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Worst. Analysis. Ever.

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Illinois

* An op-ed published by the Wall St. Journal…

Revenue isn’t the problem. An October report from the Pew Charitable Trusts found that Illinois’s tax collections have grown by almost 20% since 2008, largely thanks to a short-term income-tax hike of two percentage points that expired this year.

But what the state has taken in, it has spent with reckless abandon. The $8.5 billion in unpaid bills at the end of 2015 nicely matches the $8.5 billion in unpaid bills the state had at the end of 2011, when then-Gov. Pat Quinn, a Democrat, instituted the tax increase. The theory was that this would rescue Illinois and give it time to renounce bad habits. That didn’t work.

Breathtaking.

1) Revenue is not a problem? The analysis used above is akin to saying to someone who was just laid off: “Your average income over the past few years shows you’re doing fine, so don’t bother finding a new job.”

2) Reckless abandon? First of all, the backlog number used for the very end of 2011 is incorrect. And the bill backlog at the very end of 2014, when Quinn lost the election and before the tax hike expired was $4.36 billion. It’s now way higher. Why?

Lack of revenues and no budget to control court-ordered spending!

Also, too, the state finally made its full legally mandated pension payments after the tax hike, which (for the kabillionth time) explains most state spending growth.

It’s like getting a new, better-paying job and using almost all the new cash to pay down second mortgages and credit card bills from your previously profligate ways. Your quality of life isn’t noticeably improving, but your long-term prospects are greatly enhanced.

posted by Rich Miller
Tuesday, Feb 9, 16 @ 12:30 pm

Comments

So is the author intentionally misrepresenting this info or did she rely on John Tillman for her numbers?

Comment by 47th Ward Tuesday, Feb 9, 16 @ 12:35 pm
They are a news service ya know, 47th /s

Comment by PublicServant Tuesday, Feb 9, 16 @ 12:36 pm
Wow, I agree. That is really bad analysis.

Comment by Tone Tuesday, Feb 9, 16 @ 12:39 pm
http://www.hynescommunications.com/our-team/emily-zanotti/

Comment by NoGifts Tuesday, Feb 9, 16 @ 12:40 pm
did she rely on John Tillman for her numbers?

Likely so. She’s described as “a writer for the Heartland Institute”, which along with IPI is another false-front “think tank” pea in the far-right anti-government pod.

Unfortunately for reason and sanity, the current occupant of the governor’s mansion “thinks” like they do, and abuses facts just as freely.

Comment by Reality Check Tuesday, Feb 9, 16 @ 12:42 pm
===Emily is also a Second City-trained comedy writer and stand-up comedian who performs frequently in Chicago===

Thanks NoGifts. That explains it. Now that I know it’s satire, boy, that is hilarious. Revenue isn’t the problem, LOLOL!

Comment by 47th Ward Tuesday, Feb 9, 16 @ 12:42 pm
“As the Director of Web Strategy for the Sam Adams Alliance, Emily pioneered a national blogger outreach strategy that helped to organize and network state-level activists into a national grassroots force and produced a number of viral issue-based campaigns. As an independent consultant, Emily helps organizations structure social media strategies, develop successful online brands, and tailor liberty-minded messages to a youth market.” Who is the Sam Adams Alliance? http://www.sourcewatch.org/index.php/Sam_Adams_Alliance

Comment by NoGifts Tuesday, Feb 9, 16 @ 12:43 pm
===It’s like getting a new, better-paying job and using almost all the new cash to pay down second mortgages and credit card bills from your previously profligate ways. Your quality of life isn’t noticeably improving, but your long-term prospects are greatly enhanced. ===

Well said Rich! Spot on! This is an example of the evidence not supporting the WSJ argument…..and their solution is to dismiss the evidence and revert back to old, stale, talking points.

Comment by veritas Tuesday, Feb 9, 16 @ 12:45 pm
Holy heck! Rauner is the man stopping Illinois from Digging a deeper fiscal hole? It’s like I’m taking crazy pills. Excuse me, but aren’t we worse off today than we were when he took office bill wise? Aren’t we also not making the pension contribution or paying for higher education and social services not required by court order? Someone is going to have to explain how that article’s title isn’t exactly the opposite of what is really happening. Oh sure, I know he wants to curb spending, but not having a budget has had kind of the reverse effect amirite? I mean, we haven’t exactly gotten off the hook for the MAP grants even though we haven’t funded them, and we are going to have to give higher ed something if we don’t want all of the directional unis going under. Also, didn’t a bunch of social service agencies actually provide services for which we owe them? For Pete’s sake, throw in the tax sunset and it is a recipe for disaster, not saving anything. Far from that, this is wreaking havoc and going to be something that may take decades to recover from. Even re-instituting the 5% tax rate won’t be enough to get us back to where we were when those “free spendin’ reckless democrats” ran the whole state. What we have here is a stubborn clown saying he wants to reduce spending. That isn’t the same thing as doing it.

I’m going to go crazy reading articles like this. Wait, too late. Guess I was already crazy. I mean if the Wall Street Journal says it is true, it must be. Right?

Comment by Me too Tuesday, Feb 9, 16 @ 12:46 pm
@NoGifts, As you may know, John Tillman was president and COO of the Sam Adams Alliance.

Comment by Reality Check Tuesday, Feb 9, 16 @ 12:47 pm
Revenue ISN’T the problem. Now, lack of revenue on the other hand…

Comment by Anonnymouse Tuesday, Feb 9, 16 @ 12:48 pm
More of piling it higher and deeper from Spin Doctor Emily Zanotti (Webster’s Online definition- a person (such as a political aide) whose job involves trying to control the way something (such as an important event) is described to the public in order to influence what people think about it).

Comment by Anon221 Tuesday, Feb 9, 16 @ 12:49 pm
One would be tempted to say it’s comedy, according to her bio: “Emily is also a Second City-trained comedy writer and stand-up comedian who performs frequently in Chicago and across the Midwest.”

However, the rest of the bio makes clear she’s part of the well-paid, right wing noise machine. Sow doubt and confusion. Make up facts. You can even find among her writings, “Bill Nye, The Not So Great at Science Guy.” Although that’s about abortion, the Heartland Institute is one of the prime deniers of man made global warming. But she brags about how much she loves science.

Comment by Moe Berg Tuesday, Feb 9, 16 @ 12:49 pm
I thought the WSJ was more careful about the quality of articles written for their paper? Even Op Ed. Bummer

Comment by NoGifts Tuesday, Feb 9, 16 @ 12:54 pm
The WSJ edit board has always been weird. The news pages remain first rate; they chronicle money and power, not personalities.

I once interviewed Robert Novak, the pride of Joliet and the U of I (and no liberal). He said that when he was a WSJ reporter, his job was to make the edit board look like idiots, every day.

He also said it was way too easy.

Comment by Anonymous Tuesday, Feb 9, 16 @ 12:55 pm
This article appeared on my Facebook and I was stunned by its flagrant misreporting. Even when the WSJ is biased, they usually have some kind of facts on which to base their bias. This “news story” completely fails in every single way.

I am seriously reconsidering this publication as a good source of information. This article is a complete disaster and disservice.

Comment by VanillaMan Tuesday, Feb 9, 16 @ 12:56 pm
But, Narrative!

Comment by Elo Kiddies Tuesday, Feb 9, 16 @ 1:01 pm
So if revenue isn’t the problem, we can write even more checks and not worry about them bouncing?

Comment by Huh? Tuesday, Feb 9, 16 @ 1:01 pm
WSJ should at least have changed the words around a bit from the Heartland report.

WSJ: “As of January 2014, the state had amassed debt of $321.4 billion, or $24,959 per capita, according to State Budget Solutions and the Heartland Institute. About a third of that was unfunded future pensions—in other words, not counting benefits being paid to retirees today. Illinois hasn’t balanced its budget since 2001.”

Heartland: “As of January 2014, Illinois had a state debt of approximately $321.4 billion, according to State Budget Solutions. Illinois’ state debt per-capita was $24,959, fifth-highest in the country. … The organization concluded $147.4 billion in promised retirements benefits are unfunded, yet the state reported on its balance sheet only $37 billion of these liabilities. Illinois hasn’t had a balanced budget since 2001.”

Comment by Mostly Harmless Tuesday, Feb 9, 16 @ 1:02 pm
Owned by Rupert Murdoch since 2007.

Comment by Beaner Tuesday, Feb 9, 16 @ 1:03 pm
Not. well. done.

Comment by A guy Tuesday, Feb 9, 16 @ 1:03 pm
Bruce Rauner says Illinois has a spending problem, not a revenue problem. Unfortunately, he is unwilling to aggressively cut spending and allow government to become considerably smaller.

Comment by Muscular Tuesday, Feb 9, 16 @ 1:07 pm
It takes money to pay bills. I’m not sure why that’s so hard for the right wingers to figure out.

When a right-winger gets a bill in the mail, what do they do? Do they A) mail in a check to pay the bill? Or, do they B) call the vendor and explain to them that if they just cut the amount they were charging their customers, they would have more customers, and therefore they shouldn’t have to pay the full amount of the bill? Now, it may be true that the vendor would have more customers over the very short term, but if the revenue didn’t cover the cost of producing the service or product provided, the vendor would go out of business. I mention this, of course, because right wingers are sooooo business savvy.

Right now, taxes are so low, they don’t cover the costs of producing social services, education, and everything else that a government is supposed to provide. As a result, we need a tax increase. Sooner rather than later.

Comment by Fusion Tuesday, Feb 9, 16 @ 1:10 pm
Rauner spin at work again. Laughable considering the recent developments from Rauner, like his AV to charge fees at the museum, the university funding bill dependent upon special fund grab. Of course special funds grab was the principle element of the FY 15 fix.

Comment by Norseman Tuesday, Feb 9, 16 @ 1:14 pm
How high does everyone think taxes will be raised eventually is Rauner can resist an increase for another 3 years? 7% individual and 9% business maybe? Anyone’s guess I suppose.

Comment by Robert the 1st Tuesday, Feb 9, 16 @ 1:21 pm
*if Rauner

Comment by Robert the 1st Tuesday, Feb 9, 16 @ 1:22 pm
== “Who is the Sam Adams Alliance? http://www.sourcewatch.org/index.php/Sam_Adams_Alliance” ==

Well, shucks. Sam Adams Alliance sure sounded like a group of fun people …

Guess I’ll have to round up a Leinenkugel Alliance instead …

Comment by Curmudgeon Tuesday, Feb 9, 16 @ 1:37 pm
oh, so revenue isn’t the problem. /s

It sure is now, after the lawn job we have been getting from the Rauner/GOP scorched earth tactics.

On our way to $25,000,000,000 backlog (post FY19 per GOMB 1/6/16. No need for revenue to fix that. /s

The two real disturbing things about this “report,” is the misrepresentation of the progress that was being made, and the total omission of the financial damage being done.

Good report Mr. Miller.

Comment by cdog Tuesday, Feb 9, 16 @ 1:38 pm
Here’s my favorite line, “He has implored Democrats to find a way to alter pension obligations that they can support.”

I give Emily credit for saying “have the Dems find a loophole to not pay retirees and Repubs will jump on it.

Comment by Jocko Tuesday, Feb 9, 16 @ 1:38 pm
1) isnt it more akin to someone who was living paycheck to paycheck getting a raise and instead of starting savings they just increased their bad spending habits and when they lost said raise are all the sudden shocked to find out they cant keep up their current lifestyle?

Comment by Anon Tuesday, Feb 9, 16 @ 1:45 pm
Anon:

Um, no it isn’t the same. Re-read the post and you’ll figure out why it isn’t.

Comment by Demoralized Tuesday, Feb 9, 16 @ 1:53 pm
While the article is full of errors, the premise that Illinois has more of a spending problem than a revenue problem is still valid. Even if most of our spending is for good causes, it doesn’t take away from the fact there is not enough money to pay for everything. Individuals and families don’t get to run their personal finances that way. The income side is usually more or less fixed and we HAVE to adjust our spending to fit the income. I don’t know anyone who can DEMAND a raise from their employer because they decided to donate a million dollars to their favorite charity (presumably a good cause of some sort) and then realized they couldn’t afford it. Yet most governments (it’s not just an Illinois problem) are constantly coming up with good programs without the income to support them and then declaring we HAVE to raise taxes to fulfill all these promises we’ve made. And why do they always want to resort to tax increases to fix the mess? Because they CAN! Again, who among us can demand a raise from our employer just because we want to be able to spend more. We have to live within our means, and so should the state, whatever the level of income is.

Comment by weary Tuesday, Feb 9, 16 @ 1:54 pm
Who ever let factual numbers get in the way of promoting your position to a naive public?

Comment by forwhatitsworth Tuesday, Feb 9, 16 @ 2:02 pm
The exploding pension payment is the problem - it is crowding out the rest of state funding. I don’t think revenue alone will fix that. If there is reform, then some revenue can fix that. Throwing money at the growing payment will just cause us to need to throw more money at the payment down the line, because no reform took place.

Comment by A Modest Proposal Tuesday, Feb 9, 16 @ 2:02 pm
This op-ed is nertz. It fails to quantify IL’s temporary tax increase as a 67% increase rather than a 2% increase –– using 67% is mandatory style policy on the WSJ editorial page. At least the article doesn’t spill the beans that the flat income tax rates were 3%, then 5%, and now 3.75%. WSJ’s local readers would snicker at those paltry rates. The marginal income tax rates for NYC taxpayers are 8.82% (state) + 3.876% (city) = 12.696%. That’s right, the municipal add-on alone exceeds the our total current 3.75% rate in IL. State and property tax are extra, of course.

Could Chicago balance it’s budget and fix CPS with even half that extra revenue?

What’s wrong with IL billionaires? If the 0.01% in NYC can struggle by with 12.696% income tax, why can’t their counterparts here make things work with 3.75%, 5% or even 7 or 8% if we someday get a graduated tax?

Illinois don’t know from high taxes.

Comment by X-prof Tuesday, Feb 9, 16 @ 2:05 pm
C’mon, their figures were of by a margin of less than 100%.

Comment by SAP Tuesday, Feb 9, 16 @ 2:09 pm
Sales and property tax are extra

Comment by X-prof Tuesday, Feb 9, 16 @ 2:09 pm
=== The exploding pension payment is the problem - it is crowding out the rest of state funding. I don’t think revenue alone will fix that. If there is reform, then some revenue can fix that. Throwing money at the growing payment will just cause us to need to throw more money at the payment down the line, because no reform took place.===

The structure of the pension systems are fine as long as everyone meets their required responsibilities. The problem is that our politicians did not live up to their responsibilities and built quite a large debt. The debt is not going away. What about re-amortization?

Comment by forwhatitsworth Tuesday, Feb 9, 16 @ 2:14 pm
=The structure of the pension systems are fine as long as everyone meets their required responsibilities=

Meaningless statement. Anything is “fine” so long as funded. Giving every state employee $25 million a year is “fine” so long as funded.

Comment by Robert the 1st Tuesday, Feb 9, 16 @ 2:22 pm
Modest Proposal,
The creation of Tier 2 was the reform. It is now time to pay what is owed.

Comment by Ole' Nelson Tuesday, Feb 9, 16 @ 2:31 pm
Robert the 1st -
Do you realize that Tier 2 benefits are so low that the employee contribution not only covers the entire benefit cost, but will in effect, subsidize benefits for Tier I employees? This does not seem “meaningless” for the system going forward. All that is left to do is to pay the backlog that has resulted largely from decades of underfunding by the state.

Comment by Ole' Nelson Tuesday, Feb 9, 16 @ 2:41 pm
FWIW, When you have a baloon payment, or back end loaded payments due on a loan and the opportunity to refinance, you refinance. If we’re using the kitchen table budget analogy, you refinance (read, adjust the repayment schedule). Not to mention within 20 years all the employees will be paying more into the system than they’ll receive. Seems to me that it isn’t so crazy to amortize the debt repayment over a longer period than it currently is.

Comment by Me too Tuesday, Feb 9, 16 @ 2:44 pm
Ole’ Nelson

What does that tell you about tier 1 compensation? The problem was, is, and will continue to be the same. The taxpayers and tier II employees will pay for it.

Comment by Robert the 1st Tuesday, Feb 9, 16 @ 2:50 pm
Any time you spend more than you take in you have a spending problem, because eventually you go broke. However no one in Illinois is stepping up to solve the spending problem. What you then have left is a revenue problem

Comment by Anonymous Tuesday, Feb 9, 16 @ 2:52 pm
The pension payments have stopped “exploding” because we’ve hit the top step of the Blago ramp. (Edgar’s ramp leveled off in 2010 but Blago and Filan reset the ramp in 2006 when they were also taking a partial pension holiday. That bill was also called pension reform)

I’m not sure that Tier 2 is real reform, either, as it is sooner or later likely to be flagged by the Feds for Safe Harbor violations and one way or the other that will cost the State a ton of dough.

To the Post, I just skip the WSJ op-ed page. Saves time and stress.

Comment by Arthur Andersen Tuesday, Feb 9, 16 @ 2:54 pm
Hey Rich,
No fair presenting facts and logical arguments.

Comment by Leo the lip Tuesday, Feb 9, 16 @ 2:57 pm
Robert
It tells me that the Tier I benefits cannot be sustained by full employee contributions and only partial employer contributions. What retirement systems exist in which the employer (taxpayers in this case) bear none of the cost?

Comment by Ole' Nelson Tuesday, Feb 9, 16 @ 2:57 pm
- Robert the 1st - ,

Every analysis done of Tier 1 says the pension system was properly structured in terms of contributions and projected payout. The primary problem was the failure to fund as scheduled, followed by the loss of investment gains due to the lack of funding. Those 2 items all by themselves account for 70% to 90% of the current short-fall / debt, with the variance between the two points depending on which study you look at.

Comment by RNUG Tuesday, Feb 9, 16 @ 2:59 pm
==The problem was, is, and will continue to be the same.==

Yes. The problem was and is a failure to fund the system properly.

Comment by Demoralized Tuesday, Feb 9, 16 @ 3:01 pm
=== Worst. Analysis. Ever. ===

Rich, this looks like Team Rauner sent WSJ copies of the Tribune “editorials” and asked them to chime in.

It looks like they just cut and pasted from Bruce McRickert’s talking points.

Comment by Juvenal Tuesday, Feb 9, 16 @ 3:11 pm
Yea rich et al have it all figured out, it’s not a spending problem. Like when they short the pensions and spend it on other stuff that’s not a spending problem either? Quinn made the pension payment? Yea and what would that payment have been if the required payments where made going back to Edgar? All you capital faxers crack me up. Illinois has a spending problem. Just cause the spending happened in the past doesn’t mean it’s not a problem.

Comment by Anonymous Tuesday, Feb 9, 16 @ 3:47 pm
++- RNUG - Tuesday, Feb 9, 16 @ 2:59 pm:
- Robert the 1st, Every analysis done of Tier 1 says the pension system was properly structured in terms of contributions and projected payout. The primary problem was the failure to fund as scheduled, followed by the loss of investment gains due to the lack of funding. Those 2 items all by themselves account for 70% to 90% of the current short-fall / debt, with the variance between the two points depending on which study you look at.++ RNUG, thanks for clarifying the Facts.

Comment by Mama Tuesday, Feb 9, 16 @ 3:50 pm
“Even re-instituting the 5% tax rate won’t be enough to get us back to where we were when those “free spendin’ reckless democrats” ran the whole state.”
BINGO!

Comment by Mama Tuesday, Feb 9, 16 @ 3:55 pm
@ Anonymous - Tuesday, Feb 9, 16 @ 3:47 pm:

First of all, enough with the Anonymous. Pick a name. Any name.

Second, the issue is the WSJ’s “analysis” that revenue isn’t a problem. Of course revenue is a problem. And, saying revenue is a problem doesn’t mean that one doesn’t also think there is a spending problem. Only the daftest of the daft think it isn’t both.

And, yes, Quinn made the pension payments due in those years.

Comment by Demoralized Tuesday, Feb 9, 16 @ 4:13 pm
“All that is left to do is to pay the backlog [debt] that has resulted largely from decades of underfunding [the pension funds] by the state.”

When the boys and girls in Springfield raise our income taxes do you suppose they will give the above as the reason for the increase?

Comment by CapnCrunch Tuesday, Feb 9, 16 @ 4:27 pm
Slight quibble with the title. My favorite econ prof in grad school would have us analyze the WSJ editorials. Without challenging their facts, their analysis was consistently wrong. They are not worse now than before, just bad.

Comment by Last Bull Moose Tuesday, Feb 9, 16 @ 5:23 pm
== When the boys and girls in Springfield raise our income taxes do you suppose they will give the above as the reason for the increase? ==

Yes, but only after they run another unconstitutional pension reform bill that gets rejected. Then it will be “The court told us to do it because …”

Comment by RNUG Tuesday, Feb 9, 16 @ 5:34 pm