Remarking on a report by Moody’s on Chicago’s fiscal situation, the editors of the Chicago Tribune summarize it this way:
You’ve read these broad strokes before. What’s new, and useful, is the credit rating agency’s mathematical vision of a Chicago that can’t or won’t curb its pension debacle, slash its spending, or substantially raise its taxes. In other words, if Chicago doesn’t take one or more of those off-ramps, it will glide down Interstate 94 toward Detroit.
Moody’s frames Chicago’s financial future as a dilemma that confronts Mayor Rahm Emanuel and the City Council with “tough choices now or tougher choices later.” Based on our interviews with many aldermen during their re-election campaigns, we’re sorry to report that not enough of them are eager to make tough choices now. They had better, because …
Here are their conclusions:
•Chicago’s plight is distinguished less by public drama than by the lack of it. Illinois and Chicago politicians over the years have created enormous problems for this city, its public employees and its taxpayers. Emanuel and some civic leaders understand the urgency, but many citizens are probably still unaware of just how painful the consequences will be.
•The Moody’s report is, in essence, indisputable math: If Chicago doesn’t substantially reform its pension scheme, whack its spending or goose its tax revenues, doom awaits. Some unanticipated challenge — investment returns that fall short of the necessary 7.5 percent to 8 percent every year, say, or a smaller workforce contributing to the plans — would make the projections even worse.
•The state Supreme Court may clarify whether governments can, or can’t, modify public pensions. But even that would only be a guide to the rescues that risk-averse politicians can enact.
What do they think the solution is? Deponent sayeth not.
Barring a bailout from the state, something Gov. Bruce Rauner has ruled out, I don’t see much other than default. Chicago can’t pay its bills and there are no legal and prospective remedies for it doing so.
