A Stitch in Haste

One of the reasons I left academic economics in disgust back in the late 1980s was the then-fashionable debate (think "Reaganomics") about "whether deficits matter" and the "maximum sustainable government debt."

Almost twenty years later, and I'm still pretty disgusted.

New Yorkers may have to shell out 40 percent more for water by 2009, The Post has learned.

The increase will mean an extra $220 a year for the average single-family homeowner, jumping from $554 to $774.

The relatively minor 3 percent increase proposed for this year -- an election year -- is less steep than the 5.5 percent increases of the previous two years.

According to projections, though, water rates will immediately increase another 5.6 percent next year, followed by three years of 8.7 percent increases, which will be the largest rise in water rates in 15 years, and the biggest five-year increase since the early '90s.

But Kip, water is a necessity and, perhaps, a public good. And it's also metered, so those who use more water pay more for it. If water is becoming more expensive, then it's becoming more expensive -- it can't be helped. What's your gripe?

This is my gripe:

The primary reason for the increases...is the city Department of Environmental Protection's huge debt load and mammoth five-year capital plan.

In fiscal 2006 alone, the department will pay $722.3 million to service its debt load of nearly $14 billion. Another $8 billion in debt will be added over the next five years.

Add to that the DEP's five-year capital plan, which will cost over $10 billion.

I don't mind paying for water, preferably through a private utility but through a public authority if need be. But I mind a whole damn lot paying for the interest on an obscene debt level to correct the fiscal recklessness of the past.

Granted, capital projects, like the massive $6 billion third water tunnel, require public debt, and public debt requires public interest expense. But it simply cannot be the case that capital debt for a public work like water must increase every single year ad infinitum. This is interest on debt that covered operating deficits, which is a euphemism for public spending irresponsibility.

How delicious it would be if New Yorkers' water bills were itemized: "$200 for water, $250 for interest expense." There would be rioting in the streets.

Oppressive taxation is bad enough, but oppressive taxation to finance past debt, while future debt grows on top of that, is a recipe for disaster. New York City saw it during the fiscal crisis. The Social Security system in particular (and the federal government generally) will see it soon enough.

Oh, and did you catch that part about how the only "relatively minor" tax increase is coming -- surprise -- during an election year? Maddening.

NOT-SO-FUN FACT: The interest on the federal debt was $321,566,323,971.29 for fiscal year 2004. That's well over $1,000 per person. Not to fund defense, or pay judges, or even to fight drugs, poverty or AIDS. Just interest. And it will only go up from there. Enjoy your tax refund -- while you're still getting one.