“A lot of businesses are going to struggle, especially those that are smaller with little cash on hand, and it’s going to trickle down to every person that works for them,” Ted told Terry Martin of the Illinois Channel on Friday. “We don’t know how long it’s going to last but it’s going to cause big, big stress. The question now is, does it create a recession?”
Ted discussed the impact of the Coronavirus on Illinois and Chicago’s budgets, the effect of the market crash on Illinois’ already crisis-level pension funds, and how these recent events make the push for a progressive tax all the more foolhardy.
Some highlights from the discussion:
“When you look at a budget like Illinois’, about $21 billion dollars comes from personal income taxes. Well, with a whole bunch of people out of work for two, three, or four months you can bet that income taxes are going to take a hit. If it’s a 10 percent hit, you’re talking about a $2 billion shortfall. There’s also $8 billion in sales taxes the state relies on. A 10 percent hit there means another $800 million gap. That’s a $3 billion hole on what’s already a $2-3 billion shortfall.”
“Moody’s has come out and said there are two states unprepared for recession: Illinois and New Jersey, and two cities unprepared: Chicago and Detroit.”
“Bad companies that have bad credit ratings, some of them will be rated junk because of what’s happening to the economy. You have to wonder how the agencies are looking at near-junk Illinois under a stress scenario like this.”
“When it comes to Illinois, the last decade has hidden all the cracks that exist here. The booming stock markets, the national economy, those really helped Illinois hide from its problems. Now they’re going to be exposed. And the question is, do we have the leadership that will say we’re going to take our medicine and do the right things? Or are they going to kick the can down the road again?”
Read more about the impact of the coronavirus on Illinois: