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Blue Civil War: Rahm Takes on Pension Lie

Obama's Chief Of Staff Rahm Emanuel Addresses The Media At The Capitol

Mayor Rahm Emanuel wants to fix Chicago’s harrowing pension crisis, but he has few allies to work with in this deep-blue city. His problems are daunting: Chicago has one of the worst-funded public pension systems in the country, with bills for a $24 billion liability beginning to roll in. A state mandate is forcing the city to double its payments into police, firefighter, and other pension funds, and Illinois law will soon require Chicago schools to resume regular payments to teachers’ pensions, which will eat up 8 percent of the city’s education budget.

Mayor Emanuel, never one to mince words, called this system what it is—a big fat lie:

Mr. Emanuel’s assessment: Workers are paying into a retirement system that makes unrealistic promises, and the city is offering benefits it can’t pay. “The system today as constructed is not honest to the employees and is not honest to the taxpayers,” he said in a recent interview. […]

“There’s a set of choices. Reform pensions and continue to be able do other things that are essential for a great city—or make pension payments and do certain things to the rest of the budget that are not part of a great city,” Mr. Emanuel said.

Mayor Emanuel deserves praise for honesty about his city’s pension crisis, not least because his position is a lonely one. Attempts to negotiate benefit cuts with labor unions have already failed and seem likely to continue to fail. The state legislature is unlikely to empower Emanuel to make the necessary benefit cuts; Illinois lawmakers have proven reluctant to get their own fiscal house in order. And funding pension payments through a whopping 150 percent increase in property taxes is an option the Mayor understandably doesn’t even want to consider. One of these boughs is going to break eventually. It’s anyone’s guess which one.

Ultimately, Chicago is only the opening battlefield for the Blue Civil War in Illinois. The state has a $100 billion unfunded pension liability and $9 billion in unpaid bills. The push for reform, according to Reuters, begins today. Via Meadia will be watching.

[Rahm Emanuel image courtesy of Getty Images]

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  • David Venne

    Get Nobel Prize-winning Op-Ed columnist Paul Krugman to come up with a solution. He’s great at with make believe math.

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