Finger-pointing begins
Thursday, Dec 1, 2011 - Posted by Rich Miller
* So, how does a major bill like the tax cut package score a veto-proof majority in the Senate and get slaughtered on an 8-99 roll call in the House? As I’ve been warning subscribers for a while now, this is one very big reason…
We in the media have lots of fun talking about Mike Madigan, the always “powerful” speaker of the Illinois House. But there’s a reason.
You’ll never see a better example than Monday’s efforts in Springfield to keep Chicago’s big trading exchanges and Sears Holdings Inc. from leaving the state.
Mr. Madigan recused himself from a bill that would have given CME Group Inc., CBOE Holdings Inc. and Sears the tax breaks they say they need to continue to call Illinois home. That left the “B Team” in charge, and it performed about as well as Caleb Hanie did last weekend.
Madigan’s recusal on the gaming expansion bill is most certainly part of the reason that issue has stalled as well. Without his muscle, stuff often doesn’t get done.
* House GOP Leader Tom Cross was another roadblock…
House Minority Leader Tom Cross, R-Oswego, said Wednesday that many Republicans don’t think the earned-income tax credit should be part of the negotiations at all. They see the tax package as a matter of creating and retaining jobs and don’t think the tax credit helps achieve that.
Cross said Republicans have been talking to Democrats about setting aside the current version of the tax package and finding some different approach. Cross said he wants to hear from House Speaker Michael Madigan, D-Chicago, about the next move.
But a top Madigan lieutenant said Cross has to spell out where he stands.
“My sense is that we need some indication from Tom Cross that he is willing to support something,” said House Majority Leader Barbara Flynn Currie, a Chicago Democrat who has been openly skeptical of responding to companies threatening to leave unless they get tax relief.
Some House Democrats who voted against the bill may have missed their only chance to see a significant expansion of the Earned Income Tax Credit…
Cross wants to put the focus on economic development, saying “we don’t have any extra money” for tax breaks for the working poor that are part of the package.
Negotiating a deal on that point might be difficult, or impossible. Senate Democrats and Gov. Pat Quinn are calling for the opposite, wanting any corporate tax relief to come with breaks for working people as well.
“That’s going to take some talking to see how we can do that,” Cross said.
More…
When I asked Mr. Cross why he couldn’t do what his Senate counterpart, Ms. Radogno, did — put some votes on what was a heavily pro-business bill — he said he is controlled by his caucus’ opposition to expanding the earned-income credit at all.
If that’s the reason, it’s bogus. Politics is not the business of perfection.
Others suggest Mr. Cross is irked that CME has given too much campaign cash to Democrats and not enough to his candidates. The Cross camp denies that, but the rumor continues to circulate.
There’s more to it than that, but when the House Republicans jumped off, so did everybody else.
* Meanwhile, Sears attempted to reassure its employees yesterday…
Sears Holdings Wednesday issued an internal memo meant to reassure Hoffman Estates employees while still reiterating that the retail giant is committed to looking at all options after legislators failed to agree on tax breaks for the company.
While leaving the door open for a possible move out of state, Sears executives in the memo held out hope for eventual approval of the tax breaks the company is seeking and called the failure of the legislators to act on the issue Tuesday “another step in this process.” […]
“We received solid support for our portion of the legislation and are hopeful that the unrelated issues, including the earned income tax credit provision, will be resolved in short order by prudent leadership,” Sears’ memo to employees said.
“You should know that our portion of the bill was endorsed on the record by representatives of both Hoffman Estates and District 300. The fight is not over, and we continue to work toward a resolution,” the memo said.
While the process continues, Sears said “a final decision has not yet been made. Our commitment to you remains the same: to be thorough in our review of all of our options.”
* Related…
* Traders disappointed tax break deal failed
* Ohio said to offer $400M lure for Sears offices
* Editorial: Hard to do business amid Illinois’ chaos
* Lawmakers want tax fairness, not one-at-a-time relief
- Lakeview - Thursday, Dec 1, 11 @ 8:54 am:
Check out the Peggy Bundy Collection, I mean the Kardashian Kollection, ad in today’s Tribune, and then tell me with a straight face that Sears’ problem is nothing more than high taxes and the dysfunctional Illinois government.
- sad - Thursday, Dec 1, 11 @ 8:55 am:
I didn’t realize the republican’s “down state” values included only tax cuts\breaks for corporations. Very interesting.
- wordslinger - Thursday, Dec 1, 11 @ 8:55 am:
–Cross wants to put the focus on economic development, saying “we don’t have any extra money” for tax breaks for the working poor that are part of the package.–
Fine, why don’t those working poor get a job, anyway. Oh, wait…
But under what theory of free-market capitalism does the government, in the midst of an economic meltdown and under threat of blackmail, start granting one-off tax breaks to the working rich?
Not this year.
- just sayin' - Thursday, Dec 1, 11 @ 8:58 am:
Yeah sounds like Tom Cross and his members didn’t think they received enough payola.
How dare CME and Sears try to pass buy legislation on the cheap. Gotta give the Republicans a taste too guys.
- Justice - Thursday, Dec 1, 11 @ 9:11 am:
Sears problem is not tax breaks. They are losing market share as fast as they can and have been for years.
It is my opinion that giving them a tax break will be temporarily beneficial to them at best as they will likely go belly up either way.
- Ahoy - Thursday, Dec 1, 11 @ 9:12 am:
Kind of funny that the earned-income credit was a conservative idea to reward the working poor.
- Montrose - Thursday, Dec 1, 11 @ 9:15 am:
Over the past few years, bills to increase the EITC have had a very large number of sponsors from both parties in both chambers. Those bills never were brought up for a vote, but the sudden lack of interest in supporting EITC by rank and file republicans is a sign that we have reached new lows.
- AFSCME Steward - Thursday, Dec 1, 11 @ 9:17 am:
So now we know, it is just as we suspected about the Republicans, they are all for tax cuts, as long as they only apply to millionaires and large corporations. Thanks Tom for finally clearing that up for us.
“Cross wants to put the focus on economic development, saying “we don’t have any extra money” for tax breaks for the working poor that are part of the package.”
But we do have enough money to give tax breaks to wealthy corporations, one that made record profits & the other that didn’t pay any taxes. Great idea. Why didn’t I think of that ?????
Perhaps the real reason for the impass is that the agreed upon payoffs…cough cough… I mean campaign contributions…. haven’t been received by the appropriate reps.
- wordslinger - Thursday, Dec 1, 11 @ 9:21 am:
So much for the Reagan Republicans.
Reagan called the EITC “the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.”
What do you expect from a guy from Dixon who voted for FDR four times?
- Michelle Flaherty - Thursday, Dec 1, 11 @ 9:25 am:
OK, if memory serves me correctly, it was leader Cross (via a news release) who first said the package had to be bigger with more business incentives if it wanted HGOP votes.
Now he thinks it needs to be smaller to get HGOP votes?
- Yellow Dog Democrat - Thursday, Dec 1, 11 @ 9:44 am:
Hypocrisy Alert: The last time Illinois expanded the Earned Income Tax Credit, Tom Cross and every single
House Republican voted for it. That was 2003, and we didn’t have any “extra” money then either.
BTW, the most recent polling Ive seen shows that 60% of Illinoisans support raising, not lowering, corporate tax rates.
This is a national trend that has Congressional Republicans getting behind plans to close corporate tax loopholes.
- Justin - Thursday, Dec 1, 11 @ 9:48 am:
“Others suggest Mr. Cross is irked that CME has given too much campaign cash to Democrats and not enough to his candidates. The Cross camp denies that, but the rumor continues to circulate.”
That’s Bleepin’ Golden!
- I have issues - Thursday, Dec 1, 11 @ 9:49 am:
Hinz only got part of it right. My view is that MJM left the, ahem, B team in charge because the CME team blew it.
There are daily protests in the street about the 99% on LaSalle Street-and the CME team comes to Springfield and talks about fiduciary duty? They made no case that resonated with lawmakers!
MJM saw this was a loser, so he walked. As simple as that. What do they do with candidates who won’t work? Drop them. If he did leave the B team in charge (and I’m still not sure exactly what or who that is), it was because the CME team failed.
The REALLY ironic thing is that the progressives-those die hard ones who consistently criticize MJM for not being progressive enough-where are they now?? He won’t get credit for stopping this with them-but oh well, what else is new?
- EITC guy - Thursday, Dec 1, 11 @ 9:52 am:
Unbelieveable. The House GOP doesn’t like the EITC, and the way it helps struggling, working families?
As previous commenters have said, the Illinois EITC’s strongest and loudest proponents historically have included both House and Senate Republicans, who lauded the credit for underscoring the value of hard work.
You have to work - to have earned income - in order to even qualify for the Earned Income Tax Credit. It’s not the kind of “welfare” program that you often hear legislators rail against.
- Rich Miller - Thursday, Dec 1, 11 @ 9:58 am:
===There are daily protests in the street about the 99% on LaSalle Street===
So?
There are protests about issues every day. It hasn’t stopped legislation in the past.
And, frankly, the protesters are absolutely flat out wrong about CME. They don’t trade those opaque (at best) credit default swaps. They’re not responsible for tanking the world’s economy. They should go picket one of the big banks, instead.
- Bill - Thursday, Dec 1, 11 @ 9:59 am:
I bet Barb and the rest of the caucus love being called the “B team”. Maybe we’ll hit the century next time. Maybe the CME millionaires should have shown up at committee…or at least dropped a few hundred K more on the wingers. Arrogance may work sometimes on the trading floor but it doesn’t play well on the voting floor.
- hisgirlfriday - Thursday, Dec 1, 11 @ 10:00 am:
“he said he is controlled by his caucus’ opposition to expanding the earned-income credit at all.”
So why wasn’t Cross controlled by his caucus’ opposition to medical marijuana when that issue came up?
- EITC guy - Thursday, Dec 1, 11 @ 10:01 am:
House Repubs “see the tax package as a matter of creating and retaining jobs and don’t think the tax credit helps achieve that.”
Let’s see: The EITC helps struggling, working families hang onto more of their own money.
They spend said money at neighborhood stores and shops and businesses of all kinds.
These businesses need paying customers, to stay afloat.
These businesses have had to lay-off employees and forego hiring new employees.
Maybe if they had more paying customers, spending more money, those businesses could hire-back some employees and avoid laying-off others.
Sounds like job-retention and -creation to me.
In fact, a Brookings study shows that every $1 that a family retains through the EITC translates into $1.58 of economic impact for local communities through consumer spending.
- Jim - Thursday, Dec 1, 11 @ 10:01 am:
I don’t claim to be an expert on this issue, but it appears to me these companies are seeking tax breaks because they can get better deals elsewhere. If they weren’t threatening to move, no one would be paying attention. So Illinois could lose more in revenue if they leave than if they give the tax breaks to keep them here.
It’s strictly mathematics, as I see.
As far as other tax breaks, like the EITC, why is
Quinn pushing this when Illinois is bankrupt. We can’t pay our bills now, and we won’t be able to do so in the future.
This whole debate seems bizarre to me, given the state’s fiscal problems. I include the corporate tax breaks in that mix, but they appear to have the state over a barrel. If Sears goes to Ohio and CME leaves Illinois, all those people who want to cut off their nose to spite their face may regret because the state will be in an even bigger financial hole.
- Rich Miller - Thursday, Dec 1, 11 @ 10:02 am:
===Maybe the CME millionaires should have shown up at committee===
They did.
- AFSCME Steward - Thursday, Dec 1, 11 @ 10:04 am:
Dear Governor Quinn and Legislative Leaders
I am struggling with my economic survival due to the excessive, unreasonable and unfair tax burden being placed upon me. I am notifying you today that unless you immediately pass tax relief for me I will relocate to another state.
Sincerely
All of the non-millionaire taxpayers of Illinois.
- Louis G. Atsaves - Thursday, Dec 1, 11 @ 10:05 am:
So the minority party that has absolutely no control over government gets blamed for this? If the House Democrats wanted to move on this they certainly could have. But they were looking for patsies and found none available.
Repeating the same silly argument doesn’t remove it from the silly column.
- Rich Miller - Thursday, Dec 1, 11 @ 10:06 am:
AFSCME Steward, if you can find a better state job slsewhere, I would invite you to leave.
- Rich Miller - Thursday, Dec 1, 11 @ 10:06 am:
And the sooner the better.
- bigdaddygeo - Thursday, Dec 1, 11 @ 10:07 am:
The EITC increase should be passed on its own. It is just a subsidy to corporations that can reduce pay to workers. Employees should be paid a living wage. House Democrats could pass this without House Republicans.
- hisgirlfriday - Thursday, Dec 1, 11 @ 10:09 am:
Rich,
CME may not “trade” credit default swaps but it does make money from CDS contracts.
http://www.cmegroup.com/company/cds-platform.html
And CME may not have “tanked the world’s economy” but I don’t think it’s unfair to say that CME has in some respects facilitated the tanking of the economy. A key example is their failure to fulfill its regulatory function (along with CBOE) when it comes to the conduct of MF Global.
- Frank - Thursday, Dec 1, 11 @ 10:16 am:
EITC is only a small part of the equation for Cross and other GOPers. What they really want is for CME and Sears to move so they can make that the centerpiece of their campaigns next year.
Cross already has the mail pieces written “Quinn, Madigan and the Dems chased two of Illinois’ oldest, biggest, and best companies out of state with their tax increases.”
- AFSCME Steward - Thursday, Dec 1, 11 @ 10:25 am:
Common Rich, you can’t take sarcasm anymore ???
- too obvious - Thursday, Dec 1, 11 @ 10:26 am:
Cross and the Republicans think that if they do what they can to further tank the Illinois economy, maybe they can win a couple of seats in the general assembly next year. That’s what passes for strategy in the IL GOP these days.
- dave - Thursday, Dec 1, 11 @ 10:26 am:
**There are protests about issues every day. It hasn’t stopped legislation in the past. **
There are protests about issues every day. But there are very, very few protests (if any) every day about the same issue, as we are seeing from the Occupy movement.
- Rich Miller - Thursday, Dec 1, 11 @ 10:28 am:
===very, very few protests (if any) every day about the same issue===
Yeah, and they’re wrong every day as well.
- Anon - Thursday, Dec 1, 11 @ 10:29 am:
Leaving the “B Team” in charge was far less of a problem than failing to get Currie behind the CME bill. Not having the Speaker inserting himself is a problem, but Currie could have done some heavy lifting if she had been actually behind it as well.
Kudos to Currie for calling them out and kudos to Topinka for stating the obvious. We need gambling revenues more than we dont need whatever shenanigans may come with it.
Lets see CME explain the formula behind the 27 percent taxation, show us where and what they have been offered, and I think we will see different results.
- dave - Thursday, Dec 1, 11 @ 10:32 am:
**Yeah, and they’re wrong every day as well. **
Well that can be debated, but I don’t think that is the point.
The point is that there is a loud and vocal group of protestors around the country protesting the power that the 1% (in this case, CME) has in our political and economic systems. CME and its shareholders couldn’t have picked a worse time to try and get an additional $85M+ in their pockets each year.
- Robert - Thursday, Dec 1, 11 @ 10:34 am:
===It’s strictly mathematics, as I see…===
Mathematics? Finally something I know about here. Technically it is probability, and probably closer to gambling.
A 100% chance of losing SOME tax revenue from the business if you cut its taxes vs. X% chance of losing all the tax revenue from that business (plus costs of having more unemployed folks) if they really do leave.
I think the problem here is some think that Sears or CME are 100% leaving while others think they are completely bluffing / 0% chance of leaving
- wordslinger - Thursday, Dec 1, 11 @ 10:42 am:
The bill only got nine votes. It’s not like Cross single-handedly killed it, or even could if he wanted to. 109 members (if all were there) didn’t vote for it.
- Anonymous - Thursday, Dec 1, 11 @ 10:49 am:
CME certainly did not help itself by not showing up for the committee hearing. I am sure Rep. Cole was indeed incredulous (probably others too) that no one spoke from CME. Maybe they already knew what the future of their quest looked like.
- Grandson of Man - Thursday, Dec 1, 11 @ 11:01 am:
==EITC is only a small part of the equation for Cross and other GOPers. What they really want is for CME and Sears to move so they can make that the centerpiece of their campaigns next year.==
Why didn’t Cross and other House Republicans just vote for the bill anyway, if this was their MO?
- Easy - Thursday, Dec 1, 11 @ 11:04 am:
Hinz column was way off base. Cullerton knew that doubling the eitc would not pass in the house. not just for lack of gop votes, but also lack of dem votes as demonstrated by roll call.
this is another case of senate and house dem leadership not getting together. we saw it with the budget and now we are seeing it on this package. the dems inability to communicate with each other killed the cme bill, not the minority party.
- Michelle Flaherty - Thursday, Dec 1, 11 @ 11:12 am:
Easy, did you listen to the debate?
there were House Dems saying the EITC was still too low.
- Rich Miller - Thursday, Dec 1, 11 @ 11:13 am:
Easy, c’mon. You surely know that the only people who ended up voting for that bill were the ones who absolutely had to.
- Easy - Thursday, Dec 1, 11 @ 11:16 am:
Yes, and by listening to the debate I noticed that there were far more democrats speaking in opposition to the bill than Republicans. When the Democrats cannot event communicate and reach consensus among themselves, how do they possibly expect GOP support to come along.
- Rich Miller - Thursday, Dec 1, 11 @ 11:16 am:
And, Michelle, those Dems were just making excuses.
- Anonymous - Thursday, Dec 1, 11 @ 11:25 am:
The House and Senate Dem leadership communicate consistently and continually. I can’t imagine that either the Speaker or the President were surprised by the vote in either chamber. It’s a way to test the waters and the resolve of the proponents.
- walkinfool - Thursday, Dec 1, 11 @ 11:34 am:
The Senate bill voted upon was just like the gaming bill: too big, too many issues jammed together, too much stretching to try to appease too many interests.
Madigan’s biggest impact on both would not have been negotiating votes, but rather editing them down to size before they were offered.
- reformer - Thursday, Dec 1, 11 @ 11:47 am:
The GOP position is right out of the Republican play book: Support tax subsidies for their corporate friends, while opposing any help for the working poor. Comforting the comfortable is their motto.
- I have issues - Thursday, Dec 1, 11 @ 12:09 pm:
Rich-they may very well be completely wrong. I can see the CME argument both ways. (I worked down there for a while for a clearing firm).
However, dave is 100% correct. The politics of this now were horrible. If passed, even with the EITC addons, the bill would be viewed as a giveway to the rich 1%.
Throw in the MF Financial debacle, and the stories of CME not protecting accounts, and passage would be toxic.
Duffy’s constant “fiduciary duty” argument only made the above situation worse. The appearance of this thing was just very bad. Appearance=reality kind of thing.
- Leave it - Thursday, Dec 1, 11 @ 12:21 pm:
Maybe they should call CME and Sears’ bluff. If those companies do decide to leave, then Illinois will really have to take a hard look at it’s tax structure and possibly do something about it instead of just increasing taxes and creating more loopholes, breaks and exemptions.
If big businesses can strong-arm the legislature into paying less taxes it increases the burden and level of discontent on those who do not have the kind of leverage. Not to mention that it is a downright slap in the face to those who don’t have the ability or resources to lobby the legislature. This leads to an even more unfriendly business climate.
Maybe it is time that Illinois has to compete to get new businesses in the state instead of just playing defense on the ones that we have…that is, after all, the path to growth.
- Indeedy - Thursday, Dec 1, 11 @ 12:23 pm:
Lakeview: That was laugh out loud funny. Thanks.
Hisgirlfriday: I’m pretty sure—though not 100%— it’s the CFTC and/or the NFA’s job to audit clearing firms like MFGlobal, not the exchanges. The exchanges have their own policies and market limits, etc. but their function is to process orders, not police them.
- Rich Miller - Thursday, Dec 1, 11 @ 12:26 pm:
===their function is to process orders, not police them. ===
Not really. They bill themselves as a de facto regulator. There appears to be some real fault here.
- wordslinger - Thursday, Dec 1, 11 @ 12:33 pm:
Indeedy, MF Global was a broker/dealer, not a clearing firm.
CME regularly audits, its broker/dealers, or is supposed to, to ensure that they’re in compliance with CMEs own rules on account segregation. CME has said MF Global pulled a fast one on them after one such audit.
Still, CME has made available $550 million to the bankruptcy trustee trying to get clients their money back.
Futures markets are self-regulated. The CFTC is relatively toothless compared to the SEC.
The SEC is getting involved now because MF Global was a publicly traded company, as is CME.
- Cincinnatus - Thursday, Dec 1, 11 @ 12:41 pm:
My hat tips to those brave legislators that voted present…
- wordslinger - Thursday, Dec 1, 11 @ 12:52 pm:
Cincy, a “present” vote is the same as a “no” vote. It takes a majority of the House’s 118 membership to pass anything, not just a majority of those voting.
- Cincinnatus - Thursday, Dec 1, 11 @ 1:50 pm:
I know, wordslinger. Why bother to vote, if you’re there, vote Yay or Nay or stay in your office and answer a constituent complaint…
- Because I say so... - Thursday, Dec 1, 11 @ 1:59 pm:
I think a yes vote on that bill would have been pretty hard to defend to the middle class working constituents that don’t qualify for the EITC.
- Lakeview - Thursday, Dec 1, 11 @ 2:52 pm:
CME could have handled the Occupy protesters better. The “we are the 1%” sign in the windows? The traders handing out McDonald’s applications? Even though the CME Group and its employees may not have been directly involved, both showed a certain amount of contempt for the Little People. Duffy’s comment that the employees paid taxes to support the homeless shelters had a certain ring of “Let Them Eat Cake”. And it’s not clear that CME could move without a serious effect on its business (slower bandwidth; third-tier location for an international business). Throw in the MF Global fiasco, and this is simply not the time for CME to be all heavy-handed about extorting tax breaks from Illinois.
The exchanges are, indeed, responsible for regulating their members. That’s what “self-regulation” means. On the stock side, the NYSE and NASDAQ have outsourced their regulatory authority to FINRA, but before that, each exchange had its own regulatory office.
Sears, on the other hand, will leave Illinois sooner or later, either via bankruptcy or with a stop in Ohio before bankruptcy court.
- Anonymous - Thursday, Dec 1, 11 @ 4:10 pm:
I agree with Frank above, the Republicans didn’t vote for the bill because they secretly want CME and Sears to move, which will make for great campaign fodder. It’s also interesting to note that a good number of Democratic votes came off the roll once it became obvious the bill was going down. I think a good number of them will feel safer voting for it once they know they won’t have a primary.
- Grandson of Man - Thursday, Dec 1, 11 @ 4:32 pm:
==I agree with Frank above, the Republicans didn’t vote for the bill because they secretly want CME and Sears to move, which will make for great campaign fodder. It’s also interesting to note that a good number of Democratic votes came off the roll once it became obvious the bill was going down. I think a good number of them will feel safer voting for it once they know they won’t have a primary.==
If it’s true that the Republicans secretly want the two corporations to move for political gain, and this can be successfully argued come election time, how is tacit support for the loss of thousands of jobs great campaign fodder?
- Rich Miller - Thursday, Dec 1, 11 @ 4:47 pm:
===how is tacit support for the loss of thousands of jobs great campaign fodder? ===
Not that I buy into the chaos theory, but the Democrats would wear the jacket if the companies left.
- Indeedy - Thursday, Dec 1, 11 @ 6:37 pm:
Thanks wordslinger. You’ve got it right. The CME was the SRO for MFGlobal and, yes, that means they should have caught the segregated account bs. The other question I have is what about Harris Bank? They supposedly held the accounts. Of course, MFGlobal could have duped the bank, never opened the accounts but who knows. Btw, MFGlobal was both a broker/dealer AND a clearing firm.
- Indeedy - Thursday, Dec 1, 11 @ 6:40 pm:
Rich, too. Thanks for keeping the facts straight guys!
- bigdaddygeo - Thursday, Dec 1, 11 @ 7:05 pm:
Sears lost $737 million in three quarters this year. If you believe recent moves in the stock price, the Christmas season doesn’t look that great either. Saving $5 million or even $10 million property and payroll taxes per year doesn’t make enough of a difference.
Cutting 1,000 employees out of headquarters and paying the rest 80% of their old salaries because the cost of living in Columbus is lower might. Is it that hard for Eddie to say “we did our best in trying to make a deal in Illinois but at this moment we have nothing” . He doesn’t care if his jet flies him to Columbus or Hoffman Estates.
- Anonymous - Friday, Dec 2, 11 @ 7:51 am:
Indeedy, I don’t know how it’s all going to shake out, but John Corzine but lawyer-up real good. He’s been on the milk carton, by the way.