Now that Illinois Senator President Don Harmon has broached the subject of a bailout and Senator Mitch McConnell opened up the possibility of bankruptcy, Illinois’ fiscal mismanagement is in the national spotlight.

Ted was on with John Kass last week to discuss what bankruptcy could look like for Illinois and Chicago.

Pritzker and Lightfoot have run out of can-kicks but categorically reject reforms, and Americans won’t bail them out. So what’s their plan? Bankruptcy may be the only option.

The Chicago Way w/John Kass: Can Illinois get a financial fix from fed COVID-19 funds or is bankruptcy the only real cure?

 

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Poor Taxpayer
6 months ago

The Virus will let the honest hard working taxpayer off easier than the greedy Unions of the cops, teachers and firemen. Pay, Pay, Pay, while the retire at age 45 and Play, Play, Play.
If you do not like it, then you can leave.
Feel like you are being screwed?
It is because you are.

bagel girl
6 months ago

Is it possible for the state pension funds to file for bankruptcy and not the state?

The Truth Hurts
6 months ago
Reply to  bagel girl

No. That option is not available. The level of the pension funds have absolutely nothing to do with the states obligation to pay.

Admin
6 months ago
Reply to  bagel girl

No.

Bob Out of Here
6 months ago

Aren’t the Chicago bonds backed by securitized funding sources which would make it an assetless bankruptcy?

Poor Taxpayer
6 months ago

“A Pension is a Promise”. So Pay up Illinois honest hard working taxpayers (Slaves). The Union will sue in a NY minute. So try and change it and see you in court. The only answer for the honest hard working taxpayer is to LEAVE ASAP. Otherwise expect much higher taxes for years to come. Illinois was bankrupt long before the virus, this just sped it up by 2 or 3 years. Long live $120,000 pensions, 50,000 plus of them, at age 52. Let all the mentally challenged Illinois residents pay, pay, pay. Let them Play, Play, Play. There is not… Read more »

ConcernedExpat
6 months ago

My main (amongst many) frustrations with the tax and spend mentatility of Illinois is that there is never any concept of shared sacrafice. I look around at other governors in the Midwest and others are furloughing and taking a scapel to their spending budgets. That is never brought up in Illinois. Why can’t he package up a tax bill with permanent offsetting cuts of some kind? I believe there would be broad based support for such action.

Citizens understand that we cannot tax our way out of this fiscal mess…

nixit
6 months ago
Reply to  ConcernedExpat

Yep. Lots of well-paid and under-utilized professors and administrators currently in our state universities. Have any of them taken a temporary pay cut?

David
6 months ago

Like an addict no change until they hit rock bottom. Illinois is addicted to money. Illinois needs AT LEAST several serious changes to the constitution for bankruptcy (and not returning) – Pension reform, i.e. 401’s that’s it. (like the rest of the real world, if people even get that). – Fair Maps, that’s should address requiring term limits as well on both sides of the fence. – No legislative pensions – it’s a temporary job and no-one else is getting that either. – No PUBLIC unions or minimally no right to strike, (union membership is optional) – Constitutional carry would… Read more »

PensionActuary1058
6 months ago

Let the pensions blow up and become insolvent. Most of these rank and file public sector pensioners deserve to get bounced checks since they elected their corrupt union leaders and in turn the politicians

debtsor
6 months ago

First the pensions run out of assets, and go pay-go, or pay as you go along. Then as local municipalities’ finances continue to collapse, they must decide between making payments to the pension fund, or, paying employees. Pensioners won’t get paid. Those municipalities that pay employees instead of their pensions will have the state garnish money from them, and then they won’t have money to pay employees. It’s going to be a tug of war. Fortunately, it would be nice if IL would allow cities to go bankrupt. If things turn into the great depression number 2, which it is… Read more »

JimBob
6 months ago
Reply to  debtsor

State bankruptcy is in the hands (mitts) of US Congress and unlikely to get past the Democratic House. Municipal bankruptcy needs IL legislative approval. IL taxpayers have little to say because they perennially vote for those who oppose fixing the problem. Ergo, a worse crisis than COVID-19 is necessary. Other than alien invasion or nuclear war I can’t imagine a worse crisis than we have right now. Having all state government entities run out of money (together with a taxpayer boycott or mass departure) seems to be needed. That’s throwing the baby out with the bath water. I am suggesting… Read more »

Yoz
6 months ago
Reply to  debtsor

I once asked my Serbian friend why Yugoslavia fell apart. His reply?

They ran out of money.

Insolvency is far worse than bankruptcy. It pretty much places the government in permanent crisis management of its cash flows while every special interest screams bloody murder. Further, it doesn’t address the agency problems of getting all your various creditors to the table and negotiating as representative groups. If Chicago or Illinois hit insolvency, they will be begging for access to bankruptcy, instead of downplaying it as they are now.

PensionActuary1058
6 months ago
Reply to  Yoz

This is exactly right. Bankruptcy is the best option but it will take a real fiscal crisis to trigger urgency

JimBob
6 months ago

Isn’t the bottom line that there’ll be no state bankruptcy unless Trump wins and Republicans capture Senate and House? So January next year at the earliest. Isn’t it also true that there’ll be no municipal bankruptcy in Illinois until the state changes governors and control of the legislature? And aren’t such changes unrealistic in view of the quaint voting and districting in Illinois?

I don’t know if this is fatalism or fantasy. It’s certainly not taking anything away from this blog and its increasing readership, which are heading us in the right direction.

Palamas
6 months ago
Reply to  JimBob

Great back and forth, gentlemen. Chicago will go before anyone else does, principally because it is in the worst shape overall and because legally, it can. But IL will be the next rung because Chicago is so big, important, and similar to IL and its legislature — which also insolvent.

PensionActuary1058
6 months ago
Reply to  Palamas

There are only two outcomes here, bankruptcy or insolvency. One will happen. The only difference is bankruptcy will be an orderly restructuring while insolvency will be chaotic

Tom Paine's Ghost
6 months ago

Insolvency is more likely because IL Democrats want chaos. They will cut police and firefighter staffing long before anyone at the secretary of state’s office is cut because it will cause more direct pain for the taxpayers. They dream of TV footage of a burning house and one lonely firefighter, “Oh well, you should have allowed us to raise taxes.”

IL Democrats and the Public Sector Unions rule this state and the taxpayers are mere vassals.They will keep up this theater until they are financially overthrown.

Yoz
6 months ago
Reply to  JimBob

First, it’s possible that we could see a small partial bailout so Illinois and Chicago can do a can-kick, but the cost of a full bailout by the Federal government makes it pretty unlikely. Whatever Illinois wants, other states will demand as well on a per capita basis, such that a full bailout of Illinois would probably require a nationwide bailout in the trillions. To make matters worse, even if the Democrats gain full control of congress and the White House next year, their spending priority would be universal health care, not a full bail out package. Second, regardless of… Read more »

debtsor
6 months ago
Reply to  Yoz

“To make matters worse, even if the Democrats gain full control of congress and the White House next year, their spending priority would be universal health care, not a full bail out package.”

And increasing the number of justices on the Supreme Court, and trying to dilute the influence of the electoral college, and take over voting (and allow for nationwide ballot harvesting), and expand abortion protections, and raise tax rates to burdensome levels, and so on. These aren’t just scare tactics, these are ideas that have been floated by every presidential candidate.

Tom H
6 months ago

Keep up the excellent work!!! It feels like you’re the only ones on our (lowly taxpayer) side! I would love to hear Pritzker’s response to this discussion.
Is there any chance that bankruptcy would reduce overall taxpayers burden? In my opinion, even current levels are too high.

Illinois Entrepreneur
6 months ago
Reply to  Tom H

Pritzker’s response to this discussion would be that “a contract is a contract.” He would tell us that we’re just going to have to sacrifice a ‘little bit’ to honor the public union contracts. He would shame you for “insulting” public union members with ideas of shared sacrifice. A contract is a contract. You will keep hearing this for a long time, because they know that they have no other justification for this ransacking of the public treasury and collective wealth. He would also then say that “we need the progressive tax now more than ever” and act as if… Read more »

Tom Paine's Ghost
6 months ago

Illinois politicians don’t see their financial methods as incompetent. They are perfectly fine with promising massive pensions and grossly above market wages to Public Sector Unions then handing the bill to the taxpayers. They do not want to change and will never change. Until the state defaults they will never do anything and even then they will do everything that they can to serve Public Sector Unions first and IL taxpayer last.

Until public sector union collective bargaining is eliminated in Illinois this will never change.

PensionActuary1058
6 months ago

Public sector union collective bargaining should be eliminated in all states

Tom Paine's Ghost
6 months ago

And at the Federal level too. Franklin Roosevelt warned against it.