Clueless? (Go Squeezy, Go!)
Remember that one wayward cheerleader back in school - some decades back
before the time high school cheerleading demanded athletic prowess or any
knowledge of rules and competitions?
I recall fondly the one cheerleader noticeably out of sync with all
the others, the same one who would cheer “First and ten; do it again” - at
the basketball game. (She was my
sister.)
Thank goodness for progress.
Governor Quinn has been promoting and cheerleading his own concept
of “pension reform” this year with the abandon and enthusiasm not unlike my
earlier remembrances of an attractive but sometimes totally clueless
cheerleader. Well, avuncular if not
attractive.
Recently, Lou Lang, a senior Representative from Skokie, suggested adopting
a new plan to address the massive debt of Illinois to the pension systems by
making the (2011) 2% tax increase permanent, in order to eliminate the nearly
$100 billion debt owed to the five public sector systems after decades of
borrowing by the General Assembly.
Representative Lang is not the first to question the misuse or
underuse of the additional 2% income tax increase passed in the lame duck
session of the General Assembly of 2011.
In fact, Republicans have been threatening to stall or, if possible,
overturn the continuation of the 2% increase when it sunsets in 2015. Many legislators have decried the Governor’s cavalier
use of the funds to fuel specialty undertakings and other pet projects. The amount, they say – nearly $8 billion
annually – could be put to much better use.
Block that kick!
Governor Quinn strongly disagreed with Representative Lang’s
suggestion to use the 2% income tax increase to pay down the unfunded
liability. In his argument, the Governor
said that “a pension fix needs to have more reforms than simply additional tax money”
The only reforms the Governor has so far agreed to and promoted through
reptilian metaphor are benefit cuts. But
there’s a problem. All the “Squeezy” reforms
– or the cuts to benefits for active and retired teachers – will meet only
about 25% of the needs to meet the required payments to the unfunded liability
debt according to the Center for Tax and Budget Accountability.
Also unsettling, the subtext of the Governor’s response displays not
only a desire to retain the increased income tax but also a refusal to use it
for paying down the unfunded liability.
Note how he also states that Lang’s plan is suspect because it only
moves the unfunded liability to 80% rather than the 100% Quinn has been told is
best. By the way, Fitch and other rating
agencies believe that 80% is quite acceptable for a public pension system fund
ratio. Without paying down the unfunded
liability, the State of Illinois can never emerge from its fiscal nightmare and
bond rating deterioration.
Note: Representative Lang’s plan is not
alone. Others like Republican
Representative Raymond Poe (Springfield) have offered ideas and schemas about
using the increased 2% as a dedicated revenue source for the unfunded liability
after 2015. A late bill (SB 2404) by
Senators Holmes and Althoff also identifies the possibility of using a
stabilization fund of some kind to mend the unfunded liability, rather than
cutting benefits, which would not make any significant difference.
This is all terribly complicated for the Governor/cheerleader. While all of these ideas and possible bills
do not steer the State of Illinois into the courts to determine whether or not Illinois
is indeed a deadbeat state, the Governor listens carefully to his coaches. Quinn has been profuse in his cheers to the
group of young and climbing legislators in the House, sponsored by Speaker Madigan
for their work to fix the “pension mess.”
He has also fawned over the work of Senator Cullerton to provide a
coercive choice between health care and COLA’s for the public pension
systems. Despite his ovations, the
guarantees of court battles exist in all these cases. On the other hand, this is what the Governor
has been told is how the game is played in Illinois. Just as it has always been played.
“First and ten, let’s do it again…”
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