Mar 21, 2011
Almost eight billion dollars, or about one-third of the state of California’s 25-billion-dollar deficit, goes simply to service the state’s debt. The state government pays this to bond holders in interest and principal.
This cost to the budget has almost quadrupled over the last 10 years, as the state government took on huge amounts of new debt to funnel ever more money to big business and the wealthy through rich government contracts. This debt also includes 15 billion dollars that Governor Schwarzenegger and the state legislators used before to paper over a deficit brought on by all their tax cuts and subsidies to big business and the wealthy that they couldn’t cover despite big cuts in social programs and education.
As this debt grew, the banks increased the debt payments even more by increasing the interest rates on the bonds. California pays 20% more in interest on its debt than most other states.
The cost to service the debt today ranks as one of the biggest items on the budget, about as much as what the state devotes to higher education.
All that money goes directly into the pockets of the capitalist class. And the real insult is that they don’t even pay state income tax on it!
The higher the state debt grows, the more money they make. But, of course, the bankers don’t care.