Illi­nois ex­em­pli­fies our fis­cal fool­ish­ness

Cecil Whig - - FRONT PAGE - Ge­orge Will

— Seated in his of­fice here, wear­ing nei­ther a neck­tie nor a frown, Repub­li­can Gov. Bruce Rauner is re­mark­ably re­laxed for some­one at the epi­cen­ter of a cri­sis now in its se­cond year and with no end in sight. But, then, stress is point­less when the sit­u­a­tion is hope­less. Be­sides, if you can ig­nore the fact that self­gov­ern­ment is fail­ing in the na­tion’s fifth-most pop­u­lous state, you can see real artistry in the self-deal­ing by the Democrats who, with ve­to­proof ma­jori­ties in the state Leg­is­la­ture, have re­duced this state they con­trol to in­sol­vency.

Illi­nois’ gov­ern­ment, says Rauner, “is run for the ben­e­fit of its em­ploy­ees.” In­creas-

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in­gly, it is run for their ben­e­fit when they re­tire. Pen­sion prom­ises, though un­funded by at least $113 bil­lion, are one rea­son some gov­ern­ment de­part­ments are not dig­i­tized at all.

What is mis­lead­ingly called the state’s Con­sti­tu­tion re­quires bal­anced bud­gets, of which there have been none for 25 years. This year, rev­enues are pro­jected to be $32.5 bil­lion, with spend­ing of $38 bil­lion. Illi­nois Democrats are, how­ever, se­lec­tive con­sti­tu­tion­al­ists: They will die in the last ditch de­fend­ing the con­sti­tu­tion’s pro­vi­sion that says no gov­ern­ment pen­sion can be “di­min­ished or impaired.”

The gov­ern­ment is so thor­oughly union­ized (22 unions rep­re­sent al­most all gov­ern­ment em­ploy­ees), that “I can’t,” Rauner says, “turn on a light switch with­out per­mis­sion.” He ex­ag­ger­ates, some­what, but the process of try­ing to fire some­one is a ca­reer, not an op­tion.

At last count, $7.6 bil­lion was owed to many of the state’s ven­dors. But the law in its majesty re­quires that the state’s leg­is­la­tors — those who write the laws — get paid un­der any cir­cum­stances. This re­moves per­haps the most im­por­tant po­ten­tial pres­sure for com­pro­mise. If schools were un­able to open this month, par­ents with pitch­forks would march on Spring­field, so a quasi-bud­get was cob­bled to­gether to keep gov­ern­ment semi-funded for six months.

Un­der Rauner’s Demo­cratic pre­de­ces­sor, the Leg­is­la­ture passed a “tem­po­rary” tax in­crease, serenely ex­pect­ing that when it ex­pired they would en­joy the truth of Ron­ald Rea­gan’s ax­iom that there is noth­ing as im­mor­tal as a tem­po­rary gov­ern­ment pro­gram. They did not count on the first Repub­li­can gov­er­nor in 12 years.

Rauner let the tax lapse. To their de­mand for more tax in­creases, he sweetly says: Let’s talk. About pen­sion re­forms and tort re­form. And about ex­empt­ing lo­cal gov­ern­ments from pay­ing on con­struc­tion projects the “pre­vail­ing wage” — which Rauner says is, ef­fec­tively, “what­ever unions tell them they want it to be,” and which raises costs 30 to 40 per­cent.

Rauner fa­vors term lim­its for state leg­is­la­tors. Democrats have job se­cu­rity, thanks in large part to the fi­nan­cial sup­port of grate­ful pub­lic- and pri­vate-sec­tor unions. Illi­nois vot­ers over­whelm­ingly want term lim­its, which Demo­cratic politi­cians op­pose be­cause, they say, such lim­its re­strict vot­ers’ abil­ity to get what they want.

Illi­nois is a lead­ing in­di­ca­tor of in­creas­ing na­tional child­ish­ness — an un­will­ing­ness to will the means for the ends that it wills. Na­tion­ally, state and lo­cal gov­ern­ments’ pen­sions have some­where be­tween $1 tril­lion and $4 tril­lion in un­funded pen­sion li­a­bil­i­ties, de­pend­ing on, among other things, as­sump­tions about re­turns on pen­sion funds’ in­vest­ments. The Wall Street Jour­nal re­ports that in 2001, the 20-year me­dian re­turn was 12.3 per­cent and ev­ery per­cent­age-point de­cline in re­turns in­creases li­a­bil­i­ties by 12 per­cent. Last year, the largest fund, Cal­i­for­nia Pub­lic Em­ploy­ees’ Re­tire­ment Sys­tem, which as­sumes 7.5 per­cent re­turns, in­stead gained 0.6 per­cent. This, in the sixth year of the re­cov­ery from the 2008-09 cri­sis, was the worst per­for­mance since then — and an­other re­ces­sion will surely hap­pen.

Na­tion­ally, nei­ther party is ea­ger to talk about the rick­ety struc­ture of the en­ti­tle­ment state, al­though the Demo­cratic plat­form prom­ises to make mat­ters worse. Al­though sched­uled So­cial Se­cu­rity ben­e­fits vastly ex­ceed the value of worker and em­ployer con­tri­bu­tions plus in­ter­est, the plat­form, a case study in re­ac­tionary lib­er­al­ism, op­poses even rais­ing the re­tire­ment age. This, even though ben­e­fits are avail­able at 62, three years younger than when the sys­tem was cre­ated in 1935, when life ex­pectancy at 65 was 12.5 years. To­day, it is 19.3 years for men and 21.6 for women. If in 1935 Congress had in­dexed the age of So­cial Se­cu­rity el­i­gi­bil­ity to life ex­pectancy, the age to­day would be 72.

The fed­eral gov­ern­ment can con­tinue to print money. There are bankruptcy pro­ce­dures for cities but not for states. So, high-tax Illi­nois will con­tinue bleed­ing the pop­u­la­tion and busi­nesses, but with one con­tented co­hort — the Demo­cratic po­lit­i­cal class, for whom the sys­tem is work­ing quite well.

Ge­orge Will is a syn­di­cated colum­nist. Con­tact him at georgewill@wash­post.com.

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