In his most recent column Washington Post foreign policy columnist Fareed Zakaria turns to domestic policy and, perhaps not coincidentally, makes a point I have made for years. The surest way for Democrats to prove the superiority of their plans to what Republicans are doing is for them to govern well in the places they already hold the reins of government:
It’s hard to see how the government shutdown and reopening is anything other than a defeat for the Democrats — a high-stakes confrontation that ended with their own goals unmet and their message muddled. If they didn’t have the leverage or were not willing to use it to prolong the shutdown, then why did they stage it at all?
The shutdown reinforced the image of the Democrats as feckless. They promise wonderful-sounding new programs — free child care, for example — but in fact preside over bloated bureaucracies and inept execution. If America has an affordability crisis, it tends to be in places Democrats govern, like New York, Illinois and California, which all feature high taxes, soaring housing costs and stagnant outcomes in basic areas like education and infrastructure.
concluding:
The truth is that local government in the U.S. is already living on borrowed time. For decades, states and cities have traded short-term political harmony for long-term fiscal ruin. To keep the peace with powerful public sector unions, they promise ever-more-lavish pensions and benefits, then quietly defer the bill to future taxpayers. Across America, these obligations act like slow-motion fiscal time bombs — invisible for now, but guaranteed to explode.
These problems have been brewing for decades. Our savings rate has been too low for 70 years. Our spending has been too high for most of that period. Business investment has been too low for the last 25 years. We don’t produce enough of what we consume (for a good rundown on this see the San Francisco Federal Reserve).
The most likely strategy for dealing with debt at the federal level will be to monetize it—that’s what we’ve done for the last 25 years at least. That is diametrically opposed to the buzzword of the day: “affordability”.
Unless the federal government bails out local governments (something I oppose) that alternative is not open to state and local governments. What is to be done? I have been seeking answers to that question from Democrats for some time to no avail.
Nobody wants higher taxes. That is particularly true of Republicans. Every Republican president of recent memory has cut taxes. Everybody wants to spend more; they may differ on how they want to spend the money but everybody wants to spend more.
As I write this post the Chicago City Council is debating the mayor’s latest budget proposal. The mayor wants to balance the budget via higher taxes on businesses. The City Council realizes that is unlikely to attract businesses to Chicago. Chicago has its lowest population in a century and large businesses have been leaving not only the city but the state.
The state is raising the sales tax Chicagoans will pay. Chicago already has the highest sales tax of any major city and the highest property taxes of any major city. Illinoisans have refused to allow the state to create a graduated state income tax. We recognize that although the tax may be levied on those making the highest income at first in due course everyone with a job will be paying higher state income taxes. Neither the city nor the state appear to be capable of economization.
It’s not the Republicans’ fault. There are no Republicans on the Chicago City Council and the State of Illinois has supermajorities in both houses of the legislature. That has been true for decades.
I think it’s true that many of the large cities run by Democrats could do better. They need to eliminate a lot fo their housing regulations so they can build more. They need to stop catering so much to unions, though I would note that also includes police and fire unions, the ones favored by GOP. (I would note that you rarely mention the Chicago police compared to the teachers budget which is 4 times the size of the school budget although this could be my memory.) Dem cities with high crime rates should find a way to address it.
All that said, note that the norm is that these large cities pay more in taxes to the state than they get back. They are subsidizing the less urban (and GOP) areas of their states. Chat-GPT says >C>Chicago only gets back 90 cents on the dollar while southern Illinois gets back something like $2.50 for every dollar in taxes. Also, didnt you say it was state law that prevents Chicago from reforming its pension plans?
I think we should also note the following from Chat-GPT.
“The New York-Newark-Jersey City metropolitan area contributes the most to the U.S. economy, followed by Los Angeles and Chicago. These three areas are consistently ranked as the top contributors by gross domestic product (GDP).
New York-Newark-Jersey City, NY-NJ-PA: This is the largest economic hub, with an estimated GDP over $2 trillion and a larger economic output than the Los Angeles and Chicago metro areas combined.
Los Angeles-Long Beach-Anaheim, CA: Ranks second, with a GDP of over $1.1 trillion.
Chicago-Naperville-Elgin, IL-IN-WI: Comes in third, with a GDP of over $760 billion. ”
For all of their supposed dysfunction, and they could be better, it’s those same cities that have been fueling US innovation and growth.
Steve
I have no idea what you’re talking about. The total payroll of the CPD is around $1.6 billion. The total payroll of the CPS is around $3.6 billion.
I’m not sure what your point is about the Chicago metro area, the LA metro area, and the NYC metro area. Things have changed a lot over the last 50 years. Do Chicago metro less the city itself, NYC metro less the city itself, and LA metro less the city itself. I don’t know what things are like in LA or NYC but here in Chicago there are a lot more people commuting from the city to the suburbs than the other way around. That’s the opposite of what it was 50 years ago. In other words the engines are the suburbs not the city.
As far as housing goes, do the math. You can’t increase the housing stock by 1% a year and add 10% to the population and not expect a housing problem to emerge.
Oops. I misread the GPT summation. It claims a CPD budget of about 2 billion and a CPS budget of about 8 billion. It noted a 500 million increase for CPS this year which I read as the total budget. (It was basically an Ai hallucination which I didnt catch.) Also, I thought Chicago was losing population not gaining 10% a year.
Steve
Steve
I think the fundamental problem is one of the many contradictions of Democratic/progressive politics:
Both support the idea that effective solutions can come from government intervention, but also support the idea that every constituency gets to have a say and a veto point. Those things are almost always in tension. For housing, it translates a desire to build more housing, but only if it’s green, sustainable, affordable, union, and conforms with the desires of stakeholders in the local community.
There’s this viral clip from Pod Save America – watch 2-3 minutes from the 16:30 point with the hosts and this LA councilwoman on housing.
https://youtu.be/KyUp-rgpSJg?si=mEihmvLM8v9680WS&t=990
Dave Schuler: in Chicago there are a lot more people commuting from the city to the suburbs than the other way around
According to the Chicago Metropolitan Agency for Planning (CMAP): “Fourteen percent of the workforce commute from the collar counties into Chicago, while 10 percent ‘reverse commute’ from denser parts of the region to more suburban and rural municipalities”
In addition, the suburbs exist because of the city. Take the city away and the suburbs lose much of their purpose. Cities exist for a reason: they concentrate talent and investment in a single place. Rather, suburbs tend to leach on cities. They avoid city taxes, but have the advantage of being in proximity to the city. It has to do with the choice to the widespread subsidization of automobiles.
That was originally the case. Is it still? I don’t believe it. I also do not believe anything coming from CMAP.
Chicago has 2.7 million people, which is only about 29% of the Chicagoland metropolitan statistical area (9.4 million). The Chicago mayor and city council only have so much relevance these days; the population and income in Illinois is centered in the collar counties. The jobs created after deindustrialization can pretty much be located anywhere and a lot of big business have located on interstate corridors outside of Chicago.
“As in other cities, Chicago’s transit system was designed primarily to bring workers from outside the city downtown. But now, 70 percent of the region’s jobs are outside that urban core.”
https://www.npr.org/2013/10/29/241350699/reverse-commutes-now-often-a-daily-slog-too
@steve, over a majority of the population of Southern Illinois is a part of the St. Louis metro area, a lot of multi-generational poverty, high crime and persistent flooding.
@Zachriel, since the Collar County workforce is much larger than the Chicago workforce, those numbers don’t suggest Dave is wrong. I also would assume there is a much larger group of commuters that are going between suburbs.
Southern Illinois and Missouri on the other side of the Mississippi are among the nation’s best illustrations of why we shouldn’t build in the flood plain.
Dave Schuler: I also do not believe anything coming from CMAP.
Powerful argument: “The world is round.” “I don’t believe anything a government agency like NASA says.” In any case, most of the GDP of the Chicago Metropolitan Area is concentrated in the City of Chicago (based on BEA and city reports).
PD Shaw: since the Collar County workforce is much larger than the Chicago workforce, those numbers don’t suggest Dave is wrong.
The denominator is the same in both cases.
“In any case, most of the GDP of the Chicago Metropolitan Area is concentrated in the City of Chicago (based on BEA and city reports). ”
BEA only reports by county. I’m not too familiar with Chicago, but I’m pretty sure it’s only a portion of the county, although I don’t know the breakdown.
And generally, it’s very rare for official statistics to measure GDP in a city, but these are sometimes estimated. So I tried to find out if there are such estimates for the city of Chicago, but was not successful. If you have a link, that would be interesting to look at.
The best I could do was find reliable stats on Cook County’s GDP compared to the rest of the MSA, and Cook County accounts for ~58% of the MSA’s total GDP. So, some rough math indicates that Chicago would need to account for ~85% of Cook County’s GDP to be above the 50% threshold for the MSA. And I have to wonder how much GDP is in Chicago only because some firms are headquartered there, which is a different thing than actually generating the GDP at that location.
I don’t know whether that’s the case or not, and it seems besides the point whatever the case may be. Same with nitpicking about the exact numbers of commuters in either direction.
Chicago is not a healthy, well-run city. It’s not growing. From the outside it doesn’t seem as bad as other rust-belt cities (I’m most familiar with Cleveland since my wife grew up there and we visit often), but it doesn’t look good to me and the state as a whole is losing population. And getting back to the OP, Chicago has been hurt by corruption and machine politics that’s been entrenched for decades, it’s not a place where anyone of any ideological persuasion would point to as an example to be followed. Democrats certainly don’t spend any time putting Chicago up as an example of their superior governance, and Republicans conveniently ignore the (very few) GoP politicians who have done nothing positive there.
I just need to look out the window to determine whether “reverse commuting” (Chicago to suburbs) is more prevalent than commuting. It is. The Edens and the Ike are more crowded going into the city in the afternoon and evening commutes than they are going out. By a lot.
Furthermore, Naperville, Aurora, and Schaumburg are not dependent on Chicago. Only a fool would make such a statement. Said another way you can make an argument for Cook County but not for Lake, Du Page, McHenry, etc. Fifty years ago the “collar counties” were bedroom communities for the city. Not any more.
The only way in which they’re dependent on the city is the way the interstates run. The late Mayor Daley saw to that.
Zachriel: “The denominator is the same in both cases.”
I stand corrected, though the phrasing in the report is imprecise. I’ve looked at the report (linked below) and it does not support your view of traditional core/suburb dynamics:
“64 percent of workers living in the city of Chicago commute within city limits. Chicago is home to about a third of the region’s jobs, but 57 percent of workers live and work in suburban areas.”
In other words, two-thirds of jobs were in the suburban area. That is sourced to a 2014 analysis of census data of an uncertain date. It’s probably gotten worse at least somewhat since COVID. The larger point is that Chicago’s population peaked in 1950 when the place of residency could be widely divided from place of employment, and at some point in time (I’d pick when Sears decided to move to the suburbs in 1989), it was no longer essential to have your business in Chicago, particularly with so many customers/employees available in the suburbs.
All of that is not to dump on Chicago, but to point out that the city can’t be complacent; they compete for residents and employers on fairly equal footing with hundreds of other communities.
I forgot to add to the link. PDF pages 11 through 12 have the relevant infographics.
https://cmap.illinois.gov/wp-content/uploads/FY17-0012-Travel-Trends-Snapshot.pdf
I commuted from Evanston to Logan Square in Chicago for a few years in the early 1970s. Since then I have commuted from Evanston to other suburbs and from Chicago to the suburbs (Du Page County!). All I can say is that the number of people from Naperville who are commuting to Chicago isn’t as big as it used to be.
PD Shaw: “57 percent of workers live and work in suburban areas.”
That’s the very point. Most city workers live in the suburbs, paying taxes there, benefiting from the city while not providing tax support, hollowing them out. This is a problem for many cities in the United States.
I presume by “city workers” you mean “people who live in the city and work”. People who work FOR the city or CPS are required to live in the city
What created that situation was bad city policy over decades. It won’t be fixed by continuing with the same policies.
People leave Chicago for a better standard of living and lower taxes. The city won’t fix that by raising taxes.
In the 1950s through the 1980s people left Chicago for “better schools” which, at least in some cases, was code for “no blacks”. That isn’t why people leave Chicago now. Quite a number of the people leaving the city now are black.
@Zachriel, I don’t think this report is written very clearly, but it’s clear from the accompanying chart that the report is claiming 57% of workers in the Chicago region(*) both work and live outside of Chicago. This is consistent with the observation in the report that a plurality of workers (and in some cases a majority of workers) work and live in the same place (either county or in the case of Chicago, city). Adding the 57% of the people who live and work outside Chicago to the 10% of people who live in Chicago but work in the suburbs, you get to about the same figure as I quoted from the NPR article, which said 70% of jobs are outside Chicago.
(*) The definition of Chicago region it uses is Chicago, Suburban Cook County, and the Collar Counties of Kane, Kendall, Lake, McHenry, and Will. This does not include the entire Chicago Metropolitan Statistical Area, and if it included places further away like in Wisconsin, Chicago’s importance would further diminish.
PD Shaw: @Zachriel, I don’t think this report is written very clearly
Don’t make excuses! It was written well enough. (Oopsy on our part!)
The UIC Great Cities Institute says it’s about 35%, higher in other cities such as Washington and Baltimore.
https://greatcities.uic.edu/wp-content/uploads/2014/04/GCP-97-7-New-Directions.pdf
That is not to say that Chicago and other cities don’t have problems. Of course they do. And Chicago can certainly be run better. But the erosion of the tax base is a systemic problem, leaving city services always struggling and taxes on those who remain inevitably higher, leading to a spiraling decline beyond mere policy problems.
“And Chicago can certainly be run better. But the erosion of the tax base is a systemic problem, leaving city services always struggling and taxes on those who remain inevitably higher, leading to a spiraling decline beyond mere policy problems.”
I think one should put these two things together.
The tax base issue would not be as bad from either the spending or revenue side if the city was run better. If you make the city unattractive to live or work in compared to surrounding areas, and it’s widely seen as corrupt and dysfunctional, then the inevitable will happen. Denver, the city, not just the MSA, for example, is continuing to grow population, has higher economic growth, lower unemployment, and higher median wages than Chicago, while both have a similar overall cost of living. Denver schools spend a third less on k-12 education on a per pupil basis than Chicago while students perform much better on national assessments. It’s not shocking to discover people with kids understand this and don’t want to pay high taxes for a bad school system when the suburbs are close by.
NYC is growing. Lots of cities in America are doing a lot better than Chicago and a big part of the reason is that Chicago is has poor and corrupt governance – that is the systemic problem.
Andy: If you make the city unattractive to live or work in compared to surrounding areas, and it’s widely seen as corrupt and dysfunctional, then the inevitable will happen.
It’s almost always cheaper to live outside the city and take advantage of higher paying jobs in the city. That’s systemic, not policy.
Denver has a head tax on commuters working in the city, so they avoid fiscal leakage that way, something Chicago is not allowed to do under state law. So, again. The lack of revenue from a third of people who enjoy the benefits of the city means everyone else has to pay more for less services, meaning there is more incentive to move your residence, leading to a downward spiral. This is completely independent of policy.
Good policies and other economic advantages can help counteract this, but the basic math remains the same.
Andy: It’s not shocking to discover people with kids understand this and don’t want to pay high taxes for a bad school system when the suburbs are close by.
Exactly. Lower services, higher taxes, accelerating flight.
Denver’s head tax doesn’t just apply to commuters but anyone who does business in the city, including people who live there. And while not a trivial amount at around $50 million a year, it’s still only about 1.5% of Denver’s budget. So it’s not big enough to account for the effects you’re suggesting or to explain why Denver is growing and Chicago isn’t.
And I had to look it up but Chicago has a history with a head tax and is trying to bring it back. Nothing in this article, anyway, mentions requiring permission from the state.
https://www.illinoispolicy.org/chicago-mayor-brandon-johnson-proposes-21-per-employee-corporate-head-tax/
In what cities is that true? It isn’t in Chicago.
Chicago median household income: $74,474
Naperville median household income: $150,937
Aurora median household income: $90,109
Evanston median household income: $95,766
but in Waukegan the median household income is $70,578.
Those people aren’t working in Chicago but living in Naperville, Aurora, or Evanston. They living in Naperville, Aurora, or Evanston and working in the near environs.
Those are the first big towns outside Chicago in the Chicago metro area that occurred to me. I’m sure that if I cherry-picked the towns I could find median household incomes that are lower and some that are much higher.
It might have been true 50 years ago when a lot of the Chicago metro area was still farmland.
The median household income in Cicero is $68,548 but Cicero is 90% Hispanic.