The biggest sin in Illinois politics is telling the truth.
Illinois Senate President Don Harmon is a sinner. He wrote a letter to Illinois’ congressional delegation requesting a $44 billion bailout from the federal government. That letter leaked. And he was roundly rebuked by pundits and politicians for saying the quiet part loud.
He was telling the truth.
Gov. J.B. Pritzker, House Speaker Mike Madigan and other Illinois leaders were banking on a federal bailout long before COVID-19.
How else can one explain their recklessness?
Illinois has not balanced a state budget in 20 years. Leaders refuse pension reform to reduce the debts driving those deficits. To buy time and keep political backlash to a minimum, they have borrowed money with bookie-like abandon and slashed social services that lack sufficient political clout to keep their doors open.
That borrowed money funded the most corrupt government in the nation, with nearly 900 public corruption convictions in Illinois since 2000, close to one per week.
Illinoisans now shoulder one of the highest state and local tax burdens in the nation. But paying off the state’s debts would require another 50% hike in the income tax, according to a J.P. Morgan analysis – gas for the flames of Illinois’ outmigration problem. No lawmaker is proposing this.
Many local governments, crushed under the weight of pension obligations, were on the brink of insolvency prior to the pandemic. The state itself was teetering one notch above a junk credit rating. If it tips over, it could be frozen out of the credit market altogether and become functionally insolvent.
Illinois’ pre-coronavirus rainy day fund was enough to fund mere minutes of state spending. And its $7 billion unpaid bill backlog was climbing despite record tax receipts.
Pritzker had no solutions to these problems.
The best he could come up with was eliminating the last taxpayer protection in state government, the constitutional flat income tax, which voters will decide upon in November. Prior to the virus, his administration floated hare-brained schemes like shorting the pension funds, moving state assets on paper into the pension funds to make them appear better funded, and issuing more debt.
Harmon’s letter didn’t just show a state on the brink of financial bankruptcy. It laid bare a bankruptcy of ideas among Illinois’ political leadership. The only way out was to get residents of other states to foot the bill.
Of Harmon’s $44 billion request, $10 billion would flow to Illinois’ pension funds, including those of state lawmakers who created the problem in the first place, and $9.6 billion would go to local governments. Just $1 billion would go to aid for the poor.
His honesty started a firestorm. Nikki Haley, Mitch McConnell, Donald Trump and others unloaded on the idea of a blank-check bailout for mismanaged states, some with a more partisan flavor than others.
Pritzker brushed aside Harmon’s letter. Instead, he demanded “unencumbered” federal dollars. The difference between unencumbered money and the Harmon bailout is semantic. Federal money with no strings attached would flow to the most powerful political interests in Illinois, as Harmon’s letter made clear, not families in need.
To justify his request, the governor and his allies closed ranks with a common refrain: Illinois is actually the one bailing out red states like Kentucky and South Carolina every year.
That’s an awful argument for at least three reasons.
First, this balance of payments is between individuals and the federal government. Not states versus states. How much a state “gets back” relative to how much its residents send to Washington, D.C. is almost entirely driven by the population receiving Social Security or Medicaid, combined with the fact that the federal government taxes the rich at a higher rate than the poor. Should a reckless bank get a bailout because its wealthy clients pay more in taxes? No. Neither should reckless states.
Second, the studies revealing so-called donor states conveniently leave out federal policies favoring wealthier, Democratic states, such as the state and local tax deduction.
Finally, who knew there was a problem with paying a lot in taxes for little in return? Someone should tell Illinois families.
Fortunately, Harmon wasn’t the only one telling the truth. Republican state Sen. Jason Plummer is speaking clearly about the crisis at hand.
“Sober-minded Illinoisans have long warned that the next economic wind would topple our financial house of cards. However, our leaders had other priorities,” Plummer wrote in a letter of his own. Priority No. 1? Securing guaranteed lifetime platinum benefits for themselves and their allies.
“Our elected officials are trying to use this crisis to bail out their bad decisions. And we don’t need a bailout of the politicians. We need reform for the people of Illinois,” Plummer later said on Fox News.
“We’re financially bankrupt, we’re morally bankrupt, we’re ethically bankrupt … I hope Washington, D.C. decides that if they’re going to send us money, they’re going to send us reform as well. Because the average Illinoisan is struggling.”
A bailout will ensure more pain in Illinois. Leaders won’t learn their lesson.
If the federal government does dump money into state and local governments, it must ensure consumer protections like sound pension accounting, real balanced budget requirements and a healthy rainy day fund.
Don’t cover for politicians’ mistakes.
Tell the truth, and do right by residents.
By Austin Berg | The Center Square
Austin Berg is a Chicago-based writer with the Illinois Policy Institute who wrote this column for The Center Square. Austin can be reached at email@example.com.