I take exception to this headline at Illinois Watch:
“Deadbeat, bankrupt Illinois now in charge of high-speed rail buying spree”
Illinois is arguably deadbeat but it is certainly not bankrupt. Bankruptcy is defined as the legal status of a individual or organization that is unable to pay the debts it owes to creditors. That isn’t Illinois’s problem. Illinois continues to be able to pay its bondholders even at the increased rates required by Illinois’s falling credit rating.
Illinois’s problem is that the increases in wages and benefits it has promised are not being matched by increases in Illinois’s revenues. I have argued that it will be difficult for Illinois to increase its revenues to cover those commitments, predicated as they were on very different expectations than now appear to be the case. What Illinois needs to do is bring its commitments into line with what it can expect to receive in revenues. Illinois’s elected officials have steadfastly refused to do that because they don’t want to take the consequences.
Here in Chicago the Chicago Public School teachers were granted a whopping raise for which the city’s ability to pay is in very serious doubt. The city’s solution to its problem is to trim the number of teachers which the teachers, understandably, object. Chicago’s politicians do not have the moral fiber to face the hard truth.
The most significant public bankruptcy in Illinois is the moral bankruptcy on the part of its elected officials.
Four of Illinois’s last nine governors have served time in prison, in all but one case on charges of corruption in office.
Part of the issue is that, like with Social Security (where slowing the increase in spending by some hypothetical amount, some time in the future, is called a ‘cut’), or gun control, is that politicians have use workforce numbers (“I’ll put more cops in the street/teachers in the classroom”) and pension benefits as a kind of shibboleth – you have to say these things, and then so something along those lines, to get elected as a Democrat in Illinois. You have to get pretty close to that to get elected as a Republican.
It means that we haven’t been able to talk rationally about pension benefits for years (in Illinois, or elsewhere). Personally, I tried hard to find out what exactly the changes were that Scott Walker was proposing, and what their effects would be, but found it really hard via media coverage (reading the bill helped somewhat).
“I have argued that it will be difficult for Illinois to increase its revenues to cover those commitments, predicated as they were on very different expectations than now appear to be the case. ”
In my former business – banking – there was a legal concept in every credit agreement: a “latent event of default.” Meaning, you may not be in default now, but you know you will be. Everyone knows. Financial reality……deal with it.
That is IL from my perspective right now.
I love this city like no other. But under total Democrat control, things have simply become intolerable in IL and Chicago.
This is a damned shame.