Terminal

Call it a failure of democracy. Stephen Reed, who began his political career in the Democratic Party as a teenager, heading the Teenage Democrats of Pennsylvania was the very definition of a popular politician.

Re-elected to the state house in 1976 and 1978, Reed was elected Dauphin County, Pennsylvania Commissioner in 1979 and Mayor of Harrisburg in 1981. He has won re-election as Mayor in 1985, 1989, 1993, 1997, 2001 and 2005. During the 2000s, he was considered “Pennsylvania’s most popular and successful mayor.” …

As late as January 2009, he was called “Mayor-for-life.”

Today, Reed is remembered as the man who borrowed Harrisburg, PA into so deep a hole they have to pipe the sunshine in. But during the good times, nobody thought the party would stop. The question is whether democracy has an Achilles’ Heel, in that politicians can always find a way to bribe voters with their own money, or in other cases, money borrowed in their name?

The WSJ looks back at how it all happened.

Under seven-term Mayor Stephen Reed, who governed from 1982 to 2010, Harrisburg had a long love affair with borrowed money, using it to spur projects of dubious value. The city invested millions of dollars in a stadium in the late 1980s to attract a minor league baseball team. When the Harrisburg Senators threatened to leave in 1995, the city bought the team with borrowed money. In 2009, even as the fiscal clouds darkened, it sank another $45 million, including $18 million in new debt, into upgrading the stadium. The team was attracting 2,488 fans per game.

Then there are those historical artifacts. Mr. Reed, once described by a local newspaper as a man who “never met a municipal bond he didn’t like,” wanted to borrow to open a network of museums. He spent some $39 million on a National Civil War Museum that opened in 2001. It has struggled for years to attract crowds. Undeterred, the mayor borrowed some $8 million to buy artifacts—including a Gatling gun, a Wells Fargo coach and a document signed by Wyatt Earp—for a proposed Wild West museum, though most of the purchases were made without the knowledge and consent of the city council. Plans for a Wild West museum and a National Sports Hall of Fame, financed by a $30 million bond offering, mercifully fell through.

The Harrisburg Authority, a city agency controlled by the mayor, floated much of the city’s debt, including millions on an ill-fated incinerator. …

Well you get the picture. This was Hope and Change before they invented the term. You know, about picking winners and losers. Brilliant ad hocracy, etc, etc.

My how they hoped. My how things changed. The party stopped only when the caterers finally refused to deliver; when the liquor store found the credit purchase rejected. Until that moment things looked like they could go on forever. That the can could keep being kicked down the road. Didn’t Reed know that it would all have to end?

No. Or it seems that way at least. So the question is what is different about the United States as a whole or Europe as a whole that exempts it from the falling into debt traps that Harrisburg or Greece plunged into? The answer is that the last two are “too big to fail”. They can print money. So rest easy then, it can only happen elsewhere.