Pat Allen: The View from Right Field

“Illinois Ponzi scheme fugitives caught in Arizona”

This was the headline on an Associated Press article today.  It surprised me because I didn’t realize that Michael Madigan, John Cullerton, and Pat Quinn were in Arizona.

If Governor Quinn Wants to Stop Tax Giveaways, Maybe He Needs to Look In the Mirror

According to a headline in yesterday’s Chicago Tribune, “Business tax breaks under state's microscope”. The article explains:

“Gov. Pat Quinn, in his ongoing search for new tax revenue to help close huge projected budget gaps, has called for changes in the Illinois tax code that would eliminate costly giveaways.”

Well, if Governor Quinn really wants to eliminate tax giveaways, I can tell him where to start: in his own office.

It was, after all, Governor Quinn who convinced the legislature to give huge tax breaks to Sears and the Chicago Mercantile Exchange and Chicago Board of Trade last year to get them to stay in Illinois – after he signed big tax increases earlier in the year. Sears got $150 million of tax breaks over ten years, as well as a 15-year extension of a special tax district that reduces Sears’ property taxes for its corporate headquarters. CME Group, which owns the Chicago Mercantile Exchange and the Chicago Board of Trade, got its state income state bill cut almost in half, which means it will be paying less now than it did before the income tax increase. And this is in addition to millions of additional dollars being handed out in tax breaks and tax incentives to other companies.

Governor Quinn is right. Illinois does have too many special tax breaks and giveaways. And a lot of them start right in Governor Quinn’s office.

Pat Quinn's Idea of Political Courage: Spending Money

I apologize for continuing to come back to this subject, and it is amazing that I have to, but Illinois Governor Pat Quinn gave another speech this past week about how Illinois needs to spend more money.  At a time when, according to Moody’s Investors Service, Illinois has the lowest credit rating of any state in the country (not tied for lowest, but lower than any other state in the union), Governor Quinn talked in his State of the State speech about the “political courage” necessary to spend money.  It’s almost like he hasn’t been paying attention for the last nine years.

His predecessor, and the person he ran with twice, came up with a great innovation on how to spend more money for programs but still keep your promise to not raise taxes:  Don’t pay the bills.  Which meant Illinois was going in the financial hole even before the economy collapsed in 2008.

So now Illinois has billions and billions of dollars of unpaid bills and its pension plans are the worst funded in the nation.  And what does Pat Quinn think it takes political courage to do?  Spend more money.  No, Governor Quinn, spending money is easy.  Political courage is paying the bills. 

Democrats like to talk about how they care for people, but what caring is there is not paying people who provide services or products to the state?  What caring is there in making small businesses or social service agencies take out loans (assuming they can even get one) to pay their employees because the state won’t pay them?  What caring is there in not funding a pension plan that has to make retirees wonder whether they really will get the pension they are counting on?  What caring is there in a Medicaid system whose patients doctors won’t treat because the state won’t pay them?

I will admit that Governor Quinn is not the only person who seems to think this way.  When Democrats were raising the state income tax after the 2010 election and before the people elected in that election could take office, some legislators from the Chicago area were complaining that they were raising taxes, so they wanted more spending for their constituents (here and here).  What?  They already got the spending.  The income tax was being raised to pay for money that was already spent.  It was like these legislators didn’t have a grasp of reality.  Like Governor Quinn.

Some people claim the problem is that Illinois can’t raise taxes on the rich because the Illinois Constitution requires a flat-rate income tax.  That may be a problem, but it can’t be changed without a constitutional amendment.  If, as Don Rumsfeld said, “you go to war with the army you have, not the army you might want,” then Illinois has to pay its bills with the taxes its constitution allows, not the ones some people might wish it could impose.

Many of the legislators, including some Democrats, wondered how Governor Quinn was planning on paying for all of these new programs.  Even the Senate President said that he “look[ed] forward to hearing how we can fund these important priorities within a balanced budget.”  But I hope people understand that “balanced budget” means more than just spending no more that what you take in.  In Illinois, because of our irresponsible spending over the last decade and more, “balanced budget” has to mean spending less than we take in.  Because we have to start paying the bills we haven’t paid and funding the pensions that we haven’t funded.

In other words, “political courage” isn’t spending more money when you don’t have it.  Political courage is paying the bills you already have while doing the hard work of trying to figure out how you can provide as many services as you can to the people of Illinois for the amount of money you actually have.

I realize that this post sounds like a rant, and to the extent it is, I apologize.  I would rather not do it.  I prefer more measured discourse (even if sometimes it doesn’t seem like it).  It is just that politicians who want to do the easy work of spending and promising without explaining how they are going to pay for their spending and promising drive me crazy.

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Update (2/4/12 4:15 pm): I changed the title of this post because the prior title, "Earth to Governor Quinn, Come In Governor Quinn" wasn't all that good for this post.  Sorry for any confusion.

Earth to Governor Quinn, Come In Governor Quinn

Note:  The title of this post has been changed to "Pat Quinn's Idea of Political Courage: Spending Money".  You can find it here.

“Oh Rahm, Oh Rahm, Emanuel”

Last Tuesday I wrote a short post saying Chicago’s new semi-official Christmas/Holiday song was “Oh Come, Oh Come, Em[m]anuel”.  That was too quick.   After a couple of days further thought, let me suggest that Chicago’s new semi-official Christmas/Holiday song is “Oh Rahm, Oh Rahm, Emanuel”:

Oh Rahm, Oh Rahm, Emanuel
Help save Chicago from going to hell.
From union bosses robbing us blind
And teachers letting our kids get behind.
Rejoice! Rejoice! Emanuel
Has come to us, fifth floor of City Hall.

O come, from the White House and free
Us from the Daley family tyranny.
We used to be the city on the lake.
Now we're just a city on the take.
Rejoice! Rejoice! Emanuel
Has come to us, fifth floor of City Hall.

O come, thou Rahm, come and cheer
Our spirits by returning here.
Stop ward hacks selling zoning permits
And pols looking for money in their fists.
Rejoice! Rejoice! Emanuel
Has come to us, fifth floor of City Hall.

O come, Rahm Emanuel, come
And live again in your own home.
No parking meter contracts for sale
Or airport deals for friends of the mayor.
Rejoice! Rejoice! Emanuel
Has come to us, fifth floor of City Hall.

Chicago’s New Semi-Official Christmas/Holiday Song

“Oh Come, Oh Come, Em[m]anuel”

PS – Sorry for the delay.  I only thought of it today.

Is Illinois Like Greece – Or Worse?

In a recent article in The Washington Post, Matt Miller, in the process of trying to explain what is happening in Europe – and why – said this:

"Politicians in places like Greece found they could stay in office by giving people public-sector jobs or by letting workers retire at 50 with hefty pensions, while not collecting enough taxes to pay for this. They spent lots more than they took in, borrowed the rest and lied about it. Government debt went through the roof without anyone knowing."

As I read this, I said to myself:  That’s Illinois!  With one exception:  It was pretty obvious what the politicians were doing in Springfield, and we re-elected them anyway.  Including Rod Blagojevich in 2006.  So we really only have ourselves to blame.  Which is actually even worse.

What Constitutes Pension “Reform” In Illinois

The headline in Wednesday’s Chicago Tribune (print edition) read: "Pension reforms go to Quinn”.  And it was a good bill.  It stops union leaders from adding time they spend working for the union to the time they spend working for government to get a higher government pension.  While I am sure there was a logic to the original rule, it doesn’t take into account that union salaries are higher than government salaries and that the people involved are getting pensions from the union for the same time.  It got so egregious that two different teachers’ union people were set to get teacher pensions for a combination of one day of teaching and a lot of time as a union official.  (Remember that the next time somebody from a teachers union says they are only interested in the kids.  I am sure is true for many of them, but it certainly isn’t true for all of them.)

In any case, while the headline made this seem like a big deal, it’s really small potatoes.  The real problem is not the pensions these people are getting or were going to get from the state.  It’s the pensions that the state has promised to all of its employees and which it is not funding.  It’s no news by now that Illinois’s public pensions are among the least funded in the nation.  At some point, not only are we going to have to start paying the full amount of our current contribution, we are also going to have to start making up the deficit, too.  And we are going to have to do that at a time when the current contribution is going up.

The situation actually reminds me of the story I heard (and I mentioned before) about the quality triangle: Good, fast, and cheap – pick any two.  Well, if we don’t do something about pensions in Illinois, we are going to have a state government triangle: pay pensions; have semi-reasonable taxes; and properly fund schools, social services, roads, public safety, etc.  And just like the quality triangle, Illinois will be able to pick any two because we won’t be able to have all three.

If our leaders in Springfield don’t want to face up to this, that’s fine.  They can put it off.  But it will happen.  And the longer it takes to deal with it, the worse it’s going to get.

Illinois Is Still In the Hole

According to a report from the Civic Federation, Illinois could have an $8.3 billion shortfall in its budget by the end of the 2011-12 fiscal year next June.  And Illinois is in this situation even though the state income tax was increased by 66-2/3% on January 1.  According to the report, almost all of the extra money from increasing the state income tax went to making the state’s pension payment this year (instead of borrowing it again) and repaying debt (including repaying money Illinois has borrowed in the past to make the state’s pension contributions*).

Two comments:  First, things would be even worse if it wasn’t for the Illinois House of Representatives.  Both Governor Quinn and the Democrats in the Illinois Senate wanted to spend more money, but the leaders of the House (Tom Cross and Mike Madigan, in alphabetical order), and the members of the House, refused.  All of the Democrats had promised, when they increased the state income tax, to spend less money in 2011-12 than in 2010-11.  But it was only those in the House who actually did it.  For Illinois, it was amazing that any of them did it.

Second, some people have said, in response to ads by Wisconsin urging Illinois businesses should move there, that Wisconsin has higher taxes than Illinois.  Well, maybe that is because Wisconsin actually pays its bills on time.  Someday Illinois is going to have higher taxes than Wisconsin – because someday Illinois is going to have to pay its bills.  

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* That’s the problem with borrowing money.  Eventually, you have to repay it.

The 2012 Presidential Election Is the Republicans to Lose

– and they could do it.

Here is what Charlie Cook of “The Cook Report” says about 2012:

“On one hand, we have an incumbent president with dismally low job-approval ratings; his signature legislative accomplishment of health care reform remains very unpopular, and he is presiding over an enormously weak and worsening economy. This is a combination sufficiently bad to prevent any president's reelection.

On the other hand, we have an opposing party whose center of gravity and energy levels have swung so far to one side of the ideological spectrum as to have been designed to alienate the independent and swing voters, the people who will effectively decide this presidential election. To put it more simply, this election is the Republican Party’s to lose, and yet, they may pull it off, snatching defeat from the jaws of victory.”

And to show that the Republicans could actually accomplish this, just look at what the Illinois Republicans did in 2010.  There was a huge swing to Republicans all over the country.  In fact, even in Illinois, in the more nationally-focused races, like for Congress, Republicans picked up five seats.  The eighth congressional district even elected Joe Walsh.

The Republican swing was so strong that we even elected a guy to the Senate who had made huge misrepresentations about his service in the Navy Reserves, not a good thing to do when the military is respected again.  But Mark Kirk was a moderate.

The 2010 race for governor of Illinois is a blueprint for how Republicans can lose the presidency in 2012.  Consider the advantages the Republicans had in Illinois in 2010.  The state was in terrible financial shape.  We had one of worst credit ratings of any state in the nation.  The state’s bills weren’t getting paid for months.  And the prior Democratic governor had been convicted of lying.

The Democratic candidate for governor was “a nice guy,” but he seemed to change positions based on who he had talked to last.  He wasn’t represented by a Jell-O® mold in political cartoons for nothing.  He was so bad as interim governor (after his predecessor was impeached) that he almost lost in the Democratic primary to Tom Hynes, who himself is such an ineffective campaigner* that he could lose an uncontested election.

So, in this situation, what did the Illinois Republicans do, especially when they had a great candidate in Kirk Dillard, who would have won the election in walk?  Simple.  They nominated a really conservative candidate** who so scared middle-of-the-road, independent voters, especially suburban women, that he lost.  And not only are we now stuck with relying on Speaker of the House Mike Madigan to keep some kind of limit on state spending (we still haven’t figured out how to pay all those delinquent bills even with an increase in the state income tax from 3% to 5%), but the Democrats also got to do the redistricting for Congress and the state legislature all by themselves.

If you want to see how Barack Obama can get re-elected in 2012, come to Illinois.  Our Republicans can show you how it can be done.

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* Mr. Hynes was, however, a fine state Comptroller, which goes to show that being good at campaigning and being good at governing do not always go together.

** But I couldn’t vote for Dillard in the primary, conservatives said.  He would have raised the state income tax.  Yes, he would have.  But he wouldn’t have raised it by 66-2/3%, and Brady didn’t win.