What bailout?
Tuesday, Sep 25, 2012 - Posted by Rich Miller
* The Wall Street Journal editorial board usually lives on a different planet than the rest of us, so we can take this for what it is…
Now that Chicago’s children have returned to not learning in school, we can all move on to the next crisis in Illinois public finance: unfunded public pensions. Readers who live in the other 49 states will be pleased to learn that Governor Pat Quinn’s 2012 budget proposal already floated the idea of a federal guarantee of its pension debt. Think Germany and eurobonds for Greece, Italy and Spain.
Thank you for sharing, Governor.
Sooner or later, we knew it would come to this since the Democrats who are running Illinois into the ground can’t bring themselves to oppose union demands. Illinois now has some $8 billion in current debts outstanding and taxpayers are on the hook for more than $200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018. […]
Look for Democrats in Washington to take up that call, and for such an effort to get some traction if Democrats control one or both houses of Congress next year. Jim DeMint, the South Carolina Republican, has seen this future and is already warning against it. He and Illinois Senator Mark Kirk have proposed a resolution opposing a federal bailout of state pensions, and we hope more sign on. States need to clean up their own fiscal messes.
Quinn’s budget proposal included a federal guarantee of pension debt?
Not true.
We’ve been over this before. From February of 2011…
Brie Callahan, spokeswoman for the governor’s office, said Quinn would turn down all offers of federal bailout if the state finds itself out of cash.
“We believe that the states have an obligation to pay their bills and to meet the demands they have put upon themselves,” she said. “We don’t want any federal assistance in terms of bankruptcy.”
That above excerpt was from Illinois Statehouse News, now known as Illinois Watchdog. The publication failed to reference that quote when it ran a story on this silly topic the other day…
The Illinois Policy Institute launched “No Pension Bailout,” a national movement to block Congress‘ attempts to rescue failing state and municipal pension plans.
U.S. Sen. Jim DeMint, R-S.C., joined John Tillman, the institute’s CEO, on Thursday in presenting a study, proving any bailout would punish responsible states and reward reckless ones. The study shows the winners and losers by state and county.
“States will assume they can run their pension systems into debt and turn to the federal government,” said DeMint. “For decades state legislators have endeared themselves to public employees with pension promises … based on accounting methods that would put any business in jail.”
* So, the Wall Street Journal editorial was based on Sen. DeMint’s press conference which was based on some Illinois Policy Institute fear-mongering about a single line in an administration analysis of the Fiscal Year 2012 budget over a year and a half ago, in February of 2011..
significant long-term improvements will come only from additional pension reforms, refinancing the liability and seeking a federal guarantee of the debt.
That line was immediately retracted by the governor’s office and there’s been zero discussion about this topic since then.
* From the governor’s office…
The Illinois Policy Institute continues to incorrectly state this narrative about state’s requesting “bailouts” ignoring that no governor is asking or has asked for any such bailout. We want to make clear, as Gov. Quinn did in early 2011, that the state of Illinois is not seeking a federal guarantee for its pensions.
When a statement to that effect was discovered in an Illinois budget document in 2011, Gov. Quinn immediately made clear the sentence was entered in error and many media outlets reported the correct statement: ‘Illinois has no plans to seek a federal guarantee on any bonds or pension debt.’ We ask that everyone please update their records to reflect what was made clear in 2011.
Gov. Quinn signed into law reforms for new employees which will save taxpayers tens of billions of dollars over the next several decades and he continues to call on legislators and groups like the Illinois Policy Institute to help enact comprehensive reforms for current employees.
The IL Policy Institute played a little game, and a US Senator and the Wall Street Journal played along.
- western illinois - Tuesday, Sep 25, 12 @ 9:46 am:
What is laughable is that congress is irrlevant to bailouts,the Feds ZIRP is a bailout to the banks every single day. When you can borrow from the Fed at zero you are effectivly bailed out every day. All the state would need to do is set up its own bank and be allowed at the discount window ….its all regulatory . Quinn is an idiot for not wanting to try it . If Goldman Sachs can become a bank no reason TRS couldnt
- Richard - Tuesday, Sep 25, 12 @ 9:57 am:
And just to double down on the WSJ’s cluelessness, don’t you love how they mock Quinn for not standing up to public employee unions when he’s engaged in an epic battle with AFSCME of almost Scott Walker-like proportions?
- Irish - Tuesday, Sep 25, 12 @ 10:02 am:
And don’t you just love it that the politicians don’t take responsibility for the pension issue and instead blame the employees? The employees who made their payments, kept their promises and their contractual obligations, did not lie or renege. And the media does not question the untrue statements by the politicians, who lied stole and cheated the pension systems to gain favor with the voters for their own personal gain.
- amalia - Tuesday, Sep 25, 12 @ 10:05 am:
maybe the article was written by a Romney staffer.
- Empty Chair - Tuesday, Sep 25, 12 @ 10:08 am:
This is my favorite quote of the Trib Editorial:
“Who would be stupid enough to buy Illinois bonds, probably the riskiest investment outside of Europe?”
Clearly these are Trib editorials and not the WSJ, as the board has no concept of investment grade and junk bonds. I can find hundreds of investors who can name hundreds of investments that are far riskier than IL bonds.
This is tabloid writing. Deserves a spot on TMZ.
- wordslinger - Tuesday, Sep 25, 12 @ 10:11 am:
Even before Rupert, the dipsomaniacal alternate-universe of the WSJ edit board was legendary in journalism circles.
What newspaper do they read?
Five days a week, the WSJ is the world’ best newspaper in the English language. The reporters and editors there strive every day to reveal the lunacy of the edit board.
Before he went out on his own, the old man from Joliet, Robert Novak, made it a personal quest to tear apart on page one the craziness that had been published the day before on the edit page.
- Lobo Y Olla - Tuesday, Sep 25, 12 @ 10:11 am:
Anyone know how many state/county/municipal employees are NOT union? I assume upper management are exempt classes. With that in mind, can’t some benefits for those employees be “reformed” without a huge standoff?
- Judgment Day - Tuesday, Sep 25, 12 @ 10:15 am:
Saw this from the WSJ. It’s an obvious ploy to foreclose this option from consideration before it ever gets put on the table.
Right out of the standard ‘old media’ playbook. Old battlefield tactic - “Seize and hold the high ground”.
Besides, just because Pat Quinn said it, doesn’t mean he’ll stick to it. His positions on different items seem to be “adjustingly flexible”.
- CircularFiringSquad - Tuesday, Sep 25, 12 @ 10:15 am:
Let’s conclude:
1. Trib editorial writer probably makes no investment more complicated than a prepaid Walmart card
2. Tillman and the other IPI trolls will now run to their hedgefund hustler/partners grab more cash and run more ads whining about how PQ et al are ruining IL so elect more crackpots like LittleMsMakItUp
NO one believes IPI slop, but they might go for WSJ
- Dunn Fan - Tuesday, Sep 25, 12 @ 10:22 am:
Strawman Bowling 101. It amazes one to see respected newspaper editorial boards these days be coopted by stuff like this in the name of fiscal austerity.
- Money Walks - Tuesday, Sep 25, 12 @ 10:25 am:
“significant long-term improvements will come only from additional pension reforms, refinancing the liability and seeking a federal guarantee of the debt.”
If that line was put out for the public to consume then it should be a viable assumption that that option is on the table and/or has been discussed. They likely retracted the statement because it was deemed a politically risky statement in terms of both the state’s economic outlook and it’s ability to govern. Talk like that tarnishes our image as a state and would not be politically acceptable for those in power. But don’t kid yourself into believing that our politicians would turn down a federal pension guarantee if one was offered. And given our federal governments love for “saving the day” by debasing our currency through reckless spending, quantitative easening, and other bail outs on credit, I don’t think the idea seems that far fetched.
The federal government absolutely likes to have control over the states, and buying debt is a great start.
- Steve Bartin - Tuesday, Sep 25, 12 @ 10:29 am:
Glad to hear Illinois will not be asking for a bailout. After all, it might be difficult to get a bailout when Senator DeMint refers to Chicago teachers as “thugs”. Check out the video by clicking on the link.
http://nalert.blogspot.com/2012/09/video-sen-jim-demint-compares-chicago.html
- Demoralized - Tuesday, Sep 25, 12 @ 10:32 am:
==With that in mind, can’t some benefits for those employees be “reformed” without a huge standoff? ==
No. Not in Illinois. At least for state workers. The Constitution doesn’t limit its guarantee to union workers only. Besides, it is these very workers who have already born the brunt of punishment through furlough days and no raises. So now you would be ok with going after them specifically on their pensions too? Sheesh.
- wordslinger - Tuesday, Sep 25, 12 @ 10:33 am:
–“Who would be stupid enough to buy Illinois bonds, probably the riskiest investment outside of Europe?”–
Check out the big brain on Dennis Byrne. Just don’t take his investment advice.
Illinois is a bad risk? Europe is a bad risk?
What planet are we all moving to then, because I have to tell you, if you’re going to write off the United States and Europe, you might as well put your money in a coffee can and hide it in the basement because it’s katie-bar-the-door.
For the record, Dennis’ usual ignorant rant aside, there is no shortage of investors in Illinois debt. You can look it up. Do it for Dennis, as apparently he’s too upset to do it himself.
I encourage everyone to read Dennis Byrne as a sociological study. For decades, he has been the Angriest Suburban White Man Victim in captivity.
His sense of victimization, living as he does in the United States in the 21st Century, is fascinating. You wonder where and what time in history he wouldn’t have considered himself a victim.
- MrJM - Tuesday, Sep 25, 12 @ 10:36 am:
Rich,
How many minutes each day do you spend banging your head on your keyboard?
I’m putting the over/under for the median at 12.
– MrJM
- 47th Ward - Tuesday, Sep 25, 12 @ 10:39 am:
===It amazes one to see respected newspaper editorial boards these days be coopted by stuff like this in the name of fiscal austerity.===
The WSJ is not being coopted, they are aiding and abetting a right wing plan to establish a narrative that suits their political agenda.
Step one: right leaning “think tank” grossly misrepresents an issue. Step two: right leaning “news organization” cites “think tank” in story to lend legitimacy to the gross misrepresentation. Step 3: Drudge posts headline, cueing other right leaning “news organizations” to pick up the ball and take this nationwide as fact.
Any reputable news organization is going to seek out experts to verify or dispute the report of any think tank. Too bad so few even bother these days.
It’s the dumbing down of America. WSJ is just another cog in Rupert Murdoch’s wheel.
- Anyone Remember? - Tuesday, Sep 25, 12 @ 10:39 am:
Again, for the record, the Illinois Policy Institute labeled the Personal Property Replacement Tax funds to local governments as a “subsidy” that could be eliminated to help balance the budget. And, again, I ask, has anyone at IPI read the Illinois Constitution of 1970?
- Anonymous - Tuesday, Sep 25, 12 @ 10:40 am:
WSJ Editorial, Sen DeMint, Illinois Policy Institute — consider the sources.
Beat down that straw man!
- Third Reading - Tuesday, Sep 25, 12 @ 10:43 am:
Bail out big banks, General Motors, Chrysler, Freddie/Fannie, AIG, yadda, yadda? That’s ducky.
But bail out the states? Horrors!
Uh-huh. Yeah. Right.
I’m outta here.
- Will Caskey - Tuesday, Sep 25, 12 @ 10:46 am:
As a general rule an editorial that mentions Jim DeMint with anything other than total contempt and derision is not worth reading.
- Willie Stark - Tuesday, Sep 25, 12 @ 10:47 am:
The Illinois Policy Institute is a malignant presence in the public discourse of our state. Of course, they enjoy the 1st Amendment right to say whatever they like, but their chronic mendacity is shameful and sad.
- mokenavince - Tuesday, Sep 25, 12 @ 10:51 am:
If you get your advice for Steven Moore of WSJ you realize that Chicken Little was correct the sky is falling.
Sen. DeMint is just another guy who wishes the Confederate States of America won the civil war.
I never heard of the Illinois Policy Institue.
- Wool Over Eyes - Tuesday, Sep 25, 12 @ 10:52 am:
The Illinois Policy Institute brands itself as independent. The editorial writers for Lee News over in Decatur and Bloomington have bought into that nonsense and are unbelievably joined at the hip with IPI. Hence, these goofy kinds of right-leaning editorials come from Lee all the time.
- Ahoy! - Tuesday, Sep 25, 12 @ 10:53 am:
So the point is, people from outside of Illinois just don’t realize yet that IPI has zero credibility.
- The Elderly Man You Used to Love - Tuesday, Sep 25, 12 @ 10:54 am:
Somebody sat down at a computer and typed those words, “federal guarantee,” and somebody at GOMB gave the nod to putting those words in the budget book. Who were these people? Quinn floated a trial baloon, and he got whacked for it. Everyone knows the Policy Institute has a lack of credibility, but I’m a little disappointed that Rich hasn’t taken Quinn to task for those words appearing in the budget book. They didn’t just come out of nowhere.
- CircularFiringSquad - Tuesday, Sep 25, 12 @ 10:59 am:
“The Illinois Policy Institute brands itself as independent. The editorial writers for Lee News over in Decatur and Bloomington have bought into that nonsense and are unbelievably joined at the hip with IPI”
Even the Capt. Fax has bought in using some of the Tilman Tall Tales — probably becuase it is cheap and he had too much silly sauce.
BTW speaking of the hedgefund hustlers … they dropped two of their $5K lollipops on another one of Billboard’s big baggage candidates, Glenn Nixon. They should least ask Billboards to show them the OR before they toss their cash into the toilet….Annie….Annie ????????
- wordslinger - Tuesday, Sep 25, 12 @ 11:00 am:
–WSJ is just another cog in Rupert Murdoch’s wheel.–
As I said, I still like WSJ news, but Rupert is the most sinister man of our times. He abuses freedom of the press for the most base reasons.
It goes beyond the knuckle-dragging at Fox. Check out what’s going on in the UK, where even the Tories are running for the doors to get away from him. Just a very bad man.
- Fed Pensioner - Tuesday, Sep 25, 12 @ 11:05 am:
the best laugh in all of this is that that Federal Government is probably on the hook for maybe several trillion dollars in unfunded pensions. The feds do not invest any money in future pension obligations. They just allot so much each year in the budget for that year’s payments. Not a penny invested. They give pensions after 20 years that are full pensions to many in LE and we are paying for that but Kirk says nothing. What a joke!
- Sir Reel - Tuesday, Sep 25, 12 @ 11:13 am:
Straight out of the Republican playbook. Repeat a lie enough and it becomes the truth.
- Cassiopeia - Tuesday, Sep 25, 12 @ 11:23 am:
At first glance I agree that the possibility of the federal government bailing out government pension funds should not even be remotely possible.
So was the General Motors bailout in 2009 and the TARP bailout the year before.
I’m just saying…..the improbable is not the same as the impossible.
- Money Walks - Tuesday, Sep 25, 12 @ 11:26 am:
“That line was immediately retracted by the governor’s office and there’s been zero discussion about this topic since then.”
I’m with the Eldery Man. IPI didn’t put this into the budget book for all to see. The idea is out there, given the ok by someone in the GOMB and put to print.
Has there been zero discussion about this topic because of the blowback? Probably. The lack of discussion doesn’t mean that the option is off the table…it’s just not being discussed publicly. Unless you count IPI, the WSJ and a couple Senators.
- Rich Miller - Tuesday, Sep 25, 12 @ 11:30 am:
===it’s just not being discussed publicly. ===
Oh, please. They simply did a retread of something that was dealt with almost two years ago and never discussed or debated or even floated again. It’s ridiculous. That was the first and only time the idea was mentioned, it was immediately retracted, the staffer admitted fault, and everybody moved on. Until now, when it gets dredged up for whatever reason.
- wordslinger - Tuesday, Sep 25, 12 @ 11:33 am:
Bailout talk is a joke. Use the google. It’s your friend.
Illinois is a wealthy Northern state and a cash cow to the national government. They take our money and spread it around down South and in the West to help our big-talking, “conservative,” small-government cousins.
Money talks. You-know-what walks.
http://www.economist.com/blogs/dailychart/2011/08/americas-fiscal-union
- Anonymous - Tuesday, Sep 25, 12 @ 12:06 pm:
@Demoralized
I never suggested I would support “going after pensions.” What I was suggesting is that if the HGOP consistently uses “unions” as the fiscal boogeyman, couldn’t there be a group of non-union employees who would perhaps be easier to deal with? I have earned vested interest in a county pension, and I am not in a union. I would entertain all ideas, as an individual, to at least get myself out of the pension mess. Several co-workers have suggested the same thing. Yes, our pensions are guaranteed in the constitution, but like many constitutional rights, they can be waived knowingly and intelligently. The union’s line-in-the-sand is probably different than mine.
- Lobo Y Olla - Tuesday, Sep 25, 12 @ 12:07 pm:
Sorry, anonymous above is me….
- Money Walks - Tuesday, Sep 25, 12 @ 12:25 pm:
–Illinois is a wealthy Northern state and a cash cow to the national government. They take our money and spread it around down South and in the West to help our big-talking, “conservative,” small-government cousins.–
Ok, so we are discussing federal taxes minus what the federal government injects back into the states with federal spending programs. We know where most federal taxes come from (and I wouldn’t be inlined to call it “our money”, maybe “their money” is more fitting) and we also know that high levels of income are weighted geographically toward large metropolitan areas, like Chicago.
I guess I don’t see how riding the coattails of giants like CME, and those in their employ, makes Illinois any more viable then those “small government cousins” in terms of how much top earners in a state pay in federal taxes when compared to what is spent on individual states.
And, if a federal bailout is such a nonstarter and will never happen (under Quinn at least) then why the outcry over a resolution, on the federal level, nixing the idea.
- RNUG - Tuesday, Sep 25, 12 @ 1:20 pm:
Lobo Y Olla
If you’re a county employee, then you are in IMRF, a totally separate system that is the best funded in the State.
- geronimo - Tuesday, Sep 25, 12 @ 2:10 pm:
We wouldn’t be having a conversation about extravagant pension promises that would “put any business in jail”….if our legislature had not only honored their fiscal obligation to properly fund the penion programs AND not stolen the money that was in the funds in the first place. If they hadn’t committed these frauds upon working, contributing state employees, the pension funds would be as golden as IMRF. We’re only having this conversation because of practices by our legislators that would put private business operators in jail—gee, can you steal from your employees coffers with no consequences in private businesses? How many times does the cause of our problem need to be pointed out? Yes, maybe folks are tired of hearing the blame, but why the incessant drumbeat to punish the victims of this fraud? In my book, they’ve already lost money owed them………..why is everyone wanting them to pay more? Maybe because of the sensationalized reports of a few gaming the system and making enormous pension salaries..so punish those people and prevent it from happening in the future. But to attack pensioners getting average pension amounts that they paid for?
- RNUG - Tuesday, Sep 25, 12 @ 2:19 pm:
geronimo
While I agree with you on the root cause, technically they didn’t take (steal) any money out of the pension funds … they just never put it in.
The closest the GA came to actually “stealing” the money was making the recent pension bond repayment come out of the annual budgeted pension payment, which results in less being put in.
- geronimo - Tuesday, Sep 25, 12 @ 2:57 pm:
You are right..monies were diverted away from the pension funds to pay for other programs. I’m sure it feels like theft when workers were “guaranteed” that those funds would be there. But the real outrage comes with the talk of extravagant when that term probably applies to very very few and no one that most retirees know.
- wordslinger - Tuesday, Sep 25, 12 @ 4:57 pm:
Money Walks, what’s your point?
The national government will never “bail out” Illinois simply because we — and I’m cool with saying “we” — are too wealthy, too successful and have spent all of our lives sending money down to the huckleberries in Old Dixie and the West.
Any time that crew wants to step up, I’m all for it.