Hardee County Debacle Highlights Massive Potential for Fleecing the Taxpayer

Last week, investigative reporter John Rehill shone the light on a seemingly foolhardy venture that was being attempted by the Hardee County Commission. What every taxpayer in America needs to heed from that warning, is just how much incentive exists to do all of the wrong things for all the wrong reasons – all at the taxpayer's expense.

Complicated public projects are very difficult for the average citizen to get their head around. Without an adequate amount of public debate from unaffiliated experts, it's very hard to conceptualize the cost of something like an incinerator or a municipal sewage system. It's kind of like an F-35 fighter jet. Who's to say if they are worth $100 million or $156 million apiece – aside from the people selling it to you?

And since they're not selling it to you directly, but through a representative, how easy would it be to pad the price a bit. When a handful of people are dealing with numbers this large, it would seem as though enough swag to influence one person would barely amount to the proverbial fart in a windstorm. A suitcase filled with cash, some bundled campaign contributions, a job for their spouse or kid – they'd all be relatively cheap investments for the handful of votes needed to endorse a bad idea.

It's also very difficult to monitor the progress of such projects, know when to cut bait if things go sideways or understand the complex and ever-changing methods by which such ventures are financed. That's if you're the average (or even above average) taxpayer. However, the special interests that mine municipalities for these goldmine deals seem to know exactly what they're doing.

From the investment banks that make the finance arrangements possible, to the companies that are promising to complete the job, there doesn't seem to be a shortage of players willing and able to set up the designed-to-fail deals that are among the most efficient ways to extract wealth without producing the equivalent goods and services. In fact, it's eerily similar to the way in which wealth was purged during the 2008 global financial collapse.

A financier finds some way that they are guaranteed to get paid regardless of the sensibility of the project they are acting as middle-man for – like selling a piece of crap mortgage packaged in a well-shined investment vehicle. Then a party on one end of the deal receives this newly created money, and by the time the value of whatever it financed is eventually so leveraged by the debt attached to it that it can never pay off, they've already become rich – while taxpayers are making sure that the investment class, who had to buy into the deal to create a market for the funding vehicle, doesn't get hit by the crossfire through a default.

At its core, the run-up to the 2008 collapse was a long and brutal round of economic cleansing, which transferred upward a great deal of what little middle-class wealth remained in our country – shaking loose the personal savings, the retirement plans, the actual real estate equity, the pension surpluses – so that they could fall and be collected by a market no longer capable of generating massive sums of money through the more traditional method of production and consumption of actual goods and services. Nearly two-thirds of our entire economy had become financial services! Not making the things that create actual wealth to be spent into the economy, but engineering spending by giving everyone tomorrow's money to spend today – with a little skimmed off the top.

With those trees now bare, municipalities could be the next host that such parasites attempt to dine on. Because of their taxing authority, they can not only get lots of relatively cheap financing (bonds), but also repay long past the point when other debtors are bled dry. We've already seen a large rash of cities, counties (and even states) which are leveraged by obligations that they lack the incoming revenues to ever meet – the classic problem of too much debt attached to too few assets that will never appreciate to the financed amount, without an ability to realistically raise income in order to climb out of the hole. Just as the homeowner is unlikely to be able to triple their income, the municipalities are equally unable to triple their tax revenues.

Both are compounded in bad economies and as their ability to repay becomes more obvious, the price of borrowing becomes more expensive until they get caught in the liquidity trap and are left begging for someone to bail them out. This has happened to Greece. This has happened to American homeowners. This has happened to many of the world's largest financial institutions. Will there be an end run to bleed out every Podunk town in the U.S., now that so many of the other victims are little more than dried out carcasses on the financial landscape?

What's the end game once these new hosts are bled dry; when the libraries are shuttered once the hours can be reduced no more; when the assets are auctioned, the already skeleton-staff cut to the very bone, when the final service is privatized, while collected revenues continue to pay off mountains of obligations? I'm not sure, but cases like Hardee again make poor arguments for smaller government and less oversight and regulation. Tiny boards that fly under the radar doing businesses with unencumbered titans of finance who are free to fleece them out of whatever they are incompetent or corrupt enough to have stolen, hardly seems like a step toward solving our problems.

Psychologists have argued that human nature worked against rational decisions and corrections during the financial meltdown. That being hardwired to accumulate as much perceived security as possible in times of panic set up a scenario in which, faced with the imminent bursting of a giant bubble, those in the best position and even with the greatest long-term interest in creating solutions, instead were prone to accumulating as much as they can, as to best protect themselves when the day of reckoning came. Those at the top of the ladder seem intent to continue shaking the tree, and stories like this demonstrate that having picked the low hanging fruit, they're having to get more creative.

In the bigger picture, such indebtedness works in favor of those who wish to move further and faster in this direction. Bury ”government“ under debt; refuse to raise revenues; dismantle services to reduce deficits and eventually there will be no restrictions left to ensure any sort of rules other than this new vampire capitalism, in which those who've grown strong under this rigged system feed on the blood of the rest of us until we whither up and disappear. If citizens don't wake up and start demanding meaningful change, they'll likely find themselves trapped in a new sort of feudalism that makes today's inequality seem like a picnic.

Dennis Maley is a featured columnist and editor for The Bradenton Times. His column appears every Thursday and Sunday on our site and in our free Weekly Recap and Sunday Edition (click here to subscribe). An archive of Dennis' columns is available here. He can be reached at dennis.maley@thebradentontimes.com. You can also follow Dennis on Facebook and Twitter by clicking the badges below.

Dennis Maley