IF you've been following the "securitization" of the tobacco settlement here in Ohio, none of this will be all that new to you. But if you haven't been "up" on this issue, you can do yourself a favor and checking this article out.What's the whole thing about?
What the settlement authority is doing is essentially entering into a gamble with another party. The state will "win" if, after all is said and done, the value of the lump-sum payment does indeed exceed the value of the string of payments. It will lose if this is not the case. We will not know the outcome for many years. Right now, even under ideal conditions where we assume that politicians truly represent the long-term interests of their constituents, it is essentially a 50-50 call.You see, we are continually being told that if we don't "securitize" this settlement, Ohio will lose money on the deal. But that isn't neccessarily going to be the case and we are just as likely to lose money on the deal in the long run.
So why do it?
Why then is the state treasurer so intent on selling this scheme to the public and getting his hands on the funds today? A cynical view is that it is simply in his interest to do so. While we cannot claim to know his motivations, it is hard to ignore the fact that his legacy will largely be determined by the apparent fiscal condition of the state during his tenure—which would undoubtedly improve with a multi-billion dollar influx of funds. A decade from now, if the state is in the throes of a fiscal crisis, the tobacco settlement funds that would have been available to help balance the budget will be but a distant memory.Basically, it gets his name in the papers.
I look at this a lot like I do Cordray's scheme to have Ohio's tax payers to just "make the check out" to him. It's a scam intended to increase his name recognition...and in this case, there are billions of dollars on the line.
I feel better already, don't you?
