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Unclear on the concept
Monday, May 9, 2016 - Posted by Rich Miller * OK, let’s say you graduated from college with a monstrous mountain of student loan debt that you can’t default on. Your first job paid $30,000 a year. But after a while, it became apparent that you couldn’t pay rent, transportation and everything else it takes to live as well as your student loan payments. So, you run up the credit card debt just to survive. But eventually, that becomes untenable. You’ve maxed out all your cards and the student loan company is breathing down your neck. So, you find a different, better-paying job, where you make $50,000 a year. Over time, you pay down your credit card debts and, with some frugality, manage to live within your means while making your student loan payments on time. But then your boss tells you that he can no longer afford to pay your salary and he cuts you back to $37,500 a year. And now the Tribune editorial board can’t figure out what your problem is…
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- Skeptic - Monday, May 9, 16 @ 8:51 am:
Good analogy. And further, if I had kept up the credit card payments while earning $30k (and living in my parent’s basement) instead of buying that fancy new stereo, I wouldn’t have that problem.
- Ahoy! - Monday, May 9, 16 @ 8:56 am:
You could further the analogy by adding that it’s extremely hard for that young person mentioned above to get a raise because people believe he’s untrustworthy, corrupt, makes extremely bad decisions with money and is always doing something where businesses don’t want to invest in him. Add to it that he could refinance his student loan debt but is too lazy to do so.
Sounds like this young person needs to start making better decisions.
- bwana63 - Monday, May 9, 16 @ 8:57 am:
Facts, schmacts. Trib ed board isn’t going to let a fact get in the way of their message. Kinda like Rauner’s posse.
- Anon221 - Monday, May 9, 16 @ 8:58 am:
Kinda like the SuperStars asking the social service providers why can’t they just “float” for a while on private donations until the budget impasse is over.
- They're There Their - Monday, May 9, 16 @ 9:03 am:
Been there, now my government has brought me back again!
- Demoralized - Monday, May 9, 16 @ 9:03 am:
Math is hard sometimes. They need a lesson in greater than and less than. My 2nd grader can help them out.
- 13th Ward - Monday, May 9, 16 @ 9:13 am:
A 15% tax on advertising revenues would be an excellent start to solve the problem. Let the Tribune pay its fair share!
- Honeybear - Monday, May 9, 16 @ 9:22 am:
I so appreciate you right now Rich. I would add the joy of children to the mix. Add braces, school fees, CLOTHES FOR TEEN GIRLS ( at some point resale shop clothes no longer are cool. We held out remarkably long. Luckily the girls are savvy shoppers and excellent at taking advantage of sales). Just keeping your nose above water is hard.
NOW DOUBLE YOUR HEALTH INSURANCE AND ADD THE STRESS OF HAVING YOUR JOB PRIVATIZED. Then you get what Rauner is doing to state worker like me.
- Honeybear - Monday, May 9, 16 @ 9:23 am:
Oh and I forgot. Add collection calls from medical providers because despite my paying my premiums, THE STATE IS NOT PAYING THE PROVIDERS!!!!!
- Formerly Known As... - Monday, May 9, 16 @ 9:27 am:
This is a good example that should help explain the situation to anyone on a personal level.
But with our effective state and local tax rate of 14.54% being the highest in America in 2016, it might be more accurate to think of this as a family now making $145,400 a year rather than an individual now making $37,500.
That is the way, at least, it seems to feel to most taxpayers in the state. They feel the cumulative effects of the taxes they pay, including the state income tax. That helps explain some of the opposition many have to another tax increase.
- jeffinginchicago - Monday, May 9, 16 @ 9:32 am:
The missing part of the analogy was your boss told you when you took the $50k job it would only pay that for 4 years due to client erosion. You needed to square your financials for the entire package. The rollback was no surprise. You are still better off. Think of how much better off you would be if you had actually accounted for it.
- Norseman - Monday, May 9, 16 @ 9:56 am:
The Trib editorial board is a joke.
- Jack Kemp - Monday, May 9, 16 @ 9:58 am:
A more accurate analogy: let’s say you graduated from college from college with a mountain of student loan debt that you can’t default on. Your first job paid $30,000 a year. But after a while, it becomes apparent that you couldn’t pay rent, transportation, and everything else it takes to live as well as your student loan payments. So, you run up the credit card debt just to survive. But eventually it becomes untenable. You’ve maxed out all of your cards and the student loan company is breathing down your neck.
So you go to your parents and you ask them to help you out. With some reluctance, they agree to help you pay some of your student loan debt. But they only agree to do so with the understanding that you’re going to get your finances in order and live within your means.
You don’t. You continue to haplessly spend money you don’t have and make financial promises to others you can’t keep. Your credit rating takes a big plunge two, three, four times. Seeing that you can’t seem to hold up your end of the bargain, your parents pull the plug.
And now some folks can’t figure out why mom and dad don’t want to cough.
- Rich Miller - Monday, May 9, 16 @ 10:00 am:
===So you go to your parents and you ask them to help you out===
LOL
I don’t think a tax increase passed by majorities of the GA and signed into law by the governor is akin to asking your parents for help. That would be more like going to DC and begging for a bailout.
- wordslinger - Monday, May 9, 16 @ 10:01 am:
The Tribbies are severely math-challenged.
But in fairness, most Chicago media have been math-averse for a very long time. Math is hard, “personalities” are fun.
- Skeptic - Monday, May 9, 16 @ 10:02 am:
“So you go to your parents and you ask them to help you out.” Or you get a second job to, you know, raise some more revenue.
- illinifan - Monday, May 9, 16 @ 10:07 am:
If you are a savy borrower, you take loans on your credit cards and pay most of the student loan debt off with the money borrowed from the credit card. Now the debt has been transferred to something that can be included in a bankruptcy. Declare bankruptcy thus eliminating what you owe the credit card companies. Voila reduced or no student loans and the credit card companies take the hit. It is all about how to move the dollars around without ever really having to pay it off.
- Anonymous - Monday, May 9, 16 @ 10:13 am:
OK. So with all the cuts that have been made, it s not enough, apparently. And raising tax revenue is a horror. So tell us all, what should we cut next? Where can we shave off hundreds of millions since there is so much waste?
- Austinman - Monday, May 9, 16 @ 10:14 am:
This Trib column makes me even more satisfied with the decision I made regarding ending my subscription with them. Too bias
- muon - Monday, May 9, 16 @ 10:14 am:
I’m amused at the statement that the “unpaid bill pile grows every day.” The Comproller’s Ledger today reports $6,568,350,904 in General Fund payables. Four weeks ago on April 12 the total was $7,057,500,579. Of course the arrival of income tax payments has something to do with the drop since last month, but still the Trib’s statement is a bit hyperbolic.
- Dr X - Monday, May 9, 16 @ 10:48 am:
Didn’t the Civic Federation show that backlog bills were reduced from 8billl to about 5bill with the tax increase? That isn’t improvement?
- IRLJ - Monday, May 9, 16 @ 10:57 am:
The Tribune editors share Rauner’s elitism. Not a surprise…
- Anonymous - Monday, May 9, 16 @ 10:59 am:
To be fair, the tempprary tax increase was supppsed to pay down dwbts. It was not supposed to cover pension payments. When the Illinois Supreme Court struck down the pension changes, the temporary tax hike had to do double duty. It did cut debt from $12 to $5 billion or so.
- Pawn - Monday, May 9, 16 @ 11:10 am:
muon, remember that the Comptroller’s list of unpaid bills DOES NOT include those contracts that have been issued by the state, but remain unpaid since July 1!
- justacitizen - Monday, May 9, 16 @ 11:18 am:
Where the analogy is at odds is that the 2% tax increase was used to pay backlogged bills. There seems to be major disagreement over that point.
Please Dave Ramsey, send IL to Financial Peace University!
- muon - Monday, May 9, 16 @ 11:39 am:
Pawn, but after what the IL Supremes said about the AFSCME contract with back pay, how should the state count contracts signed but unappropriated. The decision seemed to suggest that those contracts aren’t liabilities until there’s an appropriation.
- anon - Monday, May 9, 16 @ 11:40 am:
The Tribsters are in denial about how the 5% tax rate led to a sharp decline in the backlog of unpaid bills. As soon as the tax rate dropped, the backlog started skyrocketing.
- Zonker - Monday, May 9, 16 @ 12:00 pm:
Bad analogy, Rich. A proper one would be you were hired temp for two years at $50K, then would need to live on $37.5K. “Living within your means” at $50K after the end of the contract would be, well, govern-MENTALLY CHALLENGED.
That’s what Illinois government did, so the term fits.
- Arthur Andersen - Monday, May 9, 16 @ 12:11 pm:
Zonker, could you give us an example or two of “unnecessary patronage and low value garbage” in the budget, with the cost, please?
- James Knell - Monday, May 9, 16 @ 12:22 pm:
If small donors can finance Bernie Sanders’ and Barack Obama’s presidential campaigns, we ought to finance math-friendly news organizations.
Go Gannett! A lame editorial page is better than a lying editorial page.
- Pawn - Monday, May 9, 16 @ 12:55 pm:
Muon are you suggesting that contracts that are issued by the state, should not be paid? That organizations that have done work under legal contracts have been held accountable. Does accountability under contracts only go one way?
- wordslinger - Monday, May 9, 16 @ 1:04 pm:
–To be fair, the tempprary tax increase was supppsed to pay down dwbts. It was not supposed to cover pension payments.–
I’m not even sure what you’re saying. Pension liability is debt, and if you don’t pay full annual pension contributions you’re adding to debt (as the state is doing, again, now).
And as RNUG has explained thousands of times, the original plan was to use .5 of 1% of the permanent increase for a bond to pay off the backlog of bills, but the necessary GOP votes for that borrowing were not there.
A fact that is conveniently forgotten, time and time again.
- muon - Monday, May 9, 16 @ 4:36 pm:
Pawn - I’m not suggesting they not be paid. On the other hand, I don’t see how to classify them as unpaid bills either. If the contract said subject to appropriation, and there was no appropriation, and the state gets an invoice based on the contract, is it an unpaid bill by accounting standards?
What if there was an appropriation for half the expected amount in the contract? When the invoice comes in is the unpaid bill only half as much? I don’t know. We need an appropriation to clarify the status of all these contracts.
- Demoralized - Tuesday, May 10, 16 @ 7:48 am:
muon:
The contracts are signed and are valid. The only way they become invalid because of the “Subject to Appropriation” language is if an agency cancels the contract and cites that clause as the reason for the cancellation. But, until an agency cancels a contract it is valid. I’m unclear as to whether invoices submitted prior to this cancellation are invoices that must be paid. When I read the language it seems to me that those invoices may not necessarily ever have to be paid.