Berkowitz w Wirepoints' Mark Glennon on Chicago's & IL's pension mess: Explode during Mayoral run-off? Cable & Web

LORI LIGHTFOOT promised December 9, 2018 on Flannery, 2018 on Flannery on Fire NOT to cut ANY pension benefits of ANY retired police, fire, city or labor Chicago Gov’t employees and she was the top vote getter in the February 26, 2019 while maintaining that position.

Something to ponder during this month’s Chicago Mayoral run-off campaign? can we really expect that Chicago’s taxpayers can & will pay for Chicago’s share of  total unfunded gov’t pension liabilities- about $130 billion- with additional taxes or will they cut and run?

And, to a large extent, now run-off finalist Preckwinkle is unlikely to change her pension position, which largely…

Mark Glennon [Wirepoints.com]: “Public sector unions in IL have far too much power- procuring these pension benefits through graft & mistake.”

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Tonight’s City of Chicago edition of Public Affairs  features Mark Glennon, Founder and Executive Editor of Wirepoints.com–  a research, commentary and news organization, focused primarily on IL state and local fiscal problems.

The program airs: 

Thoughout the City at 8:30 pm and midnight on Cable Ch. 21 [CAN TV]

And you can watch the program 24/7 featuring Wirepoint’s Glennon, questioned by Berkowitz, by clicking here.

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Mark Glennon debates and discusses with show host Jeff Berkowitz the fiscal condition of IL, which Glennon describes as “We are beyond broke…by technical legal standards, we are bankrupt.”

–Unsustainable, unaffordable and unfunded pension liabilities:

Glennon indicates that the primary fiscal problem of Chicago, Cook County, various cities and villages throughout IL and IL itself is the unfunded pension liabilities of those jurisdictions. As Glennon states, “It is an unsustainable position, it is worsening and the numbers are worse than is commonly reported.”

What makes Glennon and Wirepoints somewhat unique is that they argue that the reason “We have not funded the pensions is that they are unaffordable [to the taxpayers],” not that the taxpayers are irresponsible or unfair to government employees.

–Politicians’ bad deals with the public sector unions

Glennon argues that politicians have been irresponsible– in their decision to make bad compensation deals with government employees. Glennon says the pension benefits “Have been too high,” and “Defined benefit pension plans (as opposed to defined contribution pension plans) are inherently bad.”

Glennon and Berkowitz discuss why the public sector pension system has evolved in the way it has: it is a system by which certain politicians (mostly Democrats) get votes and campaign contributions, the employees get supra-competitive salaries and benefits and the taxpayers get the bill.

Glennon says he is not anti-union, but he thinks in IL, “Public sector unions have far too much power– procuring these pension benefits through graft & mistake.”

Public sector pension benefits have increased three times faster than Illinois incomes for several decades, making them completely unaffordable, driving Chicago, other IL cities and IL state government itself – to the brink of bankruptcy.

— Average Chicago Household on the hook for 125K

The average Chicago household share of the unfunded pension liabilities (including Chicago, Cook County, CPS and IL taxes) is about $125,000, payable over the next 30 years. And, if taxpayers want to cut those pension payments, the IL Supreme Court has ruled that would be unconstitutional.

–Amend IL Constitution?

So, one approach would to be amend the IL Constitution to permit such cuts, which would require a statewide vote, approved by 60% of the voting population. But candidate LORI LIGHTFOOT promised December 9, 2018 on Flannery on Fire NOT to cut ANY pension benefits of ANY retired police, fire, city or labor Chicago Gov’t employees and she was the top vote getter in the February 26, 2019 while maintaining that position. Is it better to raise taxes  for all the taxpayers? Will now run-off finalist Lightfoot modify her pension fix position as she runs in the April 2, 2019 election? Tonight’s show was taped last November.

So far, there is no indication of Lightfoot changing her pension position. And, to a large extent, now run-off finalist Preckwinkle is unlikely to change her pension position, which largely matches that of Lightfoot.        

Bill Daley favored amending the IL Constitution so he could negotiate with Chicago’s public sector unions to reduce their benefits. That position probably cost Daley the chance to be in the run-off.

— Proposals to increase income tax rates

As discussed above, another approach is to raise taxes by an amount sufficient to pay the coming implosion of pension payments needed to pay for pension benefits. But Gov. Elect Pritzker’s proposed progressive income tax (as extrapolated by Wirepoints) would raise tax rates too much to be politically feasible.

–Chicago, CPS and IL Bankruptcy

That leaves us with Chicago, CPS and/or IL bankruptcy to solve the pension mess, assuming the legislature empowers cities to file for bankruptcy with the federal courts, and the federal government would empower the states to do the same.

That kind of bankruptcy empowerment is supported by Glennon, and indeed, he indicates the mere threat of such a bankruptcy might precipitate a “voluntary agreement,” by stakeholders to reach an agreement by which everyone takes “A hair cut.”

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