teacher/poet/musician glen brown

The Effects of HB 5754 and HB 1325 on the Teachers’ Defined-Benefit Pension Plan

2012-03-09T05:51:00.013-08:00

Teachers have been excluded from Social Security coverage since the beginning of its enactment in 1935. (All state and local government employees are excluded). In a report entitled, Mandatory Social Security Cost Study for Illinois Public Education from TRS (April 2007), “mandatory Social Security [as in the case for teachers opting out of the current defined-benefit pension plan for a defined-contribution savings plan or 401 k plan] would have an immediate and ever-increasing impact on Illinois public education. The cost of Social Security and a supplemental retirement plan would be substantially higher than the current defined-benefit plans provided through a combination of state, local, and employee contributions.

“...Mandating participation into the Social Security system would not only jeopardize the integrity of the existing pension plans, but also create uncertainty as to the benefit levels for future members. The most dramatic impact of mandating Social Security [would be] on schools, colleges, and universities… The conversion of existing retirement systems to include Social Security would inevitably reduce funds available for education programs and services… The reductions and cutbacks would be different at every institution, but it is clear that teachers, administrators, and school board members would be forced to make tough choices that would reduce educational opportunities.

“[Furthermore] local government costs would increase (because of the FICA tax) and state costs would decrease (because of lower retirement costs), but the net result would be an increase in total cost. The increase in FICA taxes would be much greater than the reduction in retirement costs under any realistic scenario.

“[Note that] educators would [have to] pay 6.2 percent in FICA taxes, plus a lower member contribution for the lower retirement formula. Assuming the new member contribution is 4.0 percent, educators would be contributing a total of 10.2 percent, somewhat higher than the current 9.4 percent paid by TRS members and the 8.0 percent by SURS members.

“Despite higher net costs for employers/State of Illinois and higher contributions from members, total retirement income with mandatory Social Security would almost certainly be lower than it would be under TRS or SURS alone. The dollars contributed by the employer and by the member to Social Security ‘buy’ lower benefits than the dollars contributed to the retirement systems because Social Security benefits are weighted towards lower income recipients.

“…Social Security participation for future employees of state and local government is one reform that continues to be contested as a solution. [It] would be devastating to Illinois public education. The first-year employer cost of covering newly hired educators would be $57.2 million. The cumulative additional cost would be $893.7 million within the first five years and $3.4 billion within the first 10 years…The additional cost to Illinois public employers for current employees would be $969.8 million. [As stated] public employees would also be paying 6.2 percent if Social Security were already in effect."

All in all, studies done by TRS have concluded that “the current stand-alone system [a defined-benefit pension plan] better serves Illinois educators and taxpayers... Diverting revenues from the state and local retirement plans will reduce investment options and may require TRS, SURS, and other retirement systems to make less desirable investment decisions. Ultimately, mandatory Social Security [would] increase taxpayer costs and reduce the availability of ancillary retirement benefits such as cost-of-living adjustments and health insurance… Mandating Social Security would take the control away from local decision makers, driving up the cost of doing business for schools, colleges, and universities and leading to reductions in educational programs” (TRS).

The Hybrid Pension Plan as an Alternative to HB 5754

2012-03-07T09:01:00.007-08:00

Hybrids are pension schemes where the state and the employee both contribute simultaneously to a defined-benefit pension plan and to a defined-contribution savings plan or 401 (k) plan. State employers would have to match the employees’ contributions, though there would be a contributory limitation.

In effect, the defined-benefit pension plan has always acted as the “Social Security” alternative for Illinois teachers. Teachers do not pay into the Social Security system because the State of Illinois opted out of that arrangement years ago to save money. The defined-contribution savings scheme, as part of a hybrid plan, would offer an opportunity for savings beyond the existing capped defined-benefit for teachers who began their career in January 2011 (SB 1946, April 2010).

The recently proposed HB 5754 in February 2012—a bill regarding defined-contribution or “self-managed” plans (401 k)—applies to all public pension systems and their “current” members. HB 5754 is not a bill for a hybrid plan. It’s a bill for opting out of a guaranteed defined-benefit pension plan.

Undeniably, though hybrid plans would include a partial guaranteed annuity because of their component part—the defined-benefit pension plan—and would be a much better choice than having only a 401 (k) plan, hybrid plans would induce legal and regulatory questions, some of which might include whether these defined-contribution savings plans would be covered by the Pension Benefit Guaranty Corporation, whether there would be a pay credit formula in place for these plans based upon the employee’s age and service, and whether there would be a minimum interest credit rate tied to long-term bonds (30-year Treasury yield) without risk to principal.

What would be essential for state employees before choosing a hybrid pension plan is relevant and clear information (full disclosure) regarding its cost and consequences. As stated, there is an incomplete guarantee with a hybrid plan. What must also be considered is the precarious part of the hybrid-plan equation, in other words, the defined-contribution’s investment of assets, its expenditures and its legality.

Hybrid pension plans are as effective as the competence of their trustees and the regulation and complex structure of such schemes. It would entail proficient knowledge of their funding standards. Note that hybrid pension plans would not take into account the longevity risks for retiring teachers, unlike a defined-benefit pension plan.

It is important to perceive that hybrid plans (and defined-contribution savings plans by themselves) are not definitive solutions for the apparent state’s budget problems. What remains a critical issue is that redistributing the funding burden to the state’s school districts and to their teachers and property taxpayers is unreasonable and unwarranted; and that legislators bear in mind that offering a fair and sustainable pension plan for teachers is a priority, not only for teachers but for the public school districts in Illinois.

For what is also at stake here is whether “the best and brightest” possible teaching candidates become one of the state’s exigencies. The state will not attract or retain the “best” teaching aspirants without offering an equitable and solvent defined-benefit pension plan for them.

Finally, what continues to be most crucial for all of us is that policymakers in Illinois guarantee a minimum level of payment to the public pension systems and pay the unfunded liability, thus, upholding the state’s constitutional obligation while maintaining their ethical and moral responsibility.

See "Pension Hybrid Plans, Constitutional Challenges, and the Ethical Path to Take"
See also "Defined-Benefit Pension Plan v. Defined-Contribution Savings Plan"

Governor Quinn’s Proposal Will Somersault TRIP

2012-03-05T06:20:00.002-08:00

Sure, let’s take away $87 million from the retired teachers of Illinois, and then let’s give that money away perhaps to more corporations as a gift from the governor. Sure, let’s increase those premiums for teachers. Better yet, let’s place the burden on the school districts in Illinois and their local taxpayers, no matter how badly funded the school districts already are.

As stated by Jim Bachman, executive director of the Illinois Retired Teachers’ Association, “a retired teacher pays a total of $170 to $650 a month for health insurance, depending on the type of coverage the retiree selects and whether he or she qualifies for Medicare” (Doug Finke, The State Journal Register 25 February 2012).

“Active members pay 0.88 percent of their salary; the state matches the active teacher’s contributions ($87 million for FY12); school districts contribute 0.66 percent of their payroll, and (65,000) retirees (who depend on this insurance program) pay their health insurance premiums” (Illinois Education Association, IEA).

According to Bob Haisman, a past president of IEA, for his 2013 budget, Governor Quinn has proposed to "zero out" the state's contribution to the Teachers' Retired Insurance Program (TRIP). Without warning, Governor Quinn has unilaterally proposed to slash state support. Governor Quinn is breaking the state's promise to the men and women who spent their lives teaching the children of Illinois. Tell Governor Quinn this is not the way to support our teachers, who have supported him.

Please sign this petition:

http://signon.org/sign/governor-quinn-do-not?source=s.fwd&r_by=2770571

Understanding Illinois’ Budget Deficit and Solutions

2012-03-02T03:56:00.003-08:00

·         According to the Commission on Government Forecasting and Accountability (June 2011), besides federal sources of income, the state uses only eleven sources of revenue: personal income tax (but note that Illinois was tied for the fourth lowest individual tax rate on households in the top income bracket), corporate income tax (remember the recent extortionate tax breaks given to Illinois corporations?), corporate franchise tax and fees, public utility taxes, vehicle use tax, inheritance tax, insurance taxes and fees, cigarette taxes, liquor taxes, miscellaneous tax sources, and sales tax (though Illinois does not tax services like most other states for a significant source of revenue).

·         As stated by the Center on Budget and Policy Priorities (CBPP July 2009), “a majority of states apply their sales tax to less than one-third of 168 potentially-taxable services… [States that do not tax services, such as Illinois], probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively…”

·         Moreover, “a majority of states apply their sales tax to less than one-third of 168 potentially-taxable services. Five of the 45 states with sales taxes impose them on fewer than 20 services… Research finds that purchases of some services do not fall as precipitously as durable goods purchases do when the economy slows nor rise as rapidly when the economy is booming.” States that do not tax services, such as Illinois, “probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively” (CBPP).

·         Consider the fact that a broader-based taxation system would provide a decrease in taxes for low-income and many middle-income families. Taxing services alone “would generate enough revenue to stabilize the General Revenue Fund and prevent structural deficits that lead to cuts in basic needs and social service programs” (the Center for Tax and Budget Accountability).

·         The Chicago Metropolitan Agency for Planning (CMAP, July 2011) argues that the tax system in Illinois and most other states do not reflect today’s economic realities. In the last several decades, the U.S. economy has slowly shifted from manufacturing industries to a “services and information-based economy... Since the early 1970s, spending on services has exceeded spending on goods…

·         “In 2010, consumers spent twice as much on services (66.9 percent of total personal consumption expenditures) as on goods (33.1 percent of total personal consumption expenditures). This shift in the fundamentals of the economy has changed the relationship between consumption and tax revenue… Changes in personal consumption have resulted in the Illinois sales tax covering a decreasing proportion of consumption expenditures” (CMAP).

·         The Chicago Metropolitan Agency for Planning also contends that the tax system in Illinois is inefficient. “The tax system itself is influencing economic activity” by taxing goods that are consumed rather than the consumption of resources.   Furthermore, the tax system is also inequitable because “lower-income taxpayers typically spend a higher percentage of their income on tangible goods than higher-income people.”

·         According to United for a Fair Economy, “at the core of the budget ‘crisis’ facing [Illinois] is [its] regressive state tax structure… that is, low-and-middle-income families pay a greater share of their income in taxes than the wealthy… [A regressive tax] disproportionately impacts low-income people because, unlike the wealthy, [low-income people] are forced to spend a majority of their income purchasing basic needs that are subject to sales taxes.”

·         Likewise, the Institute on Taxation and Economic Policy (November 2009) claims that the State of Illinois does not tax equitably, and it is in the top ten of regressive state tax systems where the wealthiest taxpayers do not pay as much of their incomes in taxes as the poorest and middle-income wage earners.

·         The Institute on Taxation and Economic Policy (ITEP) further maintains that the top 5 percent of income earners in Illinois pay the least amount of sales, excise, property, and income taxes because of federal deduction offsets or substantial tax savings (regressive tax loopholes) from itemized deductions, such as capital gains tax breaks and deductions for federal income taxes paid that are coupled with a flat-rate structure. “Since the rich are able to save a much larger share of their incomes than middle-income families – and since the poor rarely save at all – the taxes are inherently regressive” (ITEP).

·         Illinois income tax uses a single rate structure that results in low-income wage earners paying more taxes than the wealthy.   As said by the Institute of Taxation and Economic Policy, Illinois is among ten states in the nation with the highest taxes paid by its poorest citizens at 13 percent.

·         In 2007, the top one percent of wage earners in the U.S. (with an average income of just under $2 million a year) paid 6.4 percent in total taxes while the bottom 20 percent of wage earners (with an average income of just under $11 thousand a year) paid 10.9 percent in taxes (ITEP).

·         The Center for Tax and Budget Accountability (CTBA February 2012) asserts that “given the current economic context, now is precisely the right time to increase tax revenue with a graduated income tax focused primarily on the top ten percent of income earners, as opposed to reducing the state’s budget deficit through significant service cuts [which include retirees’ healthcare and radical pension “reform”]…

·         “Given an appropriately designed graduated-rate structure, Illinois could cut the overall state income tax burden for 94 percent of all taxpayers—on average providing a tax cut to every taxpayer with less than $150,000 in base income annually, raise at least $2.4 billion more in revenue, and keep the effective individual income tax rate for millionaires well below five percent… Illinois taxpayers with the bottom 94 percent of base income collectively would receive an annual tax cut of $1.06 billion… [T]he combined effect of this policy would be a stimulus to the economy from tax cuts and additional state spending (assuming that the additional revenue is used to fund current public services that would otherwise not be funded) that would create at least 36,000 private sector jobs in communities across Illinois…

·         “Most taxes imposed by state and local government, like sales, excise and property, are inherently regressive, that is, [they] take a greater share of the earnings from low-to-moderate income families than from affluent families. Creating a graduated-rate structure for the Illinois income tax is one of the few strategies available to counteract the natural [regressive results] of most taxes. Illinois is denied this fundamental tax fairness tool by the state constitution [Article IX, Section 3(a)] that requires one flat income tax rate for all taxpayers…” (CTBA).

·         Indeed, solutions to the state’s budget deficit include increasing the state’s revenue sources by changing the current individual income tax to a progressive or graduated income tax; broadening the state’s tax base; taxing services; increasing taxation on “undesirable habits” like gambling, cigarettes and alcohol; implementing a more timely system of payments; eliminating unnecessary tax breaks and loopholes for corporations; increasing taxation on the wealthy to achieve fairness, and examining and improving the efficiency of the state’s government.

·         Considering their spring legislative focus, it is apparent that many legislators are not contemplating today’s economic realities: Illinois’ economy has largely become a “services and information-based economy… [and that] changes in personal consumption have resulted in the Illinois sales tax covering a decreasing proportion of consumption expenditures” (Chicago Metropolitan Agency for Planning, July 2011).

·         These same legislators, et al. also ignore the fact that Illinois “suffers from structural deficits or from failure of revenues to grow quickly as the cost of services…, [and that] structural deficits stem largely from out-of-date tax systems, coupled with costs that rise faster than the economy… Fixing these structural problems would help [Illinois] balance [its] operating budgets without resorting to [a reckless and radical “pension reform” instigated and propagandized by the Civic Committee, Civic Federation, Chicago Tribune and their ilk]” (The Center on Budget and Policy Priorities, January 2011).

Guarantees & Sustainability of the Teachers’ Retirement System, Defined-Benefit Pension Plan v. Defined-Contribution "Savings" Plan

2012-03-01T04:05:00.009-08:00

I. Constitutional Guarantees:

· Article XIII, Sec. 5 of the Illinois Constitution – “Membership in any pension or retirement system of the State… shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

· Article I, Sec. 16 of the Illinois Constitution – “No ex post facto law, or law impairing the obligation of contracts… shall be passed.”

· Article I, Sec. 10 of the United States Constitution – “No State shall…pass any ex post facto Law, or Law impairing the Obligation of Contracts…”

· Preamble to the Universal Declaration of Human Rights – “Human rights should be protected by the rule of law.”

II. Sustainability of the Teachers’ Retirement System

· As markets and economy improve, so do the assets in the pension funds. “Since June 30, 2009, a date in which many recent studies on the financial condition of State pension trusts are based, investment returns have rebounded sharply – nearly 25% higher since then” (National Association of State Retirement Administrators, NASRA).

· “State and local retirement trusts accumulate and pay out assets over decades, and as such, have an extended investment horizon” (NASRA).

· According to Dave Urbanek (Public Information Officer for TRS), “pensions will not run out of money… [That] assumes that at a future date, state pensions will just cease and all outstanding financial obligations will come due… Unlike a corporation, a state government cannot go out of business…

· “[Accordingly,] state law empowers TRS (40 ILCS 5/16-158c)… Payment of the required State contributions and of all pensions, retirement annuities, death benefits…, all other benefits…, and all expenses are obligations of the State… The State has waved its sovereign immunity in regard to the teachers’ pension because TRS is a qualified pension plan under the tax-deferred provisions of the IRS code. Federal law would protect all claims…

· “Pensions [are not] the problem [or] why Illinois has been unable to pay its bills. The reason is a dramatic fall-off in State revenues over the last four years, costing the State $4.4 billion…”

· Despite the State’s lost revenue, “in fiscal year 2011, TRS recorded a 23.6 percent rate of return after all fees had been subtracted and generated $7.2 billion in investment income during the year. At the end of FY 2011, total assets stood at $37.7 billion… The TRS average investment return for a 25-year period ending in FY 2010 was 8.6 percent. The average TRS investment return for the 30-year period between 1981 and 2011 was 9.3 percent” (TRS).

· “Both rates beat the System’s assumed long-term rate of return of 8.5 percent. Data compiled by the System’s independent investment consultant over multiple time periods beyond the decade being studied by TRS shows that the System’s investment performance ranks highly among similar public pension funds” (TRS).

· As stated by Dave Urbanek, “TRS has survived for more than 70 years – because over the long term, the System’s income and accumulated assets continue to be greater than what are required to pay out in any given year… The only way TRS [will run] out of money is if income from all sources – teachers, school districts, investments and the State – dries up for a lengthy period of time. Not just one or two sources, but all sources…

· “Even under the accounting and actuarial definition of ‘full funding,’ (70 percent or 80 percent of total long-term liabilities, depending on who you ask), the [TRS] system would still carry a real unfunded liability of several billion dollars… Full funding would be necessary if, at some point in time, TRS needed to pay everyone it owed all the money due them. But that can’t happen under the way the System is structured [because] TRS is a perpetual government agency…”

III. What Defined-Benefit Pension Plans Contribute to the States’ Economy

· Defined-benefit pension plans have an economic impact of several hundred billion dollars each year and support several million American workers in their jobs; they contribute over a hundred billion dollars to annual local, state, and federal revenue, while reducing government expenditures; they also provide capital to the financial markets, and they deliver the same level of retirement income as an individual 401(k) type savings account at half the cost as a result of their professional asset management and better long-term investment strategies, particularly during challenging economic times (The National Institute on Retirement Security, NIRS).

· Defined-benefit pension plans are associated with far fewer American households that experience food privation, shelter adversity, and health care hardship and provide a bastion of hope and financial stability for millions of people in this country (NIRS). Instead of attempting to eliminate defined-benefit pension plans, they should be advocated by everyone.

· It is also true that state-funded pension plans are less expensive for Illinois taxpayers than Social Security and that Illinois taxpayers save hundreds of millions of dollars per year by not paying Social Security payroll taxes for 78% of all active employees in the five-State-managed plans.

· Defined-benefit pension plans have an economic impact of over $4 billion in the State of Illinois; their effect on Gross Domestic Product creates $2.38 billion; jobs created as a result of their existence: 30,448 (TRS).

· Defined-benefit pension plans contribute over $100 billion to annual local, state, and federal revenue in the U.S. and provide capital to financial markets (NIRS).

IV. Why Teachers Prefer a Defined-Benefit Pension Plan Instead of a Defined-Contribution “Savings” Plan

· A defined-benefit pension plan is more cost efficient than the defined-contribution plan; the state is responsible for funding, investment, inflationary and longevity risks.

· A defined-benefit pension plan offers the retiree predictability; it guarantees monthly benefits for life.

· Funds are invested by professional asset managers in a diversified portfolio that follows long-term investment strategies; the large-pooled assets reduce asset management and miscellaneous fees.

· Consider that the Teachers Retirement System of Illinois is the 39^th largest in the U.S. with 378,288 members; the average investment returns for TRS were 9.3% (over 30 years), 8.8% (over 25 years), and 8.3% (over 20 years) (TRS).

· A defined-benefit pension plan provides spousal (survivor) financial benefits and disability benefits.

· A defined-benefit pension plan is a more effective protection than the defined-contribution “savings” plan because it provides self-sufficiency in retirement; it is associated with far fewer households that experience food privation, shelter adversity and health care hardship.

· With a defined-contribution “savings” plan (401(k), 403(b), 457), only contributions are defined.

· The benefit is based upon individual investment earnings; the employee assumes all funding, investment, inflationary and longevity risks.

· A defined-contribution “savings” plan does not have the pooled investments, professional asset managers, and shared administrative costs that a defined-benefit pension plan provides.

· There are no survivor or disability benefits; the defined-contribution “savings” plan is not guaranteed for life, and teachers do not pay into the Social Security System.

Illinois' Budget Deficit: Raising More Revenue Is the Right Solution for Needed Services and Pension Stabilization

2012-02-27T04:34:00.017-08:00

Can the State of Illinois solve its budget problems without creating new revenue? The answer is no. If expenditures must at least equal revenues, then what needs to be done is to enhance the state’s sources of revenue. How will the state raise more revenue and, thus, pay its debts as well as stimulate economic growth? Many of the previous posts in this blog have reiterated that solutions to the state’s budget deficit include increasing the state’s revenue sources by changing the current individual income tax to a progressive or graduated income tax; broadening the state’s tax base; taxing services; increasing taxation on “undesirable habits” like gambling, cigarettes and alcohol; implementing a more timely system of payments; eliminating unnecessary tax breaks and loopholes for corporations; increasing taxation on the wealthy to achieve fairness, and examining and improving the efficiency of the state’s government. It is discouraging that these suggestions have fallen on the deaf ears of many Illinois legislators.

If the state’s policymakers insist upon “spending cuts” as a solution, how will the State of Illinois maintain essential services for its citizens? According to the Center on Budget and Policy Priorities (January 2012), “spending cuts are problematic during an economic downturn because they reduce overall demand and can make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals… Companies and organizations that would have received government payments have less money to spend on salaries and supplies, and individuals who would have received salaries or benefits have less money for consumption… Raising taxes, along with enacting [non-essential] budget cuts, is needed to close state budget gaps in order to maintain important services while minimizing harmful effects on the economy…”

Moreover, if the governor and some state legislators insist that “everything is on the table” regarding the state’s public pension systems, then consider what Ralph Martire, Executive Director at Center for Tax and Budget Accountability, recently suggested: the “ramp,” (which entails larger payments needed today as a result of the 1995 funding law – Public Act 88-593 – to pay the pension systems what the state owes because of its delinquent payments to those systems for decades and to reach a 90-percent funding ratio by 2045), “must be changed.” In other words, the payment “ramp” should be “amortized like a mortgaged loan where set payments can be guaranteed over a long period of time.” This is a first step for addressing the public pensions’ unfunded liabilities. Meanwhile, policymakers should remain patient and cautious about any radical pension “reforms” offered by the Civic Committee of the Commercial Club of Chicago (as in the case of specious SB 512) and other recent bills that have been proposed thus far by a few legislators. They are not solutions. They are not even quick fixes for the symptoms of a greater problem that the State of Illinois confronts.

According to the Illinois Retirement Security Initiative, a Project of the Center for Tax and Budget Accountability (CTBA, February 2011), “when compared to the state’s projected revenue growth, the state’s required pension contribution may be more manageable than many believe… assuming revenues grow at 2.8 percent per year, and the state maintains its personal income tax rate at five percent and its corporate income tax rate at seven percent.” In line with this type of thinking, we may assume that if the state expanded its potential revenue base, along with anticipated assets in the pension systems, “even Illinois, [with] the most underfunded pension plans in the country, would only have to boost tax revenue by less than 0.2 percent over the next 30 years to meet its projected shortfalls” (Dean Baker, Co-Director at the Center for Economic Policy and Research).

In a more recent article from CTBA, entitled “The Case for Creating a Graduated Income Tax in Illinois” (February 2012), “most taxes imposed by state and local government, like sales, excise and property, are inherently regressive, that is, [they] take a greater share of the earnings from low to moderate income families than from affluent families. Creating a graduated-rate structure for the Illinois income tax is one of the few strategies available to counteract the natural [regressive results] of most taxes. Illinois is denied this fundamental tax fairness tool by a state constitution [Article IX, Section 3(a)] that requires one flat income tax rate for all taxpayers…

“Given an appropriately designed graduated-rate structure, Illinois could cut the overall state income tax burden for 94 percent of all taxpayers—on average providing a tax cut to every taxpayer with less than $150,000 in base income annually, raise at least $2.4 billion more in revenue, and keep the effective individual income tax rate for millionaires well below five percent… Illinois taxpayers with the bottom 94 percent of base income collectively would receive an annual tax cut of $1.06 billion… [T]he combined effect of this policy would be a stimulus to the economy from tax cuts and additional state spending (assuming that the additional revenue is used to fund current public services that would otherwise not be funded) that would create at least 36,000 private sector jobs in communities across Illinois."

Indeed, it has been said that small increases in funding can help offset a state’s budget problems. As stated by David Madland, Director of the American Worker Project at the Center for American Progress Action Fund and Nick Bunker, Special Assistant with the Economic Policy team at that Center (March 2011): “the costs of public-sector pensions are often implicated in the conservative budget critique... [Most pension systems across the country are] ‘underfunded, in large measure because—like the investments held in 401(k) plans by American private-sector employees—they sunk along with the entire stock market.’”

Madland and Bunker further assert (and they coincidentally concur with Public Information Officer Dave Urbanek of the Teachers’ Retirement System of Illinois) that “[a] pension funding shortfall is a not an immediate crisis but rather a problem with a long-time horizon. Pension plans have sufficient funds to pay all benefits for years to come… The extent of the shortfall is often overblown. Claims that public-sector pensions face shortfalls… assume pension funds will only earn the so-called riskless rate of return, which economists calculate in the range of about 4 percent to 5 percent. This ignores that pension funds have actually earned returns well above that riskless rate for many decades—above 9 percent since 1984—and are likely to continue to do so.”

Consistent with Madland’s and Bunker’s assessment is the recent report from the Teachers’ Retirement System of Illinois (TRS) that proclaims “in fiscal year 2011, which ended last June, TRS recorded a 23.6 percent rate of return after all fees had been subtracted and generated $7.2 billion in investment income during the year. At the end of FY 2011, total assets stood at $37.7 billion… The TRS average investment return for a 25-year period ending in FY 2010 was 8.6 percent. The average TRS investment return for the 30-year period between 1981 and 2011 was 9.3 percent. Both rates beat the System’s assumed long-term rate of return of 8.5 percent. Data compiled by the System’s independent investment consultant over multiple time periods beyond the decade being studied by TRS shows that the System’s investment performance ranks highly among similar public pension funds.”

What’s more, add to this data that “government employees and public-sector unions are the folks conservatives love to ‘tar’ for the unpleasant fiscal situation in state and local governments. But there is little evidence that government workers or public-sector unions are responsible for budget deficits. Employee compensation has remained a constant share of state expenditures, and state and local workers are actually underpaid relative to comparable private-sector workers. Instead, the short-term deficits are primarily the result of the Great Recession [and a lack of proper funding to the public pension systems]” (Madland, Bunker).

Conclusively, “claims that public-sector pensions will bankrupt state and local governments are exaggerated… Policymakers [who] attempt to reduce their budget deficit by cutting solely public employee compensation [through healthcare and pension “reform”]—rather than by considering a balanced approach of appropriate cuts in several areas of the budget and revenue increases—[will create] large-scale job losses among public-sector workers, [jeopardize the subsistence of thousands of retirees and their families] and [generate] more pain for the overall [state’s] economy” (Madland, Bunker).

See Tax Reform! Not Pension Reform, Budget Cuts and Tax Breaks for the Wealthy, Nov. 20, 2011;

Spread the Burden of Taxes and Address Tax Inequities in Illinois, July 25, 2011

Paolo and Francesca

2012-02-24T04:24:00.001-08:00

A history teacher took a novel approach
to dealing with a student who fell asleep in class:
he licked the student’s ear.
--from a news story

That day we read no further.
--Canto V, Circle 2: The Inferno

Don’t fall asleep in Mr. Henry’s class.
He’ll lick your ear clean
with unblinking eyes and feline agility.
He teaches history for pay,
tongues ear wax for free.
He brings mystic lore from home,
Egyptian magic and talismans,
voluptuous lapping and a mysterious
sense of propriety.

Perhaps it was the waning moon

eaten away by field mice
that prompted Mr. Henry to arch his back
and purr while he licked that ear.

But someone did not like

Mr. Henry’s skulking as the mythic
cat of the classroom.
The school board found him indiscreet;
the students found it peculiar
that their classmate remained
in a passionate embrace with Morpheus
on the dark forests of a history text.
A small pool of spit
drowned the other lesson of the day.

There Is a Conspiracy throughout the World... a “Crisis of Fairness”

2012-02-17T04:24:00.000-08:00

“There is an economic crisis in the UK, but it was not caused by excessive public spending or the ‘gold-plated’ pensions and pay of public-sector workers. It was caused by a recession triggered by the banking collapse of 2007. Now there is another crisis: a crisis of fairness in which those who caused the economic mess are forcing everyone else in society to pay for it. It is clear whose side Cameron’s cabinet of millionaires is on. Trade unions represent people in the public, private and voluntary sectors. Our members will often experience each through their working lives – as will their partners, friends and family. Good occupational pension schemes are important wherever you work. Most pensioners are reliant on the basic state pension for the majority of their income in retirement, but it pays below the government’s own poverty line. Disgracefully today there are 2.5 million pensioners living in poverty in the UK. Only one in three private sector workers is now a member of an employer-sponsored pension scheme, public sector pensions are under threat, and the state pension is now worth just 15% of average male earnings.

“On the other hand a quarter of all tax relief on pensions, amounting to more than £10bn annually, goes to the richest 1% in the country. We hear about gold-plated public sector pensions, yet the real gilded pensions are to be found in the boardrooms of private companies that have abandoned provision for their workforces. There is a crisis of pensions in the UK, but it’s not that we’re living too long or that pensions are unaffordable; it’s a crisis of fairness.

“In retirement, as in working life, we are highly unequal. UK pensioner poverty is among the worst in Europe – only Cyprus, Latvia, Estonia [and the United States] abandon their pensioners to a greater degree. Action is needed to secure decent state pensions as the foundation for pensioner income and decent employer-sponsored pension provision for all workers in all employment sectors. Please join our campaign for ‘Fair pensions for all’.

Introduction: a crisis of fairness

Public sector pensions: affordable and sustainable

“The pensions of public sector workers have come under intense scrutiny in recent months, with ministers and the media describing them as ‘gold-plated’ and ‘unaffordable.’ Currently, public sector workers are being told they must pay more and work longer for a lower pension – but is this necessary? Last year the government asked Lord Hutton to lead an independent commission into public sector pensions… ‘Currently public sector workers are being told they must pay more and work longer.’

“Although the average person is living longer, there are massive inequalities in life expectancy: men and women in the wealthiest areas live 10 years longer, on average, than those from the poorest areas. The wealthiest can often afford to take early retirement too, whereas the poorest often already have to continue working beyond the state retirement age. Just because we are living longer, it does not necessarily mean we are fit to work longer: 40% of people aged 65–74 have a disability or illness that limits their quality of life. Pensioner poverty also intensifies the prejudices that exist over people’s working lives. Women, disabled and ethnic minority pensioners are far more likely to be in poverty because they are discriminated against by employers. Over several years, governments have allowed companies to abandon their pension duties to their staff, allowed the state pension to fall further and further behind living standards, and today’s government is now attacking public sector pensions too. We don’t want an equality of misery, but fair pensions for all: public, private and state pensions...

“Nearly one in five of us, living in the UK, are over the state retirement age. A fair pension for all is affordable in the sixth largest economy in the world, if we choose it to be. A pension is income deferred. Whether it is through national insurance or contributions to an occupational scheme, we have set aside income today to pay for our pensions tomorrow. We like to think of retirement as a time of relaxation and leisure, but for very many people it is a time of hardship and stress – with a growing proportion literally having to choose between heating and eating. Every winter tens of thousands of retired people die from cold-related illnesses. We are all living longer and should welcome that life expectancy continues to improve, but those improvements have been very uneven… There is a huge life expectancy gap between the richest and the poorest.

“We must also consider the impact of working longer on unemployment – the impact that has on young workers starting off. Youth unemployment is at the highest level on record. Finally, we ought to acknowledge that longer retirements are not necessarily unaffordable, but are a question of priorities and balance. The government is proposing little to tackle the scandal of private sector occupational pensions, or the poverty level of the basic state pension. The government’s current attempts to cut public sector pensions will create more misery and more poverty in retirement. We hope that you, whether you’re in the public sector or private sector, whether you’re working, unemployed or already retired, will join our campaign for ‘Fair pensions for all’ because the injustice of pensioner poverty requires us to work together so that everyone has a decent standard of living in retirement…”

--from the Public and Commercial Services Union in the UK

Plain and Simple

2012-02-15T05:01:00.001-08:00

Let’s imagine that we haven’t paid some of our bills for a very long time, perhaps our mortgage or rent, some of our taxes and insurance policies, credit card and utility bills. To “reform” this irresponsible and purposeful inaction, why not do what the State of Illinois has done to us and ask our banks, our county collector, and the various companies to whom we are indebted to contribute some of their money to help us pay down what we owe them? That’s right! It’s quite simple; besides it’s all about a “shared sacrifice,” isn’t it? We could write our own piece of legislation too and proclaim that the banks and businesses cap the earnings of their employees and shift the burden of our debts to their CEOs to save money. We’ll call our proposal “Shift Our Bills to Zero” or SOB 2 0.

We “have to do something,” and this “something” is a pretty crafty idea like SB 512. After all, years ago when most of the bankers and businesspersons became “vested” in their pension plans, how where we to know that they would be living longer today, that their salaries would keep increasing, that their health care costs would keep rising (even though this is an unrelated issue), and that certain criminals among them would ignite an economic conflagration resulting in the worst recession in decades as a result of deregulated derivatives and asset-backed securities (mortgages), which were foolishly exempted from SEC governance – thanks to lobbyists.

Why not shift our debts to those for whom we owe money and unite with the Civic Committee of the Commercial Club of Chicago and the Civic Federation so we can hire some of their extortionate lobbyists, lawyers and accountants to put pressure on our lenders, challenge the legality of what we “really” owe, and garble the accounting rules to make sure our scheme doesn't spark too much attention from an otherwise oblivious populace?

It surely would be easier for us to transfer the burden of what we owe back to the moneylenders; to eschew and challenge “any” contractual obligation; to rewrite the laws and policies to our satisfaction and recompense; what’s more, we would be emulating some of our “hand-picked” politicians.

Why Illinois SB 512 Is a Devious Ruse

2012-02-11T04:47:00.000-08:00

Because we are victims of today’s state (and federal) politics that have created an unethical “winner-take-all” economy for wealthy egomaniacs at the expense of everyone else; because we are victims of Republican and Democratic legislators at the state and federal levels who align their interests with self-aggrandizers and who pass laws that sustain their concentrated economic privilege and power;

because we are victims of deregulation and tax reductions for the wealthy minority that have resulted from organized political action by and in support of the wealthy sector; because we are victims of their divide-and-conquer strategy, fallacious rationalizations, distorted information and relentless priority on radical “reform” for public employees and tax cuts for themselves, regardless of whether corporate welfare produces more deficits;

because we are victims of insidious financial “reforms” that do not resolve the state or federal deficit problems but accommodate and reinforce the enormous inequality of organizational resources of these thriving self-seekers; because we are victims of their tyranny and their lack of accountability for destroying a representative democracy and a just economy, of their corporate PACs and their vast resources of money and influence committed to reforming the rules and policies that have adversely affected the lives of the middle class and disenfranchised, of their schemes to reallocate the state’s liabilities to teachers and school districts;

because we are victims of their machinations, where the vast majority of workers will not receive a defined-benefit retirement plan but where most corporate executives will secure this guarantee, where these same business czars will retire with exorbitant bonuses and other outrageous incentives, and where nothing has been done to change this intolerable injustice;

because we are victims of partisan polarization and well-financed organizational interest group politics and policies, of compromised corporate-owned media that have been bought by the wealthy minority to shape what and how we think about fiscal issues; because we are also victims of some unethical legislators who are clueless about “long-term retirement policy objectives” and are “influenced by projections that include unrelated healthcare liabilities or irrelevant corporate sector metrics,” and who have no desire to pay what is owed to the public pension systems that SB 512 is a devious ruse.

And because we are victims of today’s disappearing and weakened organized labor unions that were once the guardians of middle-class workers and representative democracy; because we are victims of our lack of courageous leadership and our lack of sustained organizational acumen; because we are victims of our indecisiveness and political ignorance, of our inability to marshal essential resources and to draw upon experts in the fields of economics and law; because we are victims of our inability to build an effective coalition and to launch a counter-attack against the arrogant wealthy minority that is waging an economic war against the poor and middle class in Illinois and elsewhere, we will remain scapegoats for the reprehensible problems created by the so-called “wealthy elite” pending the mobilization of our collective efforts against their powerful economic interests, their lucrative lobbying of the state’s policymakers, and their emphasis upon deficit reduction by way of public pension “reform.”

Because

2012-02-06T05:40:00.000-08:00

It’s an echo of the question why,
a boomerang of logic, the reason
for punching the little girl’s arm,
for breaking her new doll.

And bullies say it
with firecracker snap, owl-eyed
and with the whack and thump
of an eighteenth-century beheading.

Because is all the reason they need,
the way out of the pickle, the password
for the storybook door, the answer
to why the chicken crossed the road.

Civic Federation: “Illinois Faces Financial Disaster; Urgent Need for Medicaid and Pension Reforms”

2012-01-30T14:41:00.001-08:00

[Selected Findings and Recommendations from the 53-page document]

“Due to data limitations, the Federation’s projections are rough forecasts intended to indicate the long-range consequences of current revenue and expenditure policies…

“Civic Federation Findings: The General Funds operating deficit is projected to increase to $3.2 billion in FY2017 from $508 million in FY2012. This projection assumes that Medicaid appropriations are limited to annual growth of only 2%—well below the anticipated increase in Medicaid costs but consistent with the State’s past budget practices.

“Largely due to projected underfunding of the Medicaid program, the State’s total unpaid bills—including both General Fund’s bills and bills outside of the General Funds—are predicted to increase from $9.2 billion at the end of FY2012 to $34.8 billion at the end of FY2017.

“General Fund’s revenues are projected to decline by $427 million, or 1.3%, to $32.7 billion in FY2017 from $33.1 billion in FY2012. The decline is largely due to the lower income tax rates that take effect in FY2015; all other revenue sources are projected to increase over the next five fiscal years.

“General Fund’s expenditures are projected to increase by approximately 6.9% from $33.6 billion in the enacted FY2012 budget to $36.0 billion in FY2017. This conservative projection is based on the assumption that the Medicaid program will continue to be underfunded. It accounts for cost increases in group health insurance and pensions but leaves most other areas of the budget unchanged or flat from FY2012.

“General Fund’s costs for Medicaid are projected to increase by more than 40% to $12.1 billion in FY2017 from $8.6 billion in FY2012. If Medicaid appropriations increased by only 2% a year, well below predicted costs, the backlog of unpaid Medicaid bills would reach $21.0 billion by the end of FY2017.

“General Funds pension costs—including statutorily required State pension contributions and debt service on pension bonds—are projected to increase by approximately 35% from $5.7 billion in FY2012 to $7.8 billion in FY2017. Pension-related costs increase from roughly 17% of total General Fund’s expenditures in FY2012 to 21.6% in FY2017.

“General Fund’s costs for State employee group health insurance are projected to increase by approximately 39% from $1.4 billion in FY2012 to $2.0 billion in FY2017. Roughly 91% of the 81,900 retirees covered by the group insurance program do not pay any premiums for their coverage.

“The Governor’s three-year budget projections, released on January 3, 2012, show an operating deficit of more than $500 million in FY2012 and a total of $818 million in FY2015. The Governor’s projections do not account for the full annual cost of Medicaid or group health insurance based on current policies and do not address the increase in unpaid bills...

“Civic Federation Recommendations for State Pensions: It remains unclear how the State can comply with statutory pension funding requirements and also pay for other costs of running State government. In light of fiscal realities, the Civic Federation recommends that current Illinois retirees and employees hired before January 1, 2011 receive the same annual benefit increases as new workers: 3% a year or one-half of the increase in the CPI, whichever is less, and that benefits be increased by a simple interest rate. The Federation also supports reducing non-vested benefits for current employees, increasing employee contributions or both...

“Civic Federation Recommendations for State Retiree Health Insurance: The Civic Federation supports requiring all State retirees to share the cost of their health insurance premiums. The Federation also supports abolishing any law or rule that allows retirees who live outside Illinois to pay lower premiums than retirees who live in Illinois for the same insurance coverage...

“Civic Federation Recommendations for Medicaid: The State should move aggressively to implement the significant reform legislation passed in January 2011 by enrolling Medicaid recipients in coordinated or managed care networks and moving residents from State centers for the developmentally disabled to community settings. The State should continue its efforts to control prescription drug costs, the most expensive optional medical service provided under the Medicaid program. Short-term savings on Medicaid should come from programs that are not eligible for federal reimbursement. One such program the State cannot afford to continue and must eliminate is Illinois Cares Rx, a prescription drug program that supplements coverage for seniors in Medicare Part D...

“Civic Federation Recommendation on Borrowing for Operations and Unpaid Bills: The Civic Federation opposes any additional borrowing by the State of Illinois to support its ongoing operations or to pay down its backlog of bills because it cannot afford any additional debt service. Borrowing for operations generates one-time revenues that increase future spending pressures. The Federation supports the State’s efforts to ease the burden on vendors through an improved and cost-effective vendor payment program...

“Civic Federation Recommendation on State Employee Salaries: Given fiscal realities in the State of Illinois, there is no room for bargaining unit increases in FY2013 or in the foreseeable future. The Civic Federation urges the Governor to keep the State’s dire financial condition in mind as new collective bargaining agreements, effective in FY2013, are negotiated...

“Civic Federation Recommendations on Retirement Income: The Civic Federation supports broadening the individual income tax in Illinois to include federally taxable portions of retirement and Social Security income. This policy would provide additional revenue stability and reduce preferential treatment of retired taxpayers that the State can no longer afford, while protecting the lowest-income individuals...

“Civic Federation Recommendation for the State Cigarette Tax: The Civic Federation supports increasing the State tax on cigarettes from the current rate of 98 cents per pack to $1.98 per pack in FY2013 to reduce the State’s budget deficit and to fund public health expenses in future years...

“Civic Federation Recommendation for Statutory Transfers Out: The Civic Federation recommends limiting the use of statutory transfers out of General Funds to ensure that State resources are used in the most effective way possible. The Federation supports the Budgeting for Results Commission’s recommendation to end the funding of State operations through statutory transfers out, excluding transfers for debt service, local government sharing, revolving funds and cash flow purposes. The State should move to consolidate Special Funds currently supported by transfers out and review programs funded through these accounts as part of the annual General Funds appropriations process...

“Civic Federation Recommendation for Fund Sweeps: The Civic Federation opposes inter-fund borrowing not repaid within the same fiscal year because it pushes current operating expenses into future years. Instead, the State should sweep any available surpluses in Special Funds into the General Funds to pay down its backlog of bills and ease cash flow issues. The Civic Federation also recommends that the State’s Special Funds be consolidated and/or eliminated except in cases of high priority or mandated expenses...

“Civic Federation Recommendation on Economic Development Incentives: The Civic Federation recommends that the State of Illinois develop a comprehensive economic development incentive policy to curb economic brinksmanship by Illinois businesses and allow the State to monitor the relative effectiveness of various incentive programs. Such a policy should be in place before the State renews, expands or creates any economic development incentives.”

See January 22nd post: SB 512 – “Something Wicked This Way Comes” – is back like Banquo’s ghosts… Civic Federation skews “research” to promote destruction of pension plans for public workers

Illinois or Should It Be Called Plutocraticstan?

2012-01-28T03:38:00.001-08:00

One of John Stuart Mill’s concerns in his “Essay on Liberty,” written 153 years ago, was the potential tyranny of the majority to suppress the minority. Had he lived today, he would have written a treatise on the absolutism of the wealthy and powerful minority and their parasitic lobbyists (who choose what our legislators often consider for policy and proposed laws) instead. These individuals, through a form of political despotism, legalized coercion and self-proclaimed infallibility, steal the guaranteed liberties and rights of the rest of us. It is the members of the state’s plutocracy that decide all issues for everyone. Mill erred in his belief that democracy could count on “learned and dedicated men” to guide its development. He did not take into account the fallibility of future legislators and the selfish interests of those who procure them.

Such is the case in the State of Illinois where the government is held hostage by affluent and influential “special interests” (to protect the riches of the state’s wealthy ruling class); where both the republican and democratic parties (or the “Money Party”) are one side of the same tarnished coin corrupted by briberies (campaign funding) made legal; and by the Civic Committee of the Commercial Club of Chicago, in particular, that can manipulate the state’s politicians without consequences, set the legislative agenda, and hoodwink and oppress an oblivious populace.

What is the relationship between dishonest politics and corrupt partnerships? A substantial amount of campaign money affects the ability and the will of our state legislators to make ethical decisions; it is money that motivates legislators to believe that radical “pension reform,” for instance, is a road to navigate for reducing the state’s future budget deficit, though we know that “the road to hell is sometimes paved with good intentions.” In the attempt to pass a radical “pension reform” bill, perhaps this spring, legislators and profit seekers who support them do not consider the effects that they will impose upon the lives of teachers and other public employees. The fact that these legislators do not read the bills that they may or may not pass is an embarrassing and dangerous injustice, no matter how “busy” they are planning their continuous campaign funding. A caveat for teachers and other public employees is to read the likely amended 314-page Senate Bill 512. We can be sure that most of the legislators who might vote for this bill will not read or examine the bill’s consequences.

Bob Dylan once said, “Money doesn’t talk, it swears.” How can we trust our legislators who support policy and laws that are initiated by the plutocrats’ contributing lobbyists? How about another easy question to answer: who benefits the most from political connections or subsidizations?

What does insiders’ fund raising accomplish besides maintaining the status quo of unregulated cupidity and irresponsibility of our legislators? It creates a polarization between the rich and the rest of us; it protracts a policy-making for “special-interests” patrons, such as members of the Civic Committee and Civic Federation, where donations create obligations, allegiances and reciprocities. All of which diverts an elected legislator’s essential commitment to and concentration on representing his or her constituents.

Plutocratic lobbyists are no longer subtle about their tactics, about the contaminating financial dependency that they instigate with legislators, and about their continuing influences upon policy and bills that are passed in Illinois (and in other states across this country for that matter). If we asked our legislators whether their decisions were independent of their highly-addictive campaign funding, what would they say? That their financial support does not affect the issues and the issues’ outcomes that they consider for the rest of us? That it does not affect their votes on policy and bills or the tax benefits that they will grant to the state’s wealthiest corporations? That exorbitant campaign funding does not distract them from their elected purpose and their oath of office to represent the electorate? That injustices perpetrated by the influential self-interests of biased brokers with their moneyed-access of power that is granted to them do not exist; that the “special interests” of Political Action Committees, sponsored by Tyrone Fahner of the Civic Committee, also mean “bankrolling candidates who are willing to cross labor unions and vote to reduce pension benefits and/or require workers to pay more for them” (Illinois Review, 26 January 2012).

What are we going to do about a “rigged system” where “We Mean Business” signifies destroying public pension systems, where “shared sacrifice” exempts the wealthy from their so-called proposed “reforms” and eliminates taxation of their corporations, where their money precludes changes to a corrupt political system, where the rising inequalities that continue to exist in Illinois are funded by these powerful and wealthy interests’ groups, where the legislators’ self-serving flat-tax rate that they refuse to transform proffers unequal opportunities and quantifiable payoffs for our state’s largest corporations and their executives, and ensures benefaction for the re-election campaigns of Illinois politicians? So what are we going to do about the plutocracy’s self-perpetuating greed, their influence on our state’s elections and the legalized damage done to a dying representative democracy?

What are we going to do about our quiet, selfish indifference and acquiescence that sustain this politically-bankrupt state (of affairs)? How about telling them what you think and what you will do in order to stop their depravity: http://www.elections.il.gov/DistrictLocator/DistrictOfficialSearchByZip.aspx

SB 512: “Something Wicked This Way Comes” (or “What, Me Worry?")

2012-01-23T04:21:00.000-08:00

A few days ago, Dick Ingram, Executive Director of the Teachers Retirement System of Illinois, stated that “everyone acknowledges that the cost of public pensions under the current system will increase greatly over the next three decades and that these projected costs will hamper the state’s ability to meet its core responsibilities to all citizens. That reality means that it is time to leave political science behind and focus solely on the actuarial science — the dollars and the cents that must be brought into balance. It is the only way the Teachers’ Retirement System and the other state pension systems will be able to fulfill their fiduciary duty to their members.” Will the definition of revenue “balance,” in this context, create a conflict between the public and private sectors’ interests? Is it true that the only solution (SB 512) proposed right now for the state’s budget problems is a choice for public employees to reduce their pensions’ contractually-promised benefits? “Fiduciary duty” entails confidence and trust. Is it secondary to maximizing investments for the Civic Committee of the Commercial Club of Chicago and cash flow for the State of Illinois?

"The facts are indisputable. Over the next 30 years, the state will owe retirees in excess of $140 billion, but Illinois has less than $54 billion in the bank right now to meet those long-term obligations” (Ingram). Of course, this projected “excess” to be owed by the state includes the rising service debt. Do any public employees prefer that the State of Illinois default on the money it owes to the public pension systems and not uphold its contractual obligations? Do any other citizens of Illinois believe that the state has the means to pay all of its debts, without punishing public employees for the past reprehensible actions of a few corrupt governors, legislators, and other unethical decision-makers, if it implemented the already-proven methods for enhancing revenue flow used in other states?

“The ‘unfunded’ portion of that liability creates tremendous pressure on state government because it essentially triples the annual cost of public pensions to taxpayers, money that could be spent on other services” (Ingram). Thus far, “shared sacrifice” has been meant only for the middle class, of whom public employees are members, and the poor that must abdicate their hard-earned money and pay more taxes because of an inefficient state government. Few people consider the fact that throughout the years state “services” were provided primarily because of the reallocation of public pension monies to those demands. Perhaps an important question to ask is whether the “party of the privilege” (the Civic Committee) had anything to do with the state’s unreliable contributions to the public pension systems all these years? In other words, whether past legislative irresponsibility enabled certain self-serving legislators (that were funded quite generously through legalized and normalized bribery) to displace public pension money to those very “special interests” (or business groups) without raising taxes on corporations and electorates.

“[Indeed] the way forward will be guided by a sober focus on the math: what has been promised; what will it cost: what can we afford. It will not be easy, but there is enough common ground for us to stand on to get where we need to be. It is what Illinois deserves.” (Ingram). One might ask how far apart is “what it will cost” and “what ‘we’ can afford?” Surely, there are many political games that can be played with accounting rules and the legality of pension matters to deceive retirees and current employees about their pension systems’ liability. Though Article XIII, Section 5 isn’t a mathematical equation, it has helped prevent public employees from sinking into the quicksand of this rather indeterminate “common ground.” Impelled by the Chicago Tribune’s yellow journalism and the Civic Committee’s sleazy Illinois Is Broke, it is apparent that most legislators, moguls and the swindled public want the Illinois pensions dead.

A few months ago, Dave Urbanek, Public Information Officer for the Teachers Retirement System of Illinois, stated that “pensions will not run out of money… [That] assumes that at a future date, state pensions will just cease and all outstanding financial obligations will come due… Unlike a corporation, a state government cannot go out of business… [Accordingly,] state law empowers TRS [40 ILCS 5/16-158c]… Payment of the required state contributions and of all pensions, retirement annuities, death benefits…, all other benefits…, and all expenses are obligations of the state… The state has waved its sovereign immunity in regard to the teachers’ pension because TRS is a qualified pension plan under the tax-deferred provisions of the IRS code. Federal law would protect all claims… Pensions [are not] the problem [or] why Illinois has been unable to pay its bills. The reason is a dramatic fall-off in state revenues over the last four years, costing the state $4.4 billion.”

There are few experts in the fields of retirement-and-benefit accounting and pension law. Current and retired teachers of Illinois can only hope that the Illinois Education Association or the Illinois Federation of Teachers have hired the most ethical and intelligent members among these rare specialists. Indisputably, all public employees’ deferred, “earned” income that is “constitutionally protected” is what all public employees of llinois “deserve,” and every one of us needs to readily safeguard our pension more than ever now despite what anyone says about it.

(Read “Sustainability of the Teachers’ Pension,” June 5, 2011; “What We Believe We Know about the Sustainability of the TRS Pension,” June 10, 2011; and “Unfunded Liability and Sustainability of a Pension,” July 5, 2011 for further information on this topic).

SB 512 – “Something Wicked This Way Comes” – is back like Banquo’s ghosts… Civic Federation skews “research” to promote destruction of pension plans for public workers

2012-01-22T08:19:00.000-08:00

The past theft of pension assets in Illinois was quite easy for a few governors and some legislators; even for other rogues, who bargained for money-enhancing incentives (spiking) for retiring public employees at the expense of the many that they would leave behind without their exorbitant financial perks to retire early. We know who the indifferent scoundrels are today and about their schemes to steal even more monies from the public pension funds. These are the same types of perpetrators that still advocate a radical “pension reform” bill without reading it or understanding its consequences. That was then.

Now comes, once again, the Civic Federation claiming to do “non-partisan research.” They are a very good example of why we must guard against the so-called “expert” testimonies and negotiating that will be used to influence the Illinois legislators’ decision this spring regarding radical “pension reform,” arguments based upon omissions or adjustments to make the pension systems appear less funded and “indisputably” in need of urgent “reform.” We must guard against the disingenuous claims embodied in their demand for radical “pension reform.”

Be aware of our legislators’ mantras: “retirees are living longer now; current teachers’ salaries are increasing; the expected rate of return on pension assets will not be what it was in past years; the state’s costs are too high; Illinois has to reduce its expenses to remain economically competitive; we will have to cut services to schools and health care for the elderly; we have to make some hard decisions; we cannot reduce the liability without reducing benefits; the pension systems are unsustainable; health care costs are skyrocketing; it’s about shared sacrifice; we have to do something!”

We should know by now how statistics used for pension liabilities are based upon changing assumptions that include interest and mortality rates, asset returns, estimates of what the state will have to pay in the future, preferential accounting rules and undisclosed influences on legislative decisions. Most of us are aware how certain elements from media, especially Illinois Is Broke, Fox News and the Chicago Tribune, attempt to garner consensus from the wealthy business community, where it succeeds quite easily, and propagate distorted information and scaremongering schemes to a mostly oblivious public by using deceptive practices to distract them from carefully examining more sensible and ethical solutions to the problems.

We should realize that there is a real incentive for some executives from the Civic Committee of the Commercial Club of Chicago, Civic Federation, and for others like them to aggressively attack the public employees’ pension and to inflate the liabilities of the public pension systems while promulgating their fallacious suppositions. We have learned about the types of criminals who can orchestrate the collapse of a pension system.

There were hundreds of examples of these in the private sector during their buildup to their current attack on public workers’ pensions. Consider Victor Rice’s blustering “with cognac and cigars” after he accomplished his “organized liquidation” of the retirees’ pension for Varity Corporation, (Rice later collected $50 million in severance after he sold the company in 1999), or chief executive Patricia Russo’s slow and deliberate destruction of the employees’ pension and benefits in 2005 at Lucent while using what remained of the pension savings to pay executives’ million-dollar bonuses “because that’s what it’s going to take to continue to attract and retain the talent required to build this company back to where we want it to go.” Examples of this style of Machiavellian bravado are not exceptions in today’s plutocratic worldview.

It is our duty to protest against any diminishment of the public pension systems and public employees’ benefits or any sort of financial restructuring thereof before it is written into law this spring. Consider that defined-contribution plans will obviously create no liabilities for the state but generate enormous profits for the financial sector (of which 40 percent of the Civic Committee are members). They are the spawns of defunct defined-benefit plans from the private sector.

We should ask whether the Civic Committee and Sidley Austin’s past preemptive assault and semantic word-game manipulation were meant to test a possible reduction of benefits in the public pensions without violating Article XIII, Section 5 of the Illinois Constitution? Does anyone believe that members of the Civic Committee (and many legislators of the 97^th General Assembly) care about whether a public employee has any retirement plan at all? Who has the most to gain by radical “pension reform”? Might they be the executives of the Civic Committee, the Civic Federation, and certain legislators who wish to align the public pension systems with the financial industry? Will reducing the state’s unfunded liability become another means by which the Civic Committee, at al. manufacture even more profits? A Robber Baron’s philosophy includes the dictum that cutting pension benefits will produce gains for employers.

Birth of an Angel

2012-01-20T04:19:00.000-08:00

for Suzanne Elizabeth

The first big snow of the year

bursts with laughter in the backyard,

the forsythia and dogwood capsizing

under the weight where his daughter

plays in a white maze of discovery,

her small arms sweeping wings

under a moon-swept sky.

He feels creation in his heart,

the mill wheel spin,

the birth of a child without sin.

Millions of hexagons drift from heaven,

a mysterious map of the universe

hidden in each eye

spiraling toward infinity,

while the weak January sky

promises miracles,

whitewashes the land

where she is waving an angel,

throwing curveballs every which way,

the pure, delicate arcs

bridging the two of them

in a milky circle of light.

(1992)

To read other poems in this blog: “Adverbial Paradoxes” (March 11, 2011); “Keeping a Net Beneath Them” (March 18); “The Need to Tell Somebody” (prose poems – March 30); “Euclid and Barbie” (April 22); “The Devil’s Whore” (June 15); “Dillinger, Alias Jimmy Lawrence” (July 22); “A Want for Reason” (July 27); “Have a Nice Day” (August 7); “Fairy Tales Redux” (August 18); “Double Vision” (September 4); “Teacher, What Did I Miss?” (October 9); “Remember” (October 25); “Dia de los Muertos” (November 1); “Munditia, Patron Saint of Lonely Women” (November 17); “In the Cross Hairs” (November 23); “Hum If You Can’t Sing” (November 29); “Bartleby, the Scrivener” (December 12); “Postscript to an Elegy” (prose poems – December 19); “After His Witnessing an Argument with My Father” (December 26); “Hell” (December 31); “Don’t Ask Why” (January 6, 2012); “The Checkup” (January 12).

Illinois “Pension Reform” Mania

2012-01-13T21:07:00.000-08:00

All we can hope for now is that Governor Quinn and Illinois legislators make an ethical and legal decision regarding their single-minded “pension reform” (as if this is the sole solution for the current state’s debt problems). We can also hope that we will be receiving information from the Illinois Education Association’s (IEA) and the Illinois Federation of Teachers’ leadership (IFT) regarding an alternative, reasonable and fair plan to challenge the disastrous, absurd “pension reform” bill proposed last spring by Representative Tom Cross (with intractable House Speaker Michael Madigan’s approval) and his “special interest” group, the Civic Committee of the Commercial Club of Chicago.

Timing, good sense, and a message of “constitutionality, fairness and sustainability” are still essential components of any counter proposal. For the rest of us, personal contacts with legislators are crucial. Person-to-person meetings and telephone conversations should have already been established and should continue. We can remind our legislators that their decision about such “reform” should not be prompted by political despotism, in other words, one that is based upon autocratic and arbitrary self-interest, fallacious information and a predisposition for unanticipated consequences – all quite apparent in last year’s fall and spring sessions.

It is regrettable that most people and many Illinois legislators do not care whether teachers and other public employees have “contributed responsibly to their pension funds” or that teachers “will receive [little to] no Social Security when they retire.” Legislators have heard this mantra, and they believe that it does nothing to solve the perceived, inherited problems at hand. It is troublesome that most people and many legislators do not care whether the retired teachers’ and other public employees’ defined-benefit pension plan is a fundamental source of economic stimulus to communities in Illinois and the only retirement income for hundreds of thousands of people.

Most people and many legislators do not care that the “State of Illinois has not consistently paid its full constitutional and obligatory contributions” to the public pension systems throughout the years, that this money was diverted to other operating expenses and “special interests’ groups,” that the State of Illinois saved approximately $15 billion (this figure does not include the amount of accrued interest that would have been earned) by not paying what actuaries have calculated the Teachers’ Retirement System should have received throughout those years, that this theft enabled the State of Illinois to provide services for its citizenry without raising taxes during that time, and that this money was deferred-earned income for teachers in Illinois. Legislators have heard this reiteration, and they believe that it does nothing to solve the perceived problems at hand as well.

It is true that only a few stalwart teachers have attempted to respond to the Civic Committee's or the Chicago Tribune's diatribes and educate the ill-informed populace. It is also true that numerous teachers and their families care a great deal about the possible destruction of their pension system.

It is verifiable that Illinois legislators do not possess the resolve to take on an inadequate fiscal system that fails to generate enough revenue growth to properly maintain state services and pay state expenditures for health and social services, education, government, transportation, capital outlays, public protection and justice, etcetera. Legislators are the Civic Committee’s victims, and so are we. Be that as it may, Illinois legislators should transform the state’s revenue system.

Therefore, it is our responsibility to tell our legislators what many of us want: a progressive tax rate that 43 other states utilize; a broad-base tax base; a better timing of tax payments; an increased taxation on the wealthy; and an end to corporate welfare, via extortive tax breaks and various loopholes for corporations so the rest of us do not have to agonize over an impending, ruinous “pension reform” bill and the elimination of needed services and other legislative mistakes.

Although some Illinois legislators do not want to fully fund the public pension systems next year and thereafter (perhaps two years in a row is an unprecedented fluke), these legislators assume that they know how to accurately estimate pension assets and liabilities in the future by drawing erroneous inferences from intentional, biased data provided for them. We can envisage how some people (especially those not voted into office) can manipulate variables in order to reach a preferred conclusion. Indeed, it is easier for certain legislators and the Civic Committee to obsess over symptoms (a pension’s unfunded liabilities), for instance, and not the causes of this state’s financial deficits (budget practices and a flat-rate tax system, for example).

It is unfortunate that most Illinois legislators ignore the fact that “a high-quality revenue system relies on a diverse and balanced range of sources [that] spreads the burden of the tax among more payers than a narrow basis does” (National Conference of State Legislators, 2007). Some Illinois legislators will state that they “oppose raising any taxes to balance the state’s budget.” Of course, few legislators want to raise taxes on middle-class and impoverished voters; moreover, when legislators claim that they will not raise taxes, (especially for corporations and the wealthy one percent that bankrolled them), it is their warranty for campaign funding and a plethora of votes from oblivious constituents.

It is important to remember that legislators can exercise the power to not completely pay the public pension systems again. Undeniably, many legislators approved a financial windfall for a few Illinois corporations most recently while ironically pondering budget cuts and "pension reform" for the rest of us. “[Indeed] each new tax break means less money to run state government, [thus] requiring officials to get more money elsewhere or cut services” (Associated Press, November 2011).

Considering their spring legislative focus, it is apparent that many legislators do not contemplate today’s economic realities: Illinois’ economy has largely become a “services and information-based economy… [and that] changes in personal consumption have resulted in the Illinois sales tax covering a decreasing proportion of consumption expenditures” (Chicago Metropolitan Agency for Planning, July 2011). These same legislators also ignore the fact that Illinois “suffers from structural deficits or from failure of revenues to grow quickly as the cost of services…, [and that] structural deficits stem largely from out-of-date tax systems, coupled with costs that rise faster than the economy… Fixing these structural problems would help [Illinois] balance [its] operating budgets without resorting to [a reckless and radical 'pension reform' instigated and propagandized by the Civic Committee, Civic Federation, Chicago Tribune and their ilk]” (The Center on Budget and Policy Priorities, January 2011).

So what can the IEA and IFT offer by way of negotiation this spring on the issue that “something must be done!” about the public pension systems, (in particular, the teachers’ pension), the unfunded liability, and increasing state payments? What can current and retired teachers (and other public employees) surrender that will barely diminish the state’s colossal financial liability created by past-and-present greed, corruption, arrogance, incompetence and self-interest? We can only hope that the IEA and IFT leadership has a “plan” to offer in the legislative sessions this spring, and we hear about this strategy as soon as possible.

Meanwhile, what we can do is unite with the Occupy Wall-Street Movement in Chicago and protest at 21 South Clark Street, where the Civic Committee conducts its avaricious business practices; we can research the aforementioned subject matter, become more informed, and meet with legislators to discuss this potentially dreadful and irrevocable "pension reform" for teachers of Illinois and their families. Why? Our individual and collective future depends upon what we do and don’t do.

For some in-depth analyses regarding Illinois pension issues, click on “2011” of the Blog Archive (on the right) and then the appropriate months for the following posts: “Tax Reform! Not Pension Reform, Budget Cuts and Tax Breaks for the Wealthy” (20 November 2011); “Pension Hybrid Plans, Constitutional Challenges, and the Ethical Path to Take” (18 November 2011); “Sustainability, Affordability and Constitutionality: Are They Compatible” (10 November 2011); “Ask Your Legislator a Few More Questions” (3 November 2011); “A Response to the Chicago Tribune and the Civic Committee of the Commercial Club of Chicago” (22 October 2011); “SB 512 = No Trust in Legislative Leadership” (14 October 2011); “A Letter to My Colleagues and Friends at IRTA, Du Page” (5 October 2011); “Defined-Benefit Plan v. Defined-Contribution Plan, Updated” (30 September 2011); “Illinois May Be Broken, but Not the Civic Committee of the Commercial Club of Chicago” (26 August 2011); “Why Bankruptcy Should Never Become an Option for Illinois” (2 August 2011); “Spread the Burden of Taxes and Address Tax Inequities in Illinois” (25 July 2011); “A Call for Caution for This Fall’s Veto Session” (17 July 2011); “What Will Be Illinois’ Next Move Regarding Its Public Pensions’ Liabilities?” (11 July 2011); “Unfunded Liability and Sustainability of a Pension” (5 July 2011); “Authorized Theft and Greed in Corporate America” (30 June 2011); “What We Believe We Know about the Sustainability of the TRS Pension” (10 June 2011); “How about Tax Reform, The Most Important Issue in Illinois?” (8 June 2011); “Sustainability of the Teachers’ Pension” (5 June 2011); “An Open Letter to All Teachers in Illinois” (30 May 2011); “Illinois Is Broke: an Insidious Scheme” (2 May 2011); “Pensions: An Argument Regarding Sustainability” (28 April 2011); “Should We Blame the Teachers and Other Public Employees’ Pensions for the State’s Budget Disaster?” (27 April 2011); “Blowin’ in the Wind” (24 April 2011); “The TRS Pension: ‘Nothing but the Facts’” (16 April 2011); “An Appeal to Reason: Who Is to Blame?” (12 March 2011); “Wisconsin Might Be an Omen for the Public Employees of Illinois” (11 March 2011).

The Checkup

2012-01-12T04:36:00.000-08:00

(Symphony for a Dental Hygienist)

It’s the waiting that intimidates you:

the walls shelved with pamphlets—
root canal treatment, gum disease, X-ray safety.
Then the office door opens like an overture for nerves,
and she alarms you with your name.
Your feet, already Novocain numb from crossing them,
press down the Indian bed of nails.

What you did not forget is the chair:

doctor’s office vinyl
with a head-and-body tilt devised for excavating.
Of course, there are the instruments
plastic-wrapped on the metal tray
alongside the latex gloves and gauzy mask.

The performance begins with X-rays,

an allegro for two cardboard wings
and your fragile gag reflex;
then your memory is jarred loose
by the Scaler, an andante of scraping and foraging
for bacon bits, orange pulp and toasted crumbs,
your mouth fixed in a capital O
while the saliva ejector hangs under your tongue,
trapped in a maelstrom of spittle.

The lamp beams down
just beneath the ceiling mobile of paper boats.
There’s nowhere else to stare except at them
and her face.
By now you know the subtle shades of her eyes
better than you know your wife’s –
the number of blemishes on her brow
and other indelicacies with Lilliputian accuracy –
until she lavages your mouth with the Cavitron,
con moto moderato,
eradicating coffee and blueberry stains
with a crescendo to rival timpani.

You have made it to the finale

of flossing and electric brushing,
an allegretto of rinsing and sucking,
the metallic taste flowing from your molars
and bicuspids
raked and plowed clean.

The concert concludes with the maestro’s brief pause –

the virtuoso’s checkup.
I’ll see you in six months resound like applause,
and you whisk out the door, vivace!
with a new tooth brush and floss in hand
and with no encore.

Don’t Ask Why

2012-01-06T20:35:00.000-08:00

We’re going in through here, he says
with a Neil Armstrong drawl,
pointing to a wall chart
of the lower digestive tract.
…up the sigmoid and descending colon,
through the transverse, then
down the ascending colon.
Nothing contradictory about that, I think,
just four small steps.

Yes, at moments like this,
lunar dust lazes against the slopes of rocks
never before trekked; nebulas remain
unfathomed and quasars unseen.
Here, though, sandblasted by a gallon of Colyte,
that instant salt and polyethylene punch,
he will see across distant, soft linings
with a myopic pipe of flexible fibers
that beams light to elbow images
back to an eyepiece, milli-seconds away.

We’ll take some biopsies, he adds.
…probably just pseudo-polyps anyway.
And I’m turned on my left side,
sporting a hospital gown made for such occasions.
Two tubes bullwhip from my nose;
the I.V. probing my right arm
erases both sensation and memory.

My position is something prized with self-mockery:
life is a hoax, a gift marked by chance
explorations and clichés. Look,

there are black holes sucking light out there
and galaxies exploding at warp speed!
May the force be with you,
I murmur before the light goes out.

Hell

2011-12-31T05:28:00.000-08:00

The sinners of the last round
lie completely sealed in ice…
--Canto XXXIV, Circle 9: The Inferno

You’ve heard the jokes
about the insurance salesman and some guy
locked in a soundproof eight-by-ten cell,
or the one about being stalled in traffic
with your mother-in-law and her choir of tongues,
the windows cranked up and with no heat.

In grammar school, the old Irish priest
told us the walls were
four thousand miles thick,
that the fire was without seam and everlasting
like a Latin teacher’s conjugation of verbs.

But I always thought it was the way
Hieronymus Bosch saw it with special effects,
vapors and strobe lights, or like being trapped
with an eternity of Munch’s screamers,
their faces dripping that dripless wax.

Today it’s a used car salesman
who won’t give you back your car keys,
or the hail of Have a nice day from the cashier
who is buffing her nails and snapping her gum,
you looking up from the circle of ice,
the defroster in your car still not working.

After His Witnessing an Argument with My Father

2011-12-26T05:58:00.000-08:00

I tell my son there are things
one should never say, hurtful words,
like liar and cheat.

The heart holds whatever it hears
for a long time, I say.
The tongue is the mind’s fist.

I want to find the right words
to make a difference
for the wrong ones,

if recovering from them is possible,
to tell him some things about my heart
I have never said to anyone.

I can tell him what it felt like
to carry his grandmother
down the stairs after she died,

how once while sitting by her bedside
I was punched into silence
as I watched her sip

from an imaginary teacup,
how each day is an act of forgiveness,
and that the mind will know

only what it has learned
but is last to discover
what the heart has known forever.

But I know this talk is for me.
The metaphor bleeds through the words
while he stares out the passenger’s window.

(for Geoffrey Glen, 1992)

Postscript to an Elegy

2011-12-19T03:18:00.000-08:00

"What we’re mostly faced with are these privacies, inconsequential to all but us" –Stephen Dunn

Nothing Can Justify Suffering

After her youngest son died, she made a fortress of grief; her loneliness became an albatross that she carried with her everywhere she went. Each day that she visited his burial vault, she invented and reinvented her sorrow.

***

A Small Plot in the Short Story of Our Lives

We went to her home to celebrate her sixty-fourth. My father made dinner, and when my sister arrived, we sang Happy Birthday, all of us thinking the same thoughts. We looked for signs, but not knowing what to look for. We ate her favorite cake, pineapple cheese, disguised with whipped cream. She opened gifts, and my sister’s youngest son brought a bright burst of red-and-white carnations in a small blue vase, beautiful and imperfect as hope.

I read prose poems about Elizabeth and Race Street, a small plot in the short story of our lives, and we believed that we once lived recklessly but in a more sensible time, that happiness is something we appreciate too late in our life.

She was wearing her new wig, and I thought about her lying on the gurney, the long tube in her nose that filled her lungs with water, and how they rinsed her kidneys for four hours before they dripped Cisplatin then Vinblastine through a needle in her vein slowly as an hourglass.

She did not want to tell us about her headaches and nausea, that her arms bruised easily as peaches, how her fingertips tingled. But we asked her, and we trespassed on her life, knowing that the denouement lay just beyond the final page on which nothing else could be written.

***

We Watched Her Let Go of Her Life in Slow Motion

Hope slammed its door behind my mother’s right ear where tumors grew like broadleaf weeds. Her hearing, at the crossroads, and her hands, even more frail, trembled from a fractured life with an affinity for those who suffered. These were the hands that once pulled a die from a small child’s nose, pushed slivers out of his fingers with straight pins, and soothed his fevers and bad dreams.

Betrayal converted these hands that were worn to a light-blue thinness—unable to do the things required of the living—and her eyes that stared too long at the discord of medicine bottles, impassive icons, and votive candles on her dresser.

Black branches spread across her lungs then welded to her cerebellum. Her faced distended; her mouth erupted with tiny sores. Her eyes held the tell-tale sign while she lay uselessly like a bird’s broken wing, somewhere between pain and forgetting.

***

Foreshadowing

My mother, her head sinking into pillows, cursed squirrels – their high-wire acts, these other lives hanging in the balance, crossing telephone cable hooked to the house above her bedroom window. For days they made her flash accents of life. “They keep me awake all day long, running on the roof,” she’d say.

My father – his old legs wobbling on rungs; the cage held tightly in one hand; and the trip wire set, smeared with peanut butter – trapped squirrels off the pitched roof. “I caught eleven and one robin,” he said. “I brought them to the cemetery and let them go.”

The robin remained, its bold breast blazing through the bony tree. My father and I listened for gray squirrels. “They’ll never come back,” I said.

***

To Ask Is to Finally Say What I No Longer Believe

It was as easy as withholding food and water from someone whose world had turned from migraines to morphine. So why do I have to know if she floated above me like some magical act while the vinyl bag zipped closed over her swollen face, and if death is more than what it seems?

Why do I have to know whether prayer helped, and if her suffering and Catholic indulgences paid dividends like mutual funds, and whether her sleep was nothing but a short rehearsal and dreams—the only afterlife we can really speak of?

And why do I have to know the endings to unfinished stories, whether not speaking to her sister all those years was the right thing for her to do, and if all her collections of things were meaningful to her at the end of her life like the passive, religious figurines that had nothing but cheap plaster for souls?

The day she died, billions of white crystals began to bury her last home in a fusion of free-falling light, and the world kept on living.

***

My Mother Was Beautiful in Death (1925-90)

There is a healing that comes with distance and silence, like observing the movement of clouds. Watching my mother slowly die, I now understand how life and death can become engaged until life is unfaithful. At her wake, my wife said that her face looked beautiful, and she was…

Bartleby the Scrivener

2011-12-12T04:36:00.000-08:00

Ah Bartleby! Ah Humanity!
--Herman Melville

Perhaps he lost the language of desire,
hope checking out first
with its twin baggage of want and need,
hunger leaving no forwarding address.

Or maybe the language of etiquette
surrendered its meaning,
the tongue holding diplomacy hostage
behind a green folding screen.

Let’s presume he was stunned into silence
by God’s loneliness, by the fixed glare
of the black wall just beyond
the small side-window courting a dim light.

So much to prefer not to while the grass
and sky stitched together a singular void,
and the bud of Existentialism took root
deep within his heart, denial sprouting

against the dead letters and bricks
that merged into a mortuary of self-interest.
He knew nothingness soon becomes a stranger
to no one; preferring it was his last resistance.

Biopsy of a Free-Lance Writer’s Attack on Teachers

2011-12-05T10:45:00.000-08:00

Recently, I received an email about someone who had attempted to satirically criticize a few questions that I had about progressive tax reform as a solution to the state’s budget deficits, but his attempt at mockery turned into an ad hominem attack on Illinois teachers. For your perusal, here is a few of Mr. TSDM’s Techniques of Self-Deception and Manipulation.

To begin, consider one of Mr. TSDM’s introductory statements: “Why for example should WI have only one teacher with a salary over $100,000 when in 2010 IL had 6,855 teachers with salaries over $100,000?…”

There are over 171,000 active teachers in Illinois (Teachers Retirement System). Even if Mr. TSDM is correct about 6,855 teachers that have salaries over $100,000, besides committing the fallacy of composition (to reason that the properties or minority of individuals are necessarily the properties of the whole which they constitute – in other words, four percent of a population is not representative of the whole), what has he established except for his conspicuously-deep prejudice against teachers who have earned a constitutionally-promised pension that they have consistently contributed to throughout their careers and that was under-funded by the State of Illinois in the amount of nearly $15 billion (TRS)?

Let’s consider his next statements: “…Tax credits for jobs continues [sic] to be the Hail Mary pass of progressive economic thinking. Like Obama and Geithner, Brown has no experience in the business world and obviously has no idea why businessmen hire new employees. They hire because business is expanding not because they might get a small tax credit. So what would happen if this type of law were passed would be [sic] tax credits going to employers who were going to hire anyway. In other words a complete waste of taxpayer dollars [sic]. This is another in a long line of progressive ad verecundiam fallacies i.e. ‘appeal to improper authority.’ Examples of these fallacious arguments would be asking [sic] Mike Ditka to explain the Theory of Relativity or asking Einstein to predict the Super Bowl winner or asking Obama/Geithner/Brown to devise effective business tax policy…”

Indeed, companies hire because they want to increase their profits and meet their customers’ demands. (Mr. TSDM must have had a lemonade stand as a child). But does Mr. TSDM fully understand the ad verecundiam fallacy and assume, for instance, that his readers will not recognize a claim that employs a ludicrous faulty analogy to make a point? It is ironical that he refers to ad verecundiam, the fallacy of substantive distraction through various appeals to pedantic words and phrases, detail and specificity, references, quotations, length, or mathematical symbols, when he uses no creditable references or any appeal to ethos in his disagreement. Moreover, his comments about “the Hail Mary pass of progressive economic thinking” announce his unwillingness to examine questions and evidence fairly.

Now examine his following statements: “…Mr. Brown’s position represents that of a large group of entitled political elitists, usually public employees, who think all solutions lead to tax increases and/or targeted Progressive tax credits which is the same thing. In spite of Solyandra [sic] he wants more tax money for ineffective and unworkable green projects; in spite of $6.8 billion in new taxes in IL he wants more taxes on the ‘rich’ and new sales taxes on services; without any experience in business matters he wants tax credits for hiring even though it is useless as a job creating function.”

Besides Mr. TSDM’s attempt to conjure a “now I got ‘em” emotional response from his tea-party comrades through use of such terms as “elitist” and “progressive,” he simplifies a set of circumstances and prefers an erroneous response to a complicated issue. He presents an irrelevant allusion to Solyndra that establishes another of his disconnected generalizations. Mr. TSDM failed to note that the questions I had asked explored a broader-based taxation system that would provide a decrease in taxes for low-income and many middle-income families. Let us imagine for a moment how much money would be available for services for ninety-nine percent of the state’s population if the top one percent of the populace paid its “fair share,” and corporations paid their “full taxes” to the state. Moreover, “[a state that does not tax services, such as Illinois], probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively” (the Center on Budget and Policy Priorities, July 2009).

Ponder these next claims: “…pension sustainability is eating the budget alive… note that the $6.8 billion tax increase implemented last year will just cover the pension obligation next year. Then also notice that in 2015 when the supposedly 'temporary' tax increase expires [sic] the pension obligation jumps to $7.9 billion. The $6.8 billion for next year represents about 20% of the General Fund Revenue. That’s 20% of the budget to pay for pensions for 5% of Illinois workers…,” [and] “…how big are those (taxpayer) pension liabilities? At the end of 2010 they were $135 billion according [sic] the state actuaries but perhaps as much as $270 billion by critics. And those numbers do not include taxpayer liabilities of $17 billion for Pension Obligation Bonds and perhaps another $40 billion for retiree health care. Notice that all of these liabilities, somewhere in the range of $200 to $325 billion, are TAXPAYER liabilities and not employee/retiree liabilities. That is the problem…”

Mr. TSDM subscribes to the Chicago Tribune and, though the unfunded liabilities of the pension systems remain in perpetuity, what he also fails to acknowledge is that they grew exponentially because of the state’s deliberate and inconsistent funding methods, the state’s unreliable accounting methods, and the state’s deceitful “backroom deals” that were to be funded with future monies (they occurred without teachers’ knowledge or approval). Furthermore, what he conveniently fails to remember is that the scapegoating of public employees began when greed and corruption, particularly flagrant in the financial sector, ignited the Great Recession. This, of course, came after eight years of inordinate military spending for two costly wars, deregulation and unprecedented tax cuts for the wealthy by the federal government. This tsunami of debt contributed to every state’s budget deficits.

Mr. TSDM fails to admit that Wall Street bankers and hedge fund thieves created the crisis; he does not comment upon the fact that deregulation, derivatives and two costly wars have contributed to state deficits. In addition, he says nothing about the state’s underfunding of the pension systems and its resultant benefits reaped by Illinois taxpayers for several decades because he prefers the fallacy of begging the question (assuming as true what has yet to be proved) and to arouse fear (a fallacy of argument ad metum), resentment (a fallacy of argument ad odium) and ignorance instead. We have heard the often skewed allegation that “it’s unfair for the ninety-five percent to pay for the pensions of the five percent” when, in fact, according to TRS, for the past 20 years, seventy-five percent of the teachers’ pension system has been funded by long-term investments, teachers’ contributions and their employers (FY 1991-FY 2010, excluding FY 2004 pension obligation bond proceeds). Two-thirds of the state’s contributions each year (the other twenty-five percent of funding) are for the debt service that the State of Illinois owes because of delinquent payments to the teachers’ pension system.

Reflect upon his concluding remarks: “…we should implement taxes on all IL public pensions and restore the $456 million in cuts to student transportation, Dept. of Aging, mental health and disabilities, Public Health, Children and Family Services and the homeless. In fact taxing and suspending the COLA only on teachers with pensions over $100,000 would provide enough funds to restore the $17 million in cuts to the Department of Aging and the $6 million in cuts to the Department of Children and Family Services…

“What the rest of us want is fewer Mr. Brown’s in public ‘service’; lower salaries for the fewer Mr. Brown’s that remain; lesser pensions and health care cost for the fewer Mr. Brown’s that remain; more work (hrs. /day, days per year) from the Mr. Brown’s that remain: fewer public functions (regulations) for the fewer Mr. Brown’s to perform/monitor/watch.”

Ah! Now we finally discover his real intentions for writing his squabble. Mr. TSDM’s “zavist” (a fallacy of argument ad invidiam or, in this case, an extreme envy of a teacher’s pension) obscures any objective attempt to respond to the salient questions that I had presented for serious discussion regarding pension and tax reform in Illinois. Perhaps he had a few traumatic experiences in his formative years (Was he bullied by his classmates or a teacher in grade school?). Though it is difficult to assume whether he ever went to college based upon his attempt at writing, he is indubitably “without any experience” in logic, ethics, and legality.

What Mr. TSDM fails to understand (because of his provincial ideas and partiality) is that pension reform is an educational issue and that an essential goal for any state when considering pension reform is to attract and retain the finest possible teacher candidates available through salaries that are commensurate with their education and experience (just like remunerations for college-educated employees in the private sector). Unfortunately, many school districts in Illinois are dependent upon an antiquated and inequitable system of property taxes for most of their schools’ revenue; thus, injustices abound. What’s more, pension reform is a political and financial issue that will affect hundreds of thousands of people; it must be evaluated not only for affordability, but for fairness, sustainability and constitutionality.

We can assume that Mr. TSDM does not believe that pension reform should concur with state and U.S. constitutional laws and, therefore, be defended. We can also assume that he watches Fox News (which ironically pointed out at one time that the bankers’ “bonuses” should be honored notwithstanding of the taxpayers’ bailout because “they were contractual agreements” and “that we have to attract the brightest” among them with future guarantees). Of course, if anyone were to default on a contractual promise to Mr. TSDM, we could perhaps imagine an improved and deductive response from him.

Like Illinois Is Broke and its breed, Mr. TSDM offers to his readers a non sequitur (the conclusion is not necessitated by the premises); he finds it self-serving to confound the facts of the matter and to shift the blame on teachers for the resultant economic debacle occurring in Illinois. He does not consider the fact that claims are most effective when supported by evidence that is sufficient, accurate, and relevant or that arguments are not substantiated when they are buoyed by deleterious and fallacious reasoning, tabloid thinking, questionable statistics, inapt allusions, and an appeal to intolerance and prejudice. Insightful questioning is meant to stimulate an authentic debate; Mr. TSDM’s fallacious and condescending quips (many of which I did not bother to address) are designed to terminate further analysis and synthesis of a crucial and complex dispute.

Hum If You Can’t Sing

2011-11-29T17:25:00.000-08:00

So what if at every hard bout in life we burst
into song – thoughtless as reciting a prayer –
reward our feet with a waltz or two,

congratulate ourselves with an aria
then tap dance our way through
the kitchen and dining room?

And suppose the musicians arrive
early each morning
to tune up their strings, oil their drums

while the white-gloved conductor
waits with his cue sheet at the breakfast table?
Could we expect a chorus

prophesying disaster or another overture
of reformed legislation?
Why not ask for a drum roll through toiletry

instead or a diminuendo through dinner?
And what might our friends and spouse say
about all that sheet music

stuffed in our pants pockets, about our lives
cluttered with voice lessons, rehearsals
and women dressed in fishnet and high heels?

Imagine the fun of it all,
the spotlight on us as we dance and sing,
our pets joining in with happy tails

and the birds whistling from their cages
encouraging applause
for our pitch-perfect responses after each match.

In the Cross Hairs

2011-11-23T14:13:00.000-08:00

For five days the buck hung
from the wrought-iron grate,

a large, brown buck, heavy with muscle.
Its eyes held the look of an animal

about to be shot.
Raymond Benedetti, a pharmacist,

with a half-dozen hunting dogs
smelling of musk-rank fur,

worked his knife into its belly,
unknotting entrails before my eyes.

It wasn’t until the fifth day
that someone complained

about the stench and sound
of the chainsaw grinding through bone,

about the head that lay
on the front stoop one evening,

its deciduous antlers hacked from the skull.
I watched as a young boy, an accomplice,

under a pale gray, Midwestern sky
deep in November.

The neighbor’s cats kept their distance.
The air charged with pity and thanksgiving.

Tax Reform! Not Pension Reform, Budget Cuts and Tax Breaks for the Wealthy

2011-11-20T14:10:00.000-08:00

A recent article in the State Journal Register (November 17, 2011) states that the five pension systems need $5.33 billion for fiscal year 2013, approximately one billion dollars more than was originally anticipated, though Governor Quinn also says that state revenue is expected to grow by $1.3 billion next year. This amount has increased 20% overall because of increases of approximately $700 to $800 million for Medicaid; changes in assumptions by actuaries from the State University Retirement System; the passing of SB 1946 (Public Act 96-0889) in April of 2010 that caps new public employees’ salaries and lowers their benefits (and thus less money is made available for contributions to the pension systems); and larger payments needed today as a result of the 1995 “ramp-up” funding law (Public Act 88-593) to pay the pension systems what the state owes because of its delinquent payments to those systems for decades and to reach a 90-percent funding ratio by 2045 (Wetterich), although only 15 states in the nation have a funded ratio slightly over 70 percent while the average funding ratio is 63 percent (Barclays Capital, May 2011). According to the National Conference on Public Employee Retirement Systems (May 2011), “a funded ratio of 70 percent or above is [considered more than] adequate.”

It is true that the only proposal from the state, the flawed SB 512, will not address the current unfunded liability and that what the state should focus upon is structural reforms for revenue but hasn’t the political will to do it. Solving the shortfall between available assets and accrued liabilities is not the issue. It’s a symptom of a greater cause. Pension systems carry liabilities into perpetuity because they are “perpetual government agencies” (The Teachers’ Retirement System of Illinois). There is never a need to match assets and liabilities ever.

It is unfortunately true that most state legislators lack the political backbone to address the causes of the budget problems but prefer scapegoating the public employees and their pension systems instead while being abetted by the Civic Committee of the Commercial Club of Chicago, the Civic Federation and the Chicago Tribune. Legislators do not want to pay what is owed to the public pension systems even though past legislators, especially past governors, were the cause of the pension systems’ lack of funding.

What is needed to solve the budget problems in Illinois is a better revenue base to pay the state’s debts. What is easier to do is to evade serious problem solving of the budget issue and to incriminate the state’s public employees. The issue at hand is the state’s regressive tax rate that no one wants to confront. Unfortunately, the public lacks awareness and understanding about this gross injustice and main cause of the state’s budget deficits. Legislators, the Civic Committee, et al. have capitalized on this circumstance by calling for budget cuts and radical pension reform as the solutions for the budget problems in Illinois. They are diversionary, scapegoating tactics that will bring, what seems to be an intentional, financial harm to public employees while policymakers escape public indignation and ethical responsibility.

“At the core of the budget ‘crisis’ facing [Illinois] is [its] regressive state tax structure… that is, low-and-middle-income families pay a greater share of their income in taxes than the wealthy… [A regressive tax] disproportionately impacts low-income people because, unlike the wealthy, [low-income people] are forced to spend a majority of their income purchasing basic needs that are subject to sales taxes” (United for a Fair Economy).

Instead of reforming our tax system, legislators and the wealthy one percent of Illinois have focused on radical pension reform and severe budget cuts to services that the rest of us need. What do the wealthy and their puppet legislators propose? They propose sweeping pension reform and desire the resultant destruction, whether deliberate or inadvertent, of the public employees’ retirement systems even though the current unfunded liabilities will not be mitigated by Senate Bill 512. In addition, they propose budget cuts that will undermine healthcare for children, the elderly and low-income families; budget cuts that will prolong and increase the state’s unemployment; budget cuts in public safety and transportation; budget cuts in education; and budget cuts that will absurdly stifle any economic recovery. It is true that if the State of Illinois “does not [create] a contemporary tax system, one that is both sound and responsive to the needs of state, basic and necessary programs face the chopping block” (Center for Tax and Budget Accountability, CTBA).

Consider, for example, budget cuts in K through 12 and higher education: “disparities in [the state’s] school funding and, therefore, quality of education, would be significantly reduced if the primary basis for school funding was on state revenues,” and that is why Illinois is “next to last in a ranking of states based on funds spent on education” (CTBA). As it is now, property taxes used as the main sources of revenue for school funding guarantee income inequalities among school districts throughout the State of Illinois.

Let’s be concerned about why the State of Illinois cannot obtain more revenue. Besides federal sources of income, the state uses only eleven sources of revenue: personal income tax (but note that Illinois was tied for the fourth lowest individual tax rate on households in the top income bracket), corporate income tax (note the recent extortionate tax breaks given to some Illinois corporations), sales tax (note that Illinois does not tax services like most other states for another significant source of revenue), corporate franchise tax and fees, public utility taxes, vehicle use tax, inheritance tax, insurance taxes and fees, cigarette taxes, liquor taxes and other miscellaneous (or rather unsubstantial) tax sources (Commission on Government Forecasting and Accountability, June 2011).

In regards to sales taxes, “a majority of states apply their sales tax to less than one-third of 168 potentially-taxable services… [States that do not tax services, such as Illinois], probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively” (the Center on Budget and Policy Priorities, July 2009).

Consider that a broader-based taxation system would provide a decrease in taxes for low-income and many middle-income families. Taxing services alone “would generate enough revenue to stabilize the General Revenue Fund and prevent structural deficits that lead to cuts in basic needs and social service programs” (CTBA). As long as our legislators play their political ping pong game with one another and prioritize their own self-interests first, it is impossible to obtain any just resolutions to the state’s budget problems.

A case in point: reflect upon this potential financial windfall for corporations considered by legislators who are also ironically contemplating budget cuts and pension reform for the rest of us: “A package of tax breaks aimed at helping business and keeping a few high-profile companies from leaving Illinois could cost the government $850 million a year in its current form, raising the possibility that it will have to be scaled back to win approval from the Legislature. The package started as a move to lower the tax bill for two Chicago-based financial exchanges, CME Group Inc. and CBOE Holdings Inc., which are threatening to leave Illinois. Then a tax break for Sears was added to the mix. That was followed by tax incentives for businesses in general, and then measures to help poor families. Each new tax break means less money to run state government, requiring officials to get more money elsewhere or cut services… State government would have to absorb most of that loss, but 6 percent — or about $50 million — would hit the budgets of local governments across Illinois” (Associated Press, November 18, 2011). Does this seem preposterous in light of the aforementioned tax inequities already discussed?

So why can’t the State of Illinois provide a fair and sound tax system (Illinois is one of seven states with a regressive flat-rate tax), one that is “efficient with minimal impact on the economic decisions that taxpayers have to make” (CTBA), one that captures increased revenues in times of economic growth, one that maintains revenue collections during poor economic times, one that is simple and not liable to inconspicuous error, one that is transparent and builds trust with the state’s government officials (CTBA), and one that helps 99 percent of the state’s population?

Why? The answer is that most legislators in the State of Illinois prefer the easy way out of a difficult and challenging situation. The State of Illinois will not have a fair and sound tax system until it addresses the most important cause of our budget deficits through significant state tax reform, and that will occur only when our legislators begin to represent the 99 percent of the state’s population instead of their own self-interests and the wealthy one percent that bankrolls them.

Pension Hybrid Plans, Constitutional Challenges, and the Ethical Path to Take

2011-11-18T05:55:00.000-08:00

Recently, a colleague sent me a brief about the State of Rhode Island’s pension reform. That state’s current reform proposal features a hybrid plan that combines a defined-benefit and defined-contribution plan. Imagine an option that would divide a teacher’s contribution as follows: from a 9.4 percent contribution, perhaps 5 percent would be contributed to a defined-benefit plan and 4.4 percent would be contributed to a defined-contribution plan, where both the employer and the employee would share the market risk with the supposition that the earnings from the defined-contribution plan would still reap the financial recompenses of group investing.

Now consider another hypothetical hybrid plan: once an employee no longer reaps the benefits of his or her contributions to his or her defined-benefit plan because it has been capped (as is in the case for new employees in Illinois), then a defined-contribution option is offered to the employee with matching employer contributions thereafter. In other words, “a defined-contribution plan could be stacked on top to provide additional retirement income for those at the higher end of the pay scale. Such an approach would ensure a more equitable sharing of risks and would also prevent headlines generated by the occasional inflated public pension benefit” (Center for Retirement Research, April 2011).

We might ask whether there are legal repercussions for such pension reforms. In Rhode Island, for instance, “pension reform is more than just an educational, financial and political issue. It’s also a legal issue” (Education Sector Policy Briefs, November 2011).

It’s an educational issue because an essential goal for any state when considering pension reform is to attract and retain the finest possible teacher candidates available. It’s a financial issue because pension reform should be fair, affordable and address the issue of continued sustainability of the pension system. This has been duly noted elsewhere that “saving the pension system entirely on the backs of new teachers will not only fail to solve a state’s financial problems, more important, it will rob its future by making it more difficult to recruit new teachers” (Education Sector Policy Briefs…). This factor has apparently been forgotten by legislators in Illinois.

Furthermore, it’s a political issue because it entails the distinction among assumptions, values, beliefs and facts; the necessity for conflict resolution; and the application of powerful decision-making that will affect hundreds of thousands of people’s lives. Finally, it’s a legal issue because pension reform should concur with constitutional law and, therefore, be safeguarded.

Indeed, we are aware that a challenge to a state’s constitution might take the form of a state’s exercise of “power as a sovereign to protect the health, safety, and welfare of its citizens” (Education Sector Policy Briefs…). In regards to the “diminishing or impairing” of a clause or contract that protects citizens’ rights, the United States Supreme Court has held “that the court must establish that impairment is reasonable and necessary to serve an important public purpose, such as ‘the remedying of a broad and general social or economic problem.’ To show that a change is necessary, the state must establish that no less drastic modification could have been implemented to accomplish the state’s goal; and that the state could not have achieved its public policy goal without modification” (Education Sector Policy Briefs…).

This particular option has seldom been brought to the test, and for good reasons. To declare that a state is in an “emergency state,” will no doubt ignite legal questions and litigation about the competency and ethical motivations of policy makers and whether they had truly exhausted every alternative available to them for resolving a state’s financial debts before challenging a constitutional contract.

Moreover, according to Dave Urbanek, TRS Public Information Officer: “State law [in Illinois] empowers TRS (40 ILCS 5/16-158c)… Payment of the required State contributions and of all pensions, retirement annuities, death benefits…, all other benefits…, and all expenses are obligations of the State… The State has waved its sovereign immunity in regard to the teachers’ pension because TRS is a qualified pension plan under the tax-deferred provisions of the IRS code. Federal law would protect all claims..."

In a recent decision concerning the reduction or elimination of a statutory exemption for public-pension incomes, for example, one state’s Supreme Court’s conclusion was unequivocal: “the people can and should expect shared sacrifice; however, it cannot come at the expense of constitutional nullification, and the legislature cannot expect to balance the budget on the backs of state workers” (State of Michigan in the Supreme Court, August 2011).

If we want “everyone” to share the burden for our state’s financial problems besides the new and future public employees of Illinois who, as the result of SB 1946, are now paying down the state’s mounting service debt, a way for legislators to collect needed revenue ethically is to raise the taxes of the wealthy and bring to a halt the corporate blackmailing of state government and the awarding of lucrative tax breaks. The Institute on Taxation and Economic Policy (November 2009) maintains that the top 5 percent of income earners in Illinois pay the least amount of sales, excise, property, and income taxes because of federal deduction offsets or substantial tax savings from itemized deductions, such as capital gains tax breaks and deductions for federal income taxes paid that are coupled with an antiquated flat-rate tax structure.

Legislators should also consider spreading the tax base in Illinois: “A high-quality revenue system relies on a diverse and balanced range of sources… If reliance is divided among numerous sources and their tax bases are broad, rates can be made low in order to minimize the impact on behavior. A broad base itself helps meet the goal of diversification since it spreads the burden of the tax among more payers than a narrow basis does. And the low rates that broad bases make possible can improve a state’s competitive position relative to other states” (National Conference of State Legislatures, June 2007).

What is more, legislators should consider including the taxation of services instead of raising state income taxes. Consistent with creating a broader tax base, the Chicago Metropolitan Agency for Planning (July 2011) argues that the tax system in Illinois and most other states do not reflect today’s economic realities. States that do not tax services, such as Illinois, “probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively” (Center on Budget and Policy Priorities, July 2009).

Let us not forget the underlying reasons that have caused the pension systems’ unfunded liability in the first place. The unfunded liability of the pension systems in Illinois grew exponentially because of the state’s inconsistent funding methods, the state’s unreliable accounting methods, and the special deals made by legislators and other stakeholders that were to be funded with future monies.

The scapegoating of public employees in Illinois began when greed and corruption, particularly flagrant in the financial sector, exploded into the Great Recession. This, of course, came after eight years of inordinate military spending for two costly wars, deregulation and unprecedented tax cuts for the wealthy by the federal government. This tsunami of debt contributed to every state’s budget deficits.

A final question and answer for us to ponder: now who found it self-serving to confound the facts of the matter and shift the blame for the resultant economic debacle occurring in Illinois? The answer is those who benefit most from ignoring the injustices inherent in our state’s archaic system of income distribution, regressive tax loopholes for the wealthy and flat-rate taxation. In other words, Tyrone Fahner’s Civic Committee of the Commercial Club of Chicago; its doppelganger, Laurence Msall’s Civic Federation; and their mouthpiece, the Chicago Tribune have hoodwinked the citizenry of Illinois, made quite evident by Fahner’s million-dollar-plus Illinois Is Broke advertisements and his reinvention of a three-headed-tiered Cerberus that the Civic Committee wrote into SB 512 to guard the obscene profits that flow along the River Styx of Chicago and then a few blocks east to the doors of 21 South Clark Street.

Munditia, Patron Saint of Lonely Women

2011-11-17T03:51:00.000-08:00

(St. Peter’s Church, Munich)

She is believed to have been martyred in 310 AD, beheaded
with a hatchet. Once kept hidden in a wooden box,
she was put on display in 1883. Each year, a feast day is held
in her honor complete with a High Mass and candle procession
on November 17th.

for M.K.

She was propped up one day
in a black-and-silver sepulcher

with an eternal glass view,
her vest sewn with gaudy charms,

her gloved hands clutching a chalice
half-filled with sand

and a long golden feather.
How difficult to look at those eyes,

fixed in a perpetual stare mocking death,
at her stone-studded skeleton

encased in glass, and to think
about her estranged life,

a lifetime devoted to Christ, her ex-lover,
and how you said:

"Poor, pitiful woman cheated by faith
and her celibate single-mindedness."

And then to imagine that someone
could bejewel her, knowing all along

that her most precious gem,
her locus of power,

had rotted away to bone
hundreds of years ago.

Sustainability, Affordability and Constitutionality: Are They Compatible?

2011-11-10T11:17:00.000-08:00

How do we balance sustainability of the public pension system, affordability for the State of Illinois, and constitutionality (Bob Lyons, TRS Trustee)?

Legislators realize that the cost of ramping up payments to address the unfunded liability is unaffordable based upon today’s depressing revenue projections. “In 1995, Illinois passed a pension-ramp bill requiring significant, annual increases in the state's contribution to its public employee retirement systems, to make up for a decades long practice of failing to make the full, employer contributions into the system. That is why the pension contribution escalates… each year. It is also why Illinois has a [total] unfunded liability in excess of [$87] billion today [for all five public pensions]” (Center for Tax and Budget Accountability, CTBA).

What can any union leader or anyone else, for that matter, offer the state that will address the increasing service debt, decrease school district contributions and decrease the required state contributions through 2045? According to Buck Consultants (June 2010), total school district contributions will not begin to decrease until 2043, and combined state and federal funds that are required will continue to increase until 2046.

Questions to ask: how much do we need to pay of the service debt to keep the teachers’ retirement pension plan and the other four public pension plans solvent, even though the plans have always had an unfunded liability that never comes due at once with fluctuating funding ratios? What proposals are there besides the Civic Committee’s flawed SB 512? Why are some legislators going to vote for a bill that has both obvious and unforeseen consequences for everyone “unless something better comes along?”

Why aren’t there any Nobel-prize winning economists of Illinois in this discussion? Where are the most prominent Illinois lawyers, and why aren't their opinions also being solicited regarding legal ramifications? Why are we hearing only from the Civic Committee of the Commercial Club of Chicago that has much to gain from the passing of SB 512?

Can the IEA negotiate without violating the 1970 pension clause (Article XIII, Section 5)? Did SB 7 ruin the possibility for any good-faith negotiations with state legislators (remember what Jonah Edelman revealed)? Is it because of the belief that once one side gives up something inviolable, the other side will insist for more? Is it because union members pay their dues consistently to ensure that their hard-earned benefits are not decreased, and that public employees, such as teachers, only have one retirement pension and not social security to rely upon?

Can the IEA offer anything by way of negotiation on the issue that “something must be done” about the unfunded liability and the increasing state payments? What would that be? What can teachers possibly give up to solve the financial problems of this state that are the resultant causes of past-and-present greed, corruption and incompetence?

Moreover, is it fair that teachers and other public employees remain the scapegoats for the problems that they did not cause? Indeed, few people care about the moral and ethical appeal that is grounded in such an argument. However, why didn’t the state “consider implementing a new revenue source targeted to repaying pension liabilities that is independent of base revenue streams from income, sales, excise and utility taxes” (CTBA, 2006)? Why didn’t the state consider a broader tax base and/or taxation of services instead of an increase in income taxes?

In approximately 35 years, the passing of SB 1946 last April of 2010 (the current Tier-Two plan that began in January 2011) will most likely assure the demise of the Tier-One defined-benefit plan. Consider that the current proposed and amended SB 512 by freezing benefits in the Tier-One defined-benefit plan (for those who choose a Tier-Two option for its six percent contribution rate, capped final salary, reduced Cost of Living Adjustment (COLA) and full retirement benefits at the age of 67) will also hasten the demise of the Tier-One defined benefit plan. Consider the inevitability that 20% of the members who choose the Tier-Three defined-contribution plan (401K) will also hasten the demise of the Tier-One benefit plan, and this will do nothing to eliminate the unfunded liability that the state is required to pay.

One thing seems certain right now: both current and retired teachers and their families have the most to lose by passing the amended SB 512. Consider that the Tier-One defined-benefit plan depends upon membership contributions for its sustainability, precarious contributions from the State of Illinois and volatile Market investment returns.

According to the IEA president, Cinda Klickna, "We need to develop a plan that is constitutional, fair to the participants and will ensure the systems will, for many decades to come, continue to deliver the benefits earned by the participants and retirees. The pension systems must be sustainable." The teachers of Illinois are anxiously waiting for that plan.

Meanwhile, what’s perhaps next after SB 512? Imagine an amendment to the state constitution that challenges Article XIII, Section 5, a reduction or elimination of the retirees’ COLA and the taxation of their annuity? One final thought: how about state bankruptcy as an option? Just ask our U.S. Senator from Illinois, Mark Kirk, about this possible absurdity.

Amendment to SB512 [Other points of interest]

2011-11-08T07:12:00.000-08:00

Amendment to SB512 (Nov. 7, 2011) [Other points of interest]:

Pages 6-7 [Tier-Two]:
(c) A member or participant is entitled to a retirement annuity upon written application if he or she has attained age 67 and has at least 10 years of service credit and is otherwise eligible under the requirements of the applicable Article. A member or participant who has attained age 62 and has at least 10 years of service credit and is otherwise eligible under the requirements of the applicable Article may elect to receive the lower retirement annuity provided in subsection (d) of this Section.

(d) The retirement annuity of a member or participant who is retiring after attaining age 62 with at least 10 years of service credit shall be reduced by one-half of 1% for each full month that the member's age is under age 67.

(e) Any retirement annuity or supplemental annuity shall be subject to annual increases on the January 1 occurring either on or after the attainment of age 67 or the first anniversary of the annuity start date, whichever is later. Each annual increase shall be calculated at 3% or one-half the annual unadjusted percentage increase (but not less than zero) in the consumer price index-u for the 12 months ending with the September preceding each November 1, whichever is less, of the originally granted retirement annuity. If the annual unadjusted percentage change in the consumer price index-u for the 12 months ending with the September preceding each November 1 is zero or there is a decrease, then the annuity shall not be increased.

Pages 84-85
(40 ILCS 5/9-170.6 new)
Sec. 9-170.6. Employer contributions to the self-managed plan: Beginning in fiscal year 2014, for members electing benefits under paragraph (3) of subsection (a) of Section 9-170.5, an employer contribution shall be made each fiscal year in an amount equal to 6% of total pensionable payroll for the respective employee group.

(40 ILCS 5/9-170.7 new)
Sec. 9-170.7. Maximum self-managed plan participation. By
January 1, 2013, the Fund shall certify its total active participant population. When the number of participants that elect the self-managed plan is equal to 20% of the total active participant population, then no participant may elect the self-managed plan.

Beginning in 2016 and every 3 years thereafter, the Fund shall recertify its total active participant population and the number of participants in the self-managed plan. If the number of participants in the self-managed plan is less than 20% of the recertified total active participant population, then eligible participants may elect to participate in the self-managed plan. However, participants shall be prohibited from electing to participate once the Fund determines that the number of participants in the self-managed plan is equal to 20% of the number of total active participants in the Fund.

Pages 249-50
(40 ILCS 5/16-133) (from Ch. 108 1/2, par. 16-133)
Sec. 16-133. Retirement annuity; amount:
(A)The amount of the retirement annuity shall be (i) in the case of a person who first became a teacher under this Article before July 1, 2005, the larger of the amounts determined under paragraphs (A) and (B) below, or (ii) in the case of a person who first becomes a teacher under this Article on or after July 1, 2005, the amount determined under the applicable provisions of paragraph (B):

(A) An amount consisting of the sum of the following:
(1) An amount that can be provided on an actuarially equivalent basis by the member's accumulated contributions at the time of retirement; and
(2) The sum of (i) the amount that can be provided on an actuarially equivalent basis by the member's accumulated contributions representing service prior to July 1, 1947, and (ii) the amount that can be provided on an actuarially equivalent basis by the amount obtained by multiplying 1.4 times the member's accumulated contributions covering service subsequent to June 30, 1947; and
(3) If there is prior service, 2 times the amount that would have been determined under subparagraph (2) of paragraph (A) above on account of contributions which would have been made during the period of prior service creditable to the member had the System been in operation and had the member made contributions at the contribution rate in effect prior to July 1, 1947.

Beginning on July 1, 2013, for purposes of calculating the sum provided under this paragraph (A), member contributions in excess of the member contribution rates that apply to this benefit and are in effect immediately prior to July 1, 2013 shall not be considered when determining the amount of the member's accumulated contributions under subparagraph (1) or the additional sum based on the member's accumulated contributions under subparagraph (2). This paragraph (A) does not apply to a person who first becomes a teacher under this Article on or after July 1, 2005.

Pages 275-77
For State fiscal years 2014 through 2045, the minimum contribution to the System to be made by the State for each fiscal year shall be an amount equal to the sum of (i) the contribution determined under Section 16-158.2, plus (ii) an amount determined by the System to be sufficient to bring the total assets of the System up to 90% of the total actuarial liabilities of the System by the end of State fiscal year 2045.

In making the determinations under item (ii) of this subsection (b-3), for State fiscal years 2017 through 2045, the required State contribution shall be calculated each year as a level percentage of revenue provided by the individual income tax, sales tax, and corporate income tax assuming a 2.3% average annual growth rate in these revenues based on the most recent fiscal year's actual revenues as reported by the Commission on Government Forecasting and Accountability over the years remaining to and including fiscal year 2045 and shall be determined under the projected unit credit actuarial cost method.

Notwithstanding any other provision of this Article, State fiscal years 2014 through 2016, the State contribution to the System under item (ii) of this subsection (b-3), as a percentage of State revenue from the individual income tax, sales tax, and corporate income tax shall be increased in equal annual increments so that by State fiscal year 2017, the State is contributing at the rate required under this Section.

For State fiscal years 2014 through 2045, the total State contribution required in each fiscal year under this subsection (b-3) must not be less than 100% of the prior fiscal year's actual or required contribution, whichever is greater. Notwithstanding any other provision of this Article, the total required State contribution for this System for State fiscal year 2013 shall be $2,765,140,669.

Page 314:
Section 99. Effective date. This Act takes effect July 1,
2012.”

Amendment to SB512: Contributions by Members

2011-11-07T19:50:00.000-08:00

Amendment SB512 (Nov. 7, 2011) pages 271-73
From (40 ILCS 5/16-152) (from Ch. 108 1/2, par. 16-152)
Sec. 16-152. Contributions by members:

…Beginning July 1, 2013, all members shall be required to make the following contributions:

(1) Members who elect the traditional benefit package provided under paragraph (1) of subsection (a) of Section 16-133.6 of this Code shall contribute:

(A) In fiscal year 2014, fiscal year 2015, and fiscal year 2016, an amount equal to 13.77% of salary.
(B) In fiscal year 2017 and in each fiscal year thereafter, a percentage of salary equal to the actuarially determined fiscal year 2017 normal cost of the traditional benefit package, minus contributions by the State of Illinois in fiscal year 2017 under subsection (a) of Section 16-158.2, provided that no member's contribution shall be less than 6% or more than 15.77% of salary. The System shall certify the actuarially determined fiscal year 2017 normal cost of the traditional benefit package and the amount of the required member contribution.

(2) In fiscal year 2014 and in each fiscal year thereafter, members who elect the revised benefit package provided under paragraph (2) of subsection (a) of Section 16-133.6 of this Code shall contribute an amount equal to the greater of the actuarially determined long term normal cost of the revised benefit package as calculated in fiscal year 2014 or 12%, minus contributions by the State of Illinois in fiscal year 2014 under subsection (b) of Section 16-158.2, provided that no member's contribution shall be less than 6% of salary. The System shall certify the actuarially determined long term normal cost of such revised benefit package and the amount of the required member contribution. For purposes of this paragraph (2), long term normal cost shall be defined as the normal cost of the revised benefit package assuming that all employees are covered under the revised benefit package. Contributions under this paragraph (2) shall be based on pensionable salary.

(3) In fiscal year 2014 and in each fiscal year thereafter, members who elect the self-managed plan provided under Section 16-133.8 of this Code shall contribute a minimum of 6% of salary. Members who elect the self-managed plan provided under Section 16-133.8 of this Code may elect to increase their member contribution in accordance with rules prescribed by the Board.
(Source: P.A. 93-320, eff. 7-23-03; 94-4, eff. 6-1-05.)
(40 ILCS 5/16-152.2 new)

Sec. 16-152.2. Increases in member contributions. If the member contribution required under Section 16-152 increases for any member pursuant to this amendatory Act of the 97th General Assembly, the additional member contribution in excess of the prior member contribution for such member shall be deducted from the member's salary unless the member's employer agrees pursuant to Section 414(h) of the Internal Revenue Code to pick up and pay part or all of such increased contribution in addition to the member's salary.

Amendment to SB 512: Self-Managed Plan

2011-11-07T18:32:00.000-08:00

Amendment SB512 (Nov. 7, 2011) pages 261-65
(40 ILCS 5/16-133.8 new)
Sec. 16-133.8. Self-managed plan:

(a) Purpose. The Teachers' Retirement System of the State of Illinois shall establish and administer a self-managed plan, which shall offer members the opportunity to accumulate assets for retirement through a combination of member and employer contributions that may be invested in mutual funds, collective investment funds, or other investment products and used to purchase annuity contracts, either fixed or variable or a combination thereof. The plan must be qualified under the Internal Revenue Code of 1986.

The plan shall not include the retirement annuities, survivors' benefits, death benefits, or refunds provided under this Article.

(b) The Teachers' Retirement System of the State of Illinois shall be the plan sponsor for the self-managed plan and shall prepare a plan document and prescribe such rules and procedures as are considered necessary or desirable for the administration of the self-managed plan. Consistent with its fiduciary duty to the participants and beneficiaries of the self-managed plan, the Board of Trustees of the System may delegate aspects of plan administration as it sees fit to companies authorized to do business in this State.

(c) Selection of service providers and funding vehicles. The System may solicit proposals to provide administrative services and funding vehicles for the self-managed plan from insurance and annuity companies and mutual fund companies, banks, trust companies, or other financial institutions authorized to do business in this State. The System shall periodically review each approved company. A company may continue to provide administrative services and funding vehicles for the self-managed plan only so long as it continues to be an approved company under contract with the Board.

(d) Member direction. Members who are participating in the program must be allowed to direct the transfer of their account balances among the various investment options offered, subject to applicable contractual provisions. The member shall not be deemed a fiduciary by reason of providing such investment direction. A person who is a fiduciary shall not be liable for any loss resulting from such investment direction and shall not be deemed to have breached any fiduciary duty by acting in accordance with that direction.

Neither the System nor the member's employer guarantees any of the investments in the member's account balances.

(e) Participation. A member eligible to participate in the self-managed plan must make a written election under Section 16-133.6 and the procedures established by the System. A member who has elected to participate in the self-managed plan under Section 16-133.6 must continue participation while employed as a teacher. Participation in the self-managed plan under this Section shall constitute membership in the Teachers' Retirement System. A member under this Section shall be entitled to the benefits of Article 20 of this Code.

(f) Contributions. The self-managed plan shall be funded by contributions pursuant to salary reduction agreements for members participating in the self-managed plan and employer contributions as provided in this Section.

The member contribution shall be made as an "employer pick up" under Section 414(h) of the Internal Revenue Code of 1986 or any successor Section thereof. In no event shall a member have an option of receiving these amounts in cash, and payment of the member contribution shall be a condition of employment. The member contribution shall be deducted from the member's salary in the amount specified by paragraph 3 of subsection (f) of Section 16-152, unless the employer agrees to pick up and pay the member contribution in addition to the member's salary, pursuant to Section 16-152.1.

The program shall provide for employer contributions to be credited to each self-managed plan participant at a rate of 6% of the member's salary. The amounts so credited shall be paid into the member's self-managed plan account in a manner to be prescribed by the System. An additional amount of employer contributions shall be used for the purpose of providing the disability benefits of the System to the member. Prior to the beginning of each plan year under the self-managed plan, the Board of Trustees shall determine, as a percentage of salary, the amount of employer contributions to be allocated during that plan year for providing disability benefits for members in the self-managed plan.

The State of Illinois shall make contributions by appropriations to the System of the employer contributions required for members who participate in the self-managed plan under this Section. The amount required and the payment schedule shall be certified by the Board of Trustees of the System and paid by the State in accordance with Section 16-158.2.

The System shall not be obligated to remit the required State contributions to any person or entity until it has received the required contributions from the State.

(g) Vesting; withdrawal; return to service. A member in the self-managed plan becomes vested in the employer contributions credited to his or her account in the self-managed plan on the earliest to occur of the following: (1) completion of 5 years of creditable service; (2) the death of the member while in active service, if the member has completed at least 1 ½ years of service; or (3) the member's election to retire and apply the reciprocal provisions of Article 20 of this Code.

(h) If a member who is vested in employer contributions terminates employment, the member shall be entitled to the account values attributable to employer and member contributions and any investment return thereon.

If a member who is not vested in employer contributions terminates employment, the member shall be entitled to the account values attributable to the member's contributions and any investment return thereon, and the employer contributions and any investment return thereon shall be forfeited. Any employer contributions which are forfeited shall be used as directed by the System for future allocations of employer contributions.

SB 512 & Money Purchase Option (Update)

2011-11-06T07:14:00.000-08:00

Money Purchase Benefits or Purchase Benefit Options are a calculation based upon actuarial determiners as to the amount of money a retiree from TRS deserves after so many years of service. When an individual meets with a TRS advisor to calculate what annual annuity amount he or she will collect after “X” years of service, the TRS advisor will usually provide that figure based upon the number of years (times a calculation of 2.2 percent of his or her final average salary for each year of service and up to a maximum of 75 percent of the final average salary). The average of the highest four years’ service in the last ten years is used for the calculation.

However, if the employee began working before June of 2005, another calculation may be used based upon the person’s contributions plus interest and the employer’s contribution. Note that the retiree is given the higher of the two estimates.

According to David Urbanek, TRS Public Information Officer, “Your contributions will be accumulating in your account faster at a higher rate than under the old law. When the time comes to calculate, more people will have a higher pension. That is the biggest driver of the increased cost to the state” (Wetterich, Northwest Herald, November 6, 2011).

If there is an attempt to eliminate the money purchase option, Urbanek states that it will “create the same legal questions that [SB 512] has had since its inception. Senate Bill 512 wasn’t written with regard to other laws. SB 512 gives every member a choice of what contribution rate he or she is going to pay. That’s against IRS rules” (Wetterich).

SB 512 will have current teachers pay increasing contributions – as written now – moving from 9.4% to 13.77% and so on, to perhaps as high as 20% in the next 15 years. According to Dick Ingram, Executive Director of TRS, those individuals who qualify and decide to remain in the Tier One Pension Plan and absorb the increased rates may see returns at retirement nearly 50 – 75% beyond what they might have expected otherwise.

Note that while the Civic Committee of the Commercial Club of Chicago pushes the General Assembly to “do something” radical to thwart the pension systems and the public unions, the Civic Committee has designed a “quick-fix” bill that could cost the state even more:

“The bill could cost the state an additional $62 billion through 2045; employee pension contributions might no longer be taken out of their paychecks before federal taxes are deducted, and teachers who opt for a defined-contribution plan may be forced into the federal Social Security system, which would [increase the] cost [for] cash-strapped school districts” (Wetterich).

Ask Your Legislator A Few More Questions

2011-11-03T18:36:00.000-07:00

When you became a legislator, did you swear to uphold both the U.S. constitution and the constitution of the State of Illinois? Do you believe that the contents of SB 512 are in violation of contractual agreements as stated in Article XIII, Section 5 of the Illinois Constitution and Article 1, Section 10 of the Constitution of the United States?

If you were willing to pass SB 512 last May, apparently without thoroughly examining the consequences of the bill, a bill that would “increase taxpayers’ costs of up to $34 billion over 15 years” and, by increasing the Tier-One member contributions lead to “increased money-purchase benefits and higher liabilities for the state to fund,” are you now willing to read, contemplate, debate and analyze the bill in its entirety before voting on it?

If you supported SB 512 as it was proposed last May, one of the many problems with the bill is that "it may have the unintended consequence of forcing Tier-Three members into social security because of a drafting error in minimum benefits.” Did you know this at the time you supported the bill? Do you understand the ramifications?

If you are still in favor of passing SB 512, note that “it is estimated that Tier-Three benefits will be 30 percent less than Tier-One benefits if the final average salary and service are equal.” If you were a teacher in Illinois, would you choose a Tier-Two benefit plan? Why or why not?

Did you know that members in the current Tier-Two benefit plan (signed into law in April 2010) are paying down the unfunded liability that the state owes and that SB 512 will simply shift a substantial funding burden to teachers without requiring a mandated state funding of the pension system?

Most state contributions, “two-thirds” under current law, are for past underfunding. Do you believe that any form of pension reform should guarantee funding from the state?

If you are in favor of passing SB 512, given Market volatility these past few months, would you be skeptical with only a Tier-Three, defined-contribution plan as your only source of income for your retirement?

Do you believe it is sound public policy to follow the leadership of corporate America today, particularly in the financial sector?

Do you realize that migration into a Tier-Three defined-benefit plan “will accelerate the state’s obligation to pay down the unfunded liability?”

To move teachers into a 401k option will reduce the amount of money available for TRS investments and jeopardize retirement security for teachers. If teachers receive social security, “every school district would have to contribute 6.2 percent per teacher.” Do you believe that all school districts can afford “an estimated increased cost of approximately $40 million in the first year and more than $2.4 billion over a decade?”

Did you know that the administrative costs of a defined-contribution plan were more costly than a defined-benefit plan? Are you aware of West Virginia’s shift into a defined-contribution plan in 1991 and the subsequent consequences in 2006?

The Civic Committee of the Commercial Club of Chicago wrote SB 512; forty percent of its membership is in financial services. Will some of these members profit from the money transferred into the Tier-Three plan when teachers move from a defined-benefit plan to a defined-contribution plan?

Do you believe that a defined-contribution plan will help retain highly-qualified teachers in Illinois the way a defined-benefit plan does?

During the past fiscal year, “TRS paid out $3.9 billion in benefits but collected $6.8 billion in revenue.” Why are you and other state legislators so concerned about the unfunded liability of TRS that will, of course, never come fully due at any time in the future?

Though the state has made its required contribution to the pension systems most recently, why do some state legislators not want to address the state’s antiquated revenue system (the most important problem) but rather shift the burden of payment for pensions to local school districts outside of Chicago and, thus, increase property taxes for citizens of Illinois?

Does it matter to you that retired teachers and their defined-benefit pension create “more than $4 billion in economic activity, including more than 30,000 full-time jobs worth $2.3 billion in wages for non-teachers?” Have you considered the effects that SB 512 would have on the state’s economy as a result of the inevitable destruction of the Tier-One defined-benefit plan?

Do you believe that teacher pensions are too generous? The average is slightly more than $46,000? (Remember, teachers do not pay into social security and receive little to nothing because of the Windfall Elimination Provision or Government Pension Offset Act). The TRS pension is the “only source of income for approximately 80 percent of teachers in retirement.”

Do you believe that a defined-benefit plan helps recruit the very best teachers and retain them, thus increasing the overall quality of public education for students in Illinois?

Most everyone knows that the state has not fully funded the pension system throughout the decades. Do you and other legislators, (and the general populace) realize that all the people of Illinois have benefitted from the programs and services that were funded with the money that was supposed to go into the public pension funds?

Most of us realize that the state has a cash-flow problem, and that it isn’t the fault of the pension benefits but due to an economy that was almost completely destroyed by corrupt individuals in the private sector, particularly in the financial sector. Nearly 75 percent of people polled in Illinois believe that a regressive flat-tax rate, where millionaires and billionaires pay the same percentage of income tax, as does a teacher and the rest of the 99 percent, needs to change to a progressive tax rate. Consider that the wealthy pay even less than the average citizen because of tax breaks. How do you plan to address such a gross injustice?

If you were a public employee in Illinois, what would you think about SB 512, the Civic Committee of the Commercial Club of Chicago, the Civic Federation, and the Chicago Tribune?

Dia de los Muertos

2011-11-01T04:50:00.000-07:00

Chalma, Mexico – At least 41 worshippers
were suffocated or crushed to death
when a tightly packed crowd began pushing
and shoving at a church famed for a religious icon
believed to have miraculous powers.
Thirteen of the victims were children.
--from a news story

They came from Guadalupe and Guasave
and from villages in the south
with prayer on their tongues,
across nameless plains and mountains
in borrowed automobiles full of parcels
of hope and faith, their lives pawned
for one more pilgrimage.

Little children in their Sunday suits
and starched, white cotton dresses;
young, barefooted women
in embroidered bodices and lacy headdresses;
their mustachioed men in huaraches and doeskin;
and the old: tortilla-breasted and stern-faced
in dark shawls, fingering beads, pressed together.
Like a pile of sapodilla seeds,
they gathered at the sanctuary
with garlands of marigolds and chrysanthemum,
hoping for a cure.

There was a loud perfume of bougainvillea
rising among the festoons,
the Virgin enticing them to come closer,
and then an avalanche of bodies –
the terrible stomping
and crushing of skulls and bones,
two-and-a-half tons of trust
beneath the shrine, one afternoon
under the hemorrhaging, Mexican sun,
the red sky burning in their eyes.

You Are Being Trashed, Tricked or Mistreated by 21st Century Robber Barons

2011-10-31T03:22:00.000-07:00

Do you have a checking and a (practically-non-interest-bearing) money market account at Chase, Harris, Bank of America or LaSalle National Bank? Is your bank from the Wintrust Financial group: the Community Bank of Western Springs, Naperville Bank & Trust, Wheaton Bank & Trust Company, Glen Ellyn Bank & Trust, Community Bank of Downers Grove, Hinsdale Bank, Barrington Bank & Trust Company (there are many others)? Do you have a credit card from Bank of America, Discover or Citigroup? Is your auto-and-home insurance company Allstate? Do you have a Motorola cellular phone? Is your phone service provider AT &T or U.S. Cellular? Do you attend White Sox and Bulls’ games? Do you subscribe to the Chicago Tribune or the Chicago Sun-Times? Do you have your prescriptions filled at Walgreens? Do you eat at McDonalds and buy your groceries at Jewel? Do you shop at Crate & Barrel and Wal-Mart? Do you buy your gasoline from BP? Have you ever slept in a Hyatt Hotel?

Do you unwittingly give your money to these companies and banks? Consider this “partial” list of company CEOs who are also members of the Civic Committee of the Commercial Club of Chicago/Illinois Is Broke:

Glenn Tilton, Chairman of the mid-west region (J.P. Morgan Chase & Co.); David W. Fox, Jr., Vice Chairman (J.P. Morgan Chase & Co.); Alan G. McNally, retired Chairman and Chief Executive Officer (Harris Bank); Edward J. Wehmer, President and Chief Executive Officer (Wintrust Financial Corp.); Philip W. Hummer, Senior Vice President (Wintrust Wealth Management); Ellen Costell, CEO and US Countryhead (BMO Financial Corp. Harris Bank); Milton F. Darr, Jr., retired Chairman of the Board (LaSalle National Bank); Verne G. Istock, retired Chairman and President (Bank One Corporation/J.P. Morgan Chase & Co.); Timothy P. Maloney, Illinois President (Bank of America); Wilma J. Smelcer, retired Chair (Bank of America, Illinois); David W. Nelms, Chairman and Chief Executive Officer (Discover Financial Services); James T. Glerum, Jr., Chairman North America Regional Banking (Citigroup); Cary A. Kochman, Head of North America M&A/Co-Head, Chicago (Citigroup); Edward M. Liddy, retired Chairman and Chief Executive Officer (Allstate Insurance Corp.); Wayne E. Hedien, Chairman Emeritus (Allstate Insurance Corp.); Greg Q. Brown, Chairman and Chief Executive Officer (Motorola Solutions);

Paul V. La Schiazza, President, Illinois (AT&T); William K. Ketchum, retired President Central Region (AT&T); Bernard F. Sergesketter, retired Vice President, (AT&T); Mary N. Dillon, President and Chief Executive Officer (U.S. Cellular); Jerry M. Reinsdorf, Chairman (Chicago White Sox, Chicago Bulls); Tony W. Hunter, Chief Executive Officer (Tribune Publishing Co.); John W. Madigan, retired Chairman and Chief Executive Officer (Tribune Publishing Co.); Stanton R. Cook, retired Chairman (Tribune Publishing Co.); Scott C. Smith, retired President & Publisher (Tribune Publishing Co.); Cyrus F. Freidheim, Jr., retired President and Chief Executive Officer (Sun-Times Media Group); Gregory D. Wasson, President and Chief Executive Officer (Walgreens Co.); James A. Skinner, Vice Chairman and Chief Executive (McDonald’s Corp.); Fred L. Turner, Honorary Chairman (McDonald’s Corp.); Lawrence Howe, Senior Advisor – The Chicago Community Trust and former Chairman (Jewel Companies, Inc.); Donald S. Perkins, retired Chairman (Jewel Companies, Inc.); Gordon I. Segal, Co-Founder (Crate & Barrel); Jane J. Thompson, former President, Financial Services (Wal-Mart Stores, Inc.); John R. Thomas, retired President, Midwest Fuels Value Chain (BP Products North America, Inc.); Thomas J. Pritzker, Chairman (Hyatt Hotels Corp.)…

About moving your money out of the Big Banks

For a complete membership list of the Civic Committee of the Commercial Club of Chicago

We Must Prepare for a Constitutional Revision

2011-10-27T06:34:00.000-07:00

It is imperative that all of us, the Illinois Education Association, the Illinois Federation of Teachers and other major stakeholders are prepared for a possible constitutional revision, perhaps in the spring session. The Constitution of the State of Illinois may be changed by calling a constitutional convention for revision and then placed on a separate ballot at the next general election, by amendment proposed by a three-fifths vote in each house and then placed on a separate ballot at the next general election, or by an interpretation of the courts.

It is conceivable that a legislator who is not running for re-election and who is under the inauspicious and officious influence of the Civic Committee of the Commercial Club of Chicago and other legislators will write and propose an amendment to the Illinois constitution before exiting the General Assembly, thereby challenging the "Pension Clause" once again.

ARTICLE XIV, SECTION 1. CONSTITUTIONAL CONVENTION
(a) Whenever three-fifths of the members elected to each house of the General Assembly so direct, the question of whether a Constitutional Convention should be called shall be submitted to the electors at the general election next occurring at least six months after such legislative direction.
(b) If the question of whether a Convention should be called is not submitted during any twenty-year period, the Secretary of State shall submit such question at the general election in the twentieth year following the last submission.
(c) The vote on whether to call a Convention shall be on a separate ballot. A Convention shall be called if approved by three-fifths of those voting on the question or a majority of those voting in the election.
(d) The General Assembly, at the session following approval by the electors, by law shall provide for the Convention and for the election of two delegates from each Legislative District; designate the time and place of the Convention's first meeting which shall be within three months after the election of delegates; fix and provide for the pay of delegates and officers; and provide for expenses necessarily incurred by the Convention.
(e) To be eligible to be a delegate a person must meet the same eligibility requirements as a member of the General Assembly. Vacancies shall be filled as provided by law.
(f) The Convention shall prepare such revision of or amendments to the Constitution as it deems necessary. Any proposed revision or amendments approved by a majority of the delegates elected shall be submitted to the electors in such manner as the Convention determines at an election designated or called by the Convention occurring not less than two nor more than six months after the Convention's adjournment. Any revision or amendments proposed by the Convention shall be published with explanations, as the Convention provides, at least one month preceding the election.
(g) The vote on the proposed revision or amendments shall be on a separate ballot. Any proposed revision or amendments shall become effective, as the Convention provides, if approved by a majority of those voting on the question.

ARTICLE XIV, SECTION 2. AMENDMENTS BY GENERAL ASSEMBLY
(a) Amendments to this Constitution may be initiated in either house of the General Assembly. Amendments shall be read in full on three different days in each house and reproduced before the vote is taken on final passage. Amendments approved by the vote of three-fifths of the members elected to each house shall be submitted to the electors at the general election next occurring at least six months after such legislative approval, unless withdrawn by a vote of a majority of the members elected to each house.
(b) Amendments proposed by the General Assembly shall be published with explanations, as provided by law, at least one month preceding the vote thereon by the electors. The vote on the proposed amendment or amendments shall be on a separate ballot. A proposed amendment shall become effective as the amendment provides if approved by either three-fifths of those voting on the question or a majority of those voting in the election.
(c) The General Assembly shall not submit proposed amendments to more than three Articles of the Constitution at any one election. No amendment shall be proposed or submitted under this Section from the time a Convention is called until after the electors have voted on the revision or amendments, if any, proposed by such Convention.

(Note that there are four sections in Article XIV, Constitutional Revision).

Consider that Michael Madigan’s statement, “Let the courts decide,” might be deemed as the easier choice. This is a regularly-used method for issues regarding the interpretation of the language of an article in the constitution. Though all constitutional issues are heard in the appellate court, they are appealed and decided in the Supreme Court.

Article XIII, Section 5 (the Pension Clause) has been challenged several times since 1970. For a complete analysis, read Eric M. Madiar

Other Sources:
The Constitution of the State of Illinois
Understanding the Illinois Constitution
Pension Education: Legislative Amendment

Remember

2011-10-25T05:40:00.001-07:00

The child, bare foot on the dry plain
And what she does not have

The wolf that gnaws off its foot
And the folly of staying in one place

The blur of the hummingbird’s wings
And the owl and its unanswered question

The quiet will of the redwood
And the deep well of the body’s softness

Not the lesson, but the teacher
Prayers and the peace they bring

What the eyes may never see
And the ears may never hear

The man on the window ledge
And the testimony he leaves behind

The faces behind the barbed wire
And the eyes of the refugee and the demented

The paradox of silence
And the closed face of pain

The unoriginality of sin
And the miracle of tomorrow without promise

The patience of vultures--
the truth about Robber Barons

A Response to the Chicago Tribune and the Civic Committee of the Commercial Club of Chicago

2011-10-22T18:48:00.000-07:00

Are the articles in Sunday’s Chicago Tribune (October 23) regarding Steven Preckwinkle, David Piccioli and Reg Weaver just another blatant, diversionary attempt to shift blame for the financial woes of this state on the Teachers Retirement System and the other public pensions? What is the purpose for publishing such stories when, in fact, the average TRS recipient receives a pension of $46,452 a year and does not receive Social Security? Perhaps the Chicago Tribune should publish what the typical pension amount is for a Civic Committee retiree and how it “feeds into the cynicism about all the deals, that [it is] an insider’s game and that the system is rigged” and completely “manipulated for personal gain?”

Are the articles an attempt to prove a faulty cause-and-effect understanding of the State’s budget deficit? Does it seem fair and reasonable to stoke the blind and misinformed anger of the people of Illinois by publishing purposely- incendiary pieces about three individuals? Does the Chicago Tribune believe that its readers are that stupid to believe that three people drawing an exorbitant pension are representative of the whole of which they constitute? Is it rational to believe that the state’s public pension systems are yet the cause for the state’s chronic budget deficit and that these three men are relevant to it?

Is the real issue that specific types of people do not want teachers and other public employees to have a pension, and many financial advisors would love to get their greedy hands on that money?

It is the way of thieves “to deflect attention from the theft of some $17 billion in wages, savings and earnings among American workers… from speculators [and corporate CEOs and bankers] on Wall Street who looted the U.S. Treasury…, [who] stymied any kind of regulation… and [who] avoided criminal charges” (Chris Hedges, from “The Promotion of Liberty”).

Teachers and other public employees are victims once again of the fallacy of selected instances, illicit division, and diversion perpetrated by Sam Zell’s Chicago Tribune and Tyrone Fahner and his Civic Committee of the Commercial Club of Chicago and their obverse group, Illinois Is Broke: they simply “imply that all public-sector retirees who receive large pension payouts are representative of all public-sector pensioners, and that is the cause of [the State’s financial mess]” (Government Finance Review).

Of course, influential, wealthy businessmen such as Fahner and other members of the Civic Committee, billionaire Zell, (and some of his sycophants such as R. Bruce Dold, editorial page editor; Troy Hunter, chief executive officer of the Chicago Tribune and a member of the Civic Committee; Ray Long, reporter, et al.) and the Tribune’s WGN and its news reporter, Mark Suppelsa, are promoting the imbalanced messages of the Tribune and Illinois Is Broke. We can assume that these subordinates’ intentional, eager and biased reporting are meant to perpetuate the ignorance or indifference of the public and to manipulate legislators, via Fahner’s, Madigan’s and Cross’s pending legislation (SB 512) that will redistribute exorbitant amounts of money to the financial sector (of which 40 percent of the Civic Committee membership are affiliated); even though such legislation will cost the Illinois taxpayers an additional $34 billion according to Buck Consultants, “one of the world’s leading actuarial firms,” as well as increase the pension benefits for some of the public employees who remain in the defined-benefit plan despite the proposed, continual increases in their contributions.

Is it possible to measure just how much money some corporations are currently pocketing from the majority of Illinois citizens or to calculate how much of their profits are the result of “subsidy economics” or “corporate welfare?” Could it be more than the Civic Committee’s fabricated, absurd, and unproven claims that Illinois is “$140 billion short” and that the pension systems will cost “$30,000 per household?”

“All [the state] needs to do to correct this problem is require sound financing of [the pension plans]. That means setting aside enough money each year for the benefit that each worker has earned and then investing that money... The problem for [some] representatives and senators is that the simplicity of sound financing would mean a loss of fees for investment advisors and others who get rich off the current system. In turn, that would mean a reduction in the flow of campaign contributions…

“To business owners and executives, the cost of campaign contributions is chump change to the benefits of shortchanging pension plans. Government rules permit and encourage a vicious cycle. To the extent that pensions are not fully funded, that their true costs are not paid each year, it means that corporate profits are inflated. Inflated profits mean that share prices for company stock are inflated because they should represent the profitability of companies. And inflated stock prices mean, in turn, that executives cash in their options for more than they should get.

“Many hundreds of billions of tax dollars [across the country] have been diverted to the rich, leaving our schools, parks, and local government services starved for funds. Jobs and assets are going offshore, sometimes to the detriment of not just the economy but to national security…

“It is the rich who are gorging themselves on the government with giveaways, favors, contracts, rules that rig the economy, tax breaks, and secret deals [and not the majority of citizens in Illinois, many of whom are public employees with hard-earned pension plans]” (David Cay Johnston: Free Lunch, How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You with the Bill).

At the Chicago Tribune’s suggestion, here is some fertile “dirt” dug up without the “tools [of the] Tribune reporters’ previous [biased and bungling] investigations”:

What should be published in the jaundiced Chicago Tribune? How about a full, investigative story regarding the state’s public retirement systems and why they are not responsible for the state’s budget deficit or for the underfunding of public sector funds? Here’s a lead for the story: state employees have contributed responsibly and consistently to their pension funds. Most of them will not receive Social Security when they retire, and they will have worked for lower wages and without “corporate bonuses” throughout their career for the promise of a guaranteed pension.

What should be published is that teachers, policemen, firemen, and other state employees are not to blame for the wasteful spending, unemployment, foreclosures, bankruptcy, poverty, and other financial disasters that have occurred, but Wall Street “robber barons” are the culprits.

What should be published and further investigated in the Chicago Tribune is that last year, “state and local governments gave nearly $70 billion to corporations. [These are] massive subsidies and welfare for these large corporations… even though corporate profits have increased 60 percent, and corporations have almost $2 trillion in cash… [Corporations] are not investing this money. They are not creating jobs. They are hoarding this money that they have pulled out of the economy” (David Cay Johnston, Pulitzer Prize-winning investigative journalist).

What should be published and investigated is that billionaire real-estate investor and Chicago Tribune’s Chief Executive, Sam Zell, is well known for his “vulture investing” and is “the storied ‘grave dancer’ who scooped up hundreds of discounted assets during the real-estate collapse of the early 1990s” (The Wall Street Journal, June 2011).

What should be published and investigated is that the government of the State of Illinois has a plausible complicit partnership with the Civic Committee and that there is a consolidation of powerful oligarchic relationships among the Civic Committee’s CEOs and some of the state’s legislators; what should be published is whether the Illinois state government should continue to allow “certain businesses” to become ridiculously rich—despite the whining of “45 chief executives of top Illinois-based public companies” that the Chicago Tribune editorial board had surveyed and then published in its Sunday’s editorial page—while the rest of us become poorer and are forced to go without needed services?

What should be published is that the state’s underfunding of the pensions for 59 years, interest payments for debts incurred and its resultant tax breaks for the wealthy and the decrease in tax revenues, corporate fraud and greed and resulting stock-market crash have largely contributed to the budget problems in Illinois.

What should be published is the injustice of some legislators and the lawyers of Sidley Austin LLP who are also Civic Committee members that want to change existing state and the United States’ contractual laws (Article XIII, Section 5 of the Constitution of the State of Illinois and Article 1, Section 10 of the Constitution of the United States of America), laws that would compel others to accept but are not made compulsory upon themselves, laws that would not only destroy the future of hundreds of thousands of people but subsequently increase taxes for everyone else in Illinois.

What should be published is that past legislators of Illinois had diverted its “constitutional and obligatory” contributions to other “operating expenses” and “special” interests for several decades; what should be published is that the public pension systems of Illinois have depended mostly upon income from its own responsible investments and its contributions from its membership throughout these years; what should be published is that it is an injustice to break the trust among individuals and the pension systems into which they have elected to participate (read Article XIII, Section 5 of The Constitution of the State of Illinois; Article I, Section 10 of The Constitution of the United States of America; and Articles 22 and 23 of The Universal Declaration of Human Rights).

What should be published and investigated are the avarice, arrogance, irresponsibility, recklessness, corruption, and cronyism of the corporate and financial sector’s chief executives and that they should have been prosecuted in a court of law. What should also be published and investigated is that these same billionaire and millionaire bankers and CEOs, these "vulture" opportunists, have paid themselves million-dollar bonuses with the taxpayers’ bailout money and should be held accountable for their larceny.

SB 512 (a Review of the May 2011 version written by the Civic Committee of the Commercial Club of Chicago/Illinois Is Broke)

2011-10-20T04:28:00.001-07:00

The Tier-One Pension Benefit Plan

 The current TRS Tier-One teacher would pay a pension contribution of 13.77 % of his or her annual salary. The current contribution rate is 9.4 %. His or her contributions would also increase every three years.
 The current SURS Tier-One instructor would pay a pension contribution of 15.31 % of his or her annual salary. The current contribution rate is 8.0 %. His or her contributions would also increase every three years. (SURS offered a defined-contribution plan for its membership in 1998-99. Fifteen percent of its members chose a defined-contribution plan. Thus, the SURS defined-benefit plan lost a portion of its membership contributions, and the plan’s sustainability has abated).
 A Tier-One teacher will have a choice every three years as to whether or not he or she will remain in his or her current plan.
 As stated, the teacher’s pension contribution will increase from one election period to the next; thus, the cost for remaining in the Tier-One plan will become increasingly expensive.
 Note a teacher cannot rejoin the Tier-One pension benefit plan once he or she has chosen to leave it.

The Tier-Two Pension Benefit Plan

 Any teacher that fails to elect a pension benefit plan will default into the Tier-Two pension benefit plan.
 Participation in the Tier-Two pension benefit plan that was signed into law in April of 2010 (SB 1946) includes a teacher’s retirement age of 67 for eligibility of full benefits (the highest in the country), a reduction of the Cost of Living Allowance, and a reduced final-average salary. The teacher pays a pension contribution of 6 % of his or her annual salary.
 A current Tier-Two teacher can elect to participate in the Tier-Three pension benefit plan (a defined-contribution plan or 401-K).

The Tier-Three "Retirement Savings Plan"

 Participation in the proposed Tier-Three pension benefit plan or a defined-contribution plan (401-K) shifts all the responsibilities and all of the risk from the State to the teacher; henceforth, the benefit is not guaranteed for life. The individual teacher assumes all funding, investment, inflationary and longevity risks.
 The Tier-Three pension benefit plan does not have the pooled investments, professional asset management and shared administrative costs that a Tier-One defined-benefit plan provides. Moreover, there are no survivor or disability benefits and guarantees with the Tier-Three plan.
 The teacher would pay a pension contribution of 6 % of his or her annual salary (and the State of Illinois would assumedly pay 6 %).

Sources: the 97th General Assembly Legislation (2011-2012), the Teachers Retirement System, the Illinois Education Association, the State University Retirement System, and the National Institute on Retirement Security

What do we do best as teachers?

2011-10-18T06:18:00.000-07:00

We inspire others. We influence and move people to action. We take a person’s potentiality and make it an actuality. We offer our help to others because of our compassion and our empathy, because of our humility and our dignity. We communicate truths because of our integrity. We never give up because of our moral responsibility towards one another and the importance of trust among individuals. We fight against all injustices. We understand; we discuss; we mediate, and we act. We do what is right and model our behavior for others. We hold ourselves accountable for what we do and what we believe is true. We set the example.

What are we as teachers? We are leaders, consultants, diagnosticians and evaluators; we are life-long learners; we are architects for the experiences of others. We are what we want to see in others: our idealism, our indomitable spirit, our commitment to human rights and to the creation of a better society. We are responsible, intrepid and just. We are one of last bastions of hope for a society driven by amoral envy and indifferent greed.

And we are appalled by hypocrisy and lies, by incompetence, irresponsibility and cronyism. We are appalled by intentional faulty logic and the unethical scapegoating of others, by arrogance and self-interest, by prejudice and the injustices done to others. We are appalled by indifference because “indifference is not a response”; therefore, we unite and fight the injustice being perpetrated against ourselves and others.

SB 512 = No Trust in Legislative Leadership

2011-10-14T04:27:00.000-07:00

When Civic Committee members, whom people have not voted into office, write a bill for state legislators and give advice on how to pass their bill, the people of the state are subjected to a law concocted with partisan interests. This is a breach of trust between the constituents and their legislators’ duty to represent them. When legislators wield the power to impoverish some people and to destroy their right of self-preservation; when the Civic Committee and legislators are exempted from the severe consequences of an unjust proposal; and when the Civic Committee’s money not only buys the legislators’ votes but generates and perpetuates untruths among the populace, then one’s belief in the legitimacy of the Illinois General Assembly degenerates into skepticism and exasperation.

Furthermore, when one discovers that the best statesmen have retired a long time ago from the General Assembly; that competent and ethical leadership, in fact, no longer exists; that the majority of Illinois legislators pass bills they do not even read because “doing something” is all that really needs to be done regardless of the disastrous consequences, then one’s belief in a representative democracy and justice becomes disfigured by cynicism.

How could we have faith in a process where some legislators are afraid to vote against a critical legislation because they are worried about running for re-election, about the redrawing of boundaries of their legislative districts, and about the funding of their next campaign? Is it because of their lack of will power and ethical leadership? Moreover, what should we think about the legislative folly of the past several months? What should we say to a legislator when confronted with questions such as “how can a legislator read a 314-page bill when it’s being called in an hour or less?” or “why don’t you write the legislation?” and “what do you propose that we [legislators] do about the budget problem?” How can we believe in our state government when “party committees are often switched out or switched in to make sure that a bill will be unanimous,” and why aren’t any Nobel-prize winning economists invited to the Illinois pension symposiums?

Unquestionably, some legislators do not want to pay for public pensions anymore, even though they were never fully funded since their inception many decades ago. It’s not about “pension unsustainability,” “unfunded liabilities,” or suspect actuarial-cost methods, for we are aware of the artifice that is Illinois is Broke and that data can be easily manipulated and rationalized when one begins with a preferred conclusion and then works backwards to plausible justifications.

Many legislators and their Civic Committee benefactors want, as much as House Speaker Madigan desires, to “let the courts decide” yet again (at the taxpayers’ expense), while the Illinois Education Association and its members hope that Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, was scrupulous about his research and final conclusions that the State of Illinois still cannot "welch on promises" to the public pensions because there is “an enforceable contractual relationship” between the state and its public employees of which benefits “shall not be diminished or impaired.”

Teacher, “did I miss anything?”

2011-10-09T06:29:00.000-07:00

(after reading Tom Wayman's poem)

Nothing much. When we finally noticed
your absence, we thumbed our iPhones
and BlackBerries for the rest of the class period.

Surely, you should know that our classroom is the forum
where we examine the paradigms and presumptions
of everyone else with your own.

Nothing except the fact that you are our raison d’etre.
It is through you that our collective
and authentic Self is realized.

Of course! You missed The Second Coming on the day you were gone.
It occurred in this very classroom, over there,
slouching in your seat, "blank and pitiless as the [blackboard]."

Not a thing, and who cares? We’re all going to die anyway.
After all, this class is as meaningless as any Sisyphean task.
…might as well pluck the day, "ye rosebud," while it’s still worth plucking.

Absolutely! God, herself, could not miss this class without falling behind.
I gave a surprise quiz worth 66 percent of your grade;
Then I assigned the rest of the textbook to be discussed today!

Besides, esse est percipi (being is to be perceived)!

A Letter to My Colleagues and Friends at IRTA, Du Page

2011-10-05T21:05:00.000-07:00

Why should retired and active teachers be concerned about pension reform? Consider the effects that it will have on the defined-benefit plan if the benefit formulation for Tier 1 and Tier 2 teachers is reduced? And what might the current teachers in Tier 1 do if their pensionable salary is capped, as it is true for members participating in the Tier 2 plan? What do you think would happen if the vesting period for Tier 1 members is increased, and their cost of living adjustment is changed to a simple interest computation or even possibly eliminated? And what might Tier 1 teachers do if their retirement age is also raised to 67 and their extra-curricular assignments are excluded from the calculation of their final average salary (which has been extended to a ten-year average instead of four)?

What would many Tier 1 members do if their contributions are increased steadily from 9.4 percent to 17.43 percent by 2027? It is important to note that as some members quickly migrate to a Tier 3 defined-contribution option, the remaining teachers will have to make up the difference, as contributions will need to increase even more than a projected rate of 17.43 percent.

These are a few of the ideas discussed and examined in meetings thus far and will be debated in the future until there is agreement on the issues.

Now ask yourself these questions: how will the above-mentioned possibilities invariably threaten the existing defined-benefit plan for current teachers, and why would many teachers choose the Tier 3 defined-contribution option? The answer is that most beginning teachers do not believe that there will be a guaranteed pension for them anyway, for they are cynical because of the past spring legislative session, and some of them will not be able to afford continuous increases in their contributions as well.

There are more questions to ask: will the initial, anticipated 10-15% exodus to the Tier 3 option also increase the State’s cost and its contributions to the pension system? The answer is yes, and will the State pay for it? The answer is doubtful, and though teachers might become eligible for social security (and that will have to be determined at the federal level), who will match their contribution?

In addition to these complex considerations, will the State also have to pay down the $44 billion unfunded liability more quickly as a result of any movement to Tier 3? The answer is yes. How will all of these concerns ultimately affect you? Now ask yourself what might be the dangerous effects and legal challenges of a possible constitutional amendment to achieve the aforementioned resolutions that might be considered?

Why is it important that we meet with our legislators and tell them that pension reform will not reduce the unfunded liability and that it will not address the causes of the State’s budget problems but create both unplanned and intentional consequences? Why is it important that we meet with our legislators? It’s imperative because the attack on our pension will not go away, and we need to discuss reasonable and fair alternatives for solving the state’s budget problems and the disastrous effects that SB 512 would have on Illinois teachers and their families.

We need to discuss the ramifications that SB 512 will have on the sustainability of the defined-benefit plan and on the recruitment of the “best and brightest” university candidates for teaching in our schools. We need to discuss the fact that the proposed pension reform bill will inevitably hasten the destruction of a contractual obligation. We need to tell our legislators that we vote, that our families and relatives vote, that our friends and neighbors vote, and that we will network with anyone who will help us protect our retirement security, our subsistence, and our dignity.

Defined-Benefit Pension Plan v. Defined-Contribution Savings Plan (Updated)

2011-09-30T07:01:00.003-07:00

Defined-Benefit Pension Plan:

 Your defined-benefit pension plan is more cost efficient than the defined-contribution savings plan
 Your defined-benefit pension plan offers predictable, guaranteed monthly benefits for life
 Funds are invested by professional asset managers in a diversified portfolio that follows long-term investment strategies
 The large-pooled assets reduce asset management and miscellaneous fees
 Your defined-benefit pension plan provides spousal (survivor) financial benefits
 Your defined-benefit pension plan provides disability benefits
 The state is responsible for funding, investment, inflationary and longevity risks
 Your defined-benefit pension plan is a more effective protection than the defined-contribution savings plan
 Your defined-benefit pension plan provides you with self-sufficiency in retirement; it is associated with far fewer households that experience food privation, shelter adversity and health care hardship
 Your defined-benefit pension plan is less expensive for taxpayers than Social Security – a reason why legislators, et al had negotiated for Illinois teachers to not pay into Social Security
 Your defined-benefit pension plan has an economic impact of over $4 billion on Illinois; the effect on Gross Domestic Product is $2.38 billion; jobs that are created: 30,448 (Teachers Retirement System of Illinois, TRS)
 The Teachers Retirement System of Illinois is the 39th largest in the U.S. with 378,288 members (TRS)
 The average investment returns for TRS: 9.3% (over 30 years), 8.8% (over 25 years), 8.3% (over 20 years) (TRS)
 Defined-benefit pension plans contribute over $100 billion to annual local, state, and federal revenue in the U.S. and provide capital to financial markets (National Institute on Retirement Security, NIRS)

Defined-Contribution Savings Plan:

 With a defined-contribution savings plan (401k, 403b, 457), only your contributions are defined
 A defined-contribution savings plan shifts all the responsibilities and all of the risk from the employer to you (unless negotiated otherwise); thus, your benefit is not guaranteed for life
 Your benefit is based upon individual investment earnings
 You assume all funding, investment, inflationary and longevity risks
 A defined-contribution savings plan does not have the pooled investments, professional asset managers, and shared administrative costs that a defined-benefit pension plan provides
 There are no survivor or disability benefits and guarantees
 Though you bear no portability risks, accounts are not always rolled over when you change jobs
 Your employer (state) will have to bear the administrative costs of both defined-benefit pension and defined-contribution savings plans when you switch over
 Though not your problem, “payments to amortize unfunded liabilities for the defined-benefit pension plan may be accelerated” (NIRS)
 The Governmental Accounting Standards Board “requires [an] acceleration of unfunded liability payments when the defined-benefit pension plan is closed to be recognized on financial statements” (NIRS)
 When changing from a defined-benefit pension plan to a defined-contribution savings plan, “new members do not start with any unfunded obligation” (NIRS)
 “Projected defined-benefit savings contributions for new members are worth more than the projected defined-benefit pension costs for those members” (NIRS)
 “No unfunded obligations [liabilities] for existing members are reduced when new members go into a defined-contribution savings plan” (NIRS)
 “The loss of new members make it difficult to finance the unfunded obligations of the defined-benefit pension plan” (NIRS)

Sources: the National Institute on Retirement Security (NIRS), the Teachers Retirement System of Illinois

Our Indifference

2011-09-29T07:41:00.000-07:00

We define indifference as a lack of interest, an unimportance or insensibility. As the Nobel Peace Prize winner Elie Wiesel states: “[indifference] is more dangerous than anger and hatred.” We might add that indifference often courts a complicit relationship with political and social injustices and that, conversely, these injustices owe their success and power to indifference.

We know that the cousins of indifference are weakness and fear; we know that if we choose to be indifferent, it is a conscious choice. So how do we asphyxiate our indifference? How do we disable it? Is it important and also relevant to ask whether we are responsible for not only our future but the future of others?

It is an overwhelming problem: our political apathy. Nonetheless, each one of us can make a difference. The road to caring about our future begins with our comprehension of a possible inequity that might occur to the teachers in Illinois, with our compassion and empathy for the plight of both active and retired teachers and ourselves who may suffer the consequences of an unanticipated injustice, and then with our most effective action achieved through alliances, one small voice at a time.

Dialogue between a young, tea-party member and an old man

2011-09-25T12:33:00.000-07:00

Email Subject Heading: “Still Think Governor Walker Is Bad for Wisconsin? Good Stuff Is Happening in Wisconsin!”

A list followed regarding the “good stuff [that] is happening in Wisconsin” such as saving large amounts of money by cutting funds to Wisconsin’s public school districts, enacting merit-pay systems and collective bargaining reforms for public school teachers, decreasing “school” property taxes, eliminating 1,000 government jobs… You get the idea.

I wrote the tea-party member back, using the typical liberal rant about neo-conservatism and its perpetuation of the “corporatists” crusade at first; he instantly replied:

Dear…
“With all due respect, I think you are losing your marbles. You started your article with words such as "neo" and "blitzkrieg", yet you quote and resource the likes of Naomi Klein and Robert Reich. These are two socialists who would love to see Marxism in this country. They remind me of an earlier socialist group, the national socialist party, or NAZI for short. You may be getting caught up in their propaganda and their mastery of manipulation.”

My reply:

Dear…
Most people who call others "socialists" usually do not understand the concept of socialism; they vaguely understand even the fallacious over-simplifications of most theories that they hear reiterated typically in scare-mongering political debates and from media talk-show hosts. These people that use the term socialism use it as a negative, connotative, name-calling device to frighten others primarily to capitalize on and perpetuate their audience’s profound ignorance. This is a means of “propaganda” and “manipulation” of the populace.

For the record, I am not a socialist or a communist; I am not a fascist either; moreover, I do not believe in monarchs and aristocracies; I do not believe in theocracies and the "divine right of kings." I am not a utilitarian; I am not part of the U.S. plutocracy, (nor would I ever want to be); I am definitely not a “tea partier” (a person who utters sanctimonious platitudes about abstract concepts without intelligent understanding of the ideas or our country's complex problems)! Furthermore, I do not believe that an ideal democracy or republic can exist, for often times the majority rule (a form of tyranny in itself) is morally wrong and the minority is right. I believe in an ethical and moral capitalism but that, of course, is an oxymoron.

I have little faith in man and his political, economic and religious beliefs and objectives, for they often beget hypocrisy, greed, genocide, terrorism, slavery, oppression, and ignorance. I believe what Alexis de Tocqueville pointed out more than 150 years ago: that American democracy will never reconcile the conflicting demands of individual freedom and its civil liberties. I believe that Jefferson and Madison (who were also both members of the "privileged" class at that time) would not approve of the today's “so-called” democracy, though they would recognize that today’s American plutocracy, with its vast wealth and power, has created horrible injustices in this country and abroad.

He replied succinctly:

"What tea party are you referring to? The one seen on liberal TV networks? The tea party I know wants the government out of our way. The only un-intelligent idea this tea partier has is to let man rule himself. I guess that's too difficult for some folk!”

My reply:

I am not referring to the tea-party “clowns” that are analyzed on liberal TV networks. I am referring to some of the idiotic ideas that have actually spewed from the mouths of the “so-called” leaders of this band of “morons” (oops! please forgive my name-calling): Bachmann, Palin, Beck, O'Donnell, Paul, Meckler, etc. They are also covered on Fox, CNN, channel 2, 5, 7...

It fascinates me that you want "the government out of [your] way?” Let me ask you few questions regarding “the only unintelligent idea this tea partier has is to let man rule himself”: Do you want to collect social security and Medicare when you're an old man? Would you collect welfare if you lost your job right now? Will you need no government assistance in the future (because you have saved enough money for your retirement)? Would $2 million be enough for 25 to 30 years of retirement?

Do you visit public libraries, museums, and parks? Do you drive on public highways and streets? Do you walk on sidewalks? Do you discard your garbage at a landfill once a week? Do you send your children to private schools? Did you go to private schools? Do you want firemen to come to your home when it's burning? Do you want policemen to come to your home when it's burglarized? Do you want safety inspections of the food your family eats and the water your family drinks? Do you want a postal service? Do you want prisons for felons? Do you want a Veterans Affairs Department or a Hazardous Materials Safety Administration, or the Department of Justice and the court systems? How about a Department of Defense? Do you want a navy, army, Marine Corps, and air force to protect you from foreign invasions? How about the National Guard? How about the Nuclear Security Administration and NASA…? Sure, let's get rid of government!

By the way, there are literary works, historical references, and philosophical treatises that analyze the impossibility of the notion that "man [can] rule himself." Do you understand the ramifications of what tea-party people say, particularly about eliminating government and establishing self-rule?

He replied:

“That's absurd, we need a government. The tea party started at the end of Bush/beginning of Obama (the over spending of all the states as well). How about spending less than the amount taken in? How about social security keeping pace with the higher average? Instead, we elect morons like Quinn who raises my income tax to fund the past, not even the future. Then (expletive deleted) [he] needs more so he raises the tolls, AGAIN! Instead of cutting useless programs, he acts like a crack cocaine addict who needs money for his habit and will steal to get it! Go ahead and compare Quinn to Walker and you will see the truth.”

My reply:

Indeed, “How about spending less than the amount taken in?” That’s called saving, isn’t it? However, isn’t that contrary to the American way? And about Quinn? I’ll email you tomorrow (or perhaps never).

Dispatching a Stalwart Teacher

2011-09-18T16:52:00.000-07:00

From the journal of a Civic Committee member in the not-too-distant future
(…with humble apologies to George Orwell’s “Shooting an Elephant”)

I was living in Springfield, Illinois during the mid 20’s. The Teachers’ Retirement System of Illinois was already defunct for a few years, and the Civic Committee had sent me to squelch any potential uprisings.

Thinking about it now, I realize how much teachers had detested the Committee’s presence at the legislative sessions of 2011-12. The helplessness of teachers in the defense of their defined-benefit plan was quite obvious to all stakeholders, especially the Committee. After the pension reform bill was passed, CEO vultures from the Committee and the Civic Federation moved quickly in to carve up the teachers’ retirement melon by establishing spheres of influence over the profits they would reap from enrollment in the Tier Three “defined-contribution” option, the beginning of the final demise of the defined-benefit plan in 2021.

In 2011, many teachers had created a semblance of solidarity by forming a group called the Illinois Stalwart Pension Advocates (ISPA), which vehemently opposed exploitation by plutocrats that attacked their pension. The ISPA was essentially a small faction that emerged out of the now defunct Illinois Education Association (IEA). The ISPA was largely made up of retired activists, two “Roamin’ Dudes” (so named by a legislator), and some young teachers who lived in the Chicago land area.

These dissident teachers employed the revolutionary method of meeting, calling, and emailing legislators (or sending postcards to them) associated with the “We Are One” coalition in 2011, which included the IEA, IFT, AFSCME, AFL-CIO, Police and Firemen. Although the Committee and its media organizations continued to successfully manipulate the populace into hysterical, pension envy – the other most destructive force against the public pensions’ system of Illinois – no one thought to address them since “[They Were] One.”

Even though contacting legislators had little effect on the Committee’s vast wealth and resources to intimidate the General Assembly (GA), the ISPA did not make my job easy, for I had to tally their form letters and telephone calls to legislators for the Committee and our “insiders” in the GA. (It might have been a lot worse for me if the IEA had united with those apostates and rallied in Springfield before the fall veto session of 2011).

It was about that time that I began to believe that the Committee’s compelling grip on legislators in Illinois was a form of historical imperialism, and I began considering resigning my position. As for my job, allow me to expatiate: I was ordered to prevent any possible subversive activity in Springfield, Illinois after the passage of pension “reform,” even though it was already too late for teachers to halt the formidable Committee’s perpetration of media-controlled fabrications and falsified data that the vastly-inflamed and largely semi-literate populace and most of the GA accepted without question. As the rather gushing Jonah Edelman once said quite arrogantly about another bill that was meant to destroy the teachers’ unions and collective bargaining rights, we “did our homework” and were able to “jam this proposal down their throats.”

To my credit, I busted up a few renegades back then, though most teachers were astonishingly passive and indifferent about defending their rights and thought that political activism was a subversive activity, except when they were told to respond as a call to action with their barrage of emailed form letters that were sent straight to the legislators’ junk-mail folder (repetitive subject headings identified them as spam).

It is true that most retired teachers at that time were not politically engaged, but they were whizzes in vacationing, gardening and golfing; of course, active teachers were hijacked by test-based obsession, value-added assessment, punitive accountability, performance-based agreements, merit-pay plans, diminishing autonomy, dictatorial administrators, bureaucratic and legislative malfeasance, government vouchers and financial improprieties, officious mega-rich foundations, the imposition of market-based data-gathering approaches, incompetent and meddlesome school-boards, and the privatization and deregulation of public education. To put it simply: they had no time to afford.

Thus, I curiously developed an intolerable sense of remorse after the Committee and the 97th GA robbed Illinois teachers of their defined-benefit pension plan. After all, teachers only wanted what they had paid for throughout their long careers and what was promised them: their right to an earned, deferred income that was constitutionally guaranteed in 1970 until the Committee’s substantial and wealthy influence on the courts ruled otherwise.

And although I was a wealthy entrepreneur, an actuary, and a registered investment advisor for Fidelity Investments at that time, with not two but three guaranteed pensions waiting for me upon retirement and a proud member of the Committee with the unshakeable belief in “free market” principles, sometimes, rather unexpectedly, I was stuck between the hypocrisy of my profiteering from the many naive teachers who opted out of their guaranteed pension plan (that undoubtedly hastened its destruction) and my insufferable Christian conscience.

Indeed, some days I hated the teachers’ self-righteousness and their moral indignation. I thought that their pension was an entitlement that none of them deserved, and I wanted it abolished; other days, I wanted to renounce my oligarchic privileges, yearly bonuses, stock options, six-figure salary and partisanship to the exclusive club known as “C-pentagon” or the Civic Committee of the Commercial Club of Chicago. I guess my ambivalence might have been the product of an unsettling greed for money, and to not only control my future but the future of mankind, while simultaneously becoming someone of exceptional holiness…

One day, while I was unwinding in my office and watching Fox News, a very old man came sprinting through the opened door. He was bellowing about how a member of the ISPA had gone quite mad in a local high school gymnasium while showing a power-point presentation to a few interested teachers who could never retire since the passage of the “long-ago and far away” 2011-12 pension reform. I was told how he had thrown his laser pointer at a Committee member, who he discovered had infiltrated the not quite clandestine meeting, and then absconded.

After inquiring further about the incident, I asked the very old man to guide me to this renegade. I grabbed some paper clips and a rubber band on my desk and left my office. A few frightened teachers stopped me on my way and told me about his irrational behavior.

On Fahner Boulevard, we saw signs of his trail. We passed several busted “Illinois Is Broke” pavilions, overturned tables, squashed attaché cases, scattered Abraham Lincoln pennants, colorful leaflets about police and firemen entitlements, and many onlookers motionless with fear.

I clutched the rubber band in one hand and a paperclip in the other. On our quest to find him, we saw the president of the newly-formed Illinois Teachers’ Poverty Alliance (ITPA) and the House Minority Leader cowering at the corner of Farrell and Miles White Avenue. The very old man wanted to stop and pick up some archaic manuscript from his car – I believe he referred to it as NBI #16 – and show it to them, but I told him that we had no time to waste.

I remember it was a vibrant day in early May. It was also the annual lobbying jamboree for the ITPA. As we walked slowly together, we began questioning bystanders about the whereabouts of this elusive rebel but failed to gather any useful information. I began to have second and third thoughts when the very old man suddenly saw him in the distance. There was a small commotion, and some Committee members and several politicians were running in the opposite direction. Apparently, the extremely-old Speaker of the House had been kicked in the testicles and was writhing on the sidewalk.

Then I saw him. I looked into the eyes of the man who did the deeds; “I looked into his soul” (as George W. Bush had once said about Vladimir Putin); he looked at me. He was standing on the bottom steps of the State Capitol, waving a red, white and blue sketchbook and yelling at a queue of yellow school buses. He was about five-foot nine with lots of windswept white-and-gray hair and a surprisingly-trimmed goatee. He was bellowing about someone named Gregor and the transfiguration of a cockroach. Whatever he was mumbling, it was unintelligible.

I had already sent for a backup and for some provisions when an ITPA lobbyist handed me a box of 100 Universal Jumbo paperclips from his trembling hands. By now, quite a few people had gathered behind me to watch my every move. They began to shout: “Burn the illusion out of him!” “Freedom is slavery!” “Ignorance is strength!” (I must say, their taunts sounded strangely familiar).

Though he didn’t appear to be dangerous, I knew I couldn’t take any chances. As I started to walk towards him, the crowd followed closely behind. I was beginning to feel woeful about what I had to do. I had no intention of dispatching the poor fellow. I had merely sent for my cache to sensationalize the moment and to provide a little drama for the gathering crowd.

When I got within 10 yards of him, I noticed he was sitting on a rather sizeable valise. He didn’t seem to notice us at first. He was tearing the covers off his sketchbook and scratching his ears with the blunt ends. He was murmuring something about being “a sick man, a spiteful man,” and something about his “liver hurting.” I stopped and watch him for a moment, listening for clues. However, there were none.

I glanced around me and noticed that the mob had become quite large. It was an enormous mob of at least 177 people. I gazed at the sea of curious faces, all certain about this “simple twist of fate.” One hundred and seventy-seven wills urged me on. I felt like a pawn, an absurd marionette in some surreal spectacle, but I had to play this out. I could not lose face. The principles of a free market, the spirit of the University of Chicago’s School of Economics, and the preservation of the American plutocracy were at stake. I could not falter.

Then he stood up and began slamming the trunk against the Capitol steps, not once but several times. With no time to lose, I loaded one paperclip onto the slender, brown rubber band between my left thumb and index finger and fired. The paperclip struck his right kneecap, but he refused to go down. He stood upright and glared at me for a second. Then his eyes softened; they seemed to implore me to save him. Instead, I fired another fastener, hitting him in the left elbow. He turned sluggishly around, and I fired again, this time striking him in the buttocks. He appeared suddenly stricken, shrunken, as though the impact had finally sunk into him.

At last, perhaps eleven minutes later – not a minute less – he fell to the pavement. I walked over to him. He was still breathing, though his body quivered in undignified dejection. I pointed another clasp where I thought his heart might be and discharged three more rounds. He gasped and groaned, begging me to finish him off, but my rubber band had broken. I then turned and walked towards the jeering legislators. I thought about how they had tied his destiny to mine. I became furious and threw the box of paperclips into the dispersing rabble. Within minutes, the Committee’s private security firm had arrived. I thought that legally I had done the right thing, for a mad retiree must be dispatched; besides he had thrown his laser pointer at a Committee member and kicked the extremely-old leader of the majority party caucus and presiding officer of the legislative chamber. Nonetheless, I felt guilty.

Afterwards, there were countless discussions about the incident. Opinions were divided. Several days later, the Committee banished me to their Clark Street command center in Chicago where I offered advice on acquisitions, capital projects, mergers, pension schemes, and off-shore banks accounts, until I defected nine months later. In the years that followed, I often wondered about the day I almost exterminated a hapless, stalwart retiree simply to avoid looking like a fool.

A Letter to a Friend about Gun Control

2011-09-14T13:15:00.000-07:00

"I know what you're thinking. Did he fire six shots or only five? Well, to tell you the truth, in all this excitement, I kind of lost track myself. But being this is a .44 Magnum, the most powerful handgun in the world and could blow your head clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?" –Dirty Harry Callahan

I worked as a reserve police officer, usually late at night to early morning, drank a lot of steaming black coffee (from Dunkin’ Donuts), and taught high school students during the day a long time ago. I have always believed in non-profitable and stressful public service. Moreover, I have always believed in the theories of deterrence and retributive justice. I am for self-defense (I used to prefer Tae Kwon-do in my younger years, but I’m getting too old; besides, someone with a gun has a distinct advantage).

The 2nd amendment – established in 1791 – has been subject to debate and re-interpretation most often. The question debated about gun control is whether it is a collective or individual right to own a weapon.

According to Silveira v. Lockyer (2002), a federal appeals court in California ruled that the 2nd Amendment does not protect an individual's right to possess firearms but does protect states' rights to protect themselves. (This case was essentially a ban on assault weapons). In a subsequent court case, District of Columbia v. Heller (2007), the federal appeals court ruled that the District of Columbia law prohibiting handguns violated the individual’s right to possess firearms under the 2nd amendment. The Supreme Court granted certiorari (a writ issued by a higher court to obtain records on a case from a lower court so that the case can be reviewed), nevertheless.

So what rights does the 2nd amendment protect? According to Supreme Court Justice Joseph Scalia, the 2nd amendment protects an individual right to possess a firearm “unconnected with service in a militia” and to use that weapon for traditionally “lawful purposes,” such as self-defense within the home.

I can imagine that many people believe that their right to "keep and bear arms" is a "sure-fire" method for impeding immediate bodily harm and robbery, even if there is a Dunkin' Donuts establishment close to their homes. Nonetheless, the problem is that weapons of "individual" destruction (WID) and their facile availability are also in the hands of felons and the mentally impaired (the borderline deficient, morons, imbeciles, and idiots); the substance-induced (alcoholics and drug addicts); the schizophrenic, psychotic, paranoid, delusional, depressive, anti-social, and other deranged personalities. Furthermore, there's nothing that you or I can do to change the depraved genetic pre-dispositions or the unfortunate environmental influences of some of these people, especially if they are armed with WIDs.

Thus, I am going to view the 2nd amendment: “A well-regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed,” as a guaranteed right of the State as well as an assured right of an individual; although I agree with “gun control legislation, including prohibitions on concealed weapons and possession of firearms by felons and the mentally ill, laws forbidding the carrying of firearms in sensitive places such as schools and government buildings, laws imposing conditions and qualifications on the commercial sale of arms… [and laws] prohibiting the carrying of dangerous and unusual weapons [such as assault weapons]” (District of Columbia v. Heller – Case Brief Summary). Of course, I still have the paradoxical desire to say this to someone: “Go ahead. Make my day!”

Pt. 3 of “Waiting for Super [Legislators]” to Address the Budget Problems of Illinois and the Officious Civic Committee (revisited and summarized)

2011-09-07T16:38:00.000-07:00

“Waiting for Super [Legislators]” to Solve the More Important Budget Issues of Illinois

If Illinois legislators possess fortitude and selflessness, they can establish a revenue system with a balanced but low and broad tax base to spread the burden of taxes to multiple citizen payers and restructure the state’s antiquated single-rate income-tax method. They can also tax services to reflect today’s economy. This will increase the State’s cash flow.

Furthermore, they can change the timing of tax payments; raise taxes on the wealthy (their tax rates are the lowest it has ever been in 80 years) and eliminate “corporate welfare” (deductions and loopholes), while cutting taxes for the middle class and expanding the Earned Income Tax Credit for the poor. In addition, they can pass a jobs’ reform bill and award employers with tax credits for creating jobs in Illinois. These reforms can be accomplished if legislators demonstrate the courage to forego their allegiance to a two-party political system that is compelled by the Civic Committee of the Commercial Club of Chicago.

A Broader Tax Base Is Needed in Illinois

According to the National Conference of State Legislatures (June 2007), “A high-quality revenue system relies on a diverse and balanced range of sources… If reliance is divided among numerous sources and their tax bases are broad, rates can be made low in order to minimize the impact on behavior. A broad base itself helps meet the goal of diversification since it spreads the burden of the tax among more payers than a narrow basis does. And the low rates that broad bases make possible can improve a state’s competitive position relative to other states.”

Tax “Services” to Increase Revenue

Consistent with creating a broader tax base, the Chicago Metropolitan Agency for Planning (CMAP July 2011) argues that the tax system in Illinois and most other states do not reflect today’s economic realities. In the last several decades, the U.S. economy has slowly shifted from manufacturing industries to a “services and information-based economy... Since the early 1970s, spending on services has exceeded spending on goods. In 2010, consumers spent twice as much on services (66.9 percent of total personal consumption expenditures) as on goods (33.1 percent of total personal consumption expenditures). This shift in the fundamentals of the economy has changed the relationship between consumption and tax revenue… Changes in personal consumption have resulted in the Illinois sales tax covering a decreasing proportion of consumption expenditures.”

Furthermore, in accordance with these statistics, the Center on Budget and Policy Priorities (July 2009) proclaims that “a majority of states apply their sales tax to less than one-third of 168 potentially-taxable services. Five of the 45 states with sales taxes impose them on fewer than 20 services… Research finds that purchases of some services do not fall as precipitously as durable goods purchases do when the economy slows nor rise as rapidly when the economy is booming” (Federation of Tax Administrators). States that do not tax services, such as Illinois, “probably could increase [its] sales tax revenue by more than one-third if [it] taxed services purchased by households comprehensively."

The tax system in Illinois is inefficient. “The tax system itself is influencing economic activity” (CMAP) by taxing goods that are consumed rather than the consumption of resources.

A Better Timing of Tax Payments Is Essential

Though cash flow continues to be an issue, as Illinois has had a running General Revenue Fund deficit… since November 2000…, cash management practices are greatly affected by budgetary practices in relation to deferred liabilities which place additional pressures particularly in the first and second quarters of the year to pay those expenses. Timing of tax payments also affects the State’s cash flow and should be adjusted accordingly.

Tax Equitably: Besides Ending “Corporate Welfare,” Tax the Wealthy

Illinois income tax uses a single rate structure that results in low-income wage earners paying more taxes than the wealthy. As stated by the Institute of Taxation and Economic Policy (ITEP November 2009), Illinois is among ten states in the nation with the highest taxes paid by its poorest citizens at 13 percent. The tax system is inequitable because lower-income taxpayers typically spend a higher percentage of their income on tangible goods than higher-income people.

In 2007, the top one percent of wage earners in the U.S. (with an average income of just under $2 million a year) paid 6.4 percent in total taxes while the bottom 20 percent of wage earners (with an average income of just under $11 thousand a year) paid 10.9 percent in taxes (ITEP).

Furthermore, consider that “sales and excise taxes are the most regressive element in most state and local tax systems. Because sales taxes are levied at a flat-rate, and because spending as a share of income falls as income rises, sales taxes inevitably take a larger share of income from low-and middle-income families than they take from the rich” (ITEP). The State of Illinois is one of seven states that use a “flat-rate tax.” In other words, the income of the wealthiest people is taxed at the same marginal rate as the poorest wage earners.

The Institute on Taxation and Economic Policy maintains that the top 5 percent of income earners in Illinois pay the least amount of sales, excise, property, and income taxes because of federal deduction offsets or substantial tax savings (regressive tax loopholes) from itemized deductions, such as capital gains tax breaks and deductions for federal income taxes paid that are coupled with a flat-rate structure. “Since the rich are able to save a much larger share of their incomes than middle-income families – and since the poor rarely save at all – the taxes are inherently regressive” (ITEP).

The wealthiest people should pay tax rates commensurate with their incomes, but they do not in Illinois. There are no equal rights when there is inequity of wealth and when promises are made to support and to preserve the fortunes of a few at the expense and victimization of the many. The continued attempt to balance the State’s budget by scapegoating public employees’ and their pension plans ignores the fact that Illinois has an inequitable tax structure. A progressive tax reform, or a more effective means of income redistribution where individuals who earn more would pay higher taxes, in addition to a low-income tax credit for low-wage earners, would make the State and local taxes fairer and address the budget issues in Illinois.

A final note to all legislators who may be reading this manifesto: it is my hope that the citizens of Illinois are not “Waiting for Godot” to arrive.

Pt. 2 of “Waiting for Super [Legislators]” to Address the Budget Problems of Illinois and the Officious Civic Committee (revisited and summarized)

2011-09-06T17:04:00.000-07:00

Why Is Pension “Reform” Not the Most Important Issue in Illinois?

First, pension sustainability has little to do with a state’s deficit reduction because it is a symptom of the aforementioned points (discussed in part one) and the following substantial issues that need to be addressed, of which many are in a cause-and-effect relationship with a pension’s solvency. Focusing on public pensions’ unfunded liability (pension plans will always have liabilities) will not revive the Illinois economy and produce jobs.

Second, liabilities in a public pension fund never come due all at once. Only 15 states have a funded ratio over 70% (Barclays Capital). Funded ratios are unpredictable, and long-term liabilities are subject to changing variables. Furthermore, investment returns can overstate or understate liabilities.

Third, according to the Illinois Retirement Security Initiative, a Project of the Center for Tax and Budget Accountability (February 2011), “when compared to the State’s projected revenue growth, the State’s required pension contribution may be more manageable than many believe… assuming revenues grow at 2.8 percent per year, and the State maintains its personal income tax rate at five percent and its corporate income tax rate at seven percent.”

In line with this type of thinking, we may assume that the State’s revenues and budget, along with anticipated assets in the pension systems, will increase proportionately in the future. “Even Illinois, [with] the most underfunded pension plans in the country, would only have to boost tax revenue by less than 0.2 percent over the next 30 years to meet its projected shortfalls” (Dean Baker, Co-Director at the Center for Economic Policy and Research).

Pension reform should not be the focus in Springfield. It should be tax reform, where fairness, long-term revenue stability and a progressive tax rate become the State’s priorities and solutions for the budget issue. As determined by the Institute on Taxation and Economic Policy (November 2009), the State of Illinois does not tax equitably, and it is in the top ten of regressive state tax systems where the wealthiest taxpayers do not pay as much of their incomes in taxes as the poorest and middle-income wage earners.

Therefore, the focus should be on the “fundamental disconnect” and a long-term economic policy by promoting structural reforms (American Enterprise Institute, June 2011) and not on any unwarranted modification or the inevitable elimination of pension benefits that is perpetuated by the Civic Committee’s fallacious, lingering deflection and blame on the State’s public employees’ defined-benefit pension plans.

Consider that increasing current employee contributions and reducing benefits for future employees so that members in the defined-benefit plan will choose a defined-contribution (401k or 403b) option do not address the existing unfunded liabilities in Illinois. What is assured, however, is the destruction of the Tier I defined-benefit plan and, thus, the Teachers Retirement System.

The Center for Retirement Research (April 2011) maintains that “meaningful defined-benefit plans could remain as a secure base for the typical public employee, and defined-contribution plans could be ‘stacked’ on top to provide additional retirement income for those at the higher end of the pay scale. Such an approach would ensure a more equitable sharing of risks…” Three states already use a capped defined-benefit plan in combination with a defined-contribution plan for new employees. They are called “hybrid” plans.

Let us not forget that defined-benefit pension plans have an economic impact of several hundred billion dollars each year and support several million American workers in their jobs; they contribute over a hundred billion dollars to annual local, state, and federal revenue, while reducing government expenditures; they also provide capital to the financial markets, and they deliver the same level of retirement income as an individual 401(k) type savings account at half the cost as a result of their professional asset management and better long-term investment strategies, particularly during challenging economic times. Let us also not forget that defined-benefit pensions are associated with far fewer American households experiencing food privation, shelter adversity, and health care hardship and provide a bastion of hope and financial stability for millions of people in this country (The National Institute on Retirement Security). Instead of annihilating the defined-benefit pension plans, they should be advocated by everyone.

It is true that state-funded pensions are less expensive for Illinois taxpayers than Social Security and that Illinois taxpayers save hundreds of millions of dollars per year by not paying Social Security payroll taxes for 78% of all active employees in the five-State-managed plans (Illinois Federation of Teachers).

It is also true that the state has control over its revenue and spending and can improve funding instead of altering and lowering public pension benefits (Fitch Report, January 2011), the next topic for discussion in tomorrow’s post.

Pt. 1 of “Waiting for Super [Legislators]” to Address the Budget Problems of Illinois and the Officious Civic Committee (revisited and summarized)

2011-09-05T17:33:00.000-07:00

Budget Issues and the Victimization of American Workers

To begin, let us not forget that one of the main causes of the public pensions’ unfunded liability in Illinois (though “unfunded liability has little to do with their sustainability”) is the state’s erratic and irresponsible annual contribution payments to the public pension plans since 1953 (National Institute on Retirement, May 2011). Add wide-spread corporate financial corruption that created the financial crisis of 2008-09 and; thus, we have limited revenue, rampant foreclosures and stagnant unemployment, the outsourcing of jobs while Bush’s (now Obama’s) tax policy for the wealthy continues as well as the deceptive and diversionary attacks on public employees and their pensions.

According to Time (June, 2011), “There may be $2 trillion sitting on the balance sheets of American corporations globally, but firms show no signs of wanting to spend it in order to hire workers at home… The companies that [do] business in global markets, including manufacturers, banks, exporters, energy firms and financial services, contribute almost nothing to overall American job growth… There is a fundamental disconnect between the fortunes of American companies, which are doing quite well, and American workers…”

Now add to this calamity some corporate-owned media and their attacks on the public sector’s pension plans and their attempt to shift the blame for today’s financial problems on public sector workers, and we have a distortion of cause-and-effect reasoning with malicious intent.

Combine corporate-backed legislators with private-sector interests that use selected and biased instances of “doom and gloom” forecasts to seek radical changes to the defined-benefit pension plans in Illinois, and the deceitful practice of corporate financial firms and groups such as the Civic Committee of the Commercial Club of Chicago (Illinois Is Broke) that attempt to peddle defined-contribution plans as the panacea for the State’s budget deficit so that corporations and investment firms can continue to profit from this predicament, and we have another larger injustice to address.

The Civic Committee’s Stratagems

First, the Civic Committee’s schemes include using its own membership and actuaries to compile reports and analyses disguised as impartial data (Sidley Austin LLP, for example) and intimidating legislators (at downstate meetings and through the Chicago Tribune) to make laws in the interests of their plutocratic objectives.

Second, the Illinois Is Broke website claims that “Illinois has 13 million residents.” The wealthy Civic Committee has several hundred members. That means the remaining 99.99% of the state's citizens pay proportionately higher taxes because Illinois is one of the few states that uses a flat-tax rate and Illinois executives of large corporations, such as the membership of the Civic Committee, also pass on the burden of their taxes that they do not pay onto the average citizen through an exploitation and extortion of governmental policies that create an ironical “corporate welfare.”

Third, the Civic Committee does not publicize the fact that its CEOs shift the burden of this payment to the public and that some of the state’s lost revenue is based upon promises that they will create more jobs; even though, their outsourcing of American jobs is the result of a belief in “free market” principles and has eliminated hundreds of thousands of jobs and has eroded the tax base of the State of Illinois. Why should they care about American workers when they can obtain cheap labor overseas?

Fourth, the Civic Committee CEOs do not publicize the fact that they have hidden vast amounts of their corporate money in offshore bank accounts to avoid taxation and, thus, to increase their excessive profiteering – paid for by the rest of us. (Note that their wealth is not their greatest weapon, however: it is our apathy).

What the intrusive and self-important Civic Committee’s CEOs explicitly show us is that they want to destroy the TRS defined-benefit pension (and eventually the other state public pensions), rob the teachers’ guaranteed financial security (coming this fall veto session and thereafter) and profit from it.

Pulitzer prize-winning journalist, David Clay Johnston proclaims “that any American who forgoes wages today for the promise of a pension tomorrow and is not paid in full is a scandal. He has been robbed as surely as if a burglar broke into his or her home…

“To business owners and executives, the cost of campaign contributions is chump change to the benefits of shortchanging pension plans. Government rules permit and encourage a vicious cycle. To the extent that pensions are not fully funded, that their true costs are not paid each year, it means that corporate profits are inflated. Inflated profits mean that share prices for company stock are inflated because they should represent the profitability of companies. And inflated stock prices mean, in turn, that executives cash in their options for more than they should get.

“Many hundreds of billions of tax dollars [across the country] have been diverted to the rich, leaving our schools, parks, and local government services starved for funds. Jobs and assets are going offshore, sometimes to the detriment of not just the economy but to national security…

“It is the rich who are gorging themselves on the government with giveaways, favors, contracts, rules that rig the economy, tax breaks, and secret deals [and not the majority of citizens in Illinois, many of whom are public employees with hard-earned pension plans]” (Free Lunch, How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You with the Bill).

We have witnessed legislators who pass corporate-sponsored reform bills that support privatization and deregulation, as well as the destruction of unions, public jobs and pensions in order to garner money for their re-election bids. We should ask: might there be a conflict of interest when it comes to some policy changes for politicians who have moved from the corporate world into public office and whose motive for service is market-based profit and/or self-interest? We might also ask: will we ever put an end to the fulsome influence of corporate lobbyists?

Double Vision

2011-09-04T04:30:00.000-07:00

Caracas – Venezuelan police arrested a doctor
and eleven city morgue employees on suspicion of removing
the eyes from corpses and selling them for corneal transplants
to a doctor in Maracay who was charging up to $2000.
--from a news story

Now that he has new eyes,
a mosaic of phosphenes
becomes his corneal slide show.
The scarlet ibis, cuckoo and Orinoco crocodile,
some ten million different color surfaces
emerge in an Andes panorama.

But suppose he’s a rich white man
in Maracay with these dry Mestizo eyes,
these freedom-fighter eyes
with a retina of debt and anger.
Will they flash high-rise ranchos
or sharecropping black gold
from Lake Maracaibo?
Does he dine with the provincial elite,
protesting the socialist with a master plan?

And suppose while staring
into his vegetable stew, plantains,
cacao, and slabs of beef
or while dancing the joropo
his optic nerves trigger the insides
of a squatter settlement outside Caracas,
or the faces of children in barrios
across coastal lowlands?

Maybe he sees an ophthalmologist
for artificial tears
or a psychiatrist for photophobia.
Maybe he kneels before
a Roman Catholic priest
or the weeping Madonna
begging for the miracle
of eyes that cry.

Illinois May Be Broken but Not the Civic Committee of the Commercial Club of Chicago

2011-08-26T07:39:00.000-07:00

Corporatists are alive and well in Illinois. The history of our State has been one of excessive greed and shameless hypocrisy, of corruption and oppression, of extortion and domination, of exploitation and deception, of selfishness and subjugation, of poverty and unemployment and inequitable taxation, of protection for the wealthy and their powerful interests, of exorbitant wealth for the few and scarcity of wealth for the many: government of the Committee, by the Committee, and for the Committee.

Government by the rich and powerful or by a duplicitous “not-for-profit organization whose mission is to stimulate and encourage the growth of the area's economy and its ability to provide for its people” is based upon the impoverishment of others; the Civic Committee’s power is purchased. The “current mission” is the wholesale destruction of the entire middle class and the pension systems in Illinois, in particular, the Teachers’ Retirement System.

Who writes the laws by which the Illinois government operates? The Civic Committee. Who will profit from pension reform (to free up the cash flow and increase its profit margin) in Illinois? The Civic Committee. Who will eventually lose their “only” retirement pension (teachers do not pay into social security)? The teachers of Illinois. There are no equal rights when there is inequity of wealth and when promises are made to support and to preserve the fortunes of a few at the expense and victimization of the many.

What is the Civic Committee? It is a group that attempts to maintain and improve its membership’s privileges while creating conflict in the public at large by controlling and buying media to mold public opinion. The Civic Committee’s tactics include convincing the shrinking middle class that the reason why “Illinois is broke” is the public pension systems in Illinois. Its tactics incorporate deflecting attention away from their avaricious profiteering and elitism; keeping public employees divided by attacking one group, such as teachers instead of firemen or policemen; diverting class conflict by turning the middle class upon itself through use of such rhetorical devices as faulty rationalizations; selected instances; slogans; causal oversimplifications; non sequitur; and appeals to fear, ignorance, and bias found on its obverse group’s website (Illinois Is Broke). Its schemes include using its own membership to compile reports and analyses disguised as impartial data (Sidley Austin LLP) and intimidating legislators in downstate meetings to make laws in the interests of the wealthy and powerful few.

What is Tyrone Fahner’s and the Civic Committee’s plan for Illinois teachers? They plan to address the state’s budget deficit in the interests of big business by destroying the teachers’ defined-benefit pension plan and maintain control of the economic and political policies of state and municipal governments; they plan to redistribute money away from the public employees’ defined-benefit pension plans and to their private interests and profits by proposing an unsecured, non-guaranteed financial option called a defined-contribution plan and rendering the present defined-benefit plan unaffordable.

Besides cleverly disguising its economic terrorism against public employees, the Civic Committee’s manipulation and exploitation of the citizens of Illinois closely rival the history and spirit of conniving, arrogant capitalism evident in this country. The Illinois Is Broke website claims that state employees are getting a “sweet deal,” one that is better than “95 percent” of workers in the private industry. Apparently, members in this powerful and wealthy club are not in that 95 percent.

When Chairman of the Civic Committee of the Commercial Club of Chicago CEO Miles D. White of Abbott Laboratories retires, he will draw from two defined-benefit pensions worth a combined $20 million. This is for a man whose company’s stock fell 11% last year and who announced the layoff of 1,900 employees in January (1,000 of them in Lake County)—a cut that followed with an additional 3,000 layoffs last September. Nonetheless, Miles White believes in “shared sacrifice”: his total compensation declined 8 percent last year—to $18.4 million (American Federation of State, County and Municipal Employees).

A few of the many wealthy members of the Civic Committee of the Commercial Club to take note of are W. James Farrell, retired CEO of Illinois Tool Works, who will receive an annual pension of $1.4 million; John W. Madigan, retired CEO of the Tribune Company, who will receive an annual pension that is more than $220,000, and Richard L. Thomas, a retired bank executive, who will receive an annual pension that is more than $600,000. (R. Eden Martin makes more than $330,000 in compensation from two companies where he sits on the board—and that's in the addition to the retirement benefits he receives from the law firm, Sidley Austin LLP, where he once worked). Sidley Austin LLP attacked the TRS pension clause last year, claiming that it is “constitutional” to amend Article XIII, section 5 of the Constitution of the State of Illinois. For such a self-proclaimed “champion of accountability and transparency,” the firm's retirement benefit information is not publicly available (American Federation of State, County and Municipal Employees).

Some of the few wealthy and influential members of the Civic Committee include:

TYRONE C. FAHNER, President, Civic Committee of The Commercial Club of Chicago; GREG Q. BROWN Chairman & Chief Executive Officer - Motorola Solutions; THOMAS A. COLE Chairman, Executive Committee - Sidley Austin LLP; ELLEN COSTELLO, CEO and US Countryhead - BMO Harris Bank; MARY N. DILLON, President and Chief Executive Officer - U.S. Cellular; CHARLES L. EVANS, President and Chief Executive Officer - Federal Reserve Bank of Chicago; HERBERT W. KRUEGER, Chairman - Mayer Brown LLP; PAUL V. LA SCHIAZZA, President - AT&T Illinois; EDWARD M. LIDDY, Retired Chairman and Chief Executive Officer - The Allstate Corporation; TIMOTHY P. MALONEY, Illinois President - Bank of America; ANDREW J. MCKENNA, Chairman - Schwarz Supply Source Chairman - McDonald's Corporation; W. JAMES MCNERNEY, JR. Chairman, President and Chief Executive Officer - The Boeing Company; JAMES S. METCALF, President and Chief Executive Officer - USG Corporation; DAVID W. NELMS, Chairman and Chief Executive Officer - Discover Financial Services; DONALD S. PERKINS, Retired Chairman - Jewel Companies, Inc.; THOMAS J. PRITZKER Chairman - Hyatt Hotels Corporation; IRENE B. ROSENFELD, Chairman and Chief Executive Officer - Kraft Foods Inc.; GORDON I. SEGAL, Chairman - Crate & Barrel; JAMES A. SKINNER, Vice Chairman and Chief Executive Officer - McDonald's Corporation; RUSS M. STROBEL, Chairman, President & Chief Executive Officer - Nicor Inc.; GLENN TILTON, Chairman of the Midwest Region - JPMorgan Chase & Co. Chairman of the Board - United Continental Holdings, Inc.; GREGORY D. WASSON, Chairman and Chief Executive Officer - Walgreen Co.; THOMAS J. WILSON Chairman, President and Chief Executive Officer -The Allstate Corporation; ROBERT J. ZIMMER, President - University of Chicago; MICHAEL J. HOGAN, President - University of Illinois; MORTON O. SCHAPIRO, President - Northwestern University; HON. RAHM EMANUEL, Mayor - City of Chicago…

The Illinois Is Broke website claims that “Illinois has 13 million residents.” The wealthy Civic Committee has several hundred members. That means the remaining 99.999% of the state's citizens pay proportionately higher taxes because Illinois is one of the few states that uses a flat-tax rate and Illinois executives of large corporations, such as the membership of the Civic Committee, also pass on the burden of their taxes that they do not pay onto the average citizen through an exploitation of governmental policies that create a “corporate welfare.” The Civic Committee does not publicize the fact that its members shift the burden of this payment to the public and that some of the state’s lost revenue is based upon promises that they will create more jobs; even though, their outsourcing of American jobs is disguised as “free trade” and has eliminated hundreds of thousands of jobs and has eroded the tax base of the State of Illinois; the Civic Committee members do not publicize the fact that they have hidden vast amounts of their corporate money in offshore bank accounts to avoid taxation and, thus, to increase their excessive profiteering – paid for by the rest of us.

“Does that seem fair to you? If not, please contact your elected officials and tell them [that this state’s resources are intrinsically bound up with the Civic Committee’s corporate interests and that legislators who will not truly represent their constituents and who are subservient to the business interests of the wealthy few will be voted out of office next election].”

The only person who stands between the wholesale ruin of the middle-class and the public pension systems in Illinois is you.

For additional information regarding this issue, read the following blog posts: Global Free Market: A Perspective and Admonition (and perhaps why Tyrone Fahner of the Civic Committee of the Commercial Club of Chicago is back at the legislative table in Illinois) (August 16); Ten Question Regarding Our Legislators’ Focus (August 11); Spread the Burden of Taxes and Address Tax Inequities in Illinois… (July 25); A Call for Caution for This Fall’s Veto Session in Illinois (July 17); What else do defined-benefit pension plans do for many Americans? (July 14); SB 512, Illinois Is Broke, and the Chicago Tribune, et al. vs. Your Financial Security (June 20); How about Tax Reform, the Most Important Issue in Illinois? (June 8); and Defined-Contribution Plan v. Defined-Benefit Plan (May 25).

Fairy Tales Redux

2011-08-18T19:21:00.000-07:00

Briar Rose Defunct

There’s not much you can say to a woman
who thinks she’s slept for 100 years,
launched from a century of dreams
with just a kiss.
And it doesn’t matter; her breath is bad.

Outside, condos have erupted from the ground,
and the evening sky is pocked with fewer stars.
I hand her a long-stemmed rose;
it’s thornless. And I ask her to marry me,
knowing all the while that no insurance company
will cover another coma like this one.

With “Who the hell are you?” bursting
from her lips, brittle with the senselessness of ice,
I know the anesthetic has worn off,
but her amnesia hasn’t. It makes me think
about the physics in all this, the coming light
about to pour through a hole in her universe,
how evolution will never be the same.

And I cannot remember
how the story is supposed to end:
why the flies were asleep
on the walls and the horses in their stables,
the brindled hounds in the yard, even the doves,
their heads tucked under their wings.

But that was another story,
and it doesn’t take long to discover
that nothing consoles quite like an eternity
of dreamless nights.

…now she’s mumbling something about insomnia,
and I slip out, my knees spilling
into a gurney wheeling down the hall
with the sheet pulled over,
my hands grasping the answer in an instant.

Cinderella Dancing

In America, it’s black high-tops,
and cobbler’s wax won’t hold them down.
She drives a red Ford Focus, wears a vinyl mini,
works night shifts at Corrugated Box Incorporated
for twice minimum wage.
On weekends, she boogies with her prince ‘til dawn,
her brow boiling like water,
her feet tireless on the dance-hall parquet.
She burns her lust to cinders,
sleeps among the ashes to noon
in a brass-framed bed.

This is a new-world doll locked in uppercase,
born into a world already made to order,
a Lady Gaga in Technicolor,
rolling boyfriends like stones.
There are no hazel twigs for her devotion,
no pigeon houses or pear trees to hide in,
just Houdini wrapped in the straightjacket of Self,
sealed in solipsism that is Facebook, You Tube, Twitter,
blogging…

Red Riding Hood Buys Term Life

The plot is flawed, the dialogue unbelievable.
The characters lack a compulsive trait.
Why not make him an insurance salesman
in a blazing-blue oxford and paisley tie,
pump him up with instant coffee and breath mints
and line the inside of his gray sport coat
with appointments and ball-point pens?
As for Red wearing the velvet coat
her ex-lover gave her, black tights and high-heels,
add a pouting mouth, legs of a flight attendant
and the endurance of a triathlon athlete.

Now put them downtown with the Budweiser horses
panting around a clock in a smoke-filled bar,
Johnny Mathis songs and three-dollar beer calls.
And let’s say she doesn’t have a florist’s heart
for long-stemmed roses or daffodils,
or drink imported wines or eat French pastries.
Instead, the evening is the scent of loud perfume,
dizzy with come-ons and pitchers of beer,
their conversation stale as the popcorn and Frito-Lays.
We know the odds, ten thousand to one,
like the first day of baseball tryouts.
But he’s determined, and she’s willing
with firm adolescent glands –
lust floating in his brain and love in hers.

Oh, I’ll spare you the happiness forever after,
little-lost-girl-saved-by-a-prince routine.
They wake up with separation swirling in their hearts,
lost in a forest of ordinary in the haze of day,
lying with the promise to see each other again.
But he knows, rises out of bed,
fumbles with his watch band, counts the bills
in his billfold to make sure, then straightens his tie
while she brushes her hair, her bare arm
twitching like a machine as the door clicks shut.

Snow White Turns 154

Oh, Snow White, eternal housewife,
you should have danced all night
in your step-mother’s red-hot iron shoes.

She knew that a woman’s face mattered enough
to tell lies, worked her own with Oil of Olay.
Did you think the men in your life
wouldn’t want a beautiful housewife too?

You could have married that huntsman
and slept on the forest floor,
or lived with the wild boar and saved your heart
from the bottomless hours of housework and whoring
for those seven little men and the moments
in between while you watched your sigh-long tale of woe
thicken like porridge.

Had you puked out the last of your luck
when your prince arrived,
the tea kettle wouldn’t be steaming with anger,
misting old desires into clotheslines out back
while your hands conspired
against the poly-graphic lines around your eyes
reflected in the looking-glass upon your wall.

Riding Rapunzel

One day a beautiful woman bolted out
of bewildering love, entered
the wider circumference of her loneliness
and threw down her golden hair
for men to climb on trysts.

She galloped into their lives
like the trumpet’s shocking blare
at the starting gate,
built a small fire in each of their hearts
and slept far from her wedding vows,
while the outlines of morning smoothed
to gray afternoons.

She let her hair fall over
her dove-white breasts,
sipped straight from each breath
the rampant taste for lies,
until one day she broke her stride,
cantered upon the thin ice
of an early thaw of marriage
and drowned herself in a blue tower –
the mistress of sad, fairy-tale luck.

Global Free Market: A Perspective and Admonition (and perhaps why Tyrone Fahner of the Civic Committee of the Commercial Club of Chicago is back at the legislative table in Illinois)

2011-08-16T07:07:00.000-07:00

Free market principles, supported by neo-conservatism or neo-liberalism and perpetuated by a “corporatists’ crusade,” are align with the policies of the “Chicago School” ideologues, the World Trade Organization and the International Monetary Fund. These doctrines perpetrate a blitzkrieg deconstruction of the middle class, privatization of public ownership and industry (downsizing and parceling out public companies and services to private interests), government deregulation and cuts to spending (thus, stimulating deep economic recessions) and cutbacks or the elimination of the public sphere and all social funding – hence, turning the working class into the “disposable poor” – to loosen control of the flow of money and to produce “freer trade” in the global market marked by an intransigent belief that “it should be left to correct itself.” Global free market theory has surfed “the waves of fear and disorientation” while advancing an ideology of “unfettered capitalism,” leaving inequality and degradation in its wake, according to Naomi Klein, award-winning journalist, fellow at the London School of Economics, author and filmmaker.

The free market theory caters to self-interested desires and profit to the detriment of other peoples’ lives, all the while promising “freedom and prosperity.” Free market principles advocate that the rich and poor should be taxed at the same flat rate, despite creating a vast inequity; that, for example, education, health care, retirement pensions, national parks (and most any function intrinsic to essential governing) become privatized; that publicly-owned companies, services and their assets be auctioned off to private investors; and that besides allocating vast amounts of wealth and resources from public to private ownership, that in the free market the transfer of private debts to the public sector while public ownership is systematically dismantled ironically continue.

The free market economic theory was developed by Milton Friedman in the 1950s at the University of Chicago. It has come to underlie the basis for the exploitation of ecological, economic, political, and/or social catastrophes, documented in such places as Chile, Argentina, Brazil, Uruguay, Southern Cone, Poland, Falkland Islands, Bolivia, China, South Africa, Russia, Thailand, Malaysia, South Korea, Philippines, Indonesia, former Yugoslavia, “New Orleans,” Canada, Iraq, Sri Lanka… (Klein) – all attempted transformations through invasion, occupation, and deconstruction, in other words, the ransacking of a country’s natural resources, its culture and industries, and thus forcing austerity on masses of people, while further dispossessing the poor. (Resultant violence, theft, and torture are often “thriving industries” in the world of global free market philosophy).

Whether inadvertently or not, Friedman’s theory results in a concentration of wealth and the creation of a plutocracy through unregulated corporate profits at the expense of eradicating the middle and lower classes’ rights to earn a decent income, public pension and the opportunity to acquire any semblance of dignity or satisfaction of basic human needs. This is also referred to as the “busting of unions, the slashing of payrolls and the shredding of employee benefits, without any attempt by government to constrain or reverse these practices…,” as stated by Robert Reich, Professor of Public Policy at the University of California at Berkeley and former secretary of labor in the Clinton administration.

The method employed by “corporatist crusaders” includes unilaterally imposing the free market ideology and its creed that freedom without government regulation (or unlimited, avaricious profit for a few people) will create the greatest benefits for everyone. Historically, it has been exercised with such corruptive force that it generates “economic genocide” (Klein). Often times, this is accomplished by manufacturing a “pseudo crisis” to be later used as leverage for such opportunism. This “crisis” is then transmitted vigorously through the media and funded by big banks and corporations. Moreover, the method has also been known to employ the “divide and conquer” strategy (to break unions) and hyperinflation to forward the free market crusade.

It is said that the free market economy is built upon “planned misery” for the masses, where the majority of the population is excluded from reaping any benefits despite promises for “freedom” and “shared wealth.” The notorious effects of global free market principles at work are the elimination of subsidies, layoffs or the loss of millions of jobs, especially in the public sector, and decreased or frozen wages while the corporate elite continue to procure exorbitant financial gains through the demolition of the public sector, the consistent outsourcing of jobs and inundation of cheap imports, tax loopholes, untaxed off-shore bank accounts (a “theft ex post facto”) and from laws, that David Cay Johnston, Pulitzer Prize-winning journalist and Syracuse University law and business schools’ lecturer, says “continue to enrich the wealthy few at the expense of the many through auctions that are called markets but act instead like bid-rigging systems approved by government.”

We have witnessed legislators who pass corporate-sponsored reform bills that support privatization and deregulation (the destruction of unions, public jobs and pensions) in order to garner money for their re-election bids. We should ask: might there be a conflict of interest when it comes to some policy changes for politicians who have moved from the corporate world into public office and whose motive for service is market-based profit and/or self-interest?

The results of wealth being transferred to “disaster capitalists” while hundreds of thousands of people are subject to human rights’ abuses, mass poverty, repression, and other forms of political, economic, psychological and physical terrorism – “policies of dispossession” – are fully substantiated and documented. As many of us are aware, free market strategies have capitalized on national emergencies to meet objectives by initiating a “manufactured” debt crisis or through price and currency “shocks” crafted by a volatile and deregulated economy.

The global free market economy has proliferated unchecked corruption manifested in lucrative private contracts, tax cuts, and redistribution of public wealth to existing (or now defunct) profit-driven corporations and banks such as Halliburton, Blackwater, Lockheed Martin, FEMA, Fluor, Shaw, Bechtel, CH2M Hill, New Bridge Strategies, Ash Britt, Service Corporation International, Entergy, CACI, Booz Allen Hamilton, Koch Industries, Searle Pharmaceuticals, Monsanto, Wal-Mart, Intel, Caterpillar, Microsoft, IBM, Exxon Mobil, Shell, BP, Chevron, Goldman Sachs, Morgan Stanley, JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Merrill Lynch, Washington Mutual, Arthur Andersen, AIG, Fannie Mae, Freddie Mac, Bear Stearns, Lehman Brothers, Enron, WorldCom, Adelphia, Global Crossing, Tyco, Sunbeam, ImClone, to name just a few. The list is endless.

Behind the entire “corporatist crusade” are also “think tanks” such as the Heritage Foundation, Cato Institute, Americans for Prosperity, American Enterprise Institute, Hoover Institution, Carlyle Group, Milken Institute, Mercatus Center, Heartland Institute, Reason Foundation, et al. (And we know the organizations in Illinois).

Sources:
Johnston, David Cay. Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill). New York: Penguin Books, 2007.

Klein, Naomi. The Shock Doctrine: the Rise of Disaster Capitalism. New York: Picador, 2007.

Reich, Robert B. Aftershock: the Next Economy & America’s Future. New York: Vintage Books, 2010.

Ten Questions Regarding Our Legislators’ Focus

2011-08-11T08:28:00.001-07:00

Let’s begin by stating that this is not about the current stock market disintegration; nevertheless, should Illinois legislators remain obsessed with the sustainability of the public pensions in light of this financial unpredictability? Shouldn’t they be obsessing over job creation and stagnant or falling wages and a more equitable tax system in Illinois, the state’s infrastructure, economic growth, debt payments, public education, or sustainable energy sources instead? Indeed, most of us would prefer a sensible social and economic reform fixation rather than this mania over the fiscal endurance of the public pensions which distracts the state government from solving more important matters.

Shouldn’t our state legislators be creating a jobs’ reform bill and awarding employers with tax credits for creating jobs in Illinois? Shouldn’t they be establishing a revenue system with a balanced but low and broad tax base to spread the burden of taxes to multiple citizen payers and restructuring the state’s antiquated single-rate income-tax method, or considering the taxation of services in Illinois to reflect its 2011 economy and increase the state’s cash flow? And shouldn’t they be raising taxes on the wealthy (their tax rates are the lowest it has ever been in 80 years) and eliminating their deductions and loopholes, while cutting taxes for the middle class and expanding the Earned Income Tax Credit for the poor? These are urgent concerns to contend with at the state (and federal) level: unemployment and the inequitable distribution of wealth, incomes, and opportunities.

So what does pension sustainability have to do with a state’s deficit reduction when it is a symptom of more substantial issues that need to be addressed, of which many are in a cause-and-effect relationship with a pension’s solvency? Will focusing on public pensions’ unfunded liability (pension plans will always have liabilities) revive the Illinois economy and produce jobs? Should Illinois legislators continue to waste their time debating and calculating unpredictable liabilities, varying statistical data and erratic funding ratios in this fall’s veto session?

We know that “TRS has survived for more than 70 years – because over the long term, the System’s income and accumulated assets continue to be greater than what are required to pay out in any given year… The only way TRS [will run] out of money is if income from all sources – teachers, school districts, investments and the State – dries up for a lengthy period of time. Not just one or two sources, but all sources” (David Urbanek, TRS Public Information Officer).

Is the belief in a so-called “pension crisis” then really a manufactured diversion that allows our state legislators to avoid confronting more significant matters? Are Illinois legislators holding the public employees’ pensions hostage the way a certain fanatical and pig-headed minority recently held the “debt ceiling” hostage at the federal level?

Illinois pensions are not in any imminent danger of financial collapse. Pension fund liabilities are long-term and do not face an urgent liquidity crisis today, tomorrow, or in the immediate future. “[Besides], there is no need for [public] pension funds to closely match assets and liabilities [ever]” (Economic Policy Institute).

For more information, please read “Spread the Burden of Taxes and Address Tax Inequities in Illinois” (July 25), “A Call for Caution for This Fall’s Veto Session in Illinois” (July 17), “Authorized Theft and Greed in Corporate America” (June 30), “How about Tax Reform, the Most Important Issue in Illinois” (June 8).

"Have a Nice Day"

2011-08-07T05:12:00.000-07:00

I hate it when they say that to me,
always at the doctor’s office,
the grocery store or a restaurant –

this arrivederci of the witless,
stoic as a smile button pinned to the lips,
a one-day-only sale I hear all the time

echoing like the syllables of crows.
There’s a smell of cheap perfume to it,
like incense at a church service

that keeps me at a distance.
Maybe I should turn the locution
into the kind of dialogue Socrates had

with the soothsayers and Sophists.
Imagine their surprise
as I bring out the truth of their admission

like a gadfly or midwife.
But then again,
maybe Caesar said it best: "You too… ."

Why Bankruptcy Should Never Become an Option for Illinois

2011-08-02T09:36:00.000-07:00

Though the State’s liabilities exceed its assets, and the State has a cash-flow problem, bankruptcy should never become an option. Why? Bankruptcy would destroy the State of Illinois’ credit rating completely and its ability to borrow at affordable interest rates; the State’s budgets would be slashed; bond sales would plunge, and the bond market would destabilize.

Since a major source of revenue for Illinois and other states across the country comes from the federal government, congressional legislator Newt Gingrich coincidentally asserted that U.S. law should be changed to allow a state to file bankruptcy, thus, giving it more leverage to renegotiate labor contracts. In other words, Gingrich and other legislators perhaps believe that state governments could break the unions’ resolve to protect public employee pensions by using bankruptcy as their trump card; moreover, Gingrich wants us to know that the federal government is no longer in the “bailout business.” We may insinuate that the latter is quite ironic, considering the depletion of trillions of dollars from taxpayers to bail out bankers, corporations, and the wealthy that had devastated the U.S. economy and the lives of millions of people.

Illinois Senator, Mark Kirk, agrees with Gingrich and is advocating for a law that would allow a state to declare bankruptcy, even though state bankruptcy would invariably rob public employees of their contractual right to an earned pension. It is true that if a state declares bankruptcy, all fiscal contractual obligations would be placed under court jurisdiction. State employee contracts would be under court authority and subject to its revisions, resulting in cuts not only to pension funds, but to salaries, benefits, and bondholder obligations. Thus, pension funds could be liquidated entirely, and the State bond market would be rendered ineffectual for earning further capital.

Perhaps what might have prompted discussions regarding a state’s option to declare bankruptcy is a bill introduced a few months ago by U.S. Representatives Paul Ryan and Devin Nunes, entitled the Public Employee Pension Transparency Act (H.R. 567). This bill would require more reporting from state and local pensions and prohibit federal bailouts of states: “…state or local government employee pension benefit plans are becoming a large financial burden on certain state and local governments and have already resulted in tax increases and the reduction of services.

“In fact, a recent study published in the Journal of Economic Perspectives found that the present value of the already-promised pension liabilities of the 50 States amount to $5.17 trillion and that these pension plans are unfunded by $3.23 trillion…

“Some economists and observers have stated that the extents to which state or local government employee pension benefit plans are underfunded is obscured by governmental accounting rules and practices, particularly as they relate to the valuation of plan assets and liabilities. This results in a misstatement of the value of plan assets and an understatement of plan liabilities, a situation that poses a significant threat to the soundness of state and local budgets…

“[Hence,] the United States shall not be liable for any obligation related to any current or future shortfall in any state or local government employee pension plan. Nothing in this Act (or any amendment made by this Act) or any other provision of law shall be construed to provide Federal Government funds to diminish or meet any current or future shortfall in, or obligation of, any state or local government employee pension plan” (H.R. 567).

Two questions now come to mind. Was it alarming to witness the ticking down of the procedural clock and the dangerous “game of chicken” played by some of our reckless, mulish U.S. legislators to make their point? Shall we applaud the histrionic tantrums, political posturing, and financial incompetence of these politicians?

With great concern, we might also assume that given the ineptitude and irresponsibility at the federal level, the bankruptcy option would be the preferred choice for some of our federal legislators for solving a state’s fiscal problems, especially Illinois.

We must also be aware that it’s not only a few members of Congress that have lost their lucidity. As stated by the Center on Budget and Policy Priorities (January 2011), “various pundits [also suggest] enacting federal legislation that would allow states to declare bankruptcy, potentially enabling them to default on their bonds, pay their vendors less than they owed, and abrogate or modify union contracts. Such a provision could do considerable damage, and the necessity for it has not been proven.”

The Center on Budget and Policy Priorities affirms that “it would be unwise to encourage states to abrogate their responsibilities by enacting a bankruptcy statute. States have adequate tools and means to meet their obligations... Confusion between short-term cyclical deficits and debt, pensions and retiree insurance – and the overstatement of the magnitude of the latter set of problems – draw attention away from the need to modernize state and local budget and revenue systems and address structural problems that have built up over time in these systems.

“States suffer from ‘structural deficits’ or the failure of revenues to grow as quickly as the cost of services… Structural deficits stem largely from out-of-date tax systems, coupled with costs that rise faster than the economy in areas such as health care. Fixing these structural problems would help states and localities balance their operating budgets without resorting to [desperate measures]… It is far more constructive to focus on fixing these basics of state and local finance than to proclaim a crisis based on exaggerations of imminent threats.”

For further information, please read “Spread the Burden of Taxes and Address Tax Inequities in Illinois” (July 25), “How about Tax Reform, the Most Important Issue in Illinois?” (June 8), and “The public pensions’ funding gap: three questions/three solutions” (May 14) posted in this blog.

Selected data from the Comprehensive Annual Financial Report for Illinois, Fiscal Year 2010

2011-07-29T04:36:00.000-07:00

 For FY 2010, Illinois received $3.781 billion via the American Recovery and Reinvestment Act
 The State also received $3.581 billion from the Unemployment Compensation Trust Fund
 There are six major revenue funds in Illinois: the federal government, income taxes, sales taxes, licenses and fees, miscellaneous taxes, and public utility taxes
 Total revenues from all governmental funds: approximately $50.603 billion
 There are six major expenditures in Illinois: health and social services, education, intergovernmental, transportation, public protection and justice, and capital outlays
 Total expenditures: approximately $58.224 billion
 As of June 30, 2010, the excess (deficiency) of revenues over (under) expenditures was approximately $7.622 billion
 Other fund deficits: $4.243 billion
 Governmental and fiduciary fund deficits: the State’s General Fund ($9.239 billion), the Personal Property Tax Replacement Fund ($226.359 million), the Local Government Tax Fund of the Department of Revenue ($7.035 million), the Community College Health Insurance Security Fund of the Department of Healthcare and Family Services ($6.688 million) and the SBE Federal Department of Education Fund ($106 thousand)
 In January 2010, general obligation bonds were issued to make the required 2010 pension contributions to the State’s retirement systems for a total of $3.466 billion
 In February 2011, general obligation bonds were issued to make the required 2011 pension contributions for a total of $3.700 billion

Some specific conclusions from the report:

 FY June 30, 2010 “reveals continuing underlying financial weaknesses which significantly impact the State’s overall fiscal health in regards to deferred liabilities, ongoing operational concerns related to cash management and long-term concerns related to pension and other post-employment obligations…
 “Cash flow continues to be an issue, as Illinois has had a running General Revenue Fund deficit… since November 2000…
 “Cash management practices are greatly affected by budgetary practices in relation to deferred liabilities which place additional pressures particularly in the first and second quarters of the year to pay those expenses. [Timing of tax payments affects the State’s cash flow]
 “The State of Illinois is legally mandated to make contributions to the Teacher s’ Retirement System and State University Retirement System… The TRS and SURS are governed by articles 16 and 15, respectively, of the Illinois Pension Code
 “The five State-funded retirement systems were at a 45.4% funded ratio, using a five-year ‘smoothing’ valuation of assets with $75.741 billion in unfunded liability
 “In addition to general and special obligation bonds, the primary government had $1.023 billion in revenue bonds and $6.773 billion in non-pension long-term obligations…
 “Besides general and special obligation bond indebtedness, the State’s largest liability is its net pension obligation… at $22.263 billion
 “Actuarial valuations of an ongoing plan involve estimates and calculations on the value of reported amounts and assumptions about the probability of occurrence of events on a long-term perspective. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the retirement systems and the annual required contributions of the State are subject to continual revision as actual results are compared with past expectations, and new estimates are made about the future…
 “The State’s 50-year funding plan does not meet the more stringent 30-year maximum amortization parameters required to be reported in the State’s financial statements in accordance with the Government Accounting Standards Board…”
 The average Illinois unemployment rate was 10.9%

A Want for Reason

2011-07-27T06:50:00.000-07:00

Pamplona, Spain—Two bulls broke from the pack
and gored a man and a woman on the second day
of the annual running of the bulls festival…
--from a news story

There must have been a moment
just before the bulls began to charge,
and right after Urban Troll and Anne Ruan
were tossed in the air—their bodies
bursting like piñatas—that they thought
about the hugeness of their mistake,

about the bulls’ blind desire to run
and maim anything that got in their way –
their horns hooking into flesh and bone,
leaving 8-inch gashes for exits,
while the spectators glimpsed their future
among the flowers, banners, and streamers.

It must have been a time
when they felt like deer
running ahead of Weimaraners,
when the four-leaf clover lost its luck,
and the rabbit gave up its other foot.

Consider the stupidity
of the human mind—this whore of logic—
like the instant when fingers press against the palm,
right before skull and brain
explode to the floor.