Boom, Bust, Repeat

posted at 12:25 pm on April 13, 2009 by Slublog

The American Recovery and Investment Act is doing exactly what some conservatives predicted: giving the government more to spend money on in the future.

Little by little, the American Recovery and Reinvestment Act — better known as the economic stimulus package — is having an effect on college campuses. While the biggest ticket items, such as tens of billions in research and state stabilization dollars, are not yet flowing in any meaningful way, colleges have begun to take advantage of separate provisions in the new law designed to make it easier for them to borrow money to finance capital projects.

The University of Minnesota announced Friday that it would become the first college in the country to use the new Build America Bonds, which were created in the stimulus legislation to help state and local governments (and related entities) raise money for building projects by making it significantly cheaper for them to issue taxable bonds.

Universities and municipalities across the country will pour the sudden influx of money into infrastructure projects that they would not otherwise have been able to afford. And there’s the problem. Given the economic realities many states face, is it really wise to use one-time funds on projects that will have continuing costs? I don’t want to pick on Minnesota, but since they’re mentioned in the story, let’s use them as an example.

The University of Minnesota has five campuses spread throughout that state. Although the construction costs will be paid mainly with the available one-time funds, the taxpayers of Minnesota would be responsible for keeping any new buildings in the system maintained, powered, and heated. Since it’s unlikely that another structure would be destroyed to maintain some sort of financial equilibrium, a new building will add a few dollars to the budgets of educational and/or government entities.

Stories like this show that the long-term cost of President Obama’s stimulus will be measured not just in how much it adds to the federal government’s deficit, but what all of that “free money” will do to the state and local tax burdens across the country, and in the case of universities, the cost of higher education.

Higher federal taxes. Higher state and local taxes. Higher tuition bills. All made possible by the generosity of the Obama administration.

Note – I would like to take a moment and thank Michelle, Ed and Allahpundit for giving me the opportunity to post at Hot Air, despite the fact that I (reluctantly, honest!) voted for both Susan Collins and Olympia Snowe in recent elections.

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