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TINSTAAFL. Not German. It is an acronym meaning There Is No Such Thing As A Free Lunch.

Seniors get FREE car licensing because they don't pay the TCD fee.

Seniors and schoolchildren get FREE rides on buses and ferries.

Seniors living in a house that they own are FREE of Land Tax.

Bermudians can attend Bermuda College FREE if they are students signing up for the first time.

Every person who goes to KEMH gets the medical care that he or she needs. Most people pay. Some don't. Those who don't get FREE medical care.

Low-income mothers can get a government subsidy for daycare for their child - or children. For these mothers, child daycare is almost FREE.

Since 1999, Government has added more than a thousand people to its payroll. Civil servants don't come FREE.

The Finance Minister admits to cost overruns, overspending, and financial waste. None are FREE.

TINSTAAFL! Somewhere, somehow, someway - somebody always pays!

Some Bermudians think we get a lot of FREE stuff. Really, though, this Cabinet and Finance Minister have used the national credit card to buy that FREE stuff.

Starting seriously in 2004, the Minister for Finance - breaking faith with all her predecessors - began whipping out the national credit card for everything. She flashed that card and, when the card looked like maxing out, she increased the card's limit.

The national credit card limit (national debt limit) had been fixed at 10 per cent of GDP. This kept the card limit well within Bermuda's guaranteed ability to pay off the card.

In 2003, with GDP at $4,181,125,000 (*) the card limit - National Debt Limit - was $418,112,500. In 2003, under Minister Eugene Cox, National Debt was $160,000,000 which, at the time, was less than 4 per cent of GDP.

Debt limit soars

Finance Minister Paula Cox junked the 10 per cent of GDP rule and put the national debt limit up to the new level of $1,000,000,000 ($1bn). In 2008, GDP was calculated at $6,093,094,000*; so this increased debt limit worked out to be 16 per cent of GDP. A whopping increase from 10 per cent.

To the House of Assembly, on February 5, 2010, Minister Cox said that National Debt was now 11 per cent of GDP.

Imagine your Bank telling you that they have just upped your credit card limit from (say) $10,000 to $16,000. You then go on a buying spree and spend the EXTRA credit that the Bank has just "given" you; but you spend a big part of it on "free lunches" - not capital items.

That is what has and is still happening with our national credit card. That is how, in large part, we are paying some current expenses including those free lunches. Why we rocketed from $0 overdraft to getting and still carrying a $100,000,000 Overdraft Facility. Why our National Debt leapfrogged four times from $160m to $679m. From spending $162,404 a week (in 2003) on Debt interest charges to paying over $419,231 a week (in 2009).

Once this delayed 2010/11 Budget is in place, it will start sucking in the additional borrowed funds that it will need to meet some current expenses. Bermuda's National Debt will jump even higher. So will the weekly interest charges.

For Financial Year 2010/11, under Minister Paula Cox's cog-in-the-wheel management, National Debt will rise from her January 2010 admission of $679m to somewhere between $780m and $850m.

At that level, National Debt will be about 80/85 per cent of total projected Government revenue for 2010/11 which is still likely to stay under $1,000,000,000 **.

This kind of national debt-to-government revenue relationship is more common in debt-strapped Lesser Developed Countries. (At $160m in 2003/04, national debt was about 23 per cent of government revenue.)

Imagine that happening with your personal finances and credit card. Imagine your credit card balance approaching 85 per cent of your annual income. You know that one day, that credit card has to be dealt with, just as Bermuda has to deal with the impending 17 June $200,000,000 Loan Facility because Bermuda's National Debt is owed to foreign bankers and is serviced and must be repaid in foreign currency.

On April 1, 2010, we Bermudians will start paying out more than $26,000,000 a year ($500,000 a week) on debt interest charges.

We Bermudians will probably be spending more on weekly debt interest than we spend, each week, on selling and marketing Bermuda to potential tourists.

This does not make sense to me. Does it make sense to you? Does it make sense to anybody?

* GDP at $ Market Price in 2008 as reported in the December 2009 issue of the Gross Domestic Product booklet provided by the Department of Statistics. All other figures are from Ministry of Finance documents or Ministerial statements.

** Total Government Revenue has never yet exceeded $1,000,000,000; and is unlikely to do so in 2010. For the past four years, from 2006, Government total expenditure has always exceeded $1,000,000,000.

Explained: Current and capital expenditure

Capital expenditure: Adding a room to your house. Long-term debt. Bank loan repaid over five/ten years; or paid out of savings. Government equivalent - building schools, cruise-ship wharfs, new court houses.

Current expenditure: Immediate payment items like Belco bills, wages, groceries. Paid out of this week's or this month's earnings; or paid with a credit card with the card balance paid off within thirty days or very soon thereafter. Not paid out of savings. Government equivalent - paying for free bus rides, civil service salaries, buildings maintenance.

Borrowing for capital? Usually good! Borrowing for current? Always bad!

Explained: National Debt using a credit card analogy

In 2003 the Credit Card (CC) limit was $10,000. You had spent $4,000 so you owed and paid monthly charges on $4,000. The card limit went up to and remains at $16,500. You went on a spree, spent $7,200 more and the new balance owed was $11,200. Essentially, that is what has happened - so far.

Now it is looking as if there will be even more spending resulting in about $2,500 more in new charges. The balance owed on this CC will rise to about $13,700. You must pay monthly charges - in U.S. dollars - on $13,700.

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