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 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.
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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.
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