* Surprise, surprise. Eden Martin, who maxed out to Bruce Rauner’s campaign in May (back when caps were in place), agrees with Bruce Rauner that the pension reform proposal just isn’t harsh enough.
But there are some real whoppers in the former Civic Committee president’s latest Sun-Times column, and they’re worth a look. For instance…
Second, the amount of “savings” attributed to the reforms is exaggerated. The current unfunded liability is about $100 billion. The proposed deal would reportedly reduce that by about $14 billion, which is less than had been projected under House Speaker Michael Madigan’s earlier reform proposal.
Advocates say that in future decades the “savings” will amount to perhaps $160 billion. But those “savings” are speculative and over-stated. What would $1 billion of savings — realized in, for example, 2040 — be worth today? Only about $125 million — roughly 1/8th — using the state’s pension discount rate.
Oh, come on, man.
Taxpayers are presently on the hook for about $380 billion in pension system payments over the next 30 years. The proposal on the table right now claims to slash those payments by $160 billion.
You can argue with the actuarial projections, but Martin’s thesis relies on a complete red herring.
* More…
Similarly, private-sector plans rarely grant anything like compounding 3 percent cost-of-living adjustments, regardless of inflation. Yet the pension deal would preserve these COLAs for major chunks of the pensions of retirees.
And why, when the funds are so badly underfunded already, reduce employee contributions going forward?
Tinkering with the retirement age, fine-tuning the COLA mechanism, and reducing employee contributions — these appear to be an attempt to dress up the deal to make it look like a “compromise” with labor: bundles of offsetting give-ups and gains. Yet the unions have flatly rejected any such compromise and are preparing to go to court. So what’s the point of weakening the reforms — or taking on a new state funding commitment? […]
Third, what would be the likely impact of the deal on the state’s budget? Will the state’s required annual pension contributions compel cancellation of the scheduled roll-back in the state’s income tax? Or perhaps even require an increase? How much, and when? The number-crunchers surely know the answer, but they’re not talking. Why sign on to a huge deal like this without knowing the likely consequences?
The intellectual dishonesty in that piece is so blatant. Where to begin?
The idea, as Martin well knows, is to try and make the pension reforms constitutional enough that the Illinois Supreme Court can somehow figure a way to approve them. Martin would obviously prefer that legislators push for even deeper benefit cuts and not even try for a hint of constitutionality. What’s the point in doing that?
Also, notice how he not so subtly repeats Rauner’s claim that the bill on the table would lead to a tax increase. Rauner blames it on the state funding guarantee, which most people believe is a good thing, but could be worked around.
* As with everything, whatever a legislature passes can always be undone. Heck, even strict, plain language constitutional requirements can be upended, as the pension bill itself clearly shows.
I posted this over the weekend, but it’s worth a repost now that comments are open…
[Rep. Elaine Nekritz] said that’s not the case and noted the bill’s so-called pension payment guarantee has wiggle room. If the state fails to make a pension payment, a retirement system could file action in the Illinois Supreme Court to compel the state to make the required payment. But if the state faces a crisis, it could simply vote to change what the required payment would be, she noted, effectively working around that guarantee.
Nekritz noted that flexibility does cause her some concern, despite her support of the deal.
Rauner’s scare tactic about how a vote for the pension bill is a vote for a tax hike is just that.
The political reality is he doesn’t want this issue to disappear. So, perhaps Bill Brady ought to be more forceful when calling him out…
“Pension reform is an issue of fiscal responsibility and the future of Illinois, not a political strategy,” said Bloomington’s Brady, who sits on a special House and Senate panel that forged a framework before the leaders put on the finishing touches.
…Adding… Sen. Brady actually was more forceful. I didn’t see his full statement, which included these shots…
The spokesman for Bruce Rauner, one of my opponents, talks about “insiders” keeping the public in the dark on the details of the bill. There is nothing in this legislation that has not been discussed and debated publicly, including during pension reform debates on other proposals last spring. If Mr.
Rauner were to talk about “insiders”, maybe he could talk about his connections Stuart Levine and Ed Rendell and his pension business.
Mr. Rauner also opposes a state funding guarantee. That’s the same excuse governors and legislators have used in the past, but just look where the lack of such protections has taken us.
Ouch.
- wordslinger - Monday, Dec 2, 13 @ 9:49 am:
Any bipartisan deal is bad news for Rauner, the self-appointed White Knight on a Hog.
It will be interesting to see how the GOPers in the GA react to his tossing Durkin and Radogno under the bus.
Guys like Rauner and Martin are the type of “conservative businessmen” who, in the private sector, abuse the bankruptcy courts to get out of paying promised obligations for services already rendered. They don’t want “reform.” They just don’t want to pay.
The Tribbies know what I’m talking about.
- too obvious - Monday, Dec 2, 13 @ 9:52 am:
Where is Rauner’s pension reform bill? Oh that’s right, he doesn’t have one.
It’s not our fault Rauner’s entire campaign shtick depends on bashing a pension system that he’s made a fortune from. Rauner’s chances go from slim to nil if the bill passes this week. Again, that’s not our problem.
- foster brooks - Monday, Dec 2, 13 @ 9:52 am:
But if the state faces a crisis, it could simply vote to change what the required payment would be, she noted, effectively working around that guarantee. And what is the meaning of crisis? Unbalanced budget?
- Oswego Willy - Monday, Dec 2, 13 @ 9:59 am:
The Bruce Rauner narrative is losing steam.
A possible Bi-Partisan agreement is out there, possibly signed by the Governor, if passed, and all the Veruca Salt whining about “not enough” always fails the most important point;
Will this, or any, agreement pass Constitutional Muster, and would deeper cuts, or by completely going away from the Illinois Constitution, wil that “solve the problem” AND pass the courts.
I would have thought Bruce Rauner would have taken pause, and seen how the vote went, even working against it, before going “all in” and leaving the door open to be seen as the “problem” not the “solution”, no matter how much the Tribue and their Dopey flip-flopping history it ignored by those wanting the Rauner narrative to be true.
This would have been a better “hold your powder, work it quietly behind the scenes” kinda play, if
… you had the political wherewithal to understand the Co-Equal Branches of government, the Illinois Constitution, and the Executve Branch in the political and governmental process.
That is where Bruce Rauner’s “slip” is showing.
- OLD BRASS - Monday, Dec 2, 13 @ 10:00 am:
“..vote for a pension is bill is a vote for a tax hike…” It certainly is, it is no more than a tax hike on public state employees pensions. I worked for it, I earned it, and now the GA wants to tax it (in the form of this pension degrading.
Saving only amount to 10% being used to pay down the so called pension crisis? Where is the other 90% earmarked for. We already know…budget shortfalls and expanded entitlement programs.
They want to spread the wealth, l have yet to see a plan where they share a contribution from their pension funds.
- PublicServant - Monday, Dec 2, 13 @ 10:01 am:
===…is to try to make the pension reforms constitutional enough…===
Whether the bill is constitutional is binary isn’t it Rich?
- Formerly Known As... - Monday, Dec 2, 13 @ 10:02 am:
While Illinoisans discuss and debate whose plan is more or less “harsh”, we must also remember the underlying point that even the least “harsh” plan may well be unconstitutional.
Not to mention the fact that it is not the employees and retirees who caused this problem by failing to make their pension contributions.
- walkinfool - Monday, Dec 2, 13 @ 10:02 am:
Eden Martin discounts future savings, without discounting future costs. Not apples-to-apples, and he knows better. He glosses over the fact that the “savings” claimed are against future costs, not against the actuarial liabilities, since these fine points won’t be noticed by the average voter.
Fahner is at least intellectually honest.
Rauner’s statements have been filled with nonsense, and false claims. It is clear that he just wants to destroy defined benefit pensions in the future, and any steps taken to make them more sustainable are to be slammed. The actual language sounds like a Scott Walker commercial.
Where is Rauner the clear-sighted business analyst? Is Rauner himself trapped by the big money people on the right?
- Downstate - Monday, Dec 2, 13 @ 10:03 am:
I’m a HUGE Bruce Rauner supporter. But I agree with OW on this. Rauner didn’t have to come out so quickly with such a harsh response.
Media outlets around the state weren’t clamoring for his thoughts. He should have let the dust settle just a bit, before opining.
- Bill White - Monday, Dec 2, 13 @ 10:08 am:
=== Is Rauner himself trapped by the big money people on the right? ===
Eh, isn’t Bruce Rauner one of the big money people on the right?
- hisgirlfriday - Monday, Dec 2, 13 @ 10:08 am:
How will Dillard vote? The Trib story sounds like Dillard is flirting with voting against on constitutional grounds but his running mate may vote for it because she was on the panel.
- Publius - Monday, Dec 2, 13 @ 10:09 am:
I just want to thank Rich Miller for his long term, in depth , coverage of the pension situation and all the ins and outs of the issue. Your work on this issue and your comments on the various positions have beent informative, insightful and invaluable. Whatever hapoens Rich, we all owe you a giant “Thany you.”
- PublicServant - Monday, Dec 2, 13 @ 10:11 am:
I second the Thank You to Rich.
- Mmmmmmm - Monday, Dec 2, 13 @ 10:11 am:
I appreciate a billionaire Mitt Romney wanna be who has 5 mansions around the world, telling my school teacher daughter that her possible $40k a year pension is too extravagant and that the State needs to cut back what she is due. An outstanding American this Rauner fella
- PublicServant - Monday, Dec 2, 13 @ 10:13 am:
But I guess theft is too strong of a word…
- Grandson of Man - Monday, Dec 2, 13 @ 10:16 am:
“The political reality is he doesn’t want this issue to disappear.”
I agree. If this reform plan is passed, I believe it will seriously cut into his platform. It’s not like he can then turn to unions for support, since he’s burning bridges with them as we speak.
As far as Eden Martin’s (formerly R. Eden Martin, but now the regular guy who will have a beer with you and Rauner in a neighborhood bar) continuing involvement in the pension debate and attacks on labor, the guy just won’t retire from this stuff. He retired from the Civic Committee, but he won’t retire from union bashing. He can easily afford to get away and enjoy the rest of his life, but his antipathy toward unions is so strong that he won’t quit.
- Bobbysox - Monday, Dec 2, 13 @ 10:16 am:
==========================================
[Rep. Elaine Nekritz] said that’s not the case and noted the bill’s so-called pension payment guarantee has wiggle room. If the state fails to make a pension payment, a retirement system could file action in the Illinois Supreme Court to compel the state to make the required payment. But if the state faces a crisis, it could simply vote to change what the required payment would be, she noted, effectively working around that guarantee.
Nekritz noted that flexibility does cause her some concern, despite her support of the deal.
============================================
This is the most ironic of all ironies — it is a guarantee that the state will contribute at least NOTHING in a given year. If this is supposed to be some sort of consideration for retirees that their pensions will be there in the future, Rep. Nekritz has just discredited that argument.
And what will the legislature first do with the money savings? Give it to ADM and other rich corporations.
- hisgirlfriday - Monday, Dec 2, 13 @ 10:24 am:
Just saw in the sidebar tweets that Mark Kirk is coming out against this too? Man the Illinois GOP must be really scared what this bill does to Rauners chances.
- Kass - Monday, Dec 2, 13 @ 10:26 am:
When Rauner was on John Kass’s radio show this morning, Kass, who usually asks tough questions, had a perfect opportunity to ask Bruce how many millions of dollars he has personally made off of the public pension funds that he now wants to limit grandma from collecting her few thousand. Get tough again, John!
- Demoralized - Monday, Dec 2, 13 @ 10:30 am:
The Rauner’s and Martin’s of the world aren’t going to be satisfied until public employee pensions are taken away altogether. That’s the only “reform” they would ever support.
I like it when the rich guys, with their million dollar salaries and golden parachute pensions pile on the guy making a $40,000 a year pension. That’s just too lavish. These guys are pathetic.
- RNUG - Monday, Dec 2, 13 @ 10:37 am:
PublicServant @ 10:01 am:
No. Portions of the bill are severable, so the courts could pick and choose sections to deny or uphold.
- thechampaignlife - Monday, Dec 2, 13 @ 10:42 am:
===using the state’s pension discount rate===
In addition to what walkinfool said, shouldn’t that be discounted at the rate of inflation (say 2.5%), not the pension discount rate (roughly 8%)? Discounted for inflation, $1B in 2040 is worth about $513M today.
- GA Watcher - Monday, Dec 2, 13 @ 10:43 am:
Mr. Rauner would be better served if he let this week’s action on pension reform play out. If the bill passes, it’s going to go straight to court once it’s signed into law. Any “improvements” based on the court challenge won’t occur until after he’s elected Governor. He will then have some real authority to fix the State’s pension problems to his liking
. If it fails, he can continue to campaign on how Illinois needs his business acumen now more than ever.
- Ruby - Monday, Dec 2, 13 @ 10:45 am:
== The Rauner’s and Martin’s of the world aren’t going to be satisfied until public employee pensions are taken away altogether. ==
They also want to take away Social Security and/or turn it into a 401k type plan. But I’m not sure even that would make them happy.
- Ahoy! - Monday, Dec 2, 13 @ 10:56 am:
I can see why Rauner is so opposed. If this bill passes and IF Rauner wins the primary, he would have to run against Quinn after pension reform passed and Quinn would probably still get the union support against Rauner.
- skeptical spectacle - Monday, Dec 2, 13 @ 11:11 am:
Ok, I agree there are political motivations for Rauner to be against this bill…..these are obvious and Rich delineated them artfully.
However, let’s just take a step back………
Let’s pretend we are going to design how we run a state from scratch. If there is enough money for us to do everything we want and need to do, there is no real issue.
However, let’s say there isn’t enough money to meet even all of our obligations……I think this is a fairly safe assumption with the State of Illinois (you can hold the graduated income tax comments, I understand it, agree with it to an extent if you decrease property taxes, but don’t think it will happen)
At that point I think it is logical to state that prioritization has to occur. Let’s try to be objective here and keep in mind the role of the state…..
Should we really prioritize pension payments above the education of our children, healthcare for our citizens, keeping our citizens safe?
Do we fire teachers and close hospitals so we can keep paying pensions in a financial emergency, were it to occur?
No, we don’t this is obvious and this is where a legitimate argument could be made against a funding guarantee. Though I think there are political implications as well.
Best thing is to figure out how to allow the state to meet all of its need the best it can, without unfairly punishing one particular segment.
Accordingly, both pension reform and revenue increases will have to occur, to avoid fiscal emergencies in which a funding guarantee would be necessary.
- Anonymous - Monday, Dec 2, 13 @ 11:13 am:
Close your eyes and listen. Rauner sounds like blago, but with his own money.
For rauner, the pension issue is “F’n golden”. If the bill passes and is signed, it will fade in the public mind, except for unions wanting revenge, while waiting for the courts
- Oswego Willy - Monday, Dec 2, 13 @ 11:17 am:
- skeptical spectacle -,
All that woulod be so great, but you see, there is that pesky Illinois Constitution that keeps getting in the way from making this all so easy.
===Should we really prioritize pension payments above the education of our children, healthcare for our citizens, keeping our citizens safe?===
I think Illinois has it that Obligations, specifically bonds and bonding are #1 … I could be wrong … but if there are required #1s. #2s, etc., the idea of making priorities must factor in required payments, and the order of those payments, period.
My point in this is that, if it were all so easy to just prioritize like buying hamburger instead of steak, it would have been done.
When any of us … try to look at this in an easy light, we forget what real obsticles Illinois faces, and the Illinois Constitution is NOT an obsticle, and looking at it fully as such is just as troublesome as ignoring it.
- skeptical spectacle - Monday, Dec 2, 13 @ 11:19 am:
OW,
I agree….this is a very complicated problem for a variety of reasons including constitutional ones. I still think the largest obstacles are political, however. Very compelling situation to observe for a variety of reasons and I appreciate Rich’s coverage.
- Ruby - Monday, Dec 2, 13 @ 12:02 pm:
OLD BRASS @ 10:00 am:(
“(Pension Reform)Saving only amount to 10% being used to pay down the so called pension crisis? Where is the other 90% earmarked for.(?)”
This part of the pension bill is really disturbing. How WILL the money taken from retired state workers by diminishing their pensions be used if not to reduce the pension deficit?
- Mighty M. Mouse - Monday, Dec 2, 13 @ 4:33 pm:
It seems more and more apparent to me that Bruce Rauner is a psychopath.
“The hallmarks of the psychopathic personality involve egocentric, grandiose behavior, completely lacking empathy and conscience. Additionally, psychopaths may be charismatic, charming, and adept at manipulating one-on-one interactions.”
From Forbes, “The Disturbing Link Between Psychopathy And Leadership” http://www.forbes.com/sites/victorlipman/2013/04/25/the-disturbing-link-between-psychopathy-and-leadership/
This article first appeared at PsychologyToday.com.
- Anonymous - Monday, Dec 2, 13 @ 5:26 pm:
Mr. Rutherford really shouldn’t tweet in caps beneath a photograph of himself shaking a pointing finger at his audience–unless, of course, he is trying to scream louder than Messrs. Kirk and Rauner.
- Norseman - Monday, Dec 2, 13 @ 6:03 pm:
=== Heck, even strict, plain language constitutional requirements can be upended, as the pension bill itself clearly shows. ===
Certainly, this an ATTEMPT to upend “strict, plain language constitutional requirements.”
With respect to Eden Martin, clearly facts are not his thing.
- Just Me - Monday, Dec 2, 13 @ 6:47 pm:
For what it is worth, my parents both bought Rauner’s pension philosophy completely. In their minds all retirees are making $100k+ a year and undeserving of their pensions, and they’re totally fine with stripping them away completely. My parents were shocked to learn state retirees do not qualify for social security, and that the average pension is around $30k. They insisted I was mistaken.
- Quinn is the Grinch - Monday, Dec 2, 13 @ 10:02 pm:
Governor Quinn is the Grinch that stole Christmas to State employees and retirees. He is heartless. He lied in his last campaign when he said that he had a heart. He has an ice cold heart like all Chicago machine democrats.
- Ruby - Monday, Dec 2, 13 @ 11:22 pm:
According to page 14 of the pension bill only 10% of pension reform savings will be used to pay down the pension deficit. There is no information of how the other 90% of money taken from retired state workers will be used to save the pensions.