Posted on 09/15/2015 6:56:34 AM PDT by Kaslin
When I grew up in the north suburbs of Chicago in the 1960s and '70s, Illinois was still a financial and industrial powerhouse. The Land of Lincoln had a low-rate flat income tax, the property taxes were reasonable, the state ran budget surpluses, and Illinois was the home of such iconic mega-employers as Caterpillar, Sears Roebuck and the Chicago Mercantile Exchange.
The public schools were pretty good back then and a dedicated corps of teachers put kids first -- they didn't walk out on strike, and they didn't have the fat pensions they can get now when retiring at age 55.
Mayor Richard Daley ("the Boss") ruled Chicago for decades, and it was "the city that works." Yes, you had to pay off the unions to get things done, but this was a cost of doing business. Things did get done.
Fast forward to today, and what a sad state of affairs. Last week the state had to sheepishly announce that it doesn't even have the money in the bank to pay lottery winners. Now jackpot winners are suing the state to get their rightful money.
Perhaps the state will need a second lottery to raise money to pay off the winners from the first lottery.
Chicago is so broke that its bonds are junk status, and Mayor Rahm Emmanuel had to go hat in hand last week to the state capital, Springfield, for bailout money to pay the bills.
According to Forrest Claypool, the new chief executive for the Chicago school system: "We are really now at a point where further cuts would reach deep into the classroom." Teachers have been laid off, and extracurricular activities have been cut. Yes, the financial crisis is wreaking havoc, but to ask the state to kick in money is a laughable proposition -- like Puerto Rico asking Greece for a loan. Springfield is plum out of money, too.
To protest additional service cuts, the Wall Street Journal reports, parents are going on hunger strikes. But it will take more than divine intervention for the cash inflow to meet expenditures.
Why should residents of other states care about this financial meltdown in Chicago and Illinois? The answer is that Chicago is the canary in the coal mine when it comes to the government pension crisis. Pensions for teachers and state employees are bleeding the state dry. A state budget office spokesman tells me that "nearly one of three state tax dollars now goes to paying pensions for retired municipal and state employees."
Meanwhile, tax increases on the rich under the previous governor failed to raise much money, but did accelerate an exodus of money and talent out of the state. A new Illinois Policy Institute study, based on latest IRS data, finds a record number of people have been fleeing Cook County, home to Chicago. "The income of the people who left Cook County in 2012 was $2 billion more than the income of the people who moved into Cook County. ... The 2011 and 2012 outmigration will cost the county nearly $30 billion in taxable income over the next decade."
It couldn't get much worse, right? Wrong. The state has been operating without a new budget for more than two months. Vendors are routinely going two or three months without getting paid because the vault is empty. The Democrats who rule the state Legislature and serve their masters, the Illinois teachers unions, passed a $34 billion budget this summer that is $5 billion in the red, flouting the state's balanced budget requirement.
Republican Gov. Bruce Rauner, who inherited this calamity, is the state's last best hope. He has vetoed the state budget and rejected the unions' demands for more taxes. Property taxes and sales taxes (which can reach 10 percent in Cook County) are already nearly the highest in the nation.
The rich whom the unions want to tax have been leaving for Florida, Arizona and Texas. Rauner argues that Illinois already has one of the five worst business environments in the nation.
Worst of all, the Illinois Supreme Court ruled that pensions can't be touched because they are contractual obligations. So funding for schools, roads, and public safety get shortchanged so that public employees can keep cashing in on benefits far more generous than what private sector workers/taxpayers receive. This is justice? No wonder residents are going on hunger strikes.
It's a battle royale that pits the union bosses against the taxpayers. And it's a fight that Mr. Rauner can't lose. If he does, the exodus from the state will look like the floods of Middle Eastern refugees trying to get to Western Europe.
The shame of all this is that Chicago is a world-class city. It is the capital of the Midwest and by far the most desirable city in the region to live in. It should be, and could be, America's Hong Kong if it weren't for the labor agreements that are shredding basic government services and making the city unaffordable.
What is scary is that the fiscal virus that has incapacitated this once-great city and state may soon spread to a city or town near you.
Amazingly, national Democrats are saying with straight faces that to help American workers and make the country great again we need more powerful unions.
DIMocRATs...what a pathetic joke.
This article evidences the truth of the saying “Liberalism works fine until you run out of other peoples money.”
End collective bargaining. Push hiring back to the cities, towns, etc. Lower taxes. Endure some protests, show surplus in two years.
Wisconsin is a model for this. It works.
We won’t be laughing after we all bail them out (which you KNOW is coming).
Regarding those pensions, does the concept of “Force Majeure’ apply to the contracts?
The most dangerous cult we face today is liberalism — especially liberalism claiming to be Christian.
They NEED bankruptcy, it’s the only way to change — but they won’t get it
They will be bailed out by the Fed or US government, to preserve progressive government there
It takes a special something to get to that number.
5 years ago it was “California is the canary in the coal mine.” 10 years ago it was “New York is the canary in the coal mine.” Yet liberal enclaves continue to live on and continue to grow more liberal.
The Dims—not just a party of bankrupt ideas, but they also are adept at actually burning you to the ground. Forward!
You want to see Chicago really take a hit, elect Bernie Sanders President and let him implement his 90% income tax. Already, it is these high tax cities & states that feel the greatest bite from the Alternate Minimum Tax (AMT) which ‘throws out’ such Sch.A items as deductions for state&local income taxes, property taxes and 2% Miscellaneous like employee business expenses and investment expenses.
Now add the 90% and the AMT on that to the local taxes and watch the screams! You will have wealth flight to low tax states like no one will have ever seen.
Recently (2011) the Chicago Mercantile Exchange (CME) was wooed by low tax states since its business was no longer anchored to overseeing the commodities by being in Chicago. It took tax-break legislation to keep them in Illinois but if Chi-Town and Springfield keep going these equations will be re-examined. In spite of liberal dreams, no company is in business to go bankrupt to benefit government.
In short, Illinois’ Democratic Party economics is about to turn that state into the equivalent of Detroit. Which is too bad given Illinois should be the one of the most prosperous states because it is the largest crossroads of transcontinental goods trade.
There’s nothing funnier than a Chicago Democrat. They ought to audition for roles on comedy programs.
“It is the capital of the Midwest and by far the most desirable city in the region to live in.”
Went there in ‘72 for a nine week company school. Didn’t like it then except for the Field Museum. Back for a couple of weeks in ‘76 and again in ‘82. It had not improved. The climate was awful, people would go out into a day that we call miserable in South Carolina and talk about how nice the weather was. They would look at the sky on a rare day when the sun was shining and say, “Look at that blue sky!” I would look at the same dingy charcoal gray sky and wonder what in the world they were talking about. Forty five degrees with a slow drizzle was considered a nice day in March.
Things change and they can change quickly. There was a program on TV the other day about the old rice plantations in South Carolina. I think the year 1822 was mentioned and they said at that time Georgetown County in South Carolina was the wealthiest county in the USA. Things are different now.
Of course, back then South Carolina was rich because it was hugely productive in terms of agriculture (the USA didn’t become prominent in industrial might until after the Civil War, spurred on by the development of the railroads). And it was one of the most important slaveholding states for that reason.
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