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The Sick Man of the States

People are beginning to compare Illinois to a country famous for things beginning with S: Sophocles, Socrates, and sovereign debt. That’s right; according to the Economist, Illinois may be the Greece of America. More:

Illinois is like Greece in one obvious way: it overpromised and underdelivered on pensions and has little appetite for dealing with the problem, says Hal Weitzman of the University of Chicago Booth School of Business. This large Midwestern state, with a population of 13m (Greece has 11m, though a far smaller GDP than Illinois), has the most underfunded retirement system of any state and the largest pension burden relative to state revenue. It also has the highest number of public-pension funds close to insolvency, such as the one looking after Chicago’s police and firemen. According to the Civic Federation, a budget watchdog, Illinois has piled up a whopping $111 billion in unfunded pension liabilities (see chart), in addition to $56 billion in debt for health benefits for pensioners. The state devotes one in four of its tax dollars to pensions, which is more than it spends on primary and secondary education.

Will the state’s new Republican governor manage to turn it around? It won’t be easy or painless:

[Bruce] Rauner was elected on a promise that he would not make his predecessor’s temporary increase of income and corporate tax permanent. But he has not explained how Illinois will cope with the loss of more than $7 billion in annual revenue. Nor has he laid out any broader plans for fixing the pensions mess.

In 2015 Illinois will either sink further into a Greek-style morass of debt or start its long-delayed rehabilitation. Mr Rauner has warned of a rough 24 months ahead. “I ain’t going to be Mr Popularity for a while,” he says. Voters may not mind, if he is able to sort this disaster out.

However tepid your hopes for Illinois are after reading that, a new study on state corruption is sure to weaken them further. Harvard researchers asked local reporters how corrupt their state governments were, in terms of tactics both illegal (bribery and the like) and legal (like providing favors to campaign contributors). Illinois ranked among the worst offenders, along with “Alabama, Georgia, Kentucky, New Mexico, New Jersey, and Pennsylvania”; for these states, the “aggregate scores [were] in the highest quartiles of both illegal and legal corruption.” And as Illinois Policy notes with disgust, the state is also perceived to be more legally corrupt than illegally. With so many cronies profiting from its mismanagement, who will be willing or able to fix Illinois up?

Illinois has one other thing in common with Greece—it not only produces great deficits, but also great statesmen. And of course, the land of Lincoln was also the political proving ground of Barack Obama. It could sure use some inspiring leadership from its former senator right now.

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  • Pete

    No federal bailout!

  • Anthony

    “Natural human sociability is based on kin selection and reciprocal altruism – that is, the preferences for family and friends. While modern political orders seek to promote impersonal rule, elites in most societies tend to fall back on networks of family and friends, both as an instrument for protecting their positions and as the beneficiaries of their efforts….While everyone in a modern democracy speaks the language of universal rights, many are happy to settle for privilege – special exemptions, subsidies, or benefits intended for themselves alone.” (Francis Fukuyama)

    Illinois just has a longer unbroken string of the above human behavior (illegal and legal) as cited by Harvard researchers. To that end, said history plus interparty (combine) participation brings us to present. Question becomes (not can Bruce Rauner turn it around) are Illinoisans willing to sever their own complicity (state wide)?

  • jeburke

    I’ve always had a problem with the concept of “legal corruption.” Is accepting campaign donations from wealthy individuals who might (or might not) later seek a meeting with you to press the interests of their industry more “corrupt” than canvassing for small donations from thousands of individuals who are eager to see that same industry scorned? Is embracing legal, indirect help from a “superPAC” set up to advocate for this or that set of public policies really “corrupt” at all when concern about it stems largely from people who oppose the policies advocated?

    Illegal corruption is vastly different. It’s illegal because everyone agrees that selling your vote for cash you stuff in your own pockets should be illegal.

    Studying and reporting on these two forms of putative “corruption” in the same breath is very misleading.

  • Jmaci

    Holy cow! Don’t include Barack Obama in a paragraph about the great statesmen produced in Illinois. With all their other mistakes, Illinoisans don’t need to be reminded about the one they groomed for the White House.

  • FriendlyGoat

    One would think the home of the Chicago Mercantile Exchange could figure this out, especially since it sits inside the most prosperous country on earth which is flirting with the highest total equity valuations ever seen. Greece, you say?

    But, we’ll COLLAPSE if we don’t give both private and public pensioners the finger while simultaneously cutting some more taxes for the top half of one percent of the country. EVERYBODY “KNOWS” THAT, (because we are told that every day).

  • Corlyss

    You corrupt the word in referring to Doofus as a statesman. He’s a party hack.

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