There’s one thing that we should be able to agree on about the Illinois and Chicago financial crises: It’s not the fault of students wanting an education, poor people seeking medical care, drivers wanting decent roads, transit riders yearning for reliable service, battered children and women desperately needing help, the hungry looking for a nutritious diet and all the other beneficiaries truly dependent on the state and city.
But they’re the ones who are getting socked. A well-run government should be able to handle many of those legitimate, reasonable and competing demands, within budget. Illinois and Chicago are not.
Blame both political parties — Democrats for their years of running the city and state into the ground and Republicans who have acquiesced. And the suburban town and school boards, many Republican controlled, for caving into ruinous demands for pay and retirement benefits made by public employee unions.
As May ended, the Democratic-run legislature exhibited its incompetence again as it passed a budget $3 billion short of the revenues needed to cover expenditures.
As the Tribune recently noted, the Democratic strategy, now that Democrats refused to pass a balanced budget, will be to “force (Gov. Bruce) Rauner to wear the jacket for billions in budget cuts that would hit social service programs in the hopes that he’ll feel enough heat to eventually sign on to a tax increase …” As if the heartless governor, who didn’t bring on this crisis, is the one who is depriving the poor, elderly, young and others dependent on state aid and programs. How droll. What brass.
Mostly blame House Speaker Michael Madigan and Senate President John Cullerton (both Democrats) and their deep-pocket contributors, the American Federation of State, County and Municipal Employees and other public employee unions. Their incessant and greedy demands for more, more and more have forced government to borrow more, more and more to a point approaching bankruptcy.
Champions of the middle class, downtrodden and huddled masses? Hardly. These very Democrats are hypocritically robbing the schools, hospitals and social service providers of billions and billions of dollars that must instead go into pensions and debt service.
For example: An astonishing quarter of every dollar that Chicago earns from taxes, grants, fines and fees goes to pay for employee pensions, according to Marc Joffe, a bond market analyst and principal consultant at Public Sector Credit Solutions. On the state level, pension and interest payments gobble up 10 percent of all revenues, according to Joffe. Those billions could have gone a long way to help the most needy.
Normally, government borrows money to finance capital improvements, such as transit lines, bridges, hospitals and prisons — stuff that lasts at least as long as the life of the loan. But borrowing to pay for everyday expenses, as we do here, is like borrowing against your home to buy groceries. It eventually leads to catastrophe.
The unions will try to sell the idea that they aren’t responsible for the more than $100 billion that’s owed to the pension funds. They’ll argue that if the government had not raided the funds to pay for normal operations, we wouldn’t be facing this crisis.
In a way that’s true, but here’s the rub. First, the pensions are unreasonably generous; if they were more realistic, more reflective of what is normal in the private sector, we wouldn’t have had to put so much money in the funds to begin with.
Second, without those diversions, the state would have spent less on schools, health and other essential services. Teachers unions always complain that not enough money is being spent on schools; but without the diversions, the schools would have had received even less. Are the teachers saying that the money should have gone first to their pensions and not the schools?
The public employee unions act as if the fault lies elsewhere. But when the money was being diverted into operations instead of pensions, where were the union leaders? They were tossing union money (i.e., the members’ money) to those very same politicians, mostly Democrats, who were raiding the pension funds for other purposes. And passing inflated budgets that forced them to borrow.
Even this weekend, the Democrat-controlled Illinois legislature struck again by passing a bill that would reduce Chicago’s annual contributions to police and fire pensions and push back the date for full funding — to give the city time to figure out new ways to borrow money.
The beat goes on. And the governor who is trying to straighten out this mess gets blamed for making it worse.
This column also appeared in the Chicago Tribune.
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