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.