The View from Right Field

Helping People Takes More Than Just Raising Taxes and Spending Money

Taxes are going up in Illinois tomorrow.  The gas tax is going up 18 cents a gallon, and there are probably other taxes going up, too.  Also, there will eventually be new taxes on things like marijuana and sports gambling.¹  I understand why taxes have to go up.  Illinois has spent more than it has raised in taxes for so long that the time has come to start paying up.  I am not sure, however, that enough of the tax increases is going toward the unpaid bills and funding the pension promises the legislators have been making for years.  Actually, I am sure.  Enough isn’t going for these things.  But that is not what I want to talk (spelled “r-a-n-t”) about today.  I want to talk about how the Illinois spends its money.

One of the problems with the politicians we have in Illinois is they seem to think that, once they have passed the programs and appropriated the money, their job is done.  They think that all they have to do is spend money and problems will be solved.  Which is just so far from being true.

Warren Buffet Says Don’t Invest in States Like Illinois

Warren Buffet is one of the Democrats’ favorite billionaires.  Mr. Buffet was a big fan of Barack Obama.  When President Obama was in office, Mr. Buffet argued that taxes on the wealthy were too low and complained that he paid a lower tax rate than his secretary.

I wonder, however, if Illinois’s new Democratic governor, a billionaire himself, feels quite so friendly to Mr. Buffet these days.  According to an editorial in The Wall Street Journal today:

“In a Feb. 25 interview on CNBC, Mr. Buffett warned investors to avoid states with large unfunded pension liabilities. He said he couldn’t be sure how such states would try to bring in more revenue – whether by raising corporate taxes, personal income taxes, or a combination. But he had no doubt the taxes are coming.

Guns, Laws, and Aurora, Illinois

I have written before about guns and gun control (see here, here, and here).  I don’t need to repeat what I said in those posts.  I just wanted to comment on Illinois Governor J.B. Pritzker’s vow, after the shootings in Aurora, Illinois, to tighten Illinois’s gun laws.  The only problem with the Governor’s promise is that Illinois’s laws already prohibited the alleged shooter from buying or owning a gun.  The problem in the Aurora shootings wasn’t that we didn’t have the right laws; it was that we weren’t enforcing the laws we had.

In my post on Friday about Governor Pritzker’s proposed budget, I said that it’s not how much government spends, it’s how much government accomplishes.  In this case, it’s much the same.  It’s not what laws government passes that counts.  It’s how many laws of those laws government actually enforces.

Republicans in Illinois: What’s an Irrelevant Minority to Do?

Yesterday I wrote about Illinois Governor J.B. Pritzker’s proposed budget for Illinois.  The question for today is: what should the Republicans do in response to Governor Pritzker’s proposal?  It’s an interesting question because there are so few of them.  In the Senate, there are 40 Democrats and 19 Republicans.  Generally, it takes 30 votes to pass a bill in the Senate, so they are irrelevant there.  In order to override a governor’s veto or pass a bill at certain times, you need a “supermajority,” which is 36 votes in the Senate.  Irrelevant again.

The situation is much the same in the House, where there are 74 Democrats and just 44 Republicans.  It takes 60 votes to pass a bill.  Irrelevant.  And 71 votes is a supermajority.  Once again, irrelevant – if House Speaker Michael Madigan really wants to. 

Illinois’s New Governor – Kicking It Down the Road, Just Like Everybody Else

Illinois’s new governor, J.B. Pritzker, presented his proposed budget to the legislature this week.  The budget raises taxes, increases spending, and kicks the pension can down the road, which means he gets one out of three right.  If you’re batting, that’s pretty good.  If you’re fielding, it’s terrible.

Governor Pritzker understands Illinois has to raise taxes.  After years, if not decades, of spending more than we taxed, Illinois has to catch up.  Governor Pritzker, however, focuses his tax increases on smokers, dopers (i.e., legalized marijuana), gamblers, and insurance companies.  Which means he’s not being serious. 

I understand he wants a constitutional amendment to allow a progressive income tax, but that’s not going to happen for three years or more, so while we wait, Governor Pritzker’s only idea is to increase miscellaneous taxes all over the place; as I said, on smokers, dopers, gamblers, and insurance companies.

Will Illinois Ever Really Deal With Its Unfunded Pension Liability?

As Illinois’s new governor and old legislative leaders start to grapple with Illinois’s problems, the first question is what are they going to do about Illinois’s pension debt.  Except, of course, that is not the first question they are going to deal with because it’s hard and they want to do fun stuff first.

Some people say that Illinois’s unfunded pension debt really isn’t really that big of a problem.  They argue that Illinois might not have enough money set aside to pay all of the pensions it owes, but that’s only a problem if Illinois shuts down.  As long as Illinois stays around, and keeps making contributions to its pension funds, there will always be enough money to pay the amounts owed to retirees that year.  Which is probably true.  It’s just that that’s not the kind of system we are supposed to have.  Because that’s not a funded pension plan.  In effect, it’s a pay-as-you-go pension system.  Which is a legitimate form of pension system.  Under a pay-as-you-go pension system, you don’t set aside money for pension payments in the future.  Instead, each year the government pays for the pensions for its retired workers, or for its senior citizens, out of the current revenues it has at the time.  Lots of countries have pension systems like that.¹  And it would be what Illinois would, in effect, have if it doesn’t do something about its unfunded pension liability.

Like Illinois, Like Chicago

Chicago has a mayoral election coming up on February 26, 2019 (with a run-off, if necessary, on April 2).  Chicago is in much the same situation as the state it is in – and for much the same reason.  Because its elected officials like to spend money and increase pensions without raising taxes to pay for them.

Below is a letter to the editor published in today’s Chicago Tribune on the mayoral election.  (You can find it in the paper here.)  As you can see, it is much the same theme as my post of January 16, 2019, on the choices Illinois faces, too.

“For Chicagoans, reality hurts

In your Jan. 27 editorial (“Where will Chicago’s next mayor find $270 million – in your wallet?”), you said you asked Chicago’s mayoral candidates where they will get the extra $270 million needed to pay Chicago’s pension bills next year, an amount that will increase to almost $1 billion a year in four years.

Illinois Faces Hard Choices – But the Solution Is Simple

In his inaugural speech, new Illinois Governor J.B. Pritzker said that Illinois must make “hard choices” and that “[o]ur abdication of responsibility must end.”  I agree.  But while the problems Illinois faces may be hard, the solution to those problems is quite simple.  As I have said before, for too many years (many more than just four), Illinois has spent more money and promised more money to its employees in pensions than it was willing to collect in taxes.  What Illinois now must do is tax more than it spends – until it catches up.

While the solution is simple, the politics is hard.  Are Governor Pritzker and the members of the legislature willing to tax more than they spend, by increasing taxes and/or cutting spending, until Illinois pays its bills and fund its pensions?  And are they willing to explain to the people of Illinois that cutting spending will hurt and that increased taxes can’t just come from somebody else; that everybody is going to have to pay more?

More importantly, though, are the citizens of Illinois willing to support politicians who are willing to tell them truth and do what is necessary to make Illinois something other than a national joke for financial mismanagement?
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UPDATE (1/23/19 9:35 pm): A version of this post was published as a letter to the editor in the Wednesday Journal of Oak Park and River Forest on January 23, 2019.  See here.

A Few More Comments on the Stupid Shutdown

A few comments on the federal government shutdown, though I am not sure they add all that much to what I wrote back on January 3.  In any case, it is all the news, so here goes.

1. As I understand the shutdown, it boils down to this:  President Trump thinks that it is better to have a government shutdown than it is to not build the wall he wants to build.  The Democrats in Congress, on the other hand, think it is better to have a government shutdown than it is to let President Trump build the wall he wants to build.  Or, at least, that is how they are acting.

Illinois Gets a New Governor. And Keeps the Same Legislative Leaders.

Last week I asked who would cause Illinois Governor-elect J.B. Pritzker more problems, his supporters or his opponents.  My guess was that it would be his supporters.  Well, Governor-elect Pritzker takes office on Monday, and he will find out over the next few months.  In any case, this week, the new legislature was sworn in, and the same old legislative leaders were re-elected.  In the Senate, Senate President John Cullerton had some nice things to say to outgoing Republican Governor Bruce Rauner:

“We may have had our differences, from time to time, but you took on a challenge when others merely complain from the sidelines.  Thank you, and I wish you and your family the best.”