Even Local Governments Bail Out The Wealthiest

Why is the Federal Government getting ready to bail out the one percent? Because local governments do so.

Bob Allen has already posted about how the $1.1 trillion cromnibus bill puts taxpayers on the hook to bailout banks if their “investments” (i.e. risky gambling adventures) fail. How can they get away with such brazen corruption?

central power corruption

The answer, in part, is that it seems to be part of human nature to assume that the purpose of government is to protect the super wealthy. We see this at work even in much smaller levels of government. For example, in Chatanooga, a prestigious private school that should go bankrupt is getting the power to borrow money tax-free as a government-granted privilege. The Daily Caller reports, “Chattanooga Approves Bailout For Exclusive Private School.”

In a deal that might violate Tennessee’s state constitution, the city of Chattanooga agreed this week to issue state bonds on behalf of the exclusive Baylor School.

Chattanoogan columnist David Tulis reported on Friday that the city board issued a $13 million bond “to support capital improvements and debt retirement at Baylor School,” chartered as a nonprofit company in Tennessee.

Under the terms of the agreement, Baylor will pay 3.14 percent interest for the first decade after issuance, and then repay the principal over the following 10 years.

The bond, which was issued by the city and funded through Sun Trust Bank, “draws liquidity from 20 years into the future to be spent today,” with the school’s property acting as collateral, Tulis reports.

As collateral on state-issued credit, Tulis claims, “This property belongs to the board until the debt is paid,” and is therefore tax-exempt, as are any profits that might be earned from the bond. 

The proponents of the special bond are claiming it is legal because they say that the government is not assuming responsibility for the debt. But even if that is true, why do private businesses that serve the richest get special treatment from the government? I’m sure there are many small private schools in Chattanooga. Yet none of them get special tax-free bonds to use in this way. Such schools, if they arranged to issue bonds, would have to pay taxes.

So basically those who are needier have access to less money and a greater tax burden while the elite get exempted from such financial obligations.

Chattanooga is a microcosm of the United States corruptocracy.