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Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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I voted with my feet 19 years ago. My property taxes in CO are 1/3 what they would be in IL. The racket is state and local pols including school boards, public sector unions and various actuaries will go down with the ship in IL. Glad I don’t have to pay for the racket!!!
The only good thing that may come out of having many more states move into miserable pension underfunding territory is that it increases the likelihood of a future bailout of some kind by the Federal government. That could be a win for pension recipients like myself and Illinois taxpayers and bondholders at the same time, and if y’all could just slightly tone down your animosity towards state workers and retirees then perhaps we could work together towards a solution that moves Illinois forward. A New Jersey state senator has proposed just such a scheme – that the Feds borrow large… Read more »
I agree that the Feds will have no choice but to get involved at some point. But a federal bailout as you suggest is not fair. What about social security? Instead of raising the social security age thresholds or tax rates, why not keep SSI as-is and simply “bail it out”? And what about states with no Constitutional pension protection? Will they get reduced benefits even though their states were as negligent as Illinois in pension funding? Then you have proposed private sector bailouts for Central States and coal miner pension funds, even though there were rules in place (PBGC)… Read more »
The PBGC and FDIC both have $ caps on bailouts. To broaden the base of abused taxpayers from city to state to nation and to include Teamsters (etc.) would eliminate all principles of prudent risk management from our system. Moving it to the federal level does put the mess into the hands of a sovereign with the power to print money and some may see that as an advantage. But the underlying notion of protecting everyone from individual or collective foolishness could apply equally to college debt, consumer debt, mortgage debt on underwater properties, etc. There is scriptural authority for… Read more »
It’s hard to see how that could get through Congress, especially the Senate. The majority of states that are in comparatively good shape would have no reason to tax everybody to help the minority that are in relatively bad shape. If, instead, the bailout were done proportionately so that all states were treated equally regardless of how bad their pensions are, you wouldn’t really be accomplishing anything.
I just removed the University of Richmond from the list of schools that my senior in high school should apply to – I would never want you influencing her opinions on government and public obligations. I’ve read your posts to this website and others – it’s comical. The abuses that are occurring by those in charge at the state and local level (i.e., exorbitant raises, vacation buyouts, etc. that juice pensions), the pension millionaires who pay in a fraction of what they receive over their lifetime (including an assumption on compounding of returns), and the policies being dictated by those… Read more »
Illinois: Not as Bad as New Jersey….
…how dare Illinois steal New York’s motto!
“New Jersey became the state with the worst-funded public pension system in the U.S. in 2015, followed closely by Kentucky and Illinois.” “Illinois’s unfunded pension liabilities rose to $119.1 billion from $111.5 billion.” Those are two quotes from the above reference Bloomberg article which Crains re-posted to its (Crains) website . Yet the headline reads, “Illinois’ pension woes are not so bad after all*.” What? Illinois’ unfunded pension liability increased and Illinois’ ranking among the states moves from last to third to last, so Illinois’ pension woes are not so bad after all*? Note, Crain’s ended their changed headline with… Read more »
Hey Mark,
I feel Greg Hinz is the worst. He is just a complete, biased dope when it comes to the pensions. Any time I ask him how much of a tax increase he thinks we need, he cannot answer. I do think he is biased, but I also think he is pension dumb as well. Your thoughts?
The person (people?) at Crain’s who changed the headline is incompetent or has an agenda.
Crain’s made a conscientious effort to change an accurate headline to a deceptive headline.
I redact my earlier comment.
The person (people?) at Crain’s who changed the headline has an agenda.
If one was incompetent, they would simply leave the headline as written by Bloomberg.