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Comment by hermannj314 | Hacker News Reader

It would be a shame if current legislators could restrict future legislators by adding infinite year bonds to all new laws with promises the law will never change as long as that bond exists.

If this principal of preserving bond contracts prohibits legistivative action or could even have a chilling effect on it, perhaps the real issue is that government debt generally is a risk to our democracy. Perhaps congresses should not be allowed to engage in debt terms that exceed the term limit of that congress. (2 years or so).

(I don't want to make any claim with regard to Florida law, nor the politics behind what's happening in Florida.)

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In this case, congress is not limited. There is a clear way out, the state buys out the bond holders and eliminates the debt. They just can’t dissolve the district without addressing the debt. The cost to do this is said to be 1B. And given the many more billions Disney has poured into the infrastructure and the fact it will continue to use the municipal utilities providing a cash stream, it doesn’t seem unrealistic or unfair to me. (Not to mention the massive tourism benefit this deal has provided to the state)

The issue seems to be that there is not enough political will to use 1B of Florida’s budget to make this happen, not that there is any prohibition on them doing so.

> It would be a shame if current legislators could restrict future legislators by adding infinite year bonds to all new laws with promises the law will never change as long as that bond exists.

Isn't it some core legal principle that legislature can't do that, and always has the power to reverse itself?

This article feels like it's built on a priority inversion, like debt terms are really the supreme law of the land, which wouldn't surprise me from something deeply embedded in financial market thinking as "Bloomberg Tax" probably is.

I may have missed the nuance in the article, but in Florida it seems they found a way to do that.

> Isn't it some core legal principle that legislature can't do that, and always has the power to reverse itself?

The problem with having supreme power to break any contract without consequences is that nobody will make contracts with you any more. For this reason, many states have (e.g.) clauses in their constitutions saying they won't.

Of course, the legislature usually has the power to amend the constitution.

I'm moderately sure that the UK government has that power; we have no equivalent of the contract clause here. People still make contracts with the UK government.

Correct - I was trying to be succinct.

The idea of "sovereign debt credit ratings" is of course how it's done internationally - a nation may be unable to actually render itself unable to default, but if it's got a 350-year history of not defaulting, that can serve as a substitute.

But many organisations need loans before they've established a 350-year history, and a constitutional clause can give investors greater confidence.

Yes. One of the fundamental principles of British democracy is that no parliament may bind its successors; any law they make can be overturned by a future parliament. Generally the main consequence of this is that companies aren't willing to sign contracts that are likely to be overturned by their successors; as a general principle the government will pay for work already done, but penalty clauses designed to force the next government to keep the scheme going (which I think Labour tried with ID cards) don't fare so well.

This is kind of necessary in a functioning democracy (as opposed to a corpocracy with democratic trappings); if any government can just give sweetheart deals transferring power to corporations that voters can't do anything about by exercising their vote, in what sense are the voters really in charge at all?

Yes, that's right, I think. In the UK we have parliamentary sovereignty. As I understand it, no law and no court can stop Parliament from doing what it wants to do because every UK law can be amended by Parliament and every court merely applies those laws. (Courts may also apply international laws in some cases but the UK laws take priority and could override any foreign law.)

The UK's Constitution is utterly terrible. In many places if you tried to implement something similar it would probably self-destruct very quickly. The UK manages to keep going with it (not brilliantly, but society hasn't completely collapsed yet) only because there is a strong democratic culture. That's my theory, anyway.

At least one major ratings agency has put out a warning to Florida: https://www.fitchratings.com/research/us-public-finance/flor...

I believe it is implied that the state could buy all those bonds to eliminate the problem. And that it would cost a bit too much to be worth it.

This seems like it would seriously hamper the ability of areas to give sweetheart deals to companies to attract investment. I'd actually love this as someone who'd prefer that states compete on things like robust investments in their workforce (education, healthcare, etc) and infrastructure, rather than race-to-the-bottom tax incentives...

Race to the bottom tax incentives are the first wrung on the ladder to bootstrapping a nice place with robust investments. Provided the benefits aren't squandered.

> Perhaps congresses should not be allowed to engage in debt terms that exceed the term limit of that congress. (2 years or so).

That would completely flatten any investment into infrastructure, these projects need extremely long bond terms simply because otherwise repayment would be astronomical.

I mean they could just keep it in existence forever by issuing new debt, apparently.

Everyone is excited about Disney 'beating' the Florida government but: is having some weird corporate carve-out of US territory that essentially must legally exist forever really something good?

They can back out, just at a high financial cost. This is no different to any other contractual obligation that lasts longer than the term limit.

Why not impose a sensible limit?

Financing infrastructure that lasts decades over decades isn't pernicious.

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