Should Illinois Should Be Proud That Washington Is Following in Its Footsteps?

Being from Illinois it’s sometimes hard to proud of our government.  Illinois has the worst state credit rating in the nation and the highest unfunded pension liability, things you do not want to be number one in.

Still, Illinois may be serving as a model for the federal government.  In Thursday’s Wall Street Journal, Greg Ip asked:

“How is it possible for presidents to keep cutting most Americans’ taxes while expanding the safety net?  In great part, by borrowing.”

What Illinois has done is slightly different.  Instead of actual borrowing, though we do a lot of that, too, mostly Illinois doesn’t pay its bills.¹  We have billions of dollars of unpaid bills and a couple hundred billion dollars of unfunded pension liabilities.  The federal government doesn’t not pay its bills; it just prints money to pay them.  But the substance is much the same: it buys things and incurs liabilities, and it doesn’t raise taxes to pay for them.  Illinois can’t print money (fortunately) and there are limits on how much people are foolish enough to lend to it.  So, as I said, Illinois just doesn’t pay for the things it buys or services it gets – or the pension benefits it promises.²  And how it sort of feels like Illinois is a role model for the nation.  Though I not sure how pride we should take in that.
-------
¹ Actually, Illinois does eventually pay its bills, but there are often five or six-month waits for payment.  Which, for businesses or service providers that do not have a lot of money, is very similar to not paying.
² Democrats in Illinois like to say that Illinois’s financial condition is all the fault of Bruce Rauner, the Republican governor from 2015-2019.  It is true that Governor Rauner wouldn’t agree to a budget back in 2015-2017.  That was because the legislature wouldn’t pass even some of the changes he was proposing.  Of course, the legislature could have passed some of them, at which point Governor Rauner would have agreed to a budget, but the legislature, i.e., the Speaker of the House of Representatives, felt it was better to not have a budget than to pass any of Governor Rauner’s proposed changes.  Whose fault that makes the budget crisis depends on your point of view.  (See here and here.)
     In any case, Illinois’s stack of unpaid bills and mountain of unfunded pension liabilities didn’t start with Bruce Rauner in 2015.  One of the earliest posts in this blog, back on May 9, 2006, was titled: “Just Because We Don’t Have It Doesn’t Mean We Can’t Spend It.”  Not paying bills and not funding promises is an Illinois tradition, which Washington, in its own way, has picked up.  And it seems to be working – until some day it doesn’t.