-- Connecting the dots between our economy, government and business --
A comprehensive look at the broken process and mentality behind Chicago budgets. "There wasn’t a single vote in five years against budgets that steered Chicago straight toward a financial cliff. That sort of record takes more than being boxed out — it also requires a thorough disinterest in rebounding."
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.
SIGN UP HERE FOR OUR FREE WIREPOINTS DAILY NEWSLETTER
Ken Griffen on Bloomberg just beat the Schitt out of Chicago and Illinois. He could not be happier to have left the sorry State. PPF has his way, chasing out all the money and leave all the criminals. Best of luck with that program.
Americans are leaving their homes behind to find a better life — these are the top 5 states being abandoned2. IllinoisFor the Illinoisans leaving the state, the choice came down to moving for a new job (31%), family (30%), retirement (24%) and a new lifestyle (22%). This marked almost a decade of straight losses for Illinois, with residents looking for more affordable living. Interestingly, nearly 52% of those who left the state in 2022 earned more than $150,000 a year. Considering Illinois “offers” one of the highest combined local and state tax rates — and the second-highest property taxes —… Read more »
Soon getting rid of Herpes will be easier than selling a real estate in the Chitty of Chicago or anywhere else in Illinois. The sorry State will tax all the equity out of your house.
Overly Generous pensions had nothing to do with the economic disaster the Chitty is in.
This hangover will last a lifetime. If I had an Chitty Pension I would be already in a Punta Gorda, Florida luxury home.
Wow. Chicago’s public debt, and governance dysfunctions, are in fact a disastrous mess.
I can’t imagine what the Marxist/progressives at CTU would turn all this into should their organizer/candidate win the mayoral election.
Someone ought to ask them – sadly, I doubt that will happen very often.
The Pensions Ponzi Scheme Time Bomb is exploding right now and will keep on exploding for years to come. Get ready for much higher taxes, much higher crime and much lower education rates. The destruction of the Chitty is cast in stone. The taxpayer was sold out by the politician for the public sector vote. Can you say “luxury home in Punta Gorda, Fl” that is where the money is going.
The thing is why didn’t the non public sector get out and vote?
They did get out and vote. Public sector employees make up a small sliver of the overall voting block. The non-public sector employees voted for amendment 1. They voted for politicians that are trying to increase tier 2 pensions. They voted and are getting exactly what they want.
Ponzi schemes are illegal no matter who runs them.
Let the courts decide on Illegal contracts.
They already decided. They are LEGAL and ENFORCEABLE contracts that can not be diminished or impaired. Raising taxes is considered less drastic.
Nothing illegal about these contracts. But you keep holding out for that imaginary relief.
The four City of Chicago Ponzi Scheme Public Sector Defined Benefit Pensions Paid First are thus far legally protected by the Ponzi Scheme Pension Protection Clause as interpreted by the Illinois Supreme Court. The pensions are Ponzi schemes as pension assets are nowhere near sufficient to pay out benefits accrued (the pension funds need more revenue). As a comparison, the Securities and Exchange Commission described the five State of Illinois Public Sector Defined Benefit Pension Ponzi Schemes in their March 2013 press release and cease and desist letter to the State of Illinois. The SEC used the words “structural underfunding”… Read more »
Aren’t you tired of saying almost verbatim the same arguments over and over again? I think it’s safe to say anyone who has any abiding interest in this topic and your viewpoint gets it. For the 3rd time: you are not the ultimate arbitrator on this matter! Now, please go on to some new tirade or at least take a new approach on this one. This “one-note Charlie” approach has passed its “expiration date” and is starting to smell.
James if you do not like my comments do not read them.
I never claimed to be an ultimate arbitrator.
Good luck finding many people that will agree a structurally underfunded pension is not a Ponzi scheme.
No luck is needed. The courts and the SEC don’t view them as a Ponzi scheme so what you or any other fringe elements think doesn’t matter. They will be paid regardless what you call them.
Pension Ponzi Schemes Paid First, A structurally underfunded pension is obviously a Ponzi scheme. The SEC found the State of Illinois deceived bondholders regarding the structurally underfunded pensions and issued the State of Illinois a cease and desist order to stop the deception. It is not much of a stretch to believe that if the State of Illinois deceived bondholders about the five state pensions, it also deceived taxpayers about the very same pensions. There can be various claims such deception resulted taxpayer injury. That and/or another argument may or may not be an argument that would hold up in… Read more »
No pretty please is necessary. That’s why I point out my money can be spent on anything I would like and it doesn’t matter. Unlike social security, pensioners have rights to the benefits. The money is owed and it will be paid. The SEC paper you reference was from 2013. The Illinois Supreme Court ruled in 2015 that pensions must and will be paid. The legislature was fully aware of the underfunding and as such it is not an excuse. All those years of underfunding and yet they are still being paid and Illinois still has over 12 million people.… Read more »
Ponzi Scheme Pensions Paid First, Your entitled attitude is a very good reason for more taxpayers to leave Illinois. No one can predict the future so only time will tell if the Illinois State and Local Defined Benefit Ponzi Scheme Pensions will be paid in full. You omitted that in 2013 the SEC found the State of Illinois engaged in deceptive practices related to the five State of Illinois pensions as it related to bond disclosures. So on one hand the State is deceptive and on the other hand you do not feel compelled to say pretty please to taxpayers.… Read more »
The Illinois Supreme Court addressed the SEC order. “In entering a cease-and-desist order against the State in connection with misrepresentations made by the State with respect to bonds sold to help cover pension expenses, the SEC noted that the State understood the adverse implications of its strategy for the State-funded pension systems and for the financial health of the State”The General Assembly may find itself in crisis, but it is a crisis which other public pension systems managed to avoid and, as reflected in the SEC order, it is a crisis for which the General Assembly itself is largely responsible.… Read more »
Ponzi Scheme Pensions Paid First, The statement does not mention taxpayers. Where is the compassion from you and the Illinois Supreme Court for taxpayers funding Public Sector Defined Benefit State and Local Ponzi Scheme Pensions? The statement does not mention the tight relationship between union and legislative leaders to shift funding from pensions to salaries, and to hike pension benefits while pensions are already funded. Options exist on different levels. Staying in Illinois is an option. Moving to another state is an option. Modifying the State Constitution via a state constitutional amendment and subsequent state legislative action is an option.… Read more »
Yes sir. There are options. Stay and pay or leave. Exercise YOUR options Mikey boy. For the record, when the state tried to steal from pensioners, the ILSC does mention taxpayers in the ruling. “The United States Supreme Court has made clear that the United States Constitution “bar[s] Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole [citations].” (Internal quotation marks omitted.) United States v. Winstar Corp., 518 U.S. 839, 883 (1996). Through Public Act 98-599, however, the General Assembly addressed the financial challenges facing our State by doing… Read more »
They aren’t ponzi schemes, the City just chose not to fund them.
The City of Chicago underfunding the pensions, instead using the money to hike salaries for example, is the primary contributor to the pension Ponzi schemes.
They are pension Ponzi schemes because assets are not even close to covering the unfunded liability, and thus the pensions are not sustainable without an infusion of more taxpayer dollars.
Best of my Knowledge the Federal Courts have not ruled on this yet.
James, you need to let these people vent. Mike is trying to take over as the new Poor Taxpayer. Probably the same person. Just type and repeat the same non-sense over and over. You need to let him have that James. It helps these people deal with their frustration. Otherwise they will have to accept reality and that’s just too frightening to them.
I’m solid on reality.
Reality is Illinois Public Sector Defined Benefit State and Local Ponzi Scheme Pensions Paid First.
Repetition is the mother of all learning and we have a lot of catch up to do.
2023 is a big year.
In fact this month is the 10 year anniversary of the SEC issuing a cease and desist order to the State of Illinois for deceptive state pension practices as it relates to bond disclosures.
Perhaps compassionate JB Pritzker will issue a press release to commemorate the event.
Just keep typing the same thing and maybe eventually you will learn. Pensions are contractual obligations that can’t be diminished or impaired.
The SEC order means nothing Mike. Not sure what you think you have there. They told the state to provide more disclosure in the future. The state deceived bondholders which means the taxpayers are liable for any deception not the pension funds. Pensioners are to be paid and will continue to be paid.
Try to keep up and you might learn something.
Here is some clarification. They are LEGAL and ENFORCEABLE Ponzi scheme contracts. that can not be diminished or impaired per the Ponzi Scheme Protection Clause in the Illinois State Constitution as interpreted by the Illinois Supreme Court. Raising taxes to fund the Ponzi schemes is considered less drastic. Moreover, no possible claim can be made that no less drastic measures were available when balancing Ponzi scheme pension obligations with other State expenditures became problematic. One alternative, identified at the hearing on Public Act 98-599, would have been to adopt a new schedule for amortizing the unfunded liabilities to fund the… Read more »
Are you sure? I have not researched it but as a general statement Illinois eligible voters don’t vote. The recent Chicago election-did I read the turnout was 32%? In my municipality that has an upcoming election my son and I have a bet whether or not the turnout will be over 12%. Maybe you are right and if so fill me in…my thoughts are they don’t vote and those that do are voting based upon promised entitlements for them.
It’s well known that people who do vote do so with self interest as a primary motivator. Those that don’t vote are complicit in how all that turns out as well. Complaining about the outcome may be satisfying for the moment to some extent, but generally it’s a wasted effort unless pursued vigorously and with widespread eager support. Otherwise, it’s generally “blah, blah, blah” ending in no useful long-term positive outcome. Case in point: the often vile comments of some Wirepoints’ responders.
It’s been said that Republicans govern too much based upon numbers while Democrats govern too much based upon feelings.
The four City of Chicago Public Sector Ponzi Scheme Pensions are a major enabler of the fiscal mess. A chronically underfunded pension is a Ponzi Scheme pension as the funds to pay benefits already earned are not present without an additional cash infusion. Thus far the Illinois Supreme Court has ruled Illinois State and Local Ponzi Scheme Pensions cannot be diminished or impaired due to the Illinois State and Local Ponzi Scheme Protection Clause added to the state constitution as part of the state constitutional rewrite approved by voters on December 15, 1970. “Membership in any pension or retirement system… Read more »
One issue which has not been explored sufficiently – and perhaps there are too many variables at hand -‘is what happens, let’s say, when the woeful Chicago Municipal employee fund depletes and is then on pay go status? I just read an analysis that this could happen to this fund as early as 2028. Of course, the pensions must be paid under the law and there is no political will to address the problem. But again, what happens to the budget? Wouldn’t pay go status take an enormous bite out of the budget? And would that impact the City’s capacity… Read more »
Definitely, Willowglen, that’s exactly what we are headed for. When the pensions become pay-as-you-go the obligation to pay them is the direct obligation of the sponsoring level of government. And that costs roughly four times what a normal pension contribution would be. That would ravage Chicago’s budget.
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.
Alexander Fraser Tytler, Lord Woodhouselee (October 15, 1747 – January 5, 1813)
“It’s what the voters want” is the justification for anything and everything, no matter how egregious. It’s their mantra.
This is a thorough, smart look at the problems behind the scenes. Props to Crain’s on its improving coverage of failing government.
Budgets have become exercises in allocating funds into “feel good vote buying schemes with little regard for paying the bills. In a way that’s the new America these days…Chicago is merely leading the pack.