Debt Does Not Equal Revenue Except in California

Posted on 12 August 2012

Striking quote on inability to understand that debt != revenue:

California is also confused about the meaning of the term “revenues”. Asked at a 2008 budget conference whether Schwarzenegger would consider raising revenues to balance the budget, Thomas Sheehy, deputy director of the Department of Finance, replied that the governor’s budget, in fact, already included new revenues: $3.3 billion from the sale of deficit bonds! A corporate executive who reports borrowed dollars as sales is angling for for a bunk in federal prison. It doesn’t take much financial sophistication to understand that a cash advance on your credit card isn’t revenue. It is debt.

California Crack-up, p.95

The authors follow this with this comment which I think is of striking relevance to Open Spending:

The first, crucial step towards responsible and democratic budgeting is to present the state’s fiscal information to Californians honestly and clearly.

It also reminds me of Niall Ferguson’s statement quoted in a previous post:

The present system is, to put it bluntly, fraudulent. There are no regularly published and accurate official balance sheets. Huge liabilities are simply hidden from view.

Not even the current income and expenditure statements can be relied upon in some countries. No legitimate business could possible carry on in this fashion.