July 12, 2011Dear Sir,I read with interest the opinion piece in the July 6th edition of your newspaper by PLP supporter Walton Brown. To refresh you and your readers' memories, Mr Brown's article was an attempt to defend the PLP's economic record. In my opinion, much of the article was less about economics and more about political spin, but I would like to focus on the following items he did raise which are economic in nature and which he believes defends the government's economic record. He said:1. Other than the $200 million guarantee made to Butterfield Bank, most of the debt is due to increased pensions, day care, free bus rides for students, lower cost housing etc2. Liberal economists will tell you debt is an effective short-term measure to protect, help and advance those who are either vulnerable or who have been marginalised by inherited circumstances. The PLP stands unapologetically in this liberal camp.3. There are legal limits to what Government can borrow and we have never defaulted or been late with any payment.What the above tells me is that Mr Brown is doing his very best to impress the PLP brass to ensure he becomes “candidate material” at the next election, but it worries me, Mr Editor, that his economic theory has support within the PLP Government. With regards to the first point above, Mr. Brown should realise that increasing public pensions comes from the pension savings funds and not from our taxpayer-funded consolidated account, and the subsidy that Government provides for day care and free bus rides is a drop in the ocean compared to our public debt which at last count is around $1.2 billion.And let us not forget that much of the low-cost housing that the Government has built has been for resale to Bermudian families, so Government receives back much of the investment made in the building of these homes. Finally, Mr Brown should also know that the PLP Government removed from the Debt calculation the $200 million guarantee made to Butterfield Bank and, therefore, that amount does not factor into the Island's overall cash debt. It has instead become part of the “contingent liabilities” that the Island carries on its books, the value of which is probably in the region of three times our present debt load — but that's another subject to discuss at another time.The second point raised by Mr. Brown explains in a nutshell why we are in such a financial mess, for his government has copied big country, liberal (read socialist) spending practices that are completely inappropriate for a small economy like ours: higher taxes, more spending, bigger government and larger debt. This approach is simply not sustainable for Bermuda.Our narrow-based economy does not sit well with big government involvement because the private sector eventually gets squeezed, which leaves the government (read the taxpayer) with a weaker economic horse from which it cannot extract any further benefits. Add to this the fact that our two-pillar economy can be “transient” and you begin to realise the precariousness of our economy in the face of a debt load that is now costing us $70 million a year just to finance. One also begins to see an emerging picture where the repayment of our debt becomes an impossible task, so one must question Mr Brown's assertion that increased debt can advance those in our community who are less fortunate. In fact, such policy actually threatens the very survival of everyone, even those who have inherited their lot.This last point leads me to the third item raised by Mr Brown — that there are legal limits to what Government can borrow. The public ought to be aware that prior to 1998, Bermuda's self-administered debt ceiling was ten percent of our GDP. The PLP government changed this ceiling during Paula Cox's term as Finance Minister. Had we kept to that ‘conservative ceiling' of ten percent, our debt load at the peak of GDP would be half what it is now. By raising the ceiling the PLP Government put the island in a hole that now costs us $190,000 in interest each and every day — without any reduction in the principle balance. This is myopic economic theory and what the Government has done is mortgage Bermuda's Future which means future generations will be paying for our debt for decades to come. It also makes no sense to compare our Debt to GDP ratio to other larger OECD countries whose economies are not narrow like ours, because the true measure of our debt predicament is how and when we can repay the obligations that the PLP has committed every Bermudian to pay off, even those not yet born. I say Bermudian because the 25 percent of our population that is non-Bermudian, and therefore non voters, are really not responsible for our debt.Governments around the world owe it to their citizens to be lean and frugal — even “stingy” — with taxpayer funds. Surpluses should be protected or even repaid to taxpayers via lower taxes, for such a strategy maintains Bermuda's competitiveness globally and protects our economy and people's jobs. Unrestrained spending and growing the public sector via debt is irresponsible and only leads to further pain when the Government is required to cut back spending — just look at what is happening in Greece, Spain, Portugal and Italy presently. If democracy is to flourish in Bermuda, I would hope the voters take the opportunity at the next election to remove the current government because if they are not held accountable for spending the country into massive debt then how will we ever be able to hold any government to account? The principle of accountability must be upheld. I would also hope that, leading up to the next election, voters take with a grain of salt the political spin that will surely escalate from PLP mouthpieces like Mr Brown who maintain that all is well in the Bermuda Isles …. because it isn't!ALLAN D MARSHALL JPOBA Member