## Monday, October 8, 2012

### Numbers

I'm not a mathematician so I sometimes run into things that I totally don't understand,  and a search for an explanation has eluded me.  I hate not understanding something.  That something this time is the jobs report released last Friday.  I have no idea just how the figures are determined.  We were told that the unemployment fell from 8.1% to 7.8% in September.

Let's see.  According to government figures, September saw a weekly average of about 375,000 new applications for unemployment benefits.  If that average is correct, doesn't it mean that about one and a half million people made their initial application and thus lost their jobs?  We were told 114,000 new jobs were created so the unemployment rate dropped.

I did hear a couple of "expert" reporters from CNN and MSNBC explain that the figures had to be correct because two different agencies contributed to them.  They said the agencies surveyed a large number of employers to learn about the jobs creation and a large number of families about people heading off to work.  What I didn't hear was how many of those surveyed were actually included and I didn't hear how many employers were not surveyed. The number of families reporting that members had returned to work was simply laughable.

These confusions along with a prediction from Rush Limbaugh last spring that this confusion would come at this time simply have me stumped.  I'm not suggesting the latest figures aren't accurate; I'm only saying I wish I had listened a lot more carefully way back when my teachers were instilling math concepts in me.

While we're discussing "numbers," let's look at some dollar ones.  I think the dollar numbers have reached such a height that very few people really comprehend them.  How many of us can really say we understand trillions of dollars.  It's just a number, isn't it?  Once we were past "billions," trillions became even easier.  I'm not sure that "millions" is truly understood as the vast majority of us won't reach that number of income in our lifetimes.

But millions has become rather common in our discussions of salary because of all the folk we follow daily in the sports world.  It seems that the common salary for most professional athletes now ranges in the millions.

Trillions, however, may still be so far out of comprehension that few of us relate to just how much money we, as citizens of the United States, owe, mostly to China.  The number grows by the second more than most of us earn in a given period. Have no misconceptions; we owe all that money.  Most of us really have no clue exactly what it all means.

Our state is also in deep debt for  money we must repay.  How many of us go to the polls on election day and approve the issuance of bonds to pay for many projects, admittedly most of which are important.  But, nevertheless, the issuance of bonds becomes our debt.

Having listened over the years to people talking about bonding, I have concluded without any real evidence that many people believe that bonds are simply "free" money.  It isn't.  A bond is a loan of money.  Like any personal loans, that money with interest must be paid back.  It isn't unlike a home loan or a car loan.  We want something and don't have enough money to pay for it so we borrow that money from a lending institution.  We must pay the money back with interest.  That interest is how the lending institution makes its money.

Over the years, and I can only think of one, perhaps a couple, when the state of Maine asked us to approve borrowing via bonds for, perhaps, school construction, roads and bridges, a variety of other projects including the acquisition of private land.  Not that it hasn't happened before because it most likely has, but I can think of only once in the last several years that we voters turned down a bond.

State Treasurer Bruce Poliquin has posted a blog and sent an email to many folk explaining the bonds approved for the upcoming election.  He points out that the questions themselves lead to some of the confusion by taxpayers:  "Do you favor an \$xxx million bond issue to provide funds for . . .?"  Do you notice the question never mentions borrowing money but only issuing bonds?  Unless one is thinking or paying attention, one might not think about paying the money back with interest.  And all that money to be paid back comes from us in the form of our paying taxes and interest.

The total we'll be asked to approve this year is 75 and three-quarter millions of dollars.  If we approve the questions, over the ten year loan period we'll have to pay all of it back plus another almost 20-million in interest.  We already owe more than \$120 million to bond holders (lenders) and have another \$41 million already approved but not yet borrowed on the books.

Our state debt along with our national debt is just one of the reasons why our taxes are so high and destined to climb higher.  Yes, I know.  We won't pay back all that money in our time.  No.  We'll simply start our children and grandchildren in life with all that debt plus a lot more which will become their responsibility.

That, my friends, is why I never vote to approve any bonding.  Perhaps, though, I should reevaluate my thoughts.  After all, it's all just free money.

Dave