* Quinn was asked about breaking his campaign promise to not raise the income tax by more than a point. He essentially said Wall Street made him do it…
“As the last couple months have ensued, it was pretty clear from talking to major entities that lent money to the state of Illinois that the opportunity to borrow was fast eclipsing, and we had to do some very serious things on an emergency and temporary basis in order to get our fiscal house in order. You have to do what’s necessary at this moment, and that’s what I did.”
“Probably the panic will subside,” said Gary Pollack, managing director at Deutsche Bank Private Wealth Management in New York, cautioning the state still needs to balance its budget on an ongoing basis. […]
Domenic Vonella, an analyst at Municipal Market Data, said there were signs some Illinois bonds were trading stronger on Wednesday although trading was light.
“The market’s relieved something has happened,” said Tom Spalding, a portfolio manager at Nuveen Investments in Chicago. He also said the state must take a harder line on the spending side of its budget.
The state’s credit default swap, or insurance against a bond default, fell to 295 basis points on Wednesday, 30 basis points tighter than on Tuesday and the first time in more than a month that it was below 300, according to Markit Intraday.
Lots of suckers lost money on credit default swaps today. I have a hard time feeling sorry for those mopes.
* But, the governor was asked, after promising only a one-point hike, why did he originally back a 2.25-point tax increase?…
“I never asked for that. I never did.”
* The governor was also asked about the new Wisconsin governor’s joke about relaunching the old “Escape to Wisconsin” TV ads to attract Illinois business.
“Well, lots of luck to them, but that’s not gonna happen,” Quinn said.
“Facts are stubborn things. This past year we’ve created more jobs, far more jobs, than Indiana and Wisconsin,” he said.
The governor added: “We’re after [rail car manufacturer] Talgo, which [the Wisconsin governor] decided to kick in the shins when he didn’t want to support the high speed rail in Wisconsin. I think you’ll see that’ll be a big mistake.”
* Quincy business leaders sound off on Illinois income tax hike: Knapheide said downstate businesses are expected to pay for “the Chicago political machine” that is “destroying not only Chicago and Cook County, but the enconomy of the entire state of Illinois. The machine carefully takes care of their political cronies at the expense of the Illinois taxpayer. Their arrogance, greed and corruption leave the people of Illinois with high income taxes, high property taxes and high unemployment.”
All this talk of business fleeing is just nonsense. When in the ’80s and all the states were competing against each other to “lure” businesses to their states by offering low or no taxes, what the studies found is that businesses made their location decisions first and then bargained for tax benefits. And one of the biggest factors for where a business would locate was where the CEO wanted to live.
- Jake From Elwood - Wednesday, Jan 12, 11 @ 4:06 pm:
Since when has Indiana become the cornucopia of the Midwest?
I was thinking the typical Indiana family is more like Cletus & Brandine Spuckler than Ned Flanders. But I’m biased.
And until states can print their own money, they’ll be relying on Wall Street like the rest of us. Thank God we bailed out Goldman Sachs, otherwise we’d have no choice but to go to the Chinese directly.
Hu Jintao will be visiting Chicago soon. Maybe we can get him to buy some stuff while he’s here, like the State of Illinois building. Or Navy Pier.
- On, Wisconsin! - Wednesday, Jan 12, 11 @ 4:28 pm:
I love the Wisconsin governor’s take on all this! Particularly since that state raised nearly every possible state tax on its own residents two years ago - which is why your neighborhood has been been absolutely flooded with Packers fans and Canadian-accented businessmen, fleeing America’s Dairyland for IL.
What’s that? You haven’t noticed any such influx of Wisconsin residents? I wonder what that means …
- Small Town Liberal - Wednesday, Jan 12, 11 @ 4:29 pm:
- Maybe, just maybe, we shouldn’t have a system so reliant on Goldman Sachs to fund our deficit spending -
I’m not sure how a state bank accomplishes anything except allows the state to lend to itself and pretend to have the money to do so.
I’ve seen the idea floated, if someone can explain how it makes a lick of difference, I’d like to hear it.
But my comment is more an endorsement of, say, not ignoring that whole balanced budget requirement in our Constitution. Or getting ourselves so much in debt where we can have our chain jerked around by Wall Street.
“Facts are stubborn things. This past year we’ve created more jobs, far more jobs, than Indiana and Wisconsin,” he said.
Facts ARE stubborn things, Governor.
Midwest Seasonally Adjusted Nonfarm Empl. (in thousands):
Jan. 10 Nov. 10 Total Gain:
IL 5581.5 5612.9 31.4
IN 2760.2 2795.0 34.8
WI 2705.1 2732.8 27.7
- Small Town Liberal - Wednesday, Jan 12, 11 @ 4:38 pm:
John B - I think it allows Illinois to borrow from the Federal Reserve at a quarter percent instead of going through private lenders. I’m not positive about this, but you might ask those left wing hippies out in North Dakota, where they have a state bank.
–“You guys are nothing if not entertaining over there,” he said with a laugh on the Don and Roma show on WLS-AM. “It’s like living next door to the Simpsons — the dysfunctional family down the block.”–
That’s it, Mini-Mitch. Or since you’re a neighbor of the Simpsons, we’ll just call you Cletus, the Slack-Jawed Yokel. I have too much respect for hillbillies to allow you in their circle.
Seriously, Shorty, you see a president in that pre-school bathroom mirror?
Bang up job you’re doing there in Gary, Elkhorn and Terra Haute. I’m sure they appreciate those press releases you put out on new jobs in vacant lots that never materialize.
You know what Indiana economic development is? True story. Drive down I-65 to Louisville. The last strip mall before you cross the Ohio consists of three shacks — a liquor store, a gun store, and a bridal shop.
All the ingredients of a typical Indiana wedding. And the best thing is, the bride doesn’t even have to consider changing her last name.
- Leave a light on George - Wednesday, Jan 12, 11 @ 7:09 pm:
Furthermore, we’ll learn a lot more (like we need to) about Mini-Mitch when the Tea Party goes after Sen. Lugar in 2012.
Lugar is the greatest statesmen of his generation. A farmer who thinks farm subsidies are too high. A rural Senator who is an innovator in metropolitan government. A military advisor as an enlisted man to President Ike, he’s a brilliant diplomat who has been a non-partisan asset to all presidents and stood up to yabbos like Jesse Helms in his own party.
A real conservative, not one who just plays one on TV or the radio.
While Incurious George and Shotgun Dick were wasting hundreds of billions in treasure and teenagers’ lives chasing loser-banditos in Asia, Lugar was hard at work decomissioning former Soviet nuclear warheads(remember the Soviets?) and converting the fuel for our nuclear plants, providing 10% of the power on our electric grid. Swords into plowshares, brother.
Hey Mini-Mitch — are you a real Midwestern Republican or a Washington opportunist? Step up (probably a few steps) for Lugar.
Let the real conservatives decide who we’ll support and who we won’t. Mitch Daniels has done a lot for IN and has some strong credentials. Lugar will have a primary fight for good reason. You telling us that Lugar is a true statesman is like us extolling the liberal virtues of Joe Lieberman.
- Leave a light on George - Wednesday, Jan 12, 11 @ 8:01 pm:
Word, you are assessed a 15 yd. penalty for excessive celebration.
- BackinTown (need a new handle :) - Wednesday, Jan 12, 11 @ 9:40 pm:
S: next time, be clearer. Your mushed table looks like it’s on life support.
Nuance: Per capita doesn’t help either. Indiana has fewer people than us but has created more jobs if those #’s are correct.
Rich: Looks like they jibe to me. Those #’s S uses for November ‘10 match identically with the next-to-last table on the page (Seasonally Adjusted Nonfarm Employment). Don’t know where to find the January data, nor the time to check it atm.
How about a no goofy-table-posting rule in comments (half-snark, half-serious)?
So has IN Gov Mitch Daniels done the math on individual income tax? Indiana also has county income tax. Marion co. (Indianapolis) has 3.4% state income tax plus 1.65% county income tax = 5.05% state/county income tax paid on one’s state income tax return. Just sayin’
Backintown, maybe I’m just an old-school capitalist, but do we really believe “governments create jobs?”
I’m a New Deal Keynesian (and he was no liberal) in the asense that you create the conditions for development (infrastructure, education, social safety net) and in the bad times government primes the pump (FDR, kind of, WWII forced him to go all in; Reagan, definitely, he spent like crazy) and in good times you pay it back (Pres. Clinton, your table is waiting).
But I find it disturbing that there’s an idea that state government, any state government, creates jobs through programs, taxation or lack thereof or rock-star governor razzle-dazzle.
Good schools, good infrastructure, safe streets,and dignity of citizens ought to be the goal. That’s the role of government and that should attract capital, in the abstract.
Small business is doing their bit, but capital, represented by bailed-out banks, investment bankers and insurance companies, are going for the short-money score overseas in high-margin, low-wage, unregulated immature markets.
Meanwhile, the American taxpayer is stuck with the tab of policing the world. Enough.
If you want the protection of American rule of law, Cowboy Up. “American” corporations should pay a premium for the goods and services they import to our consumers. Level the playing field for those who are paying the tab for your security.
BackInTown, my comment was not based on me thinking the numbers using per capita would look better for Illinois. It would seem that using per capita numbers would be a better way to compare than just raw numbers.
- Louis G. Atsaves - Thursday, Jan 13, 11 @ 7:50 am:
Rich, Who. What. When. Where. Why.
Those are the journalist standards that Quinn easily avoided during that press conference. Way to let him off the hook members of the press!
A “couple of months” ago. He suddenly woke up and realized that the house was on fire? Before that he was oblivious? And exactly when was “a couple of months ago?”
Or is he fudging on the truth? I watched that video twice and clearly he does not like being confronted. His little eruptions into sarcasm did him no favors.
No one wants to ask him the tough questions. Governor Stroger still needs to answer clearly: Who. What. When. Where. Why.
===No one wants to ask him the tough questions. ===
Something that was in the original post that I deleted before publishing was the move by the governor’s office to schedule the press conference just before he had to preside over the Senate. He then showed up late to the presser, giving reporters even less time. So, by the time he got to the “couple of months” line, questions were cut off and no follow-ups could be asked.
It is not about just right or wrong. It is about timing. Like a car. You need acceleration and brakes.
Illinois has had bad timing. We wasted the Bush Boom with Blagojevich. Instead of repairing the State, we wasted everyones money on political low priorities. Blago screwed us with maladministration. So when the economic cycle did what it always does we were both screwed and broke.
Simpson analogies aside, Daniels is of course correct. We might not like to hear it after the lost decade we had, but it is true. We cant catch a break.
High taxes at the wrong time
We earned the ridicule. The lunch we bought, others will now eat. We will be laughed at.
- older and wiser - Thursday, Jan 13, 11 @ 9:34 am:
Mitch Daniels…interesting. The same Mitch Daniels who was the head of OBM as Bush and the Republicans added trillions to the defecit (under total Republican control of D.C.)
The same Mitch Daniels at OBM as investors went through what is now being called the “lost decade” (in terms of % returns) by market commentators on CNBC who are as market oriented conservative as the come.
The same Mitch Daniels who, if I’m not incorrect, as Governor of Indiana, privatized the entire Indiana tollway system, leading to triple digit increases for Hoosier motorists.
oh yeah. Mitch Daniels. A real realiable policy wonk there with a “solid” record creating jobs and improving the economy. Riggggght.
The Bush Boom? I’ve never heard that one before. You ought to trademark it for the T-shirts — made in China, of course.
What was the Bush Boom anyway? The sound of the world financial system collapsing in September 2008?
- Louis G. Atsaves - Thursday, Jan 13, 11 @ 10:12 am:
Thanks for the explanation as to the scheduling issues Rich. That is something you should not have deleted. It actually follows up on your “elevator” Quinn comments from the night before that press conference that you also posted elsewhere.
Larry Kudlow was on Don and Roma this AM and was making the comparisons to Brown in Ca, and Cuomo in NY. He said Quinn was making Cuomo look Republican. In 12 months that’s going to be the interesting comparison and if Illinois is still tracking south while other blue States are getting their financial houses in order, then I’d say the Dems who voted this tax in big trouble.
The “success” of the Quinn Tax hikes will be judged based on two things:
1.) Overall performance of the national economy. If the economy turns around and experiences substantial sustained growth, the effects of the Illinois tax hike will be minimal. On the other hand, if the economic and job growth nationwide remains depressed, these economic indicators will be exacerbated in Illinois by the tax hikes. This two-edged sword may take off a few Democrat heads because of Illinois lags the rest of the nation in economic and jobs recovery, it will be laid squarely in the lap of Quinn and these tax hikes.
2.) If national Republicans and state governments successfully slash spending (as Christie, Cuomo and Brown are all doing), Quinn’s failure to slash spending, take on unions and reform pensions, and return government to its perceived limited role, will hang like a cloud over the next election. So far, nothing has been done to handle the Illinois systemic budget problems, as we see by a spending increase cooked into the tax hike. Out-year revenue projections are lower than proposed spending and additional deficits will be added to the one we are already experiencing.
This interesting experiment in economics that Illinois is undertaking closely mirrors experiments taken in several countries across the globe the past couple of decades. Those same countries are now pulling back from this experiment, witness the PIIGS, UK and others. Let’s see how it shakes out…
- Grandson of Man - Thursday, Jan 13, 11 @ 12:55 pm:
In my department, DHS, it’s hard to see what else to cut, workforce wise, since we have perhaps the lowest per capita state workforce in the country, and we are severely understaffed. Some of us have astronomically-high caseloads.
What would be cut, upper management, eligibility for public assistance, or something else? When cuts are discussed, I have not seen something concrete. How do you cut a workforce that is already depleted? My office of 30-some-odd workers had six retirements since the end of 2008. There is a management shortage, with no new hiring in sight, according to my office’s boss.
–The economy was rolling along in those days. That is why it is hard to imagine this state being in the horrible condition it is. Thank the Dems for the past 8 years on this one.–
Is that how it works, Wally? State governments rock the international economy?
A $30 billion outfit like the State of Illinois moves a $58 trillion world economy? Not that there are any other factors in economics, other than state spending. If only Madigan, Cullerton, et al would use their powers for good!
Where did you get your economics degree, Monkey Wards?
Is not Wally’s point that the expansion of government and government spending during good times lead to the current deficits we now see? I contend that Illinois suffers more from a spending problems than it does by the lack of tax revenues.
Grandson of Man,
I can believe that your department may be at a reasonable staffing for its currently assigned duties. I would contend that perhaps your department has been assigned too many tasks because of the expansion of government by politicians beyond what some may consider the proper role of government.
I do not believe that deficits can be eliminated by nibbling around the corners of “waste, fraud and abuse.” Deficits will only be reduced when funded programs are eliminated, reducing the size and scope of government, and our tax base is broadened while reducing tax rates which should cause increased government revenues.