“Funding infrastructure through bonds doubles the price or worse. Costs can be cut in half by funding through the state’s own bank.
“The numbers are big. There is sticker shock,” said Jason Peltier, deputy manager of the Westlands Water District, describing Governor Jerry Brown’s plan to build two massive water tunnels through the California Delta. “But consider your other scenarios. How much more groundwater can we pump?”
Whether the tunnels are the best way to get water to the Delta is controversial, but the issue here is the cost. The tunnels were billed to voters as a $25 billion project. That estimate, however, omitted interest and fees. Construction itself is estimated at a relatively modest $18 billion. But financing through bonds issued at 5% for 30 years adds $24-40 billion to the tab. Another $9 billion will go to wetlands restoration, monitoring and other costs, bringing the grand total to $51-67 billion – three or four times the cost of construction.
A general rule for government bonds is that they double the cost of projects, once interest has been paid….”
“Sen. Elizabeth Warren introduced her first bill, a simple proposal to give students the same loan rates as the nation’s biggest banks. Her proposal would allow the cut-rate loans for students for one year, to give Congress the time to come to agreement on a long-term solution to interest rates. Federal Stafford subsidized loan rates for new students are set to double on July 1 to 6.8 percent.
Here’s a snippet from her floor speech introducing the bill….”
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