Illinois Needs Another Richard Ogilvie – And a Paul Simon, Too

First, a little history for people who may not remember Richard Ogilvie (other than being the guy for whom the Metra train station in downtown Chicago is named) or who think Paul Simon is the guy who used to sing with Art Garfunkel.

Richard Ogilvie was a Republican who was elected sheriff of Cook County in 1962 and then County Board President four years later.  (A Republican getting elected countywide in Cook County?  Yes, it used to happen – a long, long time ago.)  Then in 1968, Dick Ogilvie was elected governor. 

In 1969, Governor Ogilvie proposed, and the state legislature passed, Illinois’s first income tax.¹  The rate was 2.5% on individuals and 4% on corporations², and it went into effect July 1, 1969.  Perhaps not surprisingly, the tax was not popular with at least some voters, and Governor Ogilvie was defeated when he ran for reelection in 1972.³  Still Governor Ogilvie thought it was the right thing to do, so he did it, even though he knew it meant he might not get reelected.

Paul Simon might have been even better.  He was a Democrat, and in 1968, he was elected Lieutenant Governor.  It was the only time a governor and lieutenant governor of different parties were elected in Illinois.  (The Illinois constitution has since been amended to require prevent it from happening again.)

Paul Simon understood the problem with government spending more than it takes in.  After he was lieutenant governor, he became a congressman (from 1975 to 1987) and then a senator (1987 to 1999).  While in Washington, Paul Simon did something very few other Democrats did (and many Republicans did without really meaning it): He supported a balanced-budget amendment to the U.S. constitution; in fact, he co-sponsored it.⁴

Paul Simon’s theory was simple.  In his autobiography, P.S.: The Autobiography of Paul Simon, he quoted Thomas Jefferson: “[O]ne generation should no more be willing to pay the debts of a previous generation than to pay the debts of another nation.”  In 1995, before the Senate vote on the proposed amendment, he said, “If we do not act, interest payouts will spiral upward until they consume not only Social Security, but also health care, education, and transportation.”

Writing about Paul Simon in the National Journal in 2013, Major Garrett said:

“[Paul Simon] consistently told liberals his approach to fiscal conservatism was the only way they could, over the long haul, protect discretionary spending from the ravenous maw of entitlement spending.  An aging population, Simon reasoned, meant lawmakers in future years would devour discretionary spending – the fundamentals of day-to-day government – before touching Social Security, Medicare, and Medicaid.”

That’s not to say that Paul Simon didn’t want to spend.  He did.  It’s just that he was willing to raise taxes to do it:

“‘Paul believed that we should raise revenues if that was needed to address the problems of the less fortunate among us,’ [Mike] Lawrence said.  ‘He was prepared to support higher taxes if it meant meeting critical needs without borrowing.’”

But Paul Simon was against more than just deficit spending.  When he was lieutenant governor, then-Governor Ogilvie proposed a big (for the time) bond issue for the construction of roads, state buildings, etc.  Lieutenant Governor Simon opposed it.  Paul Simon favored a pay-as-you-go approach to capital improvements.⁵  You are always going to have capital spending, he argued; why not pay for it currently, instead of borrowing and then having to pay interest in addition to the principal.  What he said in 1972 seems strangely (or maybe not so strangely) prescient today:

“The greatest waste in government today is money foolishly spent in interest caused by unnecessary indebtedness.  It is politically attractive.  The incumbents can do things without paying the full bill, passing it along to others.”⁵

Comparing both Richard Ogilvie and Paul Simon to our supposed leaders in Illinois today is depressing.  Dick Ogilvie felt the state needed an income tax to raise revenue, so he proposed one, even though he knew it would make it hard for him to get reelected.  He was willing to do it, in spite of the risk, because he felt it was the right thing to do.

Paul Simon felt the same way, if not more so.  It wasn’t that he didn’t think government should do things (quite the opposite).  It was just that he was willing to pay for what he thought government ought to do.

As I said, compare these men to the people in Springfield and Chicago (not to mention Washington) today.  Our leaders in Springfield just spend.  That’s what they did last year.  They voted to spend more money than the state was going to take in.  They knew it, but they did it anyway.  The new legislature recently came up with a fix, but it is held together with paper clips and scotch tape.  And the problems for fiscal year 2015-16 will be worse because for the past decade, the people in Springfield have been spending more than they raised in taxes.

What it boils down to is that the Democrats in Springfield wanted to spend, but not enough of them were willing to raise taxes to pay for their spending.  There were enough of them to pass whatever they wanted, but they wouldn’t do it when it came to raising taxes.  They actually did raise taxes once, but only in a post-election session where the votes needed to pass the increase came from people who were leaving office.

The Republicans in Springfield aren’t a whole lot better, though their situation does raise an interesting philosophical question.  What if you don’t want to spend more than the state is going to take in⁶, but you know, because the other side has the votes, that the state is going to spend more than it will take in.  Do you have a responsibility to vote to raise taxes to pay for spending you know will happen even though you aren’t in favor of that level of spending?

Chicago is just as bad as Springfield.  An article in last Saturday’s Chicago Tribune detailed the disastrous budget policies of Mayor Richard M. Daley: sell what you can, borrow what you must, but in no event raise real estate taxes, no matter how much you spend.  I think current Mayor Rahm Emanuel understands the problem, but he’s not doing what is needed to solve the problem; i.e., raise property taxes.  It’s not going to be fun to have to pay more taxes for spending from ten years ago, but that is what is going to have to happen.  Richard Ravitch, in Monday’s Wall Street Journal, noted that Chicago has the lowest per capita tax burden of any major U.S. city.  In other words, it’s time for Chicago to raise taxes and pay its bills – and its unfunded pension liability.  Because Chicago’s politicians promised that, too.  If voters don’t like it, they shouldn’t have voted for the people who spent all the money in the past without figuring out how to pay for it.

Finally, Washington.  The only reason the deficits in Washington haven’t been worse is that the Federal Reserve has been keeping short-term interest rates so low that the interest costs haven’t been that high.  (That and the fact the federal government can print money.)  Those interest rates are going to go up, however, and when they do, the deficit will go up, too.  And as Paul Simon worried, that’s going to constrain spending on social and welfare programs for people who really need them.  It’s already doing it in Illinois.  It’s going to happen in Washington, too.

There is no good solution.  We’re in a hole.  All we can is to stop digging – and start being responsible.  We have to pay for what we spend.  We’re also going to have to put a little extra aside to pay for all of our excess spending in the past.

It won’t be easy.  It certainly won’t be fun.  But we’ve had the easy and the fun.  Now it’s time for the hard and the work.  But not just for our politicians in Springfield, Chicago, and Washington.  We voters have our job to do, too:  We have to stop electing the kind of irresponsible politicians we elected in the past who helped get us into this mess.
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¹ Actually, this wasn’t Illinois’ first income tax.  A progressive income tax was passed in 1932, but the Illinois Supreme Court ruled it was unconstitutional both because an income tax was not allowed by the 1870 constitution and because it violated the uniformity rule in the constitution’s revenue clause.

² Governor Ogilvie originally proposed a 4% tax on individuals, too, but a 2.5% rate was ultimately passed.

³ He lost to Democrat Dan Walker, who, following a long Illinois tradition, wound up in jail, though for things he did after he was governor, not while he was in office.

⁴ The proposed constitutional amendment wasn’t irrational.  It allowed for deficits in any year in which a declaration of war was in effect, if a majority of Congress declared there was a military threat to the country, or upon a three-fifths vote.

⁵ John Elmer, “To Borrow or Not to Borrow,” Chicago Tribune, June 3, 1972.

⁶ We actually don’t know what the Republicans really wanted to do because they haven’t had the votes to pass anything.