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And here’s the Vaught video…

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* Yesterday, Gov. Pat Quinn claimed that Bloomberg News had “misconstrued” his budget director David Vaught’s remarks when it ran this story…

Lawmakers will likely increase the personal tax to 5 percent from 3 percent, generating $6 billion of new revenue, the budget director, David Vaught, said in an interview. The legislature failed to address the deficit this year because of the pending November election, he said.

“We’re going to pass a tax increase in January,” Vaught said. “We expect it is going to be substantial.”

Bloomberg has posted the video from the interview. I’ve edited it down a bit. Have a look…

When asked how he defined “substantial,” Vaught pointed to Gov. Quinn’s latest one-point tax hike plan, but then went on to describe how the Senate had already passed a 67 percent income tax increase and related how the governor himself had testified at a House committee in favor of that very same tax increase.

More importantly, listen closely to what John Sinsheimer, Quinn’s director of capital markets, has to say. He points out that the “deficit” is $6 billion…

“The overseas investors we talked to, when we told them we could balance the budget with a 2 percent increase in individual and corporate income taxes, that pretty much raises $6 billion, slightly less than that.”

So, the Quinn team was also telling foreign investors how they could wipe out the deficit with a 67 percent tax hike.

I’ll leave it to others to judge whether or not Bloomberg “misconstrued” the remarks, but it seems clear from these excerpts, at least, that the two men were pointing heavily at increasing the income tax from 3 to 5 percent come January.

posted by Rich Miller
Friday, Jul 30, 10 @ 2:14 pm

Comments

I keep hearing Quinn in the voice of Ricky Ricardo from the I love lucy show talking to Vaught and saying he has some explainin to do….

Comment by Ghost Friday, Jul 30, 10 @ 2:24 pm
ABOUT TIME that SOMEBODY is honest about the fact that a substantial tax increase is necessary to balance the budget. Too bad it was not Quinn himself. Once again Quinn looks weak and ineffective. Stand behind your guy or get rid of him. Quinn does neither. Very disappointing. Turns out he hired some good people, but doesn’t have the guts to stand behind them.

Comment by Skeeter Friday, Jul 30, 10 @ 2:27 pm
Vaught is a brilliant guy who was thrown into a horrible job. I watched the entire Bloomberg video and it does appear that he was explaining the different proposals floating around.

Whether you want a tax increase or not, the guy was being honest.

Comment by ugh Friday, Jul 30, 10 @ 2:31 pm
If you proceed with the assumption that no real cuts can be made, no programs can be combined or eliminated, that 20% pay raises for your inner circle is “just how it works”, then raising the income tax to 5% won’t cut it.

First, our deficit next year will probably be aroud $15B (part of that will be carried over bills of course). Our required pension payment to the pension systems is still ramping up to “catch us up” on full funding, so there will be that increase also in expenses. Add to that higher debt service because of increase borrowing to handle this year.

Heck, let’s assume 2% gets us a $6B deficit. AT BEST, that will be in place by Jan if they do it in veto session, but income taxes raised for next year aren’t collected until 2012. You can play some games with those who pre-pay and spending withholding and hoping you’ve got the cash to pay tax returns, sure.

So let’s just assume you can spend that tax increase starting Jan 1. The year is half up, so you’d have $3B of increased revenue for $6B in expenses… carry that next $3B over as overdue bills.

It’s, of course, more complicated then that…

If you aren’t going to deal with the spending problem, you’d need to raise the income tax to at least 7% and that’s before accounting for the immenent spending spree because there is no way that additional revenue won’t also come with additional spending attached to it. Realistically, you’re talking 8-9% and that’s if you do it before 2011.

For the record, I do not accept the assumption that we can’t deal with the spending side of things too.

Comment by John Bambenek Friday, Jul 30, 10 @ 2:35 pm
Would he still push this tax increase if he would be defeated in his election bid for governor in November?

Comment by Levois Friday, Jul 30, 10 @ 2:37 pm
Levois-

My money is that the tax increase is passed in the veto session.

Comment by John Bambenek Friday, Jul 30, 10 @ 2:40 pm
If Quinn’s advisors are currently talking to foreign investors about a 66% increase, and last year, Quinn himself said he was for a 66% increase in his testimony before the State Senate, it is logical to assume that he is for a 66% increase. His call for a 33% increase is obviously a lie, or at least an embellishment, on what his administration is doing, and what he is on record as favoring.

Quinn is a liar.

(Thanks to all the “Kirk is a liar” people for providing me this methodology.)

On a serious note, there are a couple of things I notice here. Quinn is saying the legislators will be returning in January to pass a 33-66%. Has any reporter asked the legislative leaders about this?

Is there one single additional dollar that the governor would cut from the current budget to help balance it. Since the legislature punted and gave him budgetary authority, he cannot dodge this question either.

Comment by Cincinnatus Friday, Jul 30, 10 @ 2:41 pm
===My money is that the tax increase is passed in the veto session.===

On a three fifths vote? Seriously?

Comment by Rich Miller Friday, Jul 30, 10 @ 2:41 pm
Rich-

Yes. The votes are there once they don’t have to worry about an election. I’d imagine even Republicans would sign on to do it during the veto session so they can pass it, Quinn can sign it and they don’t have to worry about it being Brady’s tax increase. Of course, that assumes Brady wins….

Comment by John Bambenek Friday, Jul 30, 10 @ 2:43 pm
John, no way will the Democrats help out Brady with a tax hike. He’ll have to beg for one.

Comment by Rich Miller Friday, Jul 30, 10 @ 2:44 pm
You know full well Brady won’t beg for a tax hike. He may hem on the margins with fees or things he can say aren’t tax hikes, but no way he hikes taxes.

At worst, the status quo will be maintained. At best, all the pressure for him to become Illinos’ Chris Christie may be realized.

Comment by John Bambenek Friday, Jul 30, 10 @ 2:47 pm
“Whether you want a tax increase or not, the guy was being honest.”

Fair enough, but then if that was honesty, then was it dishonest for his boss to turn around and say the media ‘misconstrued’ his comments?

And if this , then why not initiate the boss into the same liar’s club as Congressman Kirk?

For if the intent to raise by 2% has been discussed, debated and decided upon, then don’t the voters have a right to know?

Bottom line - Enacting a tax hike in this economy cannot be done without negotiating if first with the voters. If our aspiring elected official’s don’t treat it like a negotiation, they will lose.

Any good negotiator must give up something for something. Unfortunately for Quinn, he appears to be pandering instead of negotiating with the voters on this one and Brady, by talking cuts first, seems to be on the side of the people…at least the ones who aren’t dependent on government…by acknowledging govnernment’s weakness in it’s negotiation position.

But don’t get me wrong, Brady can still find time to screw this up.

Comment by Son of Ben Friday, Jul 30, 10 @ 2:48 pm
- John Bambenek - Friday, Jul 30, 10 @ 2:47 pm:

“At best, all the pressure for him to become Illinos’ Chris Christie may be realized.”

SPIT - TAKE! We should be so lucky. And I am a Brady supporter.

Comment by Cincinnatus Friday, Jul 30, 10 @ 2:51 pm
–John, no way will the Democrats help out Brady with a tax hike. He’ll have to beg for one.–

You’re not kidding. If I were Brady, I’d be scared to death if I had to govern as I campaigned.

Comment by wordslinger Friday, Jul 30, 10 @ 2:52 pm
John, why on earth would Dems help Brady and make his job easier by balancing the budget with a big tax hike? So, They go into a redistricting year having to defend the “biggest tax increase in Illinois history” and Bill gets to rail against it and then spend all the money and have a fairly easy first term. Unless Madigan and Cullerton have had labotomys, there is just no way that would posssibly happen.

Comment by raising kane Friday, Jul 30, 10 @ 3:04 pm
Brady can kick this mess back at the GA. brady can basically veto any spending thats not balanced and demand the GA decide what to spend where.

Comment by Ghost Friday, Jul 30, 10 @ 3:20 pm
Well, I love the cynicism shown here.

If Democrats, and those on this board who side with them, really feel that a tax hike is really necessary, then they should pass one no matter who is elected Governor. You are tacitly admitting that there is no seriousness from the Democrats about balancing the budget, or that they have any ideas to do so outside of increasing taxes. Let’s see some real spending cuts offered by the Democrats to reign in the deficit. Maybe of some serious good-faith effort on this front of deficit reduction were offered by Democrats, perhaps a grand compromise could be reached with Republicans on a program that also has limited, sunsetted tax increases.

If you don’t want to pass a tax increase, what is YOUR plan to balance the budget. This is an important question since it is often used to disparage Brady.

Comment by Cincinnatus Friday, Jul 30, 10 @ 3:21 pm
Assuming Quinn’s response is going to make it to Bloomberg, then everyone in Europe who is going to buy Illinois bonds is going to have heard this

“The overseas investors we talked to, when we told them we could balance the budget with a 2 percent increase in individual and corporate income taxes, that pretty much raises $6 billion, slightly less than that.”

Is going to see something about Quinn saying

Quinn vows to veto any income tax hike that is over one percentage point…

And is going to wonder if they were being sold a bill of goods. At the least this is going to make it a bit harder to sell bonds in Europe.

Comment by OneMan Friday, Jul 30, 10 @ 3:23 pm
“Misconstrued?” I played it three times. Seemed pretty darn clear to me what the man was saying!

Comment by Louis G. Atsaves Friday, Jul 30, 10 @ 3:26 pm
The State needs the tax to support the government at its current level and to repay debt. The voters and the state economy do not need a tax increase. I.E. we need LESS government.

Comment by Lefty Friday, Jul 30, 10 @ 3:48 pm
Why would both candidates box themselves in so rigidly and reduce their options to effectively govern should they be elected?

The candidates should be open to the possibility that both increased taxation and reduced spending will be needed. We all know that Illinois governmental expenses and associated costs including pensions are unsustainable. The only way that the voters are going to endorse a needed tax increase is if the leadership can offer a long range plan to reduce the size and scope of government. A ten percent reduction as Brady has proposed should be openly debated. And if Quinn and his advisers truly believe that a 66% income tax increase is needed then that too should be a subject for serious debate.

There has been way too much jelly headed jawboning done by both of the candidates. Not a good sign of better times a coming. Don’t they realize how they unsettle a shaky base with their nonsensical campaigning?

Comment by Vole Friday, Jul 30, 10 @ 3:50 pm
I’m still thinking that the public will not accept any sort of tax hike, not a penny, until they actually experience the affect of cuts on a personal level. They won’t feel any affect, though, because there are no significant cuts yet. This is why State employees seem to be the only ones crying for the tax hike at this point. The only acceptable cuts are cuts to State workers (deserved or not). If cuts were broader, the acceptance of a tax hike would also increase. I believe (or hope) that’s what the GOP is thinking in saying, no tax increase until we cut something significant…i.e. education, health care, etc.

Or… maybe I’m just dumb

What Vaught said was accurate and the fact that Quinn doesn’t back his statement 100% is not a surprise considering his track record. Quinn lost me when he was too weak to even rescind the seniors ride free program. It proved he’s not interested in cuts at all. Sell us this tax hike along with broader cuts and it could be sold!

Comment by gsb Friday, Jul 30, 10 @ 3:52 pm
This feels to me like these guys were blowing a little smoke. Do Bloomberg’s reporters have that effect on people. From the Big City and so on. Gotta show we’re on top of things. Oh yeah, it’s under control. Of course, they said it was under control last year, and there was going to be a tax increase this summer.

Still, questions remain. What is the deficit?
If’s it’s only 6 billion what happened to the
other 7 billion. Did we really save that much
on cutting travel and furlough days? Wow. Let’s back up. How do you define deficit?

We are doomed…to permanent obfuscation by representatives of the Quinn administration.

Comment by cassandra Friday, Jul 30, 10 @ 4:02 pm
If Brady wins Madigan will wait for Brady to present his budget balancing ideas. Everybody will be coming to Madigan, but he’ll forward all the calls to Brady and then wait it out. If Quinn wins then we’ll get more of the same misdirection. However, I don’t see Quinn winning in this economy once voters start to focus on the bumbling, jumbling, fumbling job he and his crew has done over the last 18 months. Does anybody trust Quinn to spend a dollar wisely?

Comment by Louis Howe Friday, Jul 30, 10 @ 4:19 pm
@cassandra:

You know very well that there is a difference between the deficit and the debt. I know that the $13B number is what has been thrown around but it consists of two distinct things. Thing 1 - the deficit in the current year budget, which means appropriations are larger than projected revenues. Thing 2 - the debt, which means the bills already incurred that need to be paid off from the prior year. Those two add to $13 billion. I agree that only speaking about one of the numbers confuses people but I don’t know how people in the markets think. Maybe to them the more important number is the deficit b/c it indicates our inability to pass a balanced budget.

Now, to the larger picture. I know people here are arguing about tax increases or expenditure cuts, but I have found no serious people that don’t believe that BOTH need to happen. Neither will happen until after the election and the Governor and General Assembly are sworn in to office in Janury. I think it is disingenuous of people to only argue one side of the issue. Brady and some of his supporters argue that only cuts are needed. That is simply a lie. Yes you have to cut spending to ultimately balance the budget but you also have to have a revenue increase to get rid of the debt (it could be a short term increase, but an increase just the same). The other side of the coin, such as the teachers unions who proclaim that more revenue is the only answer ignore the fact that we could increase revenues every year and still not keep up with the upward spiral of programs paid for by the state. One day sanity must prevail. God can only tell when that day will arrive in Illinois. I would hope it would be before I die (I’m 35 now), but I won’t count on it.

Comment by RJW Friday, Jul 30, 10 @ 4:37 pm
@Cincinnatus:

Your overriding partisanship in your comments obvioulsy clouds your ability to reason. Until you realize that no matter the past, both parties will need to work to solve the problem we are in, attitudes like yours will keep the state exactly where it is right now.

I am not going to argue that Democrats have done well with the budget. I’m pretty sure that my 8 year old son could do better. But what exactly would you like them to do. This past session they offered a budget with across the board cuts - no different that Brady’s philosophy - and the Republicans scoffed at it as a stunt and voted against it. Stunt or not, they got an opportunity to vote on massive cuts and said no. The Republicans were given the option in the House of presenting a budget - again they said no. The Democrats said we need to borrow to help with pension payments. The Republicans said no. The Democrats passed a tax increase in one chamber and the Republicans said no. I think that runs the table on ideas - real, crappy, or otherwise. What else is it exactly that you want to see done?

Comment by RJW Friday, Jul 30, 10 @ 4:46 pm
What has really changed since this entire budget process started. Most services are still available. Maybe some less (along with lots of statements about many services stopping), but for most people things are still OK. Of the human services, how many have actually closed? Schools have announced layoffs as a preliminary, but students have not stepped into those changes yet. Roads are OK, highways just need mowing badly. The budget deficit will not get serious attention until it hits the general public in the forehead. 30-50 large human services organizations actually go out of business, class size are at 40 students/sports programs cut, local property taxes get serious hikes, and, unfortunately, increased serious bad incidents (deaths and more police involvement) happen because previous support systems are gone. All a bunch of business as usual words to most people until it hits them personally.

Comment by zatoichi Friday, Jul 30, 10 @ 4:51 pm
RJW,

Read into it whatever you want, but I have been proposing (on this site) that I’d go along with a tax increase if some spending cuts came first. As a matter of fact, in the post you reference, I say.

“Maybe of some serious good-faith effort on this front of deficit reduction were offered by Democrats, perhaps a grand compromise could be reached with Republicans on a program that also has limited, sunsetted tax increases.”

The only consistently partisan group are those that always talk about tax increases and NEVER utter a word about spending cuts, going out of their why to criticize any commenter who proposes any kind of cut on any program whatsoever.

In the last session, Republicans were constantly kept out of serious negotiations, by the DEMOCRATS. Madigan did it. Cullerton did it. Quinn did it. No wonder the Democrats in the GA punted, they never tried a single serious attempt to negotiate with the Republican caucus, all they did was try to pick off a legislator here or a legislator there.

Democrats could not get their own house in order to pass anything. Punt. With their overwhelming majority, the Democrats had many opportunities to lead, the didn’t. Don’t blame Republicans for Democrat shortfalls.

Comment by Cincinnatus Friday, Jul 30, 10 @ 5:01 pm
RJW, I don’t think C is all that partisan, he is quite conservative. If you are conservative, you don’t end up quoting or spouting a lot of D rhetoric. I may be more partisan than C, just not as conservative.

Comment by steve schnorf Friday, Jul 30, 10 @ 5:27 pm
Zatoichi has hit the nail on the head. Until the public FEELS the pain of the budget situation, nothing will happen. They don’t feel borrowing. They don’t feel 270 day payment cycles (unless they work for that state vendor).

They feel it when their tax refund and benefit checks don’t come and state offices are closed 3 of 5 days and parks are closed and teachers aren’t there to teach their kids.

If most Republicans in the GA agree with the funny math of some commenters here and believe that they can balance the budget on cuts alone with no borrowing or tax increases, then the government will shut down and all those bad things will happen. Then perhaps the outcome will change. Until then, they’ll all keep fiddling while Rome continues to burn.

Comment by Chicago Cynic Friday, Jul 30, 10 @ 5:34 pm
Too late for anyone to read this (Everyone has gone home from work). However, Zatiochi is spot-on. Almost no one other than those relative few directly dependent on state funded services have felt any pain from all of this. Schools have not closed, massive teacher lay-offs have not ocurred, parks and historic sites are still open, everyone who drives a car can see highway work underway, etc. etc. There is no real budget crisis in the eyes of the average guy outside of Springfield. Nothing is going to happen anytime soon on taxes and nothing will happen until there is a widespread and serious collapse of the services that impact the middle class.

Comment by Skirmisher Friday, Jul 30, 10 @ 6:14 pm
==things he can say aren’t tax hikes==
ah, straight from the George Ryan “user fee” playbook….

Comment by Vote Quimby! Friday, Jul 30, 10 @ 10:04 pm
We had a Governor who was crazy. Now we have a Governor who is driving the rest of us crazy, by espousing good positions but then not having the ability or courage to follow up on them. I suppose this is a bit of an improvement, but I hope some time in the future we get a REAL Governor.

Comment by jake Saturday, Jul 31, 10 @ 9:38 am
This is precisely why staff is told not to talk to the media.

Comment by heet101 Saturday, Jul 31, 10 @ 10:19 am