By: Mark Glennon*
Former Illinois Comptroller Leslie Munger told me this story a few months ago. It’s enlightening and kinda funny – classic Donald Trump.
It was at a City Club lunch event in Chicago in June 2015. As is standard there, political bigwigs from both parties were seated at a front table. They included then Comptroller Munger, her husband, and then candidate Donald Trump.
During the mingling before lunch, Munger and her husband introduced themselves to Trump, and her husband told Trump she was the Illinois State Comptroller. Trump immediately and without hesitation said, “You’re the Comptroller? Illinois is a mess. You need to declare bankruptcy and reorganize.”
Fast forward to this past Monday’s event at the White House for governors around the country. President Trump jabbed a bit with Governor Pritzker. From the Chicago Tribune:
“It’s a great — you’re going to have — you have such an easy state,” Trump said.” That’s so easy. Great state of Illinois. What an easy state. I don’t know. Huh? Have you found it to be easier or tougher than you thought?”
“Well, you’re going to help us out,” Pritzker responded, drawing a laugh from his fellow chief executives.
“I’ll help you out. I help everybody out. I’m going to help you,” Trump said.
Trump is no stranger to bankruptcy. He used it often in business and he understands its utility. Trump’s mind jumped immediately to bankruptcy upon meeting the Illinois’ Comptroller. Did the same happen when Pritzker brought up help for Illinois?
We don’t know because Trump didn’t elaborate on how he would help, but I have it on good authority that the broad concept of bankruptcy-for-states went up the flagpole last year all the way to Trump, who indicated approval in principle. The subject went off the table – for now – when Democrats took control of the United States House of representatives in January. We also know that Bruce Rauner, while Illinois governor, talked about bankruptcy-for-states openly in 2017 and went so far as to say he hoped the federal legislation needed to create it would be passed that year.
I wouldn’t expect any talk of federal authorization of bankruptcy-for states to return until a Democratic governor goes to Congress to say they can’t turn their state around without it. However, maybe that’s just a matter of time. If it’s not Illinois that revives the talk, it might well be one of the other “four states of the apocalypse,” as they were called this week – the others being New Jersey, Connecticut and New York.
*Mark Glennon is founder of Wirepoints.
Some of our earlier articles and others we’ve linked to on the subject of bankruptcy-for-states are below.
- 3/22/17 – Is Bankruptcy for States Illinois’ Answer? A Primer.
- 10/26/17 – Here’s What’s Really Going On With Bankruptcy-For-States Chatter
- 7/4/17 – Would Congress Authorize Bankruptcy for IL and Other States? Yes, Inevitably.
- 1/23/16 – The Case for Allowing US States to Declare Bankruptcy – Bloomberg Business
- 10/10/18 – JP Morgan: True Pension Payments Would Consume Half of Illinois Revenue, Bankruptcy Option Needed
- 7/10/18 – Bankruptcy for Illinois comes up again: some background