The View from Right Field

Illinois Politics: The Gift That Keeps on Giving

As you may know, Chicago’s teachers’ strike ended last week.  (The teachers were only doing it for the children, of course.)  One of their demands was an elected school board.  (The mayor presently appoints the board.)  The union wants a 21-person elected board; all the better, I suppose, to ensure that the union will be able to help elect a majority of the board.  Which would mean that during the next contract negotiation, the teachers’ union would be on both sides of the table, negotiating with itself.  Which should make the negotiation easier – and increase business for one-way U-Haul rentals out of town.

Michael Madigan, Speaker-for-Life¹  of the Illinois House (sort of like Xi Jinping in China), has said he would support legislation creating an elected school board in Chicago.  However, given that the feds and the FBI seem to be investigating Springfield, as well as the Chicago City Council (wow, they must be busy), the possible problem for such legislation is whether Speaker Madigan will have a quorum by the time the legislative session starts in January.  On Friday, State Rep. Luis Arroyo, an assistant majority leader in Speaker Madigan’s House of Representatives, resigned after being charged with bribery last week.

General Electric and Illinois

General Electric has had problems over the last few years.  Management mistakes, etc., have been so bad that last year GE cut its quarterly dividend to one cent a share.  Then, earlier this month, Larry Culp, GE’s new CEO announced that, in an effort to cut debt and reduce liabilities, GE would freeze all of its remaining defined benefit pension plans.  The plans had already been closed to new participants in 2012, but now the participants would no longer accrue new benefits under the plan. 

According to the Wall Street Journal article on GE’s action, as of 2017, only sixteen Fortune 500 companies provided traditional defined-benefit plans to new hires, and 42% of Fortune 500 companies with defined benefit plans, whether open or closed, had frozen them in some way.

Bidens in Ukraine – and Grifting in Illinois

In an article Peggy Noonan wrote last weekend about the President Trump/Ukraine story, she made a comment that seemed relevant to Illinois:

“In the end, in purely practical political terms, the one person who will be hurt by this story will be Joe Biden.  Every telling of this story necessitates pointing out that Mr. Biden’s son Hunter had cozy financial relationships with other countries, including Ukraine.  It’s real swamp stuff.  It looks bad, say the former vice president’s friends.  No, it is bad.

I Am So Tired of @realDonaldTrump

In the middle of his snit yesterday over trade and tariffs with China, President Trump tweeted, in part:

“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.” (Here and here)

I just don’t know what to say.  Maybe Xi Jinping and Kim Jung Un, people President Trump calls his friends, can order their companies to do this.  But, President Trump, you can’t do this.  We are a free country, and you can’t order people or companies around like some Communist dictator.  And saying things like this is stupid. 

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.