It’s hard to see thousands of people rallying to the cry, “no unsustainable pension systems,” but it might do more good than yelling about “science.”
– Steven Greenhut
By: Mark Glennon*
Substitute Illinois for California in a nice article this week by Steven Greenhut and it more than works. The math for Illinois is worse than Greenhut wrote about California, an it’s long time somebody started protesting about it. Let’s start with what Greenhut wrote:
The impact of ignoring math won’t mean that planet Earth dissolves in a giant fireball, as some global-warming activists claim, but it will mean that cities will continue to face “service insolvency” – when there’s enough money to pay the bills, but not to provide an adequate level of public services. Other cities will no doubt face actual insolvency….Most legislators aren’t at war with science. They remain at war, however, with basic numbers….
He asked, “Don’t they know that inadequate contributions and overly optimistic rate-of-return predictions multiply the size of the shortfall and have a cascading effect?”
Oh, jeez, most lawmakers in Illinois wouldn’t understand the question.
And do they, or voters, know that pensioners who retired before age sixty (as most do) will see their pensions doubled in about 24 years, thanks to the 3% automatic annual COLA that’s constitutionally guarantied? Or that pensions dropping towards funding levels of 20% or 30%, as so many in Illinois are, can’t be rehabilitated and won’t get paid?
The plain fact is that pension obligations in Illinois are impossible, and only a state constitutional amendment or federal bankruptcy can reduce those obligations to fiscally sustainable, fair levels.
Those who do understand exploit the public’s ignorance. That’s how they get elected.
Progressives can carry signs, Greenhut wrote, “although it’s hard to come up with pithy comments that rhyme with ‘unfunded liabilities,” ‘service insolvency,’ ‘3 percent at 50’ and ‘assumed rates of return.'”
But in Illinois, it goes beyond pensions.
Price and simple economics just don’t matter. Despite Illinois’ severe financial problems, less than 3 percent of bills passed by the 99th General Assembly and enacted into law have fiscal notes, as described in a report from Illinois Policy Institute from this month. In other words, taxpayer cost is ignored.
Look at the math behind claims that a progressive income tax could solve our problems in Illinois. It’s blatantly dishonest and demagogic. As we documented recently, under widely discussed proposals, the top 6% of households would face a long term liability just for state pensions and related healthcare of $700,000 each plus an annual tax increase of at least $36,000 to cover other budget deficits.
Take higher education as another example. A study by Pew Charitable Trusts found Illinois to be among the states that simply don’t know what they spend.
Or how about unfunded healthcare liabilities for pensioners? I study these things but I have little idea what they total. Just for state liabilities it’s something over $50 billion, but the state hasn’t published an actuarial report on them since June 2014.
And don’t dare question the cost of anything with a “green” label. Billions have been heaped on Illinois consumers with no measurement of cost.
Most importantly, when has anybody — anybody — ever put forth even the broad outline of a fiscal plan to solve the state and local consolidated fiscal crisis Illinois faces? Nobody has. Nobody has one. Nobody asks to see one.
The underlying secret to all this straight out of Rules for Radicals by Saul Alinsky in 1971. It’s now mainstream Illinois doctrine, and I couldn’t agree more with this premise:
The moment one gets into the area of $25 million and above, let alone a billion, the listener is completely out of touch, no longer really interested because the figures have gone above his experience and almost are meaningless. Millions of Americans do not know how many million dollars make up a billion.
Innumeracy and economic ignorance are a plague on the electorate. There’s only one thing worse: Politicians who exploit it. They control the narrative in Illinois and that’s why a protest will never happen.
*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.