* From a Chicago Tribune editorial entitled “Puerto Rico is the frightening Ghost of Illinois Future”…

The island, an American territory, is weighed down by $123 billion in bond and pension debt it cannot afford. Illinois, meanwhile, has about $130 billion in unfunded pension obligations alone, plus billions more in retiree health care and other liabilities. The circumstances are different, but no government can function properly — indefinitely — under ever-rising debt. Eventually something gives.

One of the different “circumstances” is that Puerto Rico’s population is just 29 percent of the Illinois Census number. So our debt would have to be much, much higher to match PR’s problem.

Another difference is that the vast majority of Illinois’ debt is tied up in long-term pension obligations, while, according to the Tribune editorial, 61 percent of PR’s outstanding debt is in bonds, which are likely much shorter term obligations.

And yet another difference is that Puerto Rico’s top income tax rate is vastly higher than ours: $8,430 on the first $61,500 (13.7 percent) plus 33 percent on any income over $61,500. They simply have much less room to raise their rates than we do at our current 3.75 percent.

…Adding… It has been duly noted in comments that PR residents don’t pay federal income taxes.

…Adding… As noted by a commenter, Illinois’ gross state product is about 7 times higher than Puerto Rico’s.

* The editorial’s conclusion…

The right response for Illinois is to look at the ruin of Puerto Rico and take its fate as a dire warning: This state has an unsustainable debt load. Eventually it will overwhelm government and taxpayers. No plan to reform the economy to spur growth and create more taxpayers. A $12 billion backlog of unpaid bills. Only gridlock and infighting as the debt load grows. But it is not too late for Illinois to change its ways.

You won’t get any argument from me that we need some economic reforms in this state. But that’s more of a long-term issue. Our debt load is currently “unsustainable” because the politicians in charge won’t find the money to pay for it via revenues and budget cuts. What’s happening right now is a completely man-made crisis.

* Scream all you want about it, but Illinois can’t just walk away from that debt. It has to be paid unless Congress steps in. And that’s something that even the Tribune doesn’t like…

It’s a theoretical solution no one should wish for because of the pain and chaos it would create. If bankruptcy protection became an option, bondholders would charge punishing interest rates, or quit buying Illinois bonds, because of the increased risk that the state couldn’t make its interest payments.