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The “growth only” canard

Friday, Apr 21, 2017

* WJBC

The president and CEO of the Illinois Chamber of Commerce is renewing his call to give up the status quo in Springfield to dig out of the state’s fiscal mess.

Todd Maisch told WJBC’s Scott Laughlin it boils down to the need for the governor and lawmakers to promote economic growth to increase revenue instead of raising taxes.

“We think that’s the wrong approach,” Maisch told WJBC’s Scott Laughlin regarding increasing revenue through higher taxes. “You’ve got to go ahead and spur small- and medium-sized business investment if we’re ever going to get out from this cycle where economic growth trails government spending. It’s just a dead end. You’ve got to break that cycle. It’s painful right now, but you’ve got no choice but to do it.”

No argument at all that we truly need some real growth in our state’s economy.

* But the Civic Federation shows us how many “painful” cuts need to be made immediately (before any long-term “growth” can kick in) if taxes aren’t raised

If GOMB’s revenue projections and maintenance - level FY2017 expenditures are assumed, a one-year cut of over 26% is necessary to eliminate the FY2018 structural deficit. This would represent a cut of 18.5% from FY2015 spending levels. If implemented across the board, this would mean cutting K - 12 education from $7.4 billion to $5.5 billion in one year. It would also represent a cut of approximately $1.2 billion from FY2015 levels.

Similarly, higher education would experience a cut of $482 million in one year. This would follow two years of underfunding from the FY2015 level that totals $1.4 billion. Finally, human services would also experience a one-year cut of more than $1.5 billion, also following two years of underfunding without full-year budgets.

Some efforts, including debt restructuring and statutory transfer reform, could mitigate these cuts. However, existing consent decrees and further litigation resulting in court-ordered spending would reduce the flexibility of the state to implement cuts in a cost-effective manner. As a result, cuts would have be concentrated in areas with less legal protection.

Even after the severe cuts needed to balance the FY2018 budget, further reductions would be needed to eliminate the backlog of bills. Additional spending cuts of 4.45% per year would eliminate the backlog by FY2022. The cuts total more than a 38% reduction in spending over five years. Cuts of this magnitude would almost certainly result in a decline in the quality of life in Illinois, and would represent a drastic departure from the current understanding of the relationship between the government of Illinois and its people.

Emphasis added.

Keep in mind that such cuts would undoubtedly force up property taxes and university tuition, which wouldn’t be great for “growth.” All because they can’t agree to raise the income tax rate by a point-and-a-quarter.

- Posted by Rich Miller        

39 Comments
  1. - Not Rich - Friday, Apr 21, 17 @ 10:03 am:

    another blast of BS from the trolls controlled by Rauner and the IPI. Wanna bet that the Chamber NEVER files legislation and gets a Repub sponsor to do what they are spouting..


  2. - Mittuns - Friday, Apr 21, 17 @ 10:12 am:

    Government spending outpaces “growth” because wages are not keeping up with inflation, all while corporate profits and stock values continue to reach record highs.

    Stop blaming government for your shameless shell game. Poor, innocent corporate executives. Pay your employees.


  3. - Honeybear - Friday, Apr 21, 17 @ 10:14 am:

    Republicans have brought about a corporate coup of our state against the people and institutions of Illinois.

    Rauner only acknowledges large corporate need.

    He cares not for small business (almost all small business centers are closed. DCEO was gutted for Intersect Illinois which failed, has only two employees and never achieved 501c3 status. Yet EDGE money, hundreds of millions flow out of us to large corporations. No accountability.

    He cares not for Education. Junk bond status. But hedge funds are going to profit enormously.

    He cares not for anyone he doesn’t wear a tie for. Only big business. Others get endless perfidy. Carhardt jackets, pressed white moving t shirts and staged events.

    He cares not for Republicans. See Rodogno and McCann. He’s going to sink the whole party in this corporate coup. Edgar called this long ago.

    I said it consistently
    1 buy it
    2 break it
    3 sell it

    I just didn’t realize that the sell it part
    Completes the Corporate Coup

    Displaying our democracy


  4. - Anonymous - Friday, Apr 21, 17 @ 10:18 am:

    Blago appeal rejected today.


  5. - Arock - Friday, Apr 21, 17 @ 10:19 am:

    Illinois was broken before Rauner took office during the period of Democratic control.


  6. - Anonymous - Friday, Apr 21, 17 @ 10:20 am:

    http://media.ca7.uscourts.gov/cgi-bin/rssExec.pl?Submit=Display&Path=Y2017/D04-21/C:16-3254:J:Easterbrook:aut:T:fnOp:N:1951608:S:0


  7. - Honeybear - Friday, Apr 21, 17 @ 10:21 am:

    Can’t get me no get right today

    Displacing our democracy

    Face palm. I had such good momentum with that one. Flat on my face right before the finish line.


  8. - Oswego Willy - Friday, Apr 21, 17 @ 10:21 am:

    ===Illinois was broken before Rauner took office during the period of Democratic control.===

    Oh - Arock -

    By nearly every measure Illinois is worse off since Rauner became governor…

    … so there’s that.


  9. - wordslinger - Friday, Apr 21, 17 @ 10:24 am:

    More word salad, please, Dr. Friedman. It almost sounds coherent.

    He’s bought-and-paid for. This is the guy who prostituted his group’s name to run a spot in the Dem primary for Dunk, one of their lowest-rated GA members, because the boss told him to.

    Like the chamber is big heat in a South Side Dem primary.

    Now how’s about a big ‘ol “hang in there” for all the chamber members who are owed big money by the state for contracted goods and services already delivered. Tell them again how their not getting paid is good for the economy.


  10. - JB13 - Friday, Apr 21, 17 @ 10:39 am:

    So if we raise income taxes by 1.25 points, all of the state’s bills will get paid? State services will be restored, with no further cuts? And property taxes and university tuition won’t go up?

    Anyone willing to take that bet?

    “Canard,” indeed.

    Reasonable people understand taxes will go up to deal with this mess. Reasonable people also can and will demand something in return, some way the other “stakeholders” at least share in the taxpayers’ pain to come.


  11. - anon2 - Friday, Apr 21, 17 @ 10:41 am:

    The Civic Federation gives us a clear outline of the consequences of no tax hike. Will the never-on-taxes folks — the Chamber, IPI, Rep. McSweeney — be honest enough to admit that they favor taking a meataxe to state government?


  12. - Arock - Friday, Apr 21, 17 @ 10:41 am:

    OW- and what has the legislature brought forward during this time frame? What concessions or compromises have they passed?


  13. - Sir Reel - Friday, Apr 21, 17 @ 10:43 am:

    What exactly can the State of Illinois do to spur economic growth?

    The Governor’s TA a little bit but it’s mostly about decimating the Democratic party. Workman’s Comp reform is the only TA proposal that has real economic growth potential.

    What else? Infrastructure development? Not happening. Investment in higher education? Investment going down not up. Small business incubation? Not happening.

    If it’s the key, then do something.


  14. - Oswego Willy - Friday, Apr 21, 17 @ 10:44 am:

    ===…and what has the legislature brought forward during this time frame? What concessions or compromises have they passed===

    Your beef is with Crain’s

    They said, by nearly every measure Illinois is worse off since Rauner became governor, and blaming Rauner.

    Maybe you need to read that Crain’s op-ed piece…


  15. - Arsenal - Friday, Apr 21, 17 @ 10:47 am:

    ==which wouldn’t be great for “growth.”==

    This seems to me the key part of all of this; the anti-tax absolutist position wouldn’t help with growth.

    For that matter, neither does Rauner’s budget crisis.


  16. - Demoralized - Friday, Apr 21, 17 @ 10:56 am:

    ==and what has the legislature brought forward during this time frame==

    See “Grand Bargain.”


  17. - 37B - Friday, Apr 21, 17 @ 10:57 am:

    @JB13
    When income taxes were 1.25 percent higher, all of the state’s bills got paid and the bill backlog was paid down to below $3.5 billion. State services were being provided and higher education was being funded. Now, by the GA acceding to the Governor’s admonition to let taxes retreat by 1.25%, the backlog has risen by more than $9 billion. At this point, I don’t see how even restoring the 1.25% would get the State back to pre-Rauner solvency levels.
    In other words, I agree with you but for different reasons.


  18. - Demoralized - Friday, Apr 21, 17 @ 10:58 am:

    “Growth only” doesn’t fix anything now.


  19. - Earnest - Friday, Apr 21, 17 @ 11:01 am:

    >Reasonable people also can and will demand something in return, some way the other “stakeholders” at least share in the taxpayers’ pain to come.

    What do you think is a fair thing to demand in return? I like many of the things Rauner talks about, but he never comes down to what, exactly, he’d consider a fair trade. I can’t picture it, and I don’t see the reason in running up bills and destruction for something which will have no short or even medium term impact.

    Also, who is a “stakeholder” and who is a “taxpayer”? Are people who are employed and don’t work for the state the only taxpayers, or are other people too?


  20. - Langhorne - Friday, Apr 21, 17 @ 11:13 am:

    My dad taught me at arlington park, “bettin on em, dont make em win.”

    Growth is great, but it doesnt happen magically, or in a vacuum. The state has taken hundreds and hundreds of millions out of the economy. You want growth? Do your job–pay your bills.


  21. - Chicago Cynic - Friday, Apr 21, 17 @ 11:25 am:

    As usual, the Civic Federation nails it. The decisions of the last two years by Rauner have had horrific consequences for our state. First rule when you’re stuck in a hole is stop digging. Governor, it’s time to stop digging.


  22. - ste_with_a_v_en - Friday, Apr 21, 17 @ 11:50 am:

    @37B
    -Now, by the GA acceding to the Governor’s admonition to let taxes retreat by 1.25%
    It went back down before he was sworn in. And that’s how it was planned. Sure he said not to in the lame duck session, but he had no legal authority to stop it


  23. - Skeptic - Friday, Apr 21, 17 @ 12:04 pm:

    “but he had no legal authority to stop it” Ok, so if Madigan proposes a tax hike, you’d yell from the roof tops, yet you blame Madigan for letting the tax rate drop too? Pick a lane.


  24. - Skeptic - Friday, Apr 21, 17 @ 12:08 pm:

    “Now, by the GA acceding to the Governor’s admonition to let taxes retreat by 1.25%” Also recall that Rauner (through twisted logic) said that by not letting the tax rate drop, the party in power was raising taxes by 67%. So there’s that as well.


  25. - Oboe - Friday, Apr 21, 17 @ 12:13 pm:

    Rauner’s ultimate goal is to be the first state since Arkansas in 1933 to default on its debt obligations.
    Yes, it will take an act of Congress, but it seems that nothing less will change where Illinois will end up.
    Ala United, Ford, etc., this is a typical corporate strategy used to restructure their debts and pension liabilities.


  26. - Illinois O'Malley - Friday, Apr 21, 17 @ 1:13 pm:

    @ste, so nothing is Rauner’s fault, got it. He’s powerless, he can’t even propose a balanced budget, heard Madigan blocked the use of math to come up with one


  27. - City Zen - Friday, Apr 21, 17 @ 1:45 pm:

    ==Government spending outpaces “growth” because wages are not keeping up with inflation, all while corporate profits and stock values continue to reach record highs.==

    Pensioners don’t seem to mind.


  28. - Ron - Friday, Apr 21, 17 @ 1:51 pm:

    Under Rauner, Illinois unemployment has fallen and jobs are near all time highs.

    Illinois government has been broken for decades. That’s not new.


  29. - Ron - Friday, Apr 21, 17 @ 1:52 pm:

    Oboe, it’s a typical strategy because it’s the only one that works.


  30. - Oswego Willy - Friday, Apr 21, 17 @ 1:58 pm:

    ===Sure he said not to in the lame duck session…===

    Rauner campaigned on letting it sunset, Rauner as Governor-Elect begged and then applauded the sunsetting of the tax.

    Rauner, had he kept quiet, he would have been able to really hammer Dems for not either making it permanent or continuing the rate via legislation.

    Rauner is as complicit in the sun setting as the lame duck GA.

    Rookie mistake. Rauner asked for it to sunset, the GA obliged, lol


  31. - City Zen - Friday, Apr 21, 17 @ 2:01 pm:

    ==When income taxes were 1.25 percent higher, all of the state’s bills got paid and the bill backlog was paid down to below $3.5 billion. State services were being provided and higher education was being funded. ==

    Isn’t there an opportunity cost you’re not accounting for? Once you give the state that 1.25%, you simultaneously remove 1.25% from the economy. All your choosing is who spends it and where.


  32. - anon2 - Friday, Apr 21, 17 @ 2:07 pm:

    === Once you give the state that 1.25%, you simultaneously remove 1.25% from the economy. ===

    When vendors are paid on time, the revenue is back in the economy.


  33. - Ron - Friday, Apr 21, 17 @ 2:28 pm:

    The state of Illinois has no idea how to efficiently spend money. Remember, we have constitutionally/taxpayer guaranteed public employee pensions. The market changes, no matter, the taxpayer gets to pay.

    That is Illinois government.


  34. - Ron - Friday, Apr 21, 17 @ 2:29 pm:

    I get very little return for the 10,000 of 1,000s of $s I send to Springfield.

    It’s infuriating.


  35. - NoGifts - Friday, Apr 21, 17 @ 2:32 pm:

    Thanks anon2, and government spending has the multiplier effect just like other spending.


  36. - JS Mill - Friday, Apr 21, 17 @ 2:36 pm:

    =I get very little return for the 10,000 of 1,000s of $s I send to Springfield.=

    That is the exact argument against a property tax freeze!

    Thank you.


  37. - Earnest - Friday, Apr 21, 17 @ 3:57 pm:

    >Remember, we have constitutionally/taxpayer guaranteed public employee pensions. The market changes, no matter, the taxpayer gets to pay.

    Would it be OK to apply this same reasoning to Social Security and Medicare? If the federal government is running a deficit or has debt, it would be fine to reduce monthly amounts or take away COLAs or reduce Medicare coverage?


  38. - CapnCrunch - Friday, Apr 21, 17 @ 4:16 pm:

    “Rauner is as complicit in the sun setting as the lame duck GA.
    Rookie mistake. Rauner asked for it to sunset, the GA obliged, lol”

    Will, why do you think the GA obliged?
    Was it the power the Governor-elect had over them?
    Was it his persuasive arguments?
    Was it because they agreed with him that Illinois did not need the revenue?
    Why?


  39. - Oswego Willy - Friday, Apr 21, 17 @ 4:28 pm:

    ===Will, why do you think the GA obliged?
    Was it the power the Governor-elect had over them?===

    The GA had the power of making Rauner accountable for the actions of the sunset.

    In actual politics, it was genius to let Rauner publicly call, beg, and applaud the sunsetting.

    It made Rauner complict and took away a hammer Rauner could’ve had by being silent, and now hammering them for the inaction. The power was feeding Rauner’s ego, and fulfilling a want.

    ===Was it his persuasive arguments?
    Was it because they agreed with him that Illinois did not need the revenue?===

    Rauner’s argument was he could balance a budget without it, but in reality it was to leverage the actual need of Revevue to wedge social services and higher education to destroy labor.

    So there was that, Rauner thinking Dems will…

    Raise taxes, destroy labor, all on their own to save social services and higher ed, things Rauner held hostage… aided by the sunsetting Revevue.

    How’s that? That answer your question?


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