A lesson that must be learned
Monday, May 18, 2015 - Posted by Rich Miller
* Paul Krugman’s point is about some national and international stuff, which we really do not need to get into here because, well, this is a state blog. But his conclusion is well worth discussing in the context of Illinois’ failed “pension reform” law…
It doesn’t matter that the skeptics have been proved right. Simply raising questions about the orthodoxies of the moment leads to excommunication, from which there is no coming back. So the only “experts” left standing are those who made all the approved mistakes. It’s kind of a fraternity of failure: men and women united by a shared history of getting everything wrong, and refusing to admit it. Will they get the chance to add more chapters to their reign of error?
This is most definitely a conversation we need to have in Illinois. We were misled into this battle by people and institutions who shouted down anyone who dared to object or so much as voiced concerns.
* From a column I wrote back in 2013…
The Civic Committee, a group of wealthy business executives headed up by former Republican Attorney General Ty Fahner, also has claimed that [Senate President John Cullerton’s] proposal wouldn’t save enough money. But last year, Fahner supported a bill that actually would have increased state costs in the short term and saved the state just a few billion dollars over the long term.
Fahner has been all over the place. He supported a pension bill sponsored by House Speaker Michael Madigan last year, then claimed a few months later that the pension problem was “unfixable.” He demanded that cost-of-living increases be eliminated altogether, but now backs a plan that allows COLAs on the first $30,000 of pension income.
Cullerton took the plan endorsed by Fahner and grafted his own pension reform language onto it. Cullerton’s “consideration” proposal wouldn’t take effect unless and/or until the courts ruled that the Fahner-backed proposal was unconstitutional.
Fahner didn’t like that idea, either. And he and lots of big-business types lobbied hard against it, along with a certain editorial board down the street, and forced Republicans off the bill. That killed the proposal, and the Fahner-backed bill was defeated as well.
* And from a Tribune editorial around the same time…
The person who leads the Senate and who holds significant influence over his members prefers his own pension bill. Cullerton’s Senate Bill 1, which also could come to a vote Wednesday, includes the provisions of Biss’ bill. But it also does something odd: It says if the courts strike down those provisions, a Plan B would kick in.
Cullerton’s Plan B comes up far short of the savings needed to restore fiscal health to the pension plans. It depends on multiple choice: Government workers would choose between the much-coveted, compounded cost-of-living increases they receive in retirement, or access to the state’s health care plan. Cullerton believes his bill has a better chance of being found constitutional by the courts.
But the real message from lawmakers to the courts would be this: Hey, we don’t really trust Plan A, so be our guest, throw it out, we’ll live with Plan B. No, really. We beg you.
Both Fahner and the Tribune were on exactly the same messaging track. And they were both wrong.
That’s not to say that Cullerton’s proposal at the time would’ve necessarily passed constitutional muster. It’s just that anyone who objected to the Fahner/Tribune orthodoxy (Cullerton, Ralph Martire, public employee unions, etc.) was marginalized by the powers that be. Debate was stifled, and that was ridiculous.
Even I felt so beaten down by the end of that debate that I wanted the darned thing passed just to get it off the table for a while and let the courts decide.
We can never let that happen again.
- too obvious - Monday, May 18, 15 @ 12:02 pm:
Lawyers with bigger legal brains than those on the sup. ct. said SB 1 was constitutional.
But the people with the robes said otherwise so we’re stuck with it.
- Cassiopeia - Monday, May 18, 15 @ 12:05 pm:
Nobody really knows what to do but journalists and commentators feel compelled to say something. Since few of them understand economics they will continue with the foolishness.
- Elo Kiddies - Monday, May 18, 15 @ 12:06 pm:
Progrrss won’t come until peole who are focused on short term savints yield to people who are willing to pay the tab.
- thechampaignlife - Monday, May 18, 15 @ 12:07 pm:
Stated another way: the perfect is the enemy of the good.
- bored now - Monday, May 18, 15 @ 12:08 pm:
all the easy solutions have been tried. the problems that remain are complex, sometimes interconnected, and require more innovative attempts at solutions. the problem is that politicians tend to be cautious (rauner couldn’t be more tied to the gop orthodoxy in his agenda) with eyes less to polls than to the base. and reformers in illinois? they are just cannon fodder. this is illinois. i really don’t see how anything innovative comes out…
- RNUG - Monday, May 18, 15 @ 12:08 pm:
Rich, I know the beat down feeling …
- anon - Monday, May 18, 15 @ 12:09 pm:
The real problem isn’t that Cullerton’s patently unconstitutional scheme was shouted down. (just because it stole less than SB1 didn’t make it “more constitutional”) The problem is that anyone who advocated following the constitution’s plain language about no diminishment was shouted down.
- Anyone Remember - Monday, May 18, 15 @ 12:10 pm:
Rich -
You are correct. As usual, you’ve said it better than most of us could have.
- Salty - Monday, May 18, 15 @ 12:12 pm:
Well said, however, I don’t expect the Tribune editorial board to change their approach.
- Harry - Monday, May 18, 15 @ 12:14 pm:
Krugman aside, I agree with Rich that we should look at why the State has labored for so long to come up with a dry hole, and imho the blame has to rest more than anywhere else on the Civic Committee and the Tribune. The Civic Committee’s proposals have always been private-sector oriented, and ignored the fact that these are not ERISA plans but fall under State law and what they are familiar with at their companies does not apply. That is now Rauner’s position, btb.
Rather than learn about the differences between ERISA and governmental plans, they just shrieked and insulted people–esp. Fahner, who is simply a rude person and I cannot fathom why the Civic Committee wanted him as its front-man. But the Tribune as well, clearly allied with the Civic Committee.
And they not only got it technically wrong in a most ignorant way, but they were NASTY about it, demonizing anyone who opposed their position and insulting public employees and unions far beyond what normal political disagreements should be. They not only were wrong, but they poisoned the well.
As far as I can see, they (CC and Trib) have played very negative roles for about 8+ years while pension liabilities grew, and more than anyone else are responsible for the current mess.
- Wensicia - Monday, May 18, 15 @ 12:15 pm:
When agenda is placed before reality…
Trouble is, these people refuse to admit they were wrong, so how will they ever learn?
- Carhartt Representative - Monday, May 18, 15 @ 12:17 pm:
I remember last year when Quinn was railing against the pension debt. The pension problems really seemed to start for CPS in the late 1990s when Paul Vallas was Superintendent and Gery Chico was the head of the School Board.
It suddenly occurred to me that Vallas was his running mate and Chico was his head of the ISBE. There is nothing more frustrating than when the person who caused the problem is now supposedly the person with the solution.
- archimedes - Monday, May 18, 15 @ 12:18 pm:
Some, such as Senator Kwame Raoul, seem to get it:
“A number of approaches remain open to us, but the Court has made clear that the constitution’s prohibition on unilateral modifications applies to the lifetime of the contract made at the time of employment, not merely to benefits already accrued.
We return to our task aided by the insights of the Court, fully aware of our constitutional responsibilities as well as the severity of our fiscal condition, in partnership with all affected and open to new ideas.”
- anon - Monday, May 18, 15 @ 12:19 pm:
I do think that the tone of the Illinois Supreme Court opinion was a reaction to all of the ignore-the-constitution rhetoric spouted by people like Ty and the Tribune. The same ruling would have still resulted but it would not have been expressed so emphatically and the Court would not have taken pains to include language cutting off other future schemes (e.g. the footnote about consideration for “additional benefits” putting Cullerton on notice that his scam won’t fly either).
- Sir Reel - Monday, May 18, 15 @ 12:22 pm:
“Wealthy business executives” amassed their wealth because only they know the truth. Why doesn’t everyone else get it?
- anon - Monday, May 18, 15 @ 12:35 pm:
And, some of the screamers have had the chutzpah to make statements about their new-found willingness to negotiate cuts with the unions now that they lost the Supreme Court case. Do you really think those people whom you demonized and attacked viciously for years are going to be willing to bargain after that big win?
- Michelle Flaherty - Monday, May 18, 15 @ 12:36 pm:
Perhaps the most shameful thing I’ve seen is the state’s leading media outlet conspiring with business elite to corrupt the plain language of the constitution for personal gain.
- Norseman - Monday, May 18, 15 @ 12:38 pm:
Those who set the narrative don’t like to hear contravening views. Despite clear case law and extremely well written analyses saying that their approaches were illegal, Fahner, the Trib, Madigan and others refused to consider any options that didn’t entail bleeding employees and retirees.
Because of their intransigence and the years of delay involved, Chicago now has to deal with junk bond status and Illinois is teetering on the same.
These same people want to continue this path by proposing other questionable efforts to cut benefits for current employees. None of which will help NOW.
No Rich, these folks don’t care to learn their lesson and they don’t care about the stress it causes people being inappropriately targeted.
- Phil King - Monday, May 18, 15 @ 12:44 pm:
There are a whole lot of competing and unrealistic expectations that the public places on high profile pundits and ESPECIALLY on elected officials.
Politicians are expected to speak with authority and know what to do. Generalities and hedging is looked down upon as “slippery.” And yet, they must stay open to compromise.
They’re also expected to recognize when they make mistakes and not be dogmatic partisans. And yet, politicians are routinely punished for “flip-flopping” if they change tune on any issue.
There is no way to win.
The public needs to realize that politicians are people. They’re often unsure. They often change their minds. In fact, I think we should reward elected officials who realize that a policy they supported has failed and change their position. The trick is figuring out when it is genuine and when it is mere political expediency.
Like most tough issues, it’s a spectrum, not black and white.
All that said, Krugman is perhaps the worst person to talk on these issues. He sells an extremely dogmatic brand of economics and will relent to no deviations from his brand. He routinely makes predictions which are proven false and then twists facts around to make it seem like he was right all along.
I won’t get into particulars, but I think it’s worth pointing out his hypocrisy because he’s part of the problem.
- Anyone Remember - Monday, May 18, 15 @ 12:46 pm:
Carhartt Representative
Thought the CPS pension problems were a result of the actions of Richard M. Daley, using authority given to him by Jim Edgar, Pate Philip, and Lee Daniels.
- Now What? - Monday, May 18, 15 @ 12:47 pm:
What was that line our Governor said regarding “leveraging a crisis?” Pesky rule of law…
- Cook County Commoner - Monday, May 18, 15 @ 12:52 pm:
Paul Krugman may be right. The “fraternity of failure,” as he calls it in another context, is alive and well in Illinois. I fear that the fraternity is too dug in to extricate through politics, until inputs external to the political structure (eg., bond down-grades, loss of jobs, loss of competitiveness, folks leaving the state) take their toll. Hope I’m wrong.
- Liberty - Monday, May 18, 15 @ 1:02 pm:
Krugman always contributes his share to the tribalism.
- AC - Monday, May 18, 15 @ 1:04 pm:
If you aren’t tired, then you aren’t paying attention. Anger only makes sense for the first few decades.
- Precinct Captain - Monday, May 18, 15 @ 1:04 pm:
==All that said, Krugman is perhaps the worst person to talk on these issues.==
You missed the point.
- Ghost of Harold - Monday, May 18, 15 @ 1:19 pm:
A great majority of the Civic Committee “screamers” were also the people tripping over themselves to support Daley’s 2016 Olympics. Where would we be without their fine leadership? Thank goodness we have their fine skills leading Sears, Motorola, Exelon, Nveen, Citigroup, Tribune Corp, United Air, and United Stationers to guide us.
- forwhatitsworth - Monday, May 18, 15 @ 1:24 pm:
=== We return to our task aided by the insights of the Court, fully aware of our constitutional responsibilities as well as the severity of our fiscal condition, in partnership with all affected and open to new ideas.” ===
Sen. Raoul has said some very brilliant things about pension reform, especially a speech he gave on the Senate floor supporting pension benefits protected in our state constitution. Of course, this didn’t stop Sen. Raoul from voting YES to pension theft SB1 that has just been declared unconstitutional by the ISC in a 7-0 vote. Seems to me that Raoul wears a big cape affected by the wind currents.
- ZC - Monday, May 18, 15 @ 1:25 pm:
I’m not thrilled with the _Kanerva v Weems_ decision and now its progeny, but I do understand the Court’s unwillingness to let the state Constitution be turned into basically a turnstile for whatever the Powers That Be want it to mean, in a given instance.
That’s one saving grace / undeniable pleasure from this Court ruling: watching Ty Fahner, and the Big Money Guys used to having their way, twist and flail against a judicial power they can’t purchase or intimidate.
We’re up for some very choppy fiscal waters ahead but we are undeniably in better shape than being a state where the Constitution means whatever Bruce Rauner wants it to mean.
- Filmmaker Professor - Monday, May 18, 15 @ 1:34 pm:
We? You mean “we” who have no voice in the media whatsoever?
- Anonymous - Monday, May 18, 15 @ 1:35 pm:
It’s much easier to be a paid, attorney advocating one side than to give neutral, reasoned advice. I see it daily.
- Louis G Atsaves - Monday, May 18, 15 @ 1:43 pm:
===”Take a moment to savor the cowardice and vileness of that last remark. And, no, that’s not hyperbole.”===
Exhibit “A” against using Krugman as a conversation starter about our pension problems. Krugman is also part of the problem, He just refuses to acknowledge his role.
- Juvenal - Monday, May 18, 15 @ 1:44 pm:
=== That’s one saving grace / undeniable pleasure ===
Because we didn’t get to here them admit:
1) They were wrong or
2) Madigan is neither omniscient, omnipotent, and therefore not solely to blame.
- Phil King - Monday, May 18, 15 @ 1:55 pm:
I think the conversation starts with reassessing the problem.
We have the largest unfunded liability because we’ve set a goal of 90% funding. This despite the CBO recommending only 80% and some saying we could go even lower.
Fact of the matter is, cash on hand has never failed to meet yearly outflows and probably never will. The actuaries predict the unfunded liability will shrink yearly until it disappears in 2045. So we’re on a slow path to full funding even at 90%.
The best thing we can do is make payments on time every time and stop scaring credit ratings agencies with our doom and gloom.
If we want to crack down on abusers (spiking, double dipping, revoking pensions for certain crimes) all the better.
But the conversation should move away from benefit reductions (particularly those that affect everyone.) the court said that’s not gonna happen.
The only amendment I could support to change that is an amendment allowing a cap on individual yearly payments. The VAST majority don’t need to see benefits reduced.
- West Side the Best Side - Monday, May 18, 15 @ 2:05 pm:
too obvious - Was your comment meant to be snark, since it wasn’t labeled as such? If it wasn’t, (since there are any number of people who think coming from a big name firm makes an attorney a legal genius just so much brighter than those poor souls on the Illinois Supreme Court) just remember those bigger brains were hired guns paid to give the opinion the people paying them wanted.
- Quiet Sage - Monday, May 18, 15 @ 2:06 pm:
To “too obvious” at 12:02 P.M. Article 13, Section 5 of the Illinois Constitution was, I believe, drafted primarily by Constitutional delegate Dawn Clark Netsch, a law professor at Northwestern. It was drafted in response to a situation in New York where public pension benefits were diminished. The language of the section was intended to be bullet proof–it contains both a statement that pensions are a binding contractual obligation and a declaration that pensions shall not be diminished or impaired. No one should have been surprised that this section rendered SB 1 unconstitutional. See Eric Madiar’s excellent article analyzing Illinois precedents on the subject.
- D.P.Gumby - Monday, May 18, 15 @ 2:13 pm:
The new fraternity of failure is now occupying the Gov’s office and trying to buy people to become members of his frat house.
- Federalist - Monday, May 18, 15 @ 2:19 pm:
Krugman’s comment is so on target and it goes for all sides of the political spectrum- or at least the more extreme sides.
- sal-says - Monday, May 18, 15 @ 2:45 pm:
== This is most definitely a conversation we need to have in Illinois. We were misled into this battle by people and institutions who shouted down anyone who dared to object or so much as voiced concerns. ==
Agreed, not again. But how is this different than what Runner has been & continues to do?
- Anon III - Monday, May 18, 15 @ 2:50 pm:
Cook Co.Com @ 12:52 == I fear that the fraternity is too dug in to extricate through politics, until inputs external to the political structure … take their toll ==
More to it; the economy is changing fast. Heavy manufacturing went off shore decades ago, now what’s left is light manufacturing which can ship the whole plant out of state in a short order.
And the goods and services made and sold change at light-speed. The rate of economic change has exceeded the ability of our political structure to keep up.
It is ironic that the “Retirement and Pension Protection” clause is aimed at freezing the compensation policies of state government. What are needed are Constitutional provisions that encourage change and flexibility in government.
- VanillaMan - Monday, May 18, 15 @ 3:06 pm:
We are running out of time for political solutions. This means that the ones with the facts will have to be the ones listened to. Just not now. The parade is listening to the loudest ones with the simplest solutions - that won’t work, won’t be acceptable and aren’t constitutional.
So, when all else fails, facts win over politics.
- anon - Monday, May 18, 15 @ 3:16 pm:
@Anon III: “It is ironic that the “Retirement and Pension Protection” clause is aimed at freezing the compensation policies of state government. What are needed are Constitutional provisions that encourage change and flexibility in government. ”
Since you are an advocate of flexibility, are you also in favor of repealing the contracts clause so the State may ignore all of its vendor and other contracts? Why limit your noblesse oblige model to pensions and government employees? Maybe the State can decide retroactively what it feels like paying for all other work performed under contract.
- Carhartt Representative - Monday, May 18, 15 @ 3:25 pm:
=Carhartt Representative
Thought the CPS pension problems were a result of the actions of Richard M. Daley, using authority given to him by Jim Edgar, Pate Philip, and Lee Daniels.=
It was. However, they were the ones running the schools under Daley when the borrowing started.
- Beaner - Monday, May 18, 15 @ 3:30 pm:
Harry - “…they just shrieked and insulted people–esp. Fahner, who is simply a rude person and I cannot fathom why the Civic Committee wanted him as its front-man.”
Tyrone C. Fayner is co-counsel for the licensure of the Casino Queen in East St. Louis. You can find out interesting facts reading 20 year old gaming board reports at the State Library.
- A guy - Monday, May 18, 15 @ 4:48 pm:
“Even I felt so beaten down by the end of that debate that I wanted the darned thing passed just to get it off the table for a while and let the courts decide.”
Don’t be so hard on yourself. I’m sure all 4 leaders, the bill sponsors and supporters all considered you a major pain in the neck back then.
You tired them out too. /s lol.
- Rod - Monday, May 18, 15 @ 5:11 pm:
To Archimedes I disagree Senator Raoul totally does not get it. He was one of the so called pension experts that helped draft SB 1. He chaired Gov. Quinn’s ad hoc Pension Reform Conference Committee.
In the DEC 11, 2013 Hyde Park Herald we can read this gem about Senator Raoul:
So given that perspective what is to stop Senator Raoul from promoting yet another constitutionally defective bill and hoping for the best?
- Robert M Roman - Tuesday, May 19, 15 @ 6:31 am:
On the other hand, review the reaction to proposals for a “LaSalle Street Tax” aka “Robin Hood Tax” aka “Tobin Tax” here at Capitol Fax… Just sayin’
be well,
bob roman