By Don MackenzieMember, The SAGE CommissionBermudians Own Our Public DebtIn response to the SAGE Commission’s interim report released in July, one blogger asked why the Commission had included a graph showing the debt per working Bermudian.The blogger wrote that the chart was “misleading, if not inflammatory … individuals do not repay national debt ... the debt is repaid by Government … through taxation”.The post represents a common view: we, as individual taxpayers, are somewhat removed and not really responsible for repaying the public debt that Government has amassed.Indeed, some people think that public debt is just something that Government continues to grow and that “Government” will just pay back the money one day.The blogger was correct in stating that the debt is repaid though taxation — but the public pays the taxes.Because each of us is responsible for repaying the country’s debt, it is appropriate to show the debt per working Bermudian.We need to understand the scale of debt burden that has been placed on each of us. The public debt will have to be repaid by every single one of us taxpayers.With a public debt approaching $2 billion, this equates to about $65,000 to every working Bermudian. If pension shortfalls are included, the figure is about $160,000 per Bermudian worker.Public debt does not discriminate. Every working Bermudian, regardless of race, political affiliation and economic level, owes this money and will be responsible for seeing that it is repaid.We do need Government to spend on certain core services that cannot be provided through the private sector.This includes public safety, education, certain infrastructure spends and other essential services. However, it is reasonable for voters to expect Government to spend its money wisely and in a responsible manner so that the burden of debt placed on the Bermuda taxpayer is kept to a minimum.What is a Deficit and Why Is It Important to Eliminate?The deficit is a measure of how much more the Government is spending that it earns. Government spending is composed of general operating expenses (current account), spending on infrastructure (capital spending) and debt servicing (interest on debt).A deficit occurs when these three cost categories exceed Government revenues.Government has not earned a positive income in over a decade.For the current financial year (2013/2104), the Bermuda Government deficit is projected to be 38 percent.This means that Government’s total spending this year alone will exceed its revenues by 38 percent.Over the past ten years, Government has spent almost $1.750 billion more than it has earned.The deficit creates Bermuda’s overall debt. The accumulation of public debt to unsustainable levels is a direct result of the growing gap between Government revenues and Government spending.Think of the implications for your household if, year after year, you spent more than you earned.Your bank or other creditors would not continue to lend you money (and would expect to be repaid).In your household, you need to earn more than you spend. If you don’t, your debt grows and you can put your assets (such as your home) at risk. The same expectation for borrowing and repayment applies to Bermuda’s creditors.In order to establish a healthy economy, deficits must ultimately be eliminated and turned into surpluses. Budget surpluses repay debt.If Government does not run a surplus, the debt cannot be decreased. Without a budget surplus, Government revenues are used to repay interest on the debt which continues to accumulate.A large and continued overspend by Government means that:• The debt will continue to grow to the point where Government will no longer be able to borrow money due to a loss of confidence from the lenders in Bermuda’s ability to repay.At this point, governments grind to a halt as they cannot pay all their wages and their suppliers.• Interest payments will keep increasing and Government has less money for wages, essential services and infrastructure development.• Government will be forced to increase taxes.• Each year, the debt burden carried by the working population increases.• The debt burden unfairly gets shifted to the next generation as they have to pay for our spending.As the members of the SAGE Commission continue to consult with the public and private sectors, we know the solution to our debt and deficit problem is not simply a matter of cutting costs.Government spending reductions and increased efficiency must go hand in hand with revenue growth and economic recovery.This is an issue that affects all us. We are in this together and, together, we can find a solution.