Posted on 07/21/2013 7:49:21 PM PDT by SeekAndFind
Detroit declared bankruptcy yesterday. Depending on which news source you follow, it’s big news, or it’s not.
Many are calling on the federal government to bail out Detroit. After all, the Feds bailed out GM and Chrysler. Why not bail out a city in our fair country?
Because then the entire tax base of the US is responsible for the misdeeds of one city. Can’t happen, and the Feds shouldn’t bail out states or private companies either.
Chicago has its own pension and spending problems. But it’s not Detroit. Detroit’s economy was based on one industry. It was a one trick pony. Chicago’s economy is a lot more diverse than Detroit. Losing an industry leader here would hurt-but not fatally damage Chicago.
The only company that could pull out and cause Chicago to go into a downward spiral is CME. All the side businesses related to $CME add up to a pretty large number, and a lot of ancillary jobs depend on them being there.
Illinois on the other hand is in deep trouble. There aren’t enough economic engines in the entire state to support what politicians did to it. Chicago is the only big one. Other towns in the state aren’t creating wealth at the pace that’s needed to make up the pension/public sector spending deficit. Plus, people are leaving the city of Chicago.
Yesterday, Chicago had it’s bond rating slashed. Illinois has a bad debt rating too. Currently, it stands at A3 with Moody’s. It’s hard to put into words what that actually means for Illinois taxpayers.
Debt is at an all time high with all government. The numbers are so big, we become immune to them. Individuals feel powerless to do anything about it. It’s worse when someone totals it up. For example, in Detroit, if every man, woman and child wrote a check for slightly over $26,000 today, the city would be okay.
Most people don’t have that kind of money sitting around, so they ignore what’s going on or feel helpless.
Politically, it is simple to blame Democrats. Obviously, Chicago was run into the poor financial health its in by Democrats. But the state of Illinois is different. Republicans participated as well.
There are two things going on in the debate over what to do about the deficits in Illinois.
First, there are the true believers. The socialists. Grow government, grow government pensions, support unions at any cost. They truly believe that’s the way to run society. More spending and higher taxes is the only way. They hide behind ill formed laws and contracts.
The second way is more pernicious. They use government to feather their nest and their friend’s nest. Crony capitalism. It permeates both sides of the aisle. They are trying to figure out the best way to keep the game going. They’ll vote to raise taxes and user fees. They have an innate sense of the elasticity of these things, so they raise them just so much.
Currently, there is only one candidate that can solve the mess in Illinois. Bruce Rauner. The rest have all been there and had their shot.
Redneck Illinois should split up with Chicagoland, with the latter keeping its high taxes and the former going back to a more frugal government.
Chicago is in deep doo doo.
>> Losing an industry leader here would hurt-but not fatally damage Chicago. The only company that could pull out and cause Chicago to go into a downward spiral is CME.
Those two sentences, occurring one after the other, simply do not comport.
Losing CME WOULD fatally damage Chicago, by the writer’s own admission.
Illinois and California and, to a lesser extent, New York.
How is Washington DC doing?
Then it is Detroit. One of Detroit's biggest problems is paying for the retirements of the city employees when it was a big city with a much smaller population. If the same thing happens to Chicago, then Chicago is Detroit.
And the author seems to claim that this can only happen if one big company leaves. It can happen if many small companies leave to a state with a more attractive business climate.
There is one issue many people ignore when talking about Detroit - it is 82% black. Pittsburgh lost MANY steel jobs, and I guess we were essentially a one-industry town, but we had whites.
What is CME?
And?
Probably too late. How many teachers, road workers, highway patrol, building inspectors. Tax assessors etc are coming into pensions in outlying areas?
Forty years ago rural areas had one paved road every ten or twelve miles. All that paved road costs money to build and maintain and about a fifth of the folks who work on them eventuality become retirees under the current system.
Hell, when I was a kid only a few big cities paid enough for firemen to stay on twent or thirty years. Most firemen (police too) worked it for four to twelve years. Same with the military.
The math was there to show this was going to be the result.
Coming soon, to a government near you. Retirement default.
Chicago Mercantile Exchange
Thanks
When they raised the state income tax rate by 66% overnight, we LEFT!!
And if it wasn’t for rural Illinois and the small and medium sized towns producing, Chicago would have gone belly up years ago.
The crash-n-burn can not happen fast enough to some areas for my tastes. Though I loved Chicago (B3 resident for almost 3 years), I saw enough of Baltimore (crime, taxes, corruption) to head back to FL.
Here’s how the Right starts to get the hearts/minds of 90% of the population:
Send each of them a fake bill for their portion of the debt of their State and a link/print-out of the budget. Let’s see if the residents think those cushy union ‘contracts’ (’cuz they sure don’t benefit the taxpayers) are worth it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.