* 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?
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.