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Illinois Bonds Downgraded over Pension Crisis

Illinois taxpayers are facing huge liabilities for their state’s bloated, poorly managed, and underfunded pension system, and public sector workers face an uncertain future, as taxpayers are unlikely to cough up the huge sums required to make good on the debt.

Now everything is getting worse: S&P has downgraded Illinois bonds, meaning that the interest rate on the state’s huge debt is likely to rise, squeezing the state treasury even further. As Businessweek reports:

Standard & Poor’s Ratings Services said it lowered Illinois’ rating a notch because of “weak pension funding levels and lack of action on reform measures.” The firm also said the financial outlook for Illinois is negative, in part because the state’s temporary income tax is scheduled to expire in 2015.

Illinois politicians agreed the state’s massive pension shortfall must be corrected quickly, but they blamed others for the delay. Democratic Gov. Pat Quinn said legislators didn’t do their job. Republican legislative leaders said Democrats were the ones who quit.

Unfortunately for Illinois, the political situation is extremely messy, pitting public unions and their pet democratic backers against a mix of GOP lawmakers and reform-minded Democrats who are holding out for tougher terms on pensions. Gridlock perpetuates the status quo. There’s a lot of finger-pointing, but not much is happening to address one of the worst pension crises in the country.

With public-sector unions fighting tooth and nail to preserve their cushy benefits and expensive pension plans, old style Dems like FDR, Harry Truman and Fiorello LaGuardia—all of whom thought that public sector unionism was a terrible idea—are looking smarter and smarter all the time. The combination of collective bargaining and the power of a focused voting lobby and campaign finance machine has unbalanced the budgets of too many cities and states to retain much appeal to the general public.

If the Democrats lose this election, the impact of the clammy embrace of the public sector union movement in the Midwest will be a major factor in the defeat. Defending an unsustainable governance model is no place for a serious political party.

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  • Corlyss

    Rahm for Illinois Governor!

  • Kenny

    ” …. and public sector workers face an uncertain future, as taxpayers are unlikely to cough up the huge sums required to make good on the debt.”

    The public sector employees coasted for years while ‘on the job,’ so it is they who should take the hit.

  • Brian

    Honestly, Illinois state government debt at this point is basically fraud. It is obvious that there is neither ability nor even intent to pay back the money they are borrowing. Who in the world is still loaning money to them? Don’t they realise they are essentially paying voluntary taxes?

  • http://wwrtc.blogspot.com Art Deco

    Fiorello LaGuardia was an enrolled Republican. He was, however, an ally of the American Labor Party before it was taken over by pinkos.

  • Anthony

    “Indeed, much of our despair over mediocrity (and worse) on the contemporary scene is evoked by institutional failure – in our legislatures…unions….” The war of the parts against the whole plays itself out WRM. No commitment to the commonweal (common good) by Illinois Pols (“a little less pluribus, a lot more unum”).

  • Jim.

    @Kenny-

    That’s not true of all public sector employees. There are many that are hard-working.

    The fact that they have to suffer even as the slackers still get a bigger pension than they deserve, when the solution really is to (even involuntarily) direct underperformers into other lines of work, is the shame of unions all over the country.

  • http://instapundit reba

    All this and the teachers have given notice they are ready to strike,MORE! MORE! MORE!Are these the same teachers who were bussed in and chanted RAISE MY TAXES,RAISE MY TAXES,in support of OBAMA care ???? When are the people of Ill.going to finally get it??? And vote these BUMS OUT???

  • Sage

    Jim, I’d say the solution is to fire underperformers, not to “direct” them “into other lines of work.” It’s not a question of whether some public employees are hard workers, it’s a question of the whole incentive structure set up under public employee unionism, in which neither labor nor management are negotiating over their own money, and the more money is funneled into labor the more gets kicked back to management. It’s so fundamentally corrupt that I’m always astounded that anyone, anywhere, actually thinks it ought to be legal (much less celebrated and defended). That those dues aren’t even voluntary in nearly all cases is another jaw-droppingly corrupt edifice of the whole rotten system.

    How hard people supposedly work really is a total distraction and shouldn’t even be part of the conversation.

  • Charles R. Williams

    So who will get stiffed, the bondholders or the public sector retirees? Since Illinois is a sovereign state, this is a political decision. The people who own state and local debt are fat, rich guys who wear tuxedos and top hats and smoke huge cigars. Will Illinois starve grandma who worked 40 years in the school cafeteria to bail out these rich guys who made a foolish business decision?

  • Daniel

    I am a 30+ year employee of the State of Illinois. I have never been a member of any union. But every paycheck for the past 30 years I have coughed up 8% of my pay to buy a pension. But the state legislature for those 30 years wasn’t coughing up their share. Now I am a victim of that Ponzi scheme but all I read about is that it’s my fault, fat pig unionist that I am portrayed to be. Fear and dismay over the future is bad enough. Media fueling the flames of public outrage directed against me and my fellow victims has made the despair almost unbearable.

  • Doug Irvin

    So — what happens if the public, the taxpayers, refuse to pay higher taxes to support the retirement bubble in Illinois? I’m sure someone can figure out the percentages involved between the tax dollars paid versus taxes due.

  • 51Bottles

    Yep. As “Art Deco” wrote, LaGuardia was a Republican, not a Democrat.

  • Fred

    Funny how economic reality always, always , always trumps political wannbeism.

  • http://www.theparenttrigger.com Bruno Behrend

    Illinois needs to become the testing ground for a necessary public interest law suit.

    Our “Pension Guarantee Clause” is predicated upon Federal protection of collective bargaining “contract clauses.”

    The suit that needs to be files should challenge all of these contracts as “voidable” under the theory that there never were two parties engaged in a mutually bargained-for exchange.

    The public employees essentially controlled both parties, and the politicians, state and local, where essentially corrupt agents, never really gaining the consent of their principals (taxpayers, citizens).

    They bound taxpayers to unpayable, actuarially impossible contracts.

    Everyone of these contracts needs to be “voided,” and the benefits need to be cut to what is available to pay for them.

    This would be justice in every sense of the word.

  • Mark Buehner

    They DOUBLED our state income tax this year. Doubled. And we’re in worse shape. This should be the banner Republicans fly for why they reject tax increases. The engine room is on fire, raising taxes is equivalent to spraying fuel into it. The more money we give them the more they spend, that is a fact. The very best (political) argument against raising taxes on ‘the rich’ is that we wont raise a dime more taxes on anyone because you will simply spend it. That is the unblemished history of the democratic party, more is never enough.

  • Mark Buehner

    Also- the toll collectors in this state make over $20.00 an hour. And of course have gold plated benefits and pensions. Just… i mean come on! You could fire all of them tomorrow, train a new bunch in 2 hours, pay them the minimum wage that that job actually demands and save millions. Ughh, this state is doomed.

  • https://www.facebook.com/ritchietheriveter Ritchie The Riveter

    Charles R. Williams … how about we give the upper-level administrators who were as much a part of gaming the system as their union allies and legislators were, more of a “haircut” than the rank-and-file teachers and custodians?

    More important, get IL government out of the areas of decision-making that do not directly pertain to securing the unalienable rights of IL citizens, so we have the money to keep the current pensions funded until structural changes to the pension benefits/funding that are less costly and fiscally sustainable can be made for future retirees.

    That change might include simply having public employees responsible for securing their own retirement, with the cost of doing so reflected in their salaries so that it is today’s expense rather than a deferred expense the politicians can mortgage now for votes and campaign cash.

    And that has another benefit … as Daniel’s post graphically demonstrates, many of our public workers were encouraged – if not compelled – to “outsource” their future to the decisions of others, instead of retaining the ability to secure their future by their own initiative to the maximum practical degree available. Yet another case of how delegating such authority and responsibility to alleged “experts”, under the assumption that ordinary people are incapable of making such decisions themselves that is a foundation of the Blue Model paradigm, has left many people worse off.

    Getting public employees out from under the Blue Model pension paradigms would restore that ability.

  • Dotar Sojat

    Immediately recalculate every public sector pension payment so that it is based on an average of the last three year’s BASE salary, exclusive of overtime, bonuses, and all promotions in the last 12 months before retirement. Immediately revise all public retiree health plans to require a modest co-payment, as in all private sector plans. Dollar for dollar reduction in pension payments for every dollar earned in a subsequent public sector job.

  • teacher

    as a teacher – we saw this coming in 10 years ago….

    my payment for my pension is 9 % – the illinois legislature was supposed to support that…..(they said, not this year – we will “ramp up” the payments in the future…

    they did not, for years, reach their minimum obligation…

    then the illinios governor raided the fund for 3 billion, (he promised to pay it back)

    cushy pension ? I dont get social security – maybe we should end that, too…..

  • WJW

    I don’t see what the problem is. Illinois should simply default and offer its bondholders 40 cents on the dollar.

    Within a year, Illinois could re-enter the capital markets as it could plausibly say that its debt has been reduced by 60%.

  • http://www.miserabledonuts.blogspot.com LTC (ret) John

    Gee, thanks for reminding me I live in a state that sells debt at worse terms than Mexico.

    Its a race between us and CA to see who breaks first.

  • Mark

    So much pain is coming I just can’t come up with the venom anymore. I hate to see a guy in his 70’s take a haircut in his pension, but is it fair to destroy the future of a 20 year old to keep the old guy comfy?

    Illinois is failing. It will be a rough ride down…

  • CR

    “So who will get stiffed, the bondholders or the public sector retirees?”

    Yes. Everybody loses in this scenario. The bondholders who put their money into what they thought was investment-grade paper now find thenselves holding junk. Meanwhile, the resulting financial crisis resulting from the suddenly unsaleable new paper means that benefit payments will necessarily be cut. Deeply! And there is simply not enough tax revenue to be raised to make up the difference; Wisconsin and Indiana are too close and you cannot close the borders to capital and wage flight.

  • Mark Buehner

    How about folding the whole thing into FICA like it should have been in the first place so they people who’s salaries we pay get the same ‘retirement plan’ the rest of us have been forced into? Then offer 401k matching. You know, like virtually everybody else has.

  • Darius Thomson

    I came here to say what Art Deco said. Fiorello LaGuardia was a lifelong Republican, of the Progressive “Radical Republican” variety.

    … Also, that’s the irony of FDR- is that he was essentially a Democrat who ran as a Radical Republican, and who stole their mojo.

  • willis

    “With public-sector unions fighting tooth and nail to preserve their cushy benefits and expensive pension plans…”

    What does it mean to fight to preserve their cushy benefits? One assumes the benefits are to be paid in money, correct? Without money, and their pension fund is without money, no benefit will be paid. Again, without money, there is nothing to fight to preserve.

    As for the strawman argument that a lot of these public employees really are honest, hardworking folks who really do deserve their pension, I say again, so what. Deserving does not equate to funding. Without money, you can’t pay them. Read our lips, there is no money to pay them. Right or wrong, fair or unfair, there is no, nada, zilch, money.

  • Georgiaboy61

    Re: “But every paycheck for the past 30 years I have coughed up 8% of my pay to buy a pension. But the state legislature for those 30 years wasn’t coughing up their share. Now I am a victim of that Ponzi scheme but all I read about is that it’s my fault, fat pig unionist that I am portrayed to be.”

    Daniel, government made promises to you it cannot keep, and had no moral right to make in the first place. In other words, you were cheated. Welcome to the club – and don’t forget to stock up on tar and feathers!

  • BigM

    Eastwood was brilliant. Obama’s head was cut clean off and the liberals still haven’t realized it.

    Obama is an empty chair and Biden is the intellectual leader of the democrat party. I laughed so hard I started to cry, like Oprah then I stopped… and realized 23 million Americans are unemployed and started to cry again.

    It doesn’t matter if you are Republican, democrat or Libertarian. In America when they don’t get the job done we gotta let them go. Obama has failed, time to let him go.

  • Jim.

    @Charles R. Williams-

    Owners of this debt, tuxedo-wearing rich people?

    I would bet that more Illinois state debt was owned by private-sector workers saving for their own retirement than by anyone who’s worn a tux since their senior prom.

    Interest on public debt isn’t great, but it’s good for those near retirement (or in retirement) because it’s safe.

    …Right?

  • iamstopper

    Georgia Boy,
    So you paid 8% of your salary into your pension fund, let’s say you make 100k a year, so you put $8,000 a year into your pension fund and your employer puts another 8k in there for a total of 16k. Yet when you retire at age 52 you will get 80% of your last years wages, or 80k a year for the next 30 years. Can anyone tell me how that is sustainable? In the private sector I pay 6.5% for social security as does my employer, and when I retire at 65 I will get about $2,000 a month until I die.

  • Ed

    Warren Buffett, noted democrat party crooked crony capitalist, just sold off his investments in public financing insurance. Another democrat party super-thief, George Soros, is buying vast amounts of gold.

    I’m guessing these rats are jumping ship ahead of massive California and Illinois public sector collapses. O

    Or worse, if the Obamination steals enough votes to get re-elected.

  • Nathan

    @Georgiaboy61

    That’s a pretty reasonable answer, but Daniel’s complaint was also that he felt that he was being villified as a public sector employee.

    That’s a legitimate complaint as well and we should recognize it. (not critisizing your post)

  • ad23glk7

    What an incredibly misleading post. Those who follow Illinois politics closely understand the problem is a whole lot more complicated than that. Republicans in the statehouse aren’t holding out for more; rather, they are refusing to support a genuine pension reform for existing workers because it includes a VERY FAIR cost shift for future pension payments to school districts. Chicago taxpayers pick up the entire tab for their own teachers’ pensions, but they also pick up part of the tab for pension funds for downstate and suburban teachers. It is an extremely unjust arrangement.

    Yes, pension benefits are too generous; yes, reform is needed. But anyone who understands IL politics knows the problem is not just the so-called “blue social model.” Far from it. It’s also an incredibly bad tax structure and a state riven by regional conflicts, which makes honest and fair reform very difficult to achieve.

    Time for the conservative pundits to acknowledge that dichotomizing states into Red and Blue, Good and Bad, etc., is a highly oversimplified metaphor.

  • MaryOK

    #19. Teacher. In order to fund the $100,000 plus pensions my local high scroll teachers would earn at age 55, they would have to have about 2 million in their pension account to purchase an annuity to fund that income stream. There isn’t any way their contributions, even if matched faithfully bythe taxpayers, would support that.

    As for Social Security, well you made our point. All the legislature has to do to change it in any way is to vote on it. Social Security has been changed over the years by a mere vote. The courts have already ruled that our contributions are just a tax. They don’t guarantee anyone anything. That’s why teacher pension guarantees are particularly galling.

  • Albert_II

    I think that most state & municipal bonds are held by pension funds – public and private. Who gets stiffed when these governments default on their debts?
    We working-stiffs.

  • Bernie

    I am an Illinois state employee, a university professor, due to retire in the next 5 years. Professors are not usually unionized, I don’t belong to a union for example. I have paid my 8% of salary for 35 years and feel somewhat miffed that, while I have kept my end of the deal under which I was hired, the State has not. There were no sweetheart deals: the State just had to put the agreed amount into the pension fund every year. Politicians of both parties chose to put this funding into schemes of their own in the hopes of reelection and suddenly their duplicity becomes my problem.

  • Mike B

    For those who want the bondholders to get stuck rather than employees, are they even considering that the state or municipal governments might have to borrow in the future? Rich, fat people smoking cigars? How about grandmas, seniors, etc., who lent their life savings? The retirees aren’t the problem either. It’s the state politicians who allowd this to fester.

    In my opinion, the only way to solve this is by Federal help, as many of these state retirees opted out of social security for the state plans, so this is all they have. But the Federal help must come with a catch. 401k type plans going forward, not taxpayer funded plans. Stop the guaranteed returns. NYC teacher plans used to have a guaranteed minimum 8%(while the S&P index was flat for 10 years), prompting schools chief Joel Klein to quip, “the only person who got those returns was Bernie Madoff.” Join the real world.

  • Carlos Dourado

    It seems to me that with the majority of the big Democratic-controlled states (Illinois, California, New York, New Jersey) all on their way to going broke there will be a big push by a second-term Obama Administration to bail them out (in order to prevent layoffs of teachers, firefighters, policemen, etc). Thus, the citizens of states states that are well-governed and balance their accounts (generally governed by Republicans) will be asked to foot the bill for their proffligate brethren.

  • Standfast24

    Both parties have shown feckless leadership, however with Dems owned by PS Unions, they are loathe to bite the hand that feeds them.
    Expect no reform from Dems unless they fear losing their jobs, so send the bill to voters who deserve the leadership they vote for.

  • Grey-haired grump

    Were that it took only two to tango. The problem is of course political, requiring both Democrats and Republicans and voters to create. Too late to assign blame, except to say “Government.” Any economic enterprise that is not driven by profit is doomed to be screwed up, and Government is of course, in large part, an economic enterprise.

    Of course we humans need to be coordinated via Government, but seeing Government as the end-all, be-all has never been successful.

    At some point, and this has been proven over and over again since the dawn of man, some adult or adults must show up and fix the problem.

    Regarding “fairness,” a problem that has been created over decades probably is not going to be fixed overnight, but at least some solution being worked on is better than heading over the all-too visible and known cliff.

  • R. L. Hails Sr. P. E.

    Are there no adults in Illinois? This disaster did not start yesterday. There are government officials who have known about the unfunded obligations (no money to back their promises) for two generations. All of you voters who chose “my crook”, and subsequently saw him go to the penitentiary, now realize he may have swindled you, “Elect me and I will pour money over you,… later.” Crooks will do that, lie to you.

    The time for eating dog food has arrived, and the person to blame is in the mirror. You will find justice on the other side of the grave.

    Grow up and/or die. Stop voting for crooks; it has hideous consequences.

  • http://yahoo Steve

    Here’s the real issue folks, Illinois law requires bond holders be paid first…before ANY other state debts are paid. How will the state get around that…it’s in the State Constitution! Looks like the other interests that are due money by the State will be the ones to suffer. Why would any contractor risk doing business with this state?

  • richj1313

    I’m late to the game here, but Charles Williams, bondholders are not fat, rich guys in tuxedos, they are you and me and even more so, the elderly. Some are even Illinois Teachers. Because we’re pumping dollars into the economy by lowering rates to nearly zero, Municipal Bonds are one of the only low risk ways to earn interest on your retirement money. The choice is far worse than being between the retired teacher and a fat cat, it’s a choice between the retired teacher and all of the retired people that paid for that teachers salary and benefits throughout their entire lives. Nobody is against honest, hardworking teachers earning a good living, what they are against is being jobless, taking pay cuts and seeing their retirement funds disappear, while teachers are earning salaries and benefits that far exceed those available to everyone else, all on the taxpayers dime. Unions went too far. They got piggy when nobody was looking and now they are paying the price. There is an old investor saying that is fitting to the circumstance. Pigs get fat, hogs get slaughtered.

  • RMcgadden

    I keep seeing posts about how unfair this is, and maybe it is. This was done by the people Illinois citizens elected. It was not done in secret. Everyone knows these governments were operating on borrowed money. The people who kept voting these people in seemed perfectly happy to ride that gravy train. Then the gravy ran out. Now they see the folly of these policies. But it’s a little late to save now.

  • http://fat-city-usa.blogspot.com/ Walter Sobchak

    We owned some Illinois State Bonds paying 5.5% until June. They were called because the state could refinance them at 3%. I was thrilled to get the cash.

  • Steve in SoCal

    As a Cali guy, let me add my two cetns.

    The “blue social model” is just that. . model. It will never work. Take a look at the states with problems. . .NY, Cal, IL, MI, NJ . . .they’re all blue states (NJ & my home state of MI recently changing).

    As for IL, and “both” parties? Would that be the live voters and the dead voters? IL is as blue as you can get, with enough graft that dwarfs several small countries GDP. IL has always been a place to pay to play. .

    Even in a place where you give jobs to friends to get contributions. .. at a certain point, if you don’t pay them more but want more in taxes, even the dumb ones at some point will say no. Why is this so hard to figure out.

    Everything needs to be recalibrated and until a large city or state file BK to test the laws, this problem won’t be solved.

  • Bernd

    Very simple problem. Unionized government employees elected politicians who promised them retirement benefits, but did not make those employees, or the taxpayers contribute enough money to keep those promises.

    So unionized government employees elected politicians who lied to them, chose to believe those lies, and expected taxpayers to foot the bill to cover up for those lies.

    Household finances are not in anything close to good enough shape to tolerate the tax increases needed to make up the shortfall between the promises and the available cash. Therefore public employee pension benefits are simply going to have to be cut back until they match the assets in the pension funds.

    Once that happens, one more reform is needed. If public employees want lavish pensions, then they should be responsible for contributing everything required to fund those lavish pensions without any taxpayer funding. Asking taxpayers to fund pensions for government workers when we are struggling to fund our IRA’s on our own will simply not fly.

    Sorry – no free lunch. Not on our nickel.

  • John Nelson

    What will make this election truly hilarious will be the Democrats not learning anything from defeat. They will not try to correct their relationship with public sector untions. On the contrary, I suspect Democrats will double-down on stupid by increasing their ties and reliance on the SEIU and AFSCME goons.
    I’m enjoying every minute of it.

  • ELF

    Illinois voters must immediately vote for a 0% income tax, a 0% sales tax, and 0% property tax! State services can be paid at a local level!

    Our children have no obligation to pay for the false promises, or the purchases of votes by previous Democratic politicians

  • Jazzee

    I find it interesting that the union members posting KneW the state was stealing their pension money and still just went along to get more…how can you now want the taxpayers in all states to bail you out? Some union members pay zero pension/healthcare costs..8% into a pension it’s your pension why should I as a taxpayer pay more than you? ALL UNIONS knew of these problems no matter what state and did nothing just demanded more and more…sorry no tears for any of you

  • Ton Tuttle

    “as a teacher – we saw this coming in 10 years ago….

    my payment for my pension is 9 % – the illinois legislature was supposed to support that…..(they said, not this year – we will “ramp up” the payments in the future…

    they did not, for years, reach their minimum obligation…

    then the illinios governor raided the fund for 3 billion, (he promised to pay it back)

    cushy pension ? I dont get social security – maybe we should end that, too…..”

    SS costs 12.4% a year, not 9%. I’m sure if you compare SS benefits to your pension, you are much better off. They lied, you were cheated. Why is that my problem or fault? In the end you thought that paying in 9% and getting better benefits than SS, which is $45.9T in the hole over the next 75 years, was going to work out for you? Maybe that works if the government pays its fair share, but I doubt it. They lie and yet we keep voting them back in.

  • bflat879

    I’ll bet Scott Walker is going to be looking a lot better and a lot smarter before long.

  • Illinois Professor-non union

    Illinois workers have paid their contributions into the system while Illinois has not. Illinois doesn’t pay social security for most workers and has not put that money into the pension systems.

    The number of Illinois state employees has gone down over 15 years while the number of people the state serves has gone up.

    Illinois has grown and micromanaged education because that is what the people of Illinois voted for.

    Unionization is at an all time high in the state because everyone is afraid of the politicians and you cannot get a raise unless your in a union.

    Blago brought a renewed cronyism and politically charged atmosphere to the state.

    The capital building programs in Illinois never end. From building community centers in Chicago to the World Class Shooting Center in So. Illinois the money flows in Illinois.

    Glad handing didn’t stop when Blogo went to jail – or Ryan, or Walker and on it goes…

    So please spare me the uneducated blathering about unions and put the blame where it lies — politicians spending pensions….

  • Nearsighted

    Sorry, no time to comment. While my public “employees” are relaxing this Labor Day weekend, I’ll be working night and day to pay for them. The last of MY pension withered when Govt gifted GM to the “private” unions. (stoopid bond buyer… sigh.)

    Long before WRM conjured the Blue Model, Dad (and others workin stiffs) boiled it down to 13 words: “It’s Big Business, Big Unions and Big Government against the rest of us.”

    Happy Labor Day.

  • FBanta

    The laws of Nature are self-policing.

    It takes the taxes on 16 private sector jobs to fund 1 public sector job. There are 110 Million private sector jobs in America today: enough to fund 7 Million public sector jobs. There are 22 Million.

    15 Million (68%) are funded by debt and as falling credit ratings demonstrate, that’s unsustainable.

    61% of US debt in 2011 was monetized by the FED with worthless scrip as part of a monetary policy that has stripped the dollar of 50% of it’s value since January 2009. That’s a 50% universal tax.

    Two things will happen: public sector wages and benefits, now averaging as much as 2X their private sector counterparts will be cut; as will the number of public sector jobs – to sustainable levels.

    This isn’t political, its simple math. The Laws of Nature are self-policing

  • Dan Hill

    Its quite simple – voters in Illinois, California and other bankrupt states:
    1. Quit complaining
    2. Quit voting for Democrats

    You keep voting for the Democrats who are bankrupting your states – and then complain about the results. Hard to feel sorry for you!

  • Charles R. Williams

    Jim and Mike B

    I was exaggerating about the rich guys. But as a matter of fact state and local debt is held by high income individuals to avoid taxes many of whom live outside IL. Since I view the question of who gets stiffed as a political question, it matters who the potential winners and losers are and how they will be portrayed. The just solution is a separate question entirely from what political solution will emerge.

    In my view there is only one way for Illinois to make good on its promises. That would be a one time levy on all private real estate in Illinois sufficient to fund its debts and liabilities. The advantage is that no one escapes and there is no burden on future economic activity. I do not think this will happen. The politicians will kick the can down the road until it is too late to avoid catastrophe. At that point granny will get most of her pension and unsecured bondholders will get blown away.

    My sympathies lie with granny in the school cafeteria and the non-union professor. The citizens of Illinois have supported the wrong politicians so they will pay a heavy price. That’s democracy.

  • Gregory Cogan

    I agree with President Franklin Delano Roosevelt, who wrote, in 1937:
    “All government employees should realize that the process of collective bargaining … cannot be transplanted into the public service.”

    F.D.R.’s wise and virtuous public policy was rent asunder in the 1950’s and 1960’s when (as Woody Allen noted in “Sleeper”) “a man named Albert Shanker (the head of the United Federation of Teachers) got hold of a nuclear warhead.”

    But, seriously folks, it has been since the 50’s, 60’s and 70’s that the majority of union members have become public employees.
    Since then, California, Illinois, Rhode Island and many other states have become increasingly insolvent and are headed down the road to bankruptcy.
    The unfunded liabilities for bloated public employee pensions are in the trillions of dollars.
    And more than 1/5th of all Federal Government employees have a salary of more than $100,000 per year.

    The Republicans have the right idea.
    Stop over-feeding these porcine poachers at the public trough.

  • Dave Rohlman

    I thought of this in regards to this issue:

    The Roman Republic fell, not because of the ambition of Caesar or Augustus, but because it had already long ceased to be in any real sense a republic at all. When the sturdy Roman plebeian, who lived by his own labor, who voted without reward according to his own convictions, and who with his fellows formed in war the terrible Roman legion, had been changed into an idle creature who craved nothing
    in life save the gratification of a thirst for vapid excitement, who was fed by the state, and directly or indirectly sold his vote to the highest bidder, then the end of the republic was at hand, and nothing could save it. The laws were the same as they had been, but the people behind the laws had changed, and so the laws counted for nothing.
    –Teddy Roosevelt

  • bob

    I was a union worker in the IAM for 38 years.
    We had skin in the game…We knew if we got too greedy, our future would be in jeprody as our company would not survive. We had to make a profit (like in CAPITALISM) We did force the company into bankruptcy and lost a good piece of our pension. This is so different from public sector unions.

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