Getting to Know All About You - Illinois Policy Institute

Illinois Policy Institute’s Poster Child: Detroit

Oh, By the Way Send Money…

I just received my important message and survey from the Illinois Policy Institute.  Did you get yours?

The “call-to-arms” page is in cyan blue with a bold black frame along the outside borders.  The headline trumpets

Don’t Let Illinois Suffer Detroit’s Fate

in a fiercely double bold font across the top.

I’m pumped, but there’s even more really serious stuff inside that.

Whoa!  There’s a nine-page white paper report included in the official packet, but for those without the time, inclination or ability to read, a carefully bolded question holds center court on page one:

Haven’t the liberals learned anything from Detroit’s bankruptcy?

It doesn’t take an Einstein (or even a last-chapter Charly* like me) to deduce the I.P.I.’s warning that the State of Illinois is facing possible bankruptcy – at any moment.  I’d better act quickly.

But why stop there?  The Illinois Policy Institute is also firing off an email campaign to persuade the willing and credulous that the State is quickly going down the tubes due to its wandering astray of free-market principles and refusal to reign in unions and their scandalous collective bargaining. 

In fact, an acquaintance of mine recently forwarded me a similar email of their Compass publication from I.P.I.’s forward observer in bankruptcy-torn Detroit, Ted Dabrowski.  Thank goodness, Ted was with a Detroiter who was able to get him through the debris and carnage unscathed: “I wasn’t prepared for what I saw...razed lot(s) and burnt out home(s)…130 square miles of sadness…I’ve seen destitution in many years of living in and traveling the developing world, but it was surreal to see it in America.”  Of course, back when it was time to pony up to save Detroit’s auto industry, the Illinois Policy Institute was right there to decry the city as “a victim of its own vices.”   Those vices would mostly be a labor force demanding a living wage…but that’s for later.

After reading the I.P.I’s comparisons, my acquaintance feared that we were “approaching a tipping point” in Illinois.  I’m glad he didn’t get the official letter like I had from I.P.I. CEO John Tillman.  They’d have had to lock up the razors around his home. 

If you’re looking for connections between Detroit and Chicago in the former’s bankruptcy, there’s some sizeable room for serious doubt.  If you’re seeking a connection between Detroit’s bankruptcy and a similar not-too-distant insolvency in the State of Illinois, then you need to start reading your federal and state constitutions or take a quick refresher course in Glen Brown’s blog on the subject.  The State of Illinois cannot declare insolvency for several state and federal constitutional reasons, despite what CEO John Tillman or any of the other Tea Party organizers threaten (or want?). 

So, let’s get back to the two cities, Detroit and Chicago, and whether they are the same or different according to other wiser individuals, who are not asking me to send them up to $25,000 or more.  By the way, make the check payable to the Illinois Policy Institute, not to CEO John Tillman.  He already makes approximately a quarter of a million dollars annually (that was back in 2010) for circulating this kind of scare-tactic, and that’s for his non-profit and non-partisan work.  Almost makes one cynical.

Reading through a couple of analyses in Crain’s and the Sun-times, one finds little to compare, except the blatant commonality of pension debt.  Of course, after 2007-08, that becomes a pretty common denominator for many states, cities, villages, and local districts.   On the other hand, in most states the General Assemblies did not steal the pension funds for decades in order to provide services at no cost to taxpayers.  Illinois is so special.

Crains warned that Chicago is NOT Detroit, reminding the reader that the Windy City’s GDP in 2011 was the third largest in the nation behind New York and Los Angeles.  Beyond being three times larger than a struggling Detroit, Chicago is a more diverse and robust economy – one not centered in a single area of economic manufacturing  (http://www.chicagobusiness.com/article/20130726/OPINION/130729849/calm-down-chicago-is-not-detroit ).

Remember also, the city’s bleak self-immolation that was center-stage in Michael Moore’s Roger and Me captured the flight of nearly 60% of Detroit’s population during the 20^th Century since its peak in the 1950’s. Chicago, enduring the same blighted center of the city, one now rebuilding, only faced a 25% loss and continues to see better numbers of population remaining during the opening decade of the 21^st Century

(http://www.suntimes.com/news/metro/21416458-418/analysis-why-were-not-the-next-detroit.html).

Now, as I review John Tillman’s blue flyer, I’m perplexed.  Tillman says that we are about to go down the road to bankruptcy and Suffer Detroit’s Fate.  Yet, his white paper report and his flyer vault to a remarkably disconnected request.  He wants money to stop taxes from providing the services that were being paid for by stolen pension monies.  Tillman underscores his ultimate goal in his white paper:  “The organization I head – the Illinois Policy Institute – is going all out to defeat the progressive income tax.  In fact, our ultimate goal is to abolish the state income tax completely!”

But nearly 37% of the state’s income is derived from the state income tax, and, well, wouldn’t that place the state and city even deeper into crises with far fewer finances for roads, education, protective services, etc.?  With that I.P.I. goal, wouldn’t the city of Chicago and Illinois quickly become the very image that our I.P.I. forward observer Ted witnessed in Detroit – in fact, wasn’t tax delinquency another cause on top of so many others -  for Detroit’s going bust? 

Be back in a bit.  I need to reread that white paper.

*Charly – the character in Flowers for Algernon who achieves brilliance after experimental treatment and later falls back into mental vacuity. 

  

Pension Committee's Procrustean Illogic: Coming Soon

Coming Attractions: The Committee of Ten’s Procrustean Illogic

Procrustean:  Adj. from the noun Procrustes, a mythological and lawless bandit who terrorized the countryside surrounding Athens, Greece, until he was defeated by the hero Theseus.  Procrustes had two very different beds, one very short and one very long.  Captured travelers were forced to lie upon a bed.  Those too short to fit were stretched to death, and those too tall had their legs and feet cut off. 

The word Procrustean has therefore come to describe a person’s imposing a conformity or reason without any real concern for individuality or factuality.

You will recall that Governor Quinn empaneled a group of ten legislators in July to hammer out a hybrid plan for pension reform by the end of, well, the end of July, now August, and soon September.  In hopes of increasing their sense of urgency, Quinn has withheld their pay until a solution is presented. 

Lately, various members of the Committee of Ten appointed by Governor Quinn have been floating teasers of a pending agreement on the “pension problem” in Illinois. 

Committee Chairperson Kwame Raoul remarked that there has been significant movement “from where we were at the onset of this thing, which was absolute stalemate” (http://www.sj-r.com/editorials/x369946608/Our-Opinion-Public-deserves-more-information-from-pension-committee).

Senator Bill Brady has described the working group as being in possession of “all the answers” needed to craft an appropriate legislative response.  Remember that six of the ten committee members need to sign off on the compromise in order to send it to the leadership of both houses of the General Assembly for consideration.

Very soon now, we will likely witness committee members schmoozing on radio and parading on TV with the compromise proposal intended to pass both House and Senate in the fall veto session. 

The task of finding an answer to the state’s debt problem without seeking revenue solutions – instead taking from promised benefits of future, current, and past workers – will assure a litany of upcoming Procrustean explanations – as well as a court challenge. 

Leading the way will be Representative Elaine Nekritz, the pension point person for Speaker Madigan.  You’ll remember that Nekritz (with now-Senator Dan Biss) fashioned SB1, the proposed House Bill that would have severely impacted the COLA’s, contribution levels, and eventual earnings.  The Senate said NO to SB1.   

Representative Nekritz alluded to the committee’s notable positive movement the other day on WBBM news radio when she considered, “We are all coming together in good faith, and negotiating, and these negotiations are very delicate.  But this is the first time that all four caucuses have been at the table, agreeing on anything with regard to the pension situation” (http://www.benefitspro.com/2013/08/21/progress-in-illinois-pension-reform-talks).

The four caucuses represent the Democratic Senators, the Republican Senators, the Democratic Representatives, and the Republican Representatives – not those coalitions of workers who will be affected. 

Good faith does not necessarily include the coalitions of people to be impacted.  They’ve had their say. 

And of course we can count on the Procrustean refrain that the committee has cobbled this compromise in order to “save” our chance to have any pension at all. 

It is a theme you can find in much of their illogic.  Senator Brady suggested the other day that they would “craft a proposal that would be meaningful, constructive and would protect the interests of the people who’ve paid into the pensions and the taxpayers.” 

Good faith?

Remember, they’re making your bed.  Now you only have to lie down in it. 

Tribune: Building Potemkin Villages

Shhhh! Don’t Disturb the Media’s Potemkin Villages.

Potemkin Village:  An impressive showy facade designed to mask undesirable facts.  The semantic etymology is, according to wordsmith,org, after Prince Grigory Potemkin, who erected cardboard villages to fool Empress Catherine II during her visit to Ukraine and Crimea in 1787. Earliest documented use: 1904.

Yesterday, August 8^th, nearly 5000 participants and supporting crowds attended a very loud demonstration outside the Palmer House in Chicago to protest the existence and membership of the American Legislative Exchange Council. 

What was in the beginning a smaller group of union activists quickly spread by 11:45 a.m. into an almost a full-block line snaking around three sides of the famed hotel; people carrying picket signs, blowing whistles, and jeering against the Koch-brother think tank which writes and promotes legislation like the infamous Stand Your Ground laws in Florida and many other states. 

Shortly after noon, the Chicago police found it necessary to block off traffic on Monroe Street to accommodate the swelling crowds and provide for pedestrian traffic across the street.  The event was punctuated with several speakers from AFSCME, various labor unions, and the Reverend Jesse Jackson.

But you won’t read about it in your Tribune.  Or hear about it, except in a fleeting ten second reference on ABC televised news.  Shhhhhh! 

The mainstream media did not cover the event.  Just like other events they choose to avoid.

Last night, Bruce Dold, Tribune editorial board leader, appeared once again on WTTW’s Chicago Tonight to discuss the possible intrigues in the Madigan family and his hope that “pension reform” (a euphemism for the reneging of contractual promises to state workers in order to pay back what was stolen from them by the General Assembly over decades) would carry on.   An equally perturbed Natasha Korecki from the Sun Times joined him.  They lamented the possible Madigan family feud, the issues with Metra, whether Lisa Madigan will run for office, the field of possible Illinois governors-to-be.    

But the ALEC demonstration?   Shhhhhh!

How about the three-year $20 million no-bid contract for principal development provided Barbara Byrd-Bennet’s past consulting group for the CPS?  Shhhh!

(http://www.catalyst-chicago.org/news/2013/07/30/21797/20-million-no-bid-contract-raises-questions-about-supes-academy)

And what about the egregious boast by business leader Ty Fahner of the Civic Committee of the Commercial Club of Chicago that he and his cronies had effectively raised the rates of borrowing for the state of Illinois by forcing a downgrading of bond ratings?  This, by the way, will cost taxpayers an additional $130 million for one single bond issue. Shhhhhh!

(http://teacherpoetmusicianglenbrown.blogspot.com/2013/08/the-video-segment-of-ty-fahner-talking.html)

You’ll have to take the word of the alternate news sources in Chicago, the ones uncontaminated by Sam Zell and the new business model. 

But I know one thing.  Thousands of regular people gathered on the street in front of the Palmer House, and not inside designing new laws to privatize education, prevent a living wage, undermine advances in environmental protections, and other legislative obscenities.

It happened, no matter what you don’t hear or can’t read.

And as the people on the street chanted:  Shhhhh-ame.  Shame.

Ty Fahner Puts Illinois Taxpayers on Hook for $130 Million

Ty Fahner Puts Illinois Taxpayers on the Hook for $130 Million, Boasts about It, Then Denies It.

In a recent interview, an avuncular Gov. Pat Quinn bemoaned the penalty Illinois will now face as a result of a recent downgrade in bond ratings by Moody’s and Standard and Poor’s.   Unaware of the strong armed interference of the Civic Committee of the Commercial Club and its leader Ty Fahner, Quinn mistakenly assumed his usual myopic focus: it must be the pensions (http://wuis.org/post/quinn-says-lower-credit-rating-costly). 

Indeed, the abyss dug by decades of stealing from the public sector pensions and not paying back what was due has generated a nearly $100 billion debt service for the state.  On the other hand, Quinn was oblivious of the part the leader of the Civic Committee and his fellows played (or boasted they had played) in the downgrading of Illinois’ bond rating.  “Moody's downgraded Illinois' $27 billion of general obligation debt to A3 from A2, with a negative outlook after state lawmakers last week failed to pass a plan to deal with a $100 billion unfunded public pension liability” (http://articles.chicagotribune.com/2013-06-06/business/chi-moodys-downgrades-illinois-20130606_1_pension-reform-negative-outlook-ratings-services 

The following month, another ripple: Moody's Investors Service slashed Chicago's general obligation and sales tax ratings by three notches to A3 from Aa3 due to the city's large and growing pension liabilities and related budget troubles. 

In another recent and bizarre interview, Commercial Club President Tyrone Fahner of the Civic Committee bragged of his organization’s influence and direct involvement in the downgrade of general obligation debt for the state.  Always the stern and media-minded patriarch, Fahner described in some detail how the Civic Committee had chastised the members of the bond rating agencies for considering anything but a serious downgrade to affect political and public reaction.

Fahner: “The Civic Committee, not me, but me and some of the people that make up the Civic Committee, some of the same names I mentioned before, did meet with and call, in one case it was in person, a couple of calls to Moody’s, Fitch and Standard & Poor’s, and say, 'How in the hell can you guys do this? You’re an enabler to let the state continue. You keep threatening more and more and more.' And I think now we’ve backed off, because we don’t want to be the straw that breaks the back, But if you watch what happened over the last few years, it’s been steadily down. Before that, it’s been the blind eye, and that’s a whole different topic, as you know, about how the rating agencies act and don’t act. That’s more in your field and stuff. It has been irresponsible. We have told them that we thought they were being irresponsible, but we stopped that a couple months ago. I do know that we suggested that they talk to the governor, the governor’s staff to see if he could give them comfort on where the state was going, and I think that’s one of the reasons why we’re really close now. I hope we’re close”

(http://teacherpoetmusicianglenbrown.blogspot.com/) .

NOTE: As a result of the downgrades, Illinois will pay an extra $130 million in interest on a bond issue this week due to lowered credit ratings presumably because the state has not been able to solve its pension crisis, but perhaps because of influence by the bully pulpit of the Civic Committee of the Commercial Club of Chicago and its well-heeled corporatist members. 


In an email to Rich Miller of Capitol Fax, Fahner now says he misspoke.   He describes his comments as “confusing and inarticulate…”   He remembers saying that such an action would not have been “the responsible thing for me to do…” so he couldn’t have done it.  A look back at the transcript undermines his excuse quite nicely.

Remember always that Mr. Fahner is a forceful lobbyist, promoting and pushing his non-profits and PAC's (We Mean Business, Illinois Is Broke, Civic Committee) to remind or even teach Illinois that pensioners are a problem - even when they are not the cause of the debt Illinois has wracked up.

And perhaps Ty Fahner is now realizing what his bombastic counseling of the state's financial evaluators can do in the long run?

"'There are investors who won't buy Illinois or bonds with Illinois labels at any price. They just see it as toxic,' said Brian Battle, director at Performance Trust Capital Partners, a Chicago-based investment firm. That means the state pays 'the biggest penalty by a long, long shot.'"

"Battle compared the Illinois situation to someone who has a good job and plenty of revenue. But 'we just spend like crazy, don't pay our credit cards and haven't saved for retirement,' he said.

"Take the $1.3 billion in bonds Illinois is expected to sell this week to improve highways, rebuild a 40-year-old elevated train line in Chicago and buy land for an airport. Battle estimates the state will pay more than $18 million in extra interest each year than states such as Virginia or Maryland, which have high credit ratings.

"That's an additional $450 million over the 25-year life of a bond issue. In personal terms, it's $36 taken directly from the pockets of each of Illinois' nearly 13 million residents. And that's for just one bond sale"  (http://www.huffingtonpost.com/2013/06/25/illinois-credit-rating-st_n_3496264.html).

Nice Work, Tyrone.  Well done, Civic Committee.