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

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 is behind 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; 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 by Sidley Austin LLP and intimidating legislators in downstate meetings to make laws in the interests of the wealthy and powerful elite.

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 savings 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; ROBERT A. EASTER 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 a few 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 “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; furthermore, 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. 

-Glen Brown


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

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.
Inside, 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 straitjacket of Self,
sealed in solipsism that is Facebook, You Tube, Twitter…


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 six-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 as the door clicks shut.


Snow White Turns 210

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 by Glen Brown

Free market principles, supported by neo-conservatism or neo-liberalism and perpetuated by a “corporatists’ crusade,” are aligned 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 (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 plutocratic advocates believe the rich and poor should be taxed at the same flat rate, despite creating a vast inequity; that, for example, public education, health care, retirement pensions, national parks (and most any function intrinsic to essential governing) become privatized; they believe in the elimination of Social Security, Medicare and Medicaid; they believe environmental protections should be deregulated and climate change denied; they believe any publicly-owned companies, services and their assets should be auctioned off to private investors and systematically dismantled; they believe labor unions should be eliminated and that universities and colleges can easily be held hostage with exorbitant donations in exchange for indoctrination of right-wing ideologies and the firing of any dissenting professors; they believe the U.S. tax code should be reformed advantageously for the wealthy, privileged elite; and besides allocating vast amounts of wealth and resources from public to private ownership, they believe in the transfer of private debts to the public sector.

The free market economic theory was developed by Milton Friedman in the 1950's 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…” (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 slow destruction of labor 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 billionaires, corporations and banks such as the Koch Brothers, 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.

Behind the entire plutocratic “corporatist crusade” are also wealthy, influential “think tanks” such as the Charles Koch Foundation, Cato Institute (Koch founded), the Heritage Foundation, Americans for Prosperity, American Enterprise Institute, Freedom Works, Hoover Institution, the Carlyle Group, Milken Institute, Mercatus Center (at George Mason University), Club for Growth, the Heartland Institute, the Tax Foundation, the Reason Foundation, Citizens for a Sound Economy, the State Policy Network, the Leadership Institute, the Competitive Enterprise Institute, the Illinois Policy Institute, the Civic Committee of the Commercial Club of Chicago, the Civic Federation, et al.

-Glen Brown


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

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"

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 Smiley 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… ."

“Have a Nice Day” was originally published by Thorntree Press in Troika IV, 1994.

Why Bankruptcy Should Never Become an Option for Illinois

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. Most importantly, the U.S. Constitution prohibits any state from declaring bankruptcy or “impairing the obligation of contracts” (Article 1, Section 10).

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 in 2008.

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 most recently 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 and state legislators for solving a state’s fiscal problems, especially in Illinois.

We must also be aware that it’s not only a few members of Congress that have lost common sense. 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, [particularly Illinois]... 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 [as in Illinois], 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.”

-Glen Brown


For better options, 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.