The Real Pension Obstructionist: A Letter to a Legislator

Pension Obstructionist: Chicago Tribune

Dear Representative and Senator,

We do not often get second chances, but all of you in the General Assembly are about to be granted another test of your allegiance to the Illinois Constitution and your political fortitude to find real and honorable answers to the Illinois “pension crisis.”

Let’s be clear about one real truth.  No matter how many of you are singled out and castigated by the Chicago Tribune for being hesitant or even thoughtful, the egregious falsehood perpetrated by the corporate media – even without Koch brother ownership – is the following: a characterization that budget woes in Illinois are a result of “diverting money from education and health care and other essential services to preserve pension benefits that are crushing the state” (Tribune Editorial  June 16, 13). 

That’s an untruth, Representative and Senator.   You know it and I know it.

Having to pay down a $100 billion debt on past avoidance (not diversion) of making required pension payments is actually what’s financially crushing the State of Illinois.  In fact the normal costs of pension payments have remained quite static or, as in last year, even less. 

The Tribune editorial board and Bruce Dold, always a willing messenger for the Civic Committee of the Commercial Club of Chicago, have enacted this falsity in order to avoid the very real financial remedies available to any state, but not one like ours -  subjected to the onerous dictatorship of a single politician like Speaker Madigan. 

Notice how the Tribune always combines the debt payment and the normal costs to make its specious points?  By not separating the two, the normal person does not realize a re-amortization of the debt owed for stealing pension moneys could be paid off without the crazy and punitive climbing cost developed by the General Assembly (with help fom the corporates) in 1995.  Why isn’t Madigan or someone promoting that possibility? 

And if you think that Speaker Madigan is about to allow you as an elected official to think independently about what is possibly unconstitutional, or what is immoral, what is financially possible or ameliorative, think again.  He has eviscerated the union backed bill SB2404 to hold over the head of Senate Leader Cullerton – a childish and twisted parody of Solomon.  Extreme power without wisdom.

Will the Representatives in the House scurry under the domination of the Speaker and vote “aye” on his new machination?  Will my own Representative fall into line as she did so easily with SB1?  I hope not.  I hope that she and others realize that another forced vote on a mutant original bill is a slap in the face of not only thoughtful colleagues in the Senate, but a derisive and cynical demonstration of just how little the Speaker thinks of their offices – in both houses. 

Will the Senate also allow SB1 reviving life and fall into line with the leader's dark vision in the other house? 

I wish you well, and I wish you the strength to look for better answers to the financial hole Illinois politicians (not public workers) have excavated for nearly eighty years.  

Sincerely,

John Dillon

Ernesto's Governor Ratings: Wake Up Worker!

Ernesto Ratings: Welcome to (south) America

Ernesto, a gentleman from a Latin country who is a good friend of the family, often schools me about the strange and mistaken notions of middle class Americans like myself.  Many servants raised Ernesto south of the equator with his wealthy family in the hills overlooking the multi-colored roofs of the crowded city below.  There were no confusions in Ernesto’s world.  There were classes, classes that were clearly delineated not only by the clothing one might wear but also the future one could expect to have.  Things were clear.

“Here,” he would remind me in carefully selected words, “people do not respect or understand the nature of and the need for classes.  This is a problem, and it breeds distrust and frustration.  Ironically, you pseudo-intellectuals actually believe you can make things work differently here, but of course you cannot.  Once you accept this truism, the frustration that comes of false expectations will cease and life can go on peacefully.”

For Ernesto, social contracts (like pensions, Medicare, Social Security, public schooling, etc.) are merely mistaken promises that assuage the needy and undeserving.  But Ernesto is also quick to remind me, he does not need any of my middle-class offerings.

“Why should I pay for your pensions?  Or anything else for that matter?  I do not need your schools – my children are educated privately.  I do not need your medical or retirement programs, because I have taken care of my family and myself in far better fashion.  I don’t need anything you might provide.

“Fire Department?” I counter.

“I have a superior sprinkler system.”

“Police?”

“We have our own security systems, safe rooms, and private officers on the grounds of our gated community Diamond Arbor.”

And when it comes to government by the people for the people, Ernesto can bring the pain. 

“You think the next governor of Illinois will care about you, your pensions, those who need medical assistance, public education, or anything else I consider welfare?  Think again”

Dan Rutherford, a business executive and one-term treasurer for the State of Illinois has thrown his hat into the ring for 2014.  By the way, Mr. Rutherford is also a member of the American Legislative Exchange Council (a.k.a. ALEC). Also, according to Project Vote Smart, Rutherford is keen on Right to Life groups and the Illinois Policy Institute is very keen on Dan, giving him a 100% score for following their positions.  Think beyond a 401(k), and you’ll lose Dan in any discussion of pensions. Ernesto Rating A.

Bruce Rauner, a self-made millionaire (unlike Ernesto), is a Tea Party favorite, or at least he is very generous to those who are.  He has financially supported prospective legislators like Susan Sweeney and others endorsed by Illinois Crossroads, the Tea Party organization in Illinois.  In fact, Rauner financially has supported gubernatorial candidate Kirk Dillard in the past, but probably not this time around.  On a recent WTTW interview, Rauner was reticent to discuss his actual positions regarding issues like abortion or same-sex marriage; this after saying he was a candidate who would speak openly and honestly.  He also preferred a broad brush 401 (k) for all public workers.  He never discussed whether Social Security would be a problem.  Ernesto Rating A+.

To say Kirk Dillard is appreciated would be an understatement when it comes to the NRA, Chamber of Commerce,  American Conservative Union, Illinois Manufacturers Associaition, Illinois Policy Institute, and Illinois Churches Association.  Kirk does not fare so well with union organizations, independent voters groups, Planned Parenthood, or the Illinois Environmental Council (Project Vote Smart).  On the other hand, long time assistant to BIG Jim Thompson and leader of the American Legislative Exchange Council in Illinois, Kirk earned Ernesto’s A+ rating.  (Why would IEA give this guy $35,000?)

Senator Bill Brady is owner of a home construction outfit who promised last time to “cut a dime from every dollar of the state budget” (ballotpedia).  Last run at Governor was marred by the information that Senator Brady endorsed a bill allowing euthanizing multiple animals in one area (box).  The Illinois Policy Institute is enamored of Brady, giving his a 100% endorsement on Project Vote Smart.  He is also revered by Illinois Gun Owners Organization, the Illinois Manufacturers Association, the NRA,  and the American Conservative Union.  Ernesto Rating A+.

William Daley, a failure in multiple areas on the Federal level (Gore’s unsuccessful bid for the Presidency, Chief of Staff for Obama after Emanuel) was truly what big business needed when Clinton was in office, and he spearheaded the North American Free Trade Agreement (NAFTA) which has done so much to those with so little in our country.  Success for Daley has come in his financial affiliations depite the hard times following the 2007-08 collapse of housing markets.  “A longtime banker and businessman, Daley headed the Amalgamated Bank of Chicago, served as president of SBC and later held top positions at JPMorgan Chase….On pension reform, Daley favors a proposal that would require workers to pay more toward their retirement, scale back the automatic annual 3 percent compounded increase in retiree checks and raise the retirement age” (http://articles.chicagotribune.com/2013-06-11/news/ct-met-illinois-governor-race-0611-20130611_1_pension-reform-bill-daley-income-tax-rate ).  Ernesto Rating A++.

Lisa Madigan was a senator in Illinois and is daughter of Speaker Mike Madigan.  Ernesto does not expect her to win.  “She’s a woman for God’s sake.”  He also feels past associations with Acorn and meager attempts to put bank foreclosures on stall or slow motion will destroy her possibilities with the business community.  Ernesto rating: C+.

When I asked why that passing rating, he responded matter-of-factly, “Don’t forget her Dad.”

“By the way, my pseudo-intellectual friend,” Ernesto summarized with a nice sip of Pinot Noir, “if you think any of these American political leaders are interested in those who depend on the social contracts made, you need a nice fitting straight jacket.”

Forget the Gun; Take the Pensions

Forget the Gun; Take the Pensions

(Please forgive the classical allusion and sudden jump to modern media...)

In The Odyssey, the tired and war-beaten protagonist is told that to find an answer to his present dilemma, he needs capture by hand a shape-shifting god and hold him until all of his various forms have been exhausted.  At that point, the god may cower and agree to deliver potential resolutions to his perpetual predicament.  Ah, to be Odysseus, or even to live in a world of real gods.

Today, the very lesser gods of the General Assembly convened for a working lunch, but they remained shape-shifters in every sense as effective as our old hero’s god Proteus, whom Odysseus finally overcame.  Would it were so for the hundreds of thousands of state employees (millions counting families), who work and wait, never knowing when or what will happen to their financial futures given the arbitrary and capricious forces that swirl in Springfield.

Three very different fellows populated lunch, although all three swear (to the media) to be close party friends.  One is an ersatz leader looking for any solution from the other two to make him look potentially as a front-runner.  Another, who worries about legal ramifications (after all, he is a lawyer), holds on to the argument that giving choice or consideration will pass constitutional scrutiny, especially with unions signing on.  Finally, the last gourmand has little in common with either of the others, hoping the first one’s political self-immolation will provide a four-lane avenue for his daughter’s ascension to the state mansion, and the second’s sleeping with the enemy will provide him with coveted acceptance with the Civic Committee of the Commercial Club of Chicago.

Imagine the dinner at Louis’ Restaurant on the West Side.

Gov. Quinn – I’m glad you came, Mike.  I hope we can straighten everything out.  I mean this is terrible… It’s not the way I wanted things to go at all.  It should never have happened.

Speaker Madigan – We’ll straighten everything out tonight.  I don’t want my people bothered anymore.

Senate Leader Cullerton – They won’t be, Mike.  I swear on my children they won’t.  But you gotta keep an open mind when we talk.  I mean I hope you’re not a hothead like that IRTA guy Elman.  You can’t talk with him.

Gov. Quinn – Ah, he’s a good kid. (leans forward and offers handshake) Sorry about the senate vote on SB1, but you know how it is.  Getting’ old and grouchy.  (Frisks Michael)

He’s clean.  

Senate Leader Cullerton – Good.

Gov. Quinn - Whaddaya say we combine the two bills together like before.  We put SB1 in front and SB2404 in back, tandem like.  If one don’t work, we can maybe get the other through?

Senate Leader Cullerton –  We’ll maybe they’ll take that.  I dunno.  Unions might not like being used, ya know?  But I can try it…

Gov. Quinn - How 'bout it, Mike? 

Speaker Madigan – They deserve it.  Sounds good to me.  By the way…I have to go to the bathroom.  Is that all right?  (Madigan heads toward the bathroom while the other two sit and eat quietly)

Chances are the union will not love this new hybrid at all, but after helping in the generation of SB2404, they may find themselves in the awkward position of not backing the “tandem” bill, or hoping that the bill’s passage fails but the secondary does not, or trying to disagree with any changes offered to them by good gangster/bad gangster act called Cullerton and Madigan.  Decisions, decisions.  Especially when you’ve helped craft half of what might kill you.  No pun intended, but when your healthcare is part of what you might give up, and you’ll pay more for lesser coverage anyway – that just might kill you. 

Whatever form of proposed legal maneuver to avoid the required payment for stolen moneys from pensioners and refusal to find real revenue answers for the state’s structural deficit problem have yet to appear.  You can bet that was not a topic of conversation over the cannoli.

According to WTTW Chicago Tonight, Governor Quinn was satisfied that both leaders of the General Assembly were “good friends” and “the meeting was pleasant.” 

Of course, real Mike hasn’t emerged from the bathroom yet...and that might just kill you.

Governor Quinn as SuperNanny: Time Out for a Summer Session, You Two!

Governor Quinn as SuperNanny: Time Out for a Summer Session!

Tomorrow, June 4, Governor Quinn will put both Senate Leader John Cullerton and House Speaker Madigan into their naughty chairs and a good time-out for misbehaviors this last spring.  In fact, it is suggested in various media that Quinn will force (ask) them to hold a summer session in order to get a pension “reform” bill passed. THIS JUST IN: Sorry, Governor, Madigan will be out of town.

According to the Illinois Government News Network, Quinn is on the verge of anger: “Today’s downgrade is no surprise. As I have repeatedly made clear to the General Assembly, this will continue to happen until legislators pass a comprehensive pension reform bill, and put it on my desk.

“Every time the General Assembly misses the deadline, Illinois’ credit rating is downgraded, which hurts our economy, wastes taxpayer dollars and shortchanges the education of our children.

“If I could issue an Executive Order to resolve the pension crisis, I would have done it a long time ago. But I cannot act alone. Legislators must send me a bill to get this job done.

“I plan to meet with the Speaker of the House and the Senate President tomorrow.

“I will keep fighting for pension reform until it is the law of the land” (^{http://www3.illinois.gov/PressReleases/ShowPressRelease.cfm?SubjectID=2&RecNum=11247}).

Sounds pretty tough.  And we all know how active and forceful the Governor has been in finding a solution to this problem of paying back the $billions owed to pensioners in Illinois, money taken from them by earlier Governors and, well, the very people who will be getting their time-out.

The fall-out for inaction has been quick in coming: various legislators are emailing to say they tried to do the right thing in voting yea for what would possibly and probably be an illegal assault on the constitutional protections afforded the victims of the pension thefts.  For example, Senator Dan Biss complained, “When this legislative session began, perhaps the clearest point of consensus was that we had to address the fiscal burden placed upon the state by our enormous pension debt. Given this universal agreement, it is quite simply unacceptable that we adjourned without making any progress -- this is a terrible indictment of our poor performance as legislators, and it will further a viciously unfair fiscal and psychological burden on public employees, taxpayers, and those who rely on state services” (^{http://senatorbiss.com/index.php/component/content/article/1-latest-news/107-a-disappointing-legislative-session} ).  

Perhaps Senator Biss overlooks some of the PTSD suffered by the million pensioners and families in Illinois who are assaulted on a yearly basis, not to mention their very real version of a forthcoming "viciously unfair fiscal burden.”  

Meanwhile, pundits are describing the inactivity in Springfield as a carefully choreographed dance by the two General Assembly leaders to assure potential gubernatorial candidate Lisa Madigan with an opportunity to attack Quinn’s strongest suit: ineptitude.

And Quinn?  He’s as clear as ever at avoiding any real leadership, calling on someone, somewhere, to do something, anything…  Which bill Governor?  He can’t say because showing any favoritism to either of his two “naughties” might threaten his constant act of imploring with some real decision-making. 

Finally, today Fitch Ratings did exactly as we knew they would after the General Assembly’s inability to legislate (that includes marriage equality, fracking, etc.).  Fitch lowered the bond ratings once again, making any attempts to raise funding for projects or even pensions more expensive.  According to the Tribune, “’Fitch believes that the burden of large unfunded pension liabilities and growing annual pension expenses is unsustainable, and that failure to achieve reform measures despite the substantial focus on this topic exacerbates concern about management's willingness and ability to address the state's numerous fiscal challenges,’ it said in a statement.” (^{http://www.chicagotribune.com/business/breaking/chi-illinois-debt-rating-20130603,0,6980287.story} ).

Nearly two years ago, Pension Education offered an explanation of how Bond Ratings can affect taxpayers and the State of Illinois.  Please see Reprise below.

Reprise: State Bond Credit Rating

Noun.  When deciding the reliability of an individual, corporation, or government to repay borrowed debt, certain companies provide ratings or grades for such levels of trustworthiness.  For you and me small consumers, we look to a FICO credit score that pinnacles at about 900, while most good borrowers remain in the 700’s.   The higher our credit rating, the more easily we can secure a loan or even reduce costs of repaying interest (that last point is extremely important). 

A state government like Illinois, on the other hand, is dependent on grades that are eerily similar to those we received in school, except the range is A – D.  The grades given to state issued bonds by private independent rating services like Fitch Ratings, Moody’s, or Standard and Poor’s indicate their credit quality.  In short, the grade reflects the state’s ability to repay the original amount borrowed along with interest in timely manner.   The ratings of the different companies may not necessarily be identical for a state, but movement from one grade level to another is considered significant.  (Remember the response to Standard and Poor’s downgrade of the U.S. Treasury Bond this last year.) 

“Bond ratings are expressed as letters ranging from 'AAA', which is the highest grade, to 'C' ("junk"), which is the lowest grade. Different rating services use the same letter grades, but use various combinations of upper- and lower-case letters to differentiate themselves.

To illustrate the bond ratings and their meaning, we'll use the Standard & Poor's format:

AAA and AA:  High credit-quality investment grade

AA and BBB:  Medium credit-quality investment grade

BB, B, CCC, CC, C: Low credit-quality (non-investment grade), or "junk bonds"  

D:  Bonds in default for non-payment of principal and/or interest” (www.investopedia.com/terms/b/bondrating.asp#ixzz1io89yfQW)

Illinois is unfortunately not alone as states and especially cities and municipalities struggle with the fallout of the Great Recession.  Downgrades will no doubt persist for the near future; indeed, with shortfalls in payments and pension obligations due to past under-funding, Illinois has now edged aside California for the worst credit rating of all the states.  Such a dubious distinction comes with more than just an ugly metaphorical sash – remember, borrowing money, which all states do, will come at a much steeper price.  It is the vicious circle of down grades costing vulnerable states even more that exacerbates the monetary pain.  And, sadly, as the state pays more for its needs, we citizens of the state of Illinois pay more.

Illinois is one of seven states in the United States still operating under a regressive flat tax rate and a tax payment schedule that undermines cash flow (https://sites.google.com/site/pensioneducationsite/home/recent-commentary).