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About 80% of property-tax dollars in Chicago go to pensions. Yet Chicago’s four pension systems have only enough assets to cover about 25% of whatthey owe workers and retirees, which is less than Detroit’s pension funds had when the Motor City declared Chapter 9 bankruptcy a decade ago. Pension funds in states like Illinois, New Jersey and Connecticut aren’t in much better shape. In Illinois 25% of general tax revenues pay for pensions. Many states—including Illinois—can’t afford to bail out their underwater cities, but they also may not want the stain of allowing them to go bankrupt.
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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The Federal government recently bailed out many private sector union multi-employer pensions, so it would not be surprising if at some point an attempt was made to bail out public sector government pensions and retiree healthcare.
Perhaps as a grand bargain with Social Security and Medicare.
And so goes the history of empires.
At some point they have typically become overextended, financially or otherwise.
Maybe this one will last forever, but it would be the first to do so.
Folks, I need to set the record straight regarding Detroit’s municipal bankruptcy.
PPF is correct when he states the small 5% haircut that the Detroit retirees had to accept. However, that was due to the “luck” of Obama being in office at the time. A President DeSantis may not be so understanding or helpful to Chicago’s fiscal woes.
An Illinois pol that could read ahead in the script would push for Chicago’s bankruptcy now while Biden is still in office and get a better deal for his base.
NYC did not get bailed out. Detroit did not get bailed out.
Smoke some more of the legal Pot, the state needs the tax revenue.
One of the only industries left in Illinois.
Few of us share PPF’s clairvoyance but my own prediction is some sort of PBGC arrangement with caps on benefits. This would be optional, of course. Those who want to trust the credit of Illinois and it’s cities coult wait around and enforce their contracts one payment at a time and pay 1/3 to collection lawyers. The PBGC is functionally bankrupt anyway and if all the retirement liabilities could be stirred in the same pot (perhaps along with Federal pensions), then everyone could be ratably treated. Lets give the whole GDP to retired people and their lawyers. If Social Security… Read more »
Very soon the fed will have to start cutting SS & Medicare entitlements or increase the age limits. But are they then going to turn around and bailout state pensioners? Politically how’s that going to fly?….we are in a horrible mess any way you cut it
You actually believe they are going to cut SS? That’s adorable. They will just raise the income threshold and start taxing the “rich”.
Yes “raise the income threshold” would be a way of “cutting SS & Medicare entitlements”. Wouldn’t this be the same for state & municiple pensions?
No. SS and Illinois pensions are nothing alike. SS is a form of welfare. Recipients have absolutely zero contractual right to SS unlike pensioners who have actual contractual rights to their pension payments. So raising the income threshold is the equivalent of raising taxes on high income earners not cutting benefits. It’s a tax not a contribution to one’s retirement. I get the confusion though as many do not realize or accept that SS is just another form of welfare.
That’s a good answer. But politically how would that fly, the feds would be cutting or increasing taxes to fund SS benefits (or welfare as you call it) while bailing out state & municiple employee pension contracts for an Illinois but not a responsible Wisconsin? I guess in the fed multi $trillion$ covid spending blowout the feds bailed out private sec pensions under “multiemployer” which was peanuts($91 bil?) compared to what blue state pensions will need and yes they also increase SS benefits. But doesn’t everyone agree the covid spending was a incredibly irresponsible disaster? There can only be massive… Read more »
Yes, that’s logical. But, since when is a political process defined primarily by what’s most logical for society as a whole. Nope, its defined by which side has the most votes, and that’s accomplished primarily by “arm twisting” where personal benefits of the people doing the congressional or state office-holder voting are an over-arching concern to the ones giving the vote to pass any such bill into law.
Logic? Anyone see the irony in James talking logic?
I think im wrong, the covid private sec ” multiemployer” bailout was only $36 bil and not $91 bil and is just a bandaid to get pensions thru for another 10 yrs…anyway i thought it was equitably horrible and would have never past except it was all part of the delusional covid spending frenzy
Private economy workers pay 12.4% of their income into Social Security.
Fool.
PPF—read this latest Brian Reidl dooms day/debt report on ss and then explain how anyone nationally is going to be systemic to bailing out state & municiple pension $multi-millionaires. We are so screwed, drowning in an ocean of debt w d&r’s equallyto blaim.
https://www.nationalreview.com/2023/04/social-security-and-medicare-insolvency-dates-are-a-distraction
You stand a better chance of getting hit by a meteorite tonight than having the Feds pick up the pension tab. The Feds do not have any money either. PPF will work at Walmart in retirement.
Biden and his acolytes have no problem printing more. Not sure how the “debt ceiling” fits into the equation but the A.G. can probably find some emergency power. If and when it’s challenged in court it will be a fait accompli as will the inflation and world-wide collapse that follows.
There is no reason that the state income tax should not be 10% flat taxes. Also the State Sale tax could be raised to 10% or higher. Let the residents pay for Punta Gorda Luxury homes.
6 to 6.5 percent should cover it. Pay more now or much more later.
6.5 percent flat tax? Or a 6.5 percent tax on per person or family income of 300k or more? That is the only population that can service this debt. Your analysis seems wanting. If indeed 80 percent of property tax revenues in Chicago go towards servicing pension debt, that is an unacceptable state of affairs and needs to be corrected for the City to be marginally healthy, even with increased income tax revenue. Look at Peoria, where all of property tax proceeds go towards pensions – it can’t be sustained in any way. I don’t think a 6.5 percent tax… Read more »
Poor Taxpayer,
How about making the beneficiaries of these golden pensions in Illinois pay more.
I think something like 2/3s of teachers in Illinois pay NOTHING for their pensions.
Da Judge
Can’t make them pay more in contributions. No, pensioners will get paid and they don’t need to contribute one more dime then already agreed upon. Taxpayers haven’t been paying enough and that will need to change. The greedy taxpayers need to stop attempting to steal from retirees.
Da Illinois Supreme Court Judges (7 zip)
Illinois is full of public sector union moochers!!
Time to pay up PPFtard!!
Da Judge
Most of the public sector union government employees only know what their corresponding private sector union big whig representatives (employed by the union not government) tell them.
Plus what their allies in the media and universities and non-profits tell them.
Which in the case of pensions and retiree healthcare is basically never the full story.
Bankruptcy is the only answer. It’s the end of an era.
According to the WSJ bailouts are also a possibility. The City Club of Chicago already is recognizing that more taxes are needed. Even the business community is starting to see the hand writing on the wall. More taxes and bailouts likely. Maybe City pensioners will need to take a Detroit style cut of 5.5 percent. In 10 years that 120k city pension will be paying out 161k but a Detroit style cut will only leave them with 152k. No such cut for state pensioners as the state has plenty of options for more taxes. More taxes, more bailouts and a… Read more »
Sounds like the WSJ is coming to terms with the most likely outcome. If not now then when the “right” people are in power. These areas are just too big and important to ignore. We send billions to hurricane disasters every year. Time will come to send it to these cities as well.
If you don’t like it you could always move to another state and just pay the bill from your new home. Don’t forget to give your one finger salute when paying the bill.
PPFtard,
Liken a massive wet dream for you I imagine.
I give it less than 1% chance of happening.
Da Judge
Not going to happen with R House and R Supreme Court.
Storm Clouds PPF. Let’s rip the band-aid off and get it over with. You’ll be fine getting 80 cents on your pension. Still better then the private sector.
Storm clouds indeed. More taxes are on the horizon. Bailouts will always be a possibility. Cities may need to time it right but clearly that will always be looming on the horizon.
Pigs get fat, hogs get slaughtered!!
Da Judge
Yup. Pay more taxes now or get slaughtered and pay even more taxes later. Da Illinois Supreme Court Judges have ruled.
I wont be paying any more taxes to Taxistan as I voted with my feet over 20 years ago.
$200,000 is what I’ve saved in taxes by leaving da sheeeet hole baby!!
Da Judge
Until Illinois, California and New Jersey receive some more bailout money. You’ll pay what we tell you.
Do you hear yourself? “You’ll pay what we tell you”? The good guy mask is slipping.
No more Mr Nice guy to those trying to steal from retirees. You’ll pay what is owed. Don’t like it? Tough. Unlike Kim Foxx, I don’t like thieves.
PPF, good luck trying to make us pay from other states, where lots of us will be if they ever raise taxes sufficiently to pay the pensions in full. And I don’t think a federal bailout will ever happen. Even with the unfathomable bailout states just got, IL didn’t come close to adequately funding its pensions in full. The feds will never pay that much.
That’s one man’s opinion. It may be true but its not necessarily so given the vagaries of politics. We all know what some say about political opinions often said in very impolite terms. I chose not to go that level; you get the point.
That’s your hope Mark. In the meantime, pensioners will continue to be paid in full and taxes will continue to rise. Your dream of stealing from retirees won’t happen in your lifetime Mark. I know not being able to steal from retirees makes you sad but such is life.
The new persona suits the situation better anyway. Extortionists gonna extort, might as well be up front about it.
It’s not extortion. When the landlord forces payment or you or forced to leave the property, is that extortion? Illinois has a debt that must be paid. You don’t get to cheat them just because they vote in a way that differs from your views.
Bills must be paid. I’ve been up front the whole time. Thieves are going to try to steal and I’ll call them out. Pay your bills dead beat. Show some responsibility.
My landlord did not present a blank lease, where the amount due can be increased without limit, upon the vote of his friends and allies.
My landlord did not promise me an upscale apartment, then force me to accept a cardboard box as fulfilling the contract.
My landlord did not urge his designated agent to spread my payments to all his friends and cronies, then whine that I didn’t pay my rent, and demand more payments.
If a landlord did this, his “contract” claims would be laughed out of court.
No way this happens while the Republican`s control the House and 2024 should be a blood bath for Democratics
Republicans aren’t taking the federal government back over in 2024. Democrats have paid zero political price for their policies; and the Republican gains in 2022 in the house were arguably from redistricting and GOTV efforts of NY and CA Republicans, unlikely to be repeated. Republican power going forward is going to be in Republican states. Republican states will be the only place safe from Democrat policies as Republican states start to have significant push back against federal Democrat policies. Republican states will realize, all of them at once, that there’s no going back, and they’re going to need to disregard,… Read more »
Wrong Republicans will take back the Senate the House time will tell and nothing short of another STEAL Trump wins for a 3th time
Only talk, the rest of the USA will be up in arms.
It is a illegal Ponzi scheme no matter who runs it.
Things have sure changed since Biden took office. A new war in the Ukraine, soaring food prices, expensive fuel charges, and new taxes on the way. Today there are even more gas hikes as Opec has decided to cut production thanks to Biden’s policy’s. Now he preaches bailouts for bad spending decisions meaning more taxes are on the way.
Obama warned abut Biden’s ability to **** things up…and he wasn’t kidding.
Sounds like all types of reparation coming across the country. Rewards for bad decision and bad behavior. I agree Old Joe
Don’t worry, if we just extend the CTA Red Line rapid transit system to Riverdale and Dolton we’ll be fine. If we can add some bullet trains like California, we’ll solve all our financial problems!
Extend it to Texas and Florida instead since everyone is leaving.
I think I may have read warnings like this about Illinois’ pension system before. Hmm, let me think. Where could that have been?
Folks, if these overspending blue cities and states get relief from Uncle Sugar it’s game over for America — and possibly the fuse that triggers the 2nd Civil War.
Old Joe,
Make Chicagoans and Illinoisans pay for their poor financial decisions regarding golden public sector pensions, COLAs, OPEB, etc.
If there is anything that would get me out in the streets burning sheeet it would be making me pay for the financial stupidity of corrupt Illinois Dems and their masters the public sector unions.
Da Judge
You won’t be burning anything. Just paying more in taxes and banging away on your keyboard complaining. Enjoy spending down that 200k you saved on bailouts. Lol
Da view from my beach front is looking pretty awesome. Going out for a snorkeling cruise in a little bit. Wailea is fantastic right now. It was a long flight but well worth it. Highly recommended.
Life is good Judgey.