforming Maine into what they think it should be.

    I’m glad LePage said those words loud and clearly and I am glad that he vetoed the r & d bond and refused to sign the others of for no other reason than by doing so he has removed the misty veil that has covered the bonds, on the ballot and in the media for far too long and exposed them for what they actually are.

    Now at last the media is talking about this subject as something other than a public relations promo for the legislature’s designs.

    I also thank Mr Frary for writing a great letter.

    There should be an amendment to the constitution which requires that when bonds are presented on the ballot that the current dept and the increase to the dept that the bond represents also be stated.

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