* Fox News…
Illinois Democratic Gov. Pat Quinn is getting hit with a nationwide backlash over his suggestion that the federal government bail out the state employees’ pension program.
Critics have in the past several days pounced on the suggestion, made last year when Quinn, in announcing the state’s fiscal 2012 budget, said part of Illinois’ long-term effort to reduce the estimate $167 billion in under-funded liabilities would be to seek “a federal guarantee of the debt.”
A national backlash? Maybe in the conservative echo chamber. As far as I can tell, nobody else cares much, if at all.
* Let’s scroll downward…
The basic plan floated by Quinn would be for the federal government to rescue the pension program through buying the state’s bonds, which critics say are too financially risky to attract investors.
Quinn said after announcing the budget that seeking the federal guarantee was only a precaution, then later called the related wording a “drafting error,” according the non-partisan Citizens Against Government Waste
* OK, we’re gonna take this one point at a time…
* 1…
The basic plan floated by Quinn would be for the federal government to rescue the pension program through buying the state’s bonds
* Former budget director David Vaught did make that suggestion, but not recently. He said this way back in October of 2009…
According to newly installed state Budget Director David Vaught, Gov. Pat Quinn recently brought up the idea with U.S. Treasury Secretary Timothy Geithner and others at the White House. The governor got a good enough reception that “he intends to extend” his efforts, Mr. Vaught said.
A federally guaranteed bond issue could be an enormous help to Illinois in dealing with a huge fiscal 2011 budget hole that Dan Long, executive director of the Commission on Government Forecasting and Accountability, the Legislature’s fiscal research arm, now pegs at $11 billion to $12 billion.
Mr. Vaught said a federal guarantee would cut the interest rate on such a bond to “in the 3% to 4% range” from “5% to 6%.” That would make it much more profitable — and less risky — for the state, which would invest the funds in higher-yielding stocks and bonds.
Since any profits could be booked up front, at least in part, the state would be able to avoid making hundreds of millions and perhaps billions in annual contributions to worker pensions that it otherwise would have to come up with in the next few years.
* 2…
state’s bonds, which critics say are too financially risky to attract investors
* Actually, the state’s bond sales have consistently been way over-subscribed. From July…
State receives $14.9 billion in orders for $1.5 billion bond deal
* 3…
Quinn said after announcing the budget that seeking the federal guarantee was only a precaution
* Um, he never said that. Citizens Against Government Waste claimed Quinn said this last month when it awarded the governor its “Porker of the Month” honor…
When queried about it then, the governor claimed that the inclusion of that bailout language was a “precaution.”
Notice how CAGW used quotes around “precaution,” but the word doesn’t appear at all in the 2011 Fox Business story it linked to. Nor is the word or the quote in the video accompanying the story. So, that’s just false.
…Adding… The group should’ve linked to this story…
The governor of Illinois said Friday he is not seeking a federal guarantee of his state’s pension debt, but that he included the proposal in his budget last week “as a precaution” as he struggles to fund pension obligations for public employees.
“That’s not something we’re pushing, really,” Gov. Pat Quinn (D-Ill.) said in an interview with Fox Business, after he and a dozen fellow Democratic governors met with President Obama at the White House to discuss possible moves to boost the economy.
OK, so he did say that. Let’s move on….
* 4…
then later called the related wording a “drafting error,”
* In reality, Quinn’s staff immediately said a staffer made an error when the analysis was written when queried by Fox Business News and others in 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.”
* So, what happened between 2009 and 2011? Back in 2009, and then again in 2010 Quinn used borrowing to make the full pension payment. But then he declared that there would be no more bonding for pension payments. Why? Well, the income tax hike gave him the revenues to make those payments. So, there was no pension bond request in his FY 2012 budget proposal in February of 2011. The tax hike revenues will fall short of making those payments in the coming years, which is a big reason why he’s pushing pension reform. Also, the Republicans took control of the US House in November, 2010 election, so by early 2011 there was no way in heck any idea like that would fly.
In other words, when the state was borrowing to make pension payments, Quinn discussed a federal bailout. But he was apparently denied by the President and DC Democrats back in 2009 because nothing ever happened, even with Democratic control of both congressional chambers.
And now, for whatever reason, the echo chamber is dredging these old stories up.
* Back to the Fox News story…
In addition, an editorial Tuesday in the Chicago Tribune argued that saving Illinois will “start a stampede of demands for equal treatment from other financially troubled states” with public pension debts ranging from $1 trillion to $25 trillion.
That was no “editorial.” It was an op-ed by Dennis Byrne. Big difference. [And no offense meant to Dennis, either. Just pointing out that an op-ed ain’t an editorial.]
