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OK, so what’s your plan now?

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Illinois

* Doug Finke speaks truth…

Another week, another series of demonstrations against cuts to state spending.

Actually, it’s not demonstrations against all cuts in spending, just state spending that benefits the demonstrators.

One of those was organized by the Service Employees International Union so seniors and people with disabilities could protest cuts to Medicaid programs. They wanted no reductions in Medicaid. Gov. PAT QUINN has proposed about $1.4 billion in cuts to Medicaid programs to help close a $2.7 billion deficit.

To their credit, the group proposed alternative funding, something usually missing from these protests. To their discredit, the alternative included “fair tax legislation that would cause the wealthy to pay their fair share.”

That’s code for a graduated income tax. A graduated income tax is not allowed by the state constitution. It would have to be amended for that to happen.

A graduated income tax amendment will probably never appear on the ballot, but more specifically, the deadline to get such an amendment on the ballot this year is past. It will be another two years before the opportunity comes around again

The problem is the $2.7 billion Medicaid problem exists right now and must be dealt with right now. Not sure that dangling a pain-free solution in front of people that has no prospect of happening does anything to help resolve the issue. [Emphasis added.]

Agreed.

posted by Rich Miller
Monday, May 21, 12 @ 10:40 am

Comments

If the Seiu folks want fair, how about taxing retirement benefits?

Comment by Louie Monday, May 21, 12 @ 10:49 am
“Cuts for thee but not for me” is about as popular as “Dont’ tax you, don’t tax me, tax the fellow behind the tree.”

Comment by reformer Monday, May 21, 12 @ 10:50 am
Legislators who purport to be concerned about the cuts to Medicaid and other vital services could have put the question of a graduated income tax on the ballot, and they could have voted to close hundreds of millions, if not billions, in corporate tax loopholes. But they chose not to.
Their choice: don’t tax the rich, slash programs for the poor and everyone else.
Don’t make it appear as they had no choice. They did. They are poised to choose the rich!

Comment by Truthteller Monday, May 21, 12 @ 10:51 am
Finke’s criticism is disingenuous. He even admits the fair tax is just one of many revenue options suggested not only by SEIU but many others.

The union ran an ad in the SJR last week which included this list:

Revenue options
Increase the cigarette tax by $1 per pack = $700 million
Make foreign dividends subject to Illinois income tax = $386 million
Reinstitute fund sweeps of surplus revenue outside General Funds = $300 million
Reduce statutory transfers by 9% = $200 million
Eliminate the retailer’s sales tax discount = $100 million
Close corporate tax loophole on purchasing industrial insurance = $10 million
Broaden the sales tax to select consumer services = $550 million
Close corporate tax loophole for offshore oil drilling = $75 million
Use revenue from the Road Fund for Secretary of State and State Police = $250 million
Defer CME/Sears tax break for 1 year = $100 million
Decouple from the Domestic Production Credit = $200 million
Close corporate tax loophole on online hotel purchases = $25 million
Total = $2.9 billion

Comment by Reality Check Monday, May 21, 12 @ 11:04 am
–Their choice: don’t tax the rich—

What are you talking about? Just because we don’t have a Washington style graduated tax structure doesn’t mean the rich don’t pay taxes. It is true that there are corporate loopholes and sweetheart deals for companies, but some deals meant working people got to keep a job in Illinois.

Let’s stop the bad talking points and get into specifics, what specific corporate loop-hole do you want closed?

Comment by Ahoy! Monday, May 21, 12 @ 11:06 am
Taxing retirement income, reducing so called loopoles, taxing cigarettes and adding gambing should all be on the table. Later on, a progressive income tax should be considered as well. These are all far more reasonable than some of the other proposals on the table.

Comment by AC Monday, May 21, 12 @ 11:14 am
=…how about taxing retirement benefits?=

This is a good and fair idea. I would be all in favor of the flat 3% income tax on my PENSION if they would leave my health care alone.

Comment by Leave a Light on George Monday, May 21, 12 @ 11:15 am
@Ahoy -

Actually, a new study of tax expenditures in Illinois shows that not one, single evaluation of corporate tax breaks has been done in Illinois at least since 2007.

In other words, there’s no evidence to back up the claim that tax breaks have saved jobs.

Moreover, if the Illinois Chamber of Commerce is to be believed, those tax breaks are driving jobs out of Illinois.

Illinois provides $1.5 billion in corporate tax breaks.

Illinois corporations pay $1.6 billion in taxes.

If we closed all of those corporate tax loopholes, we could cut the corporate tax rate in half.

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 11:17 am
The latest word is that a cigarette tax increase is going to be part of the Medicaid solution. Is SEIU simply trying to drum up support for this idea, or are they asking for more?

A separate group was claiming last week that the state is “diverting” about $250M of Road Fund money to pay for IDOT staff and benefits. SEIU’s plan would put $250M MORE cost onto Road Fund, the exact opposite of what the road builders want, which also would unwind part of the funding source for the state’s capital budget.

By the way, reducing transfers by $200M would mostly hurt units of local government, by cutting revenue-sharing and transit system subsidies. That idea didn’t go over well last week, given the reaction to Speaker Madigan’s plan to shift $ from local governments to teacher pensions.

Which consumer services are included in SEIU’s $550M item? That’s a pretty big number, it would be nice to know what SEIU wants to tax.

Comment by cover Monday, May 21, 12 @ 11:18 am
@George, Louie -

I believe that SEIU, along with other labor organizations, has supported taxing retirement income above $75,000 (maybe it was $100K).

Not sure why it didn’t make this particular list.

It is a good idea.

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 11:19 am
Cut crony capitalism (let Chicago businesses pay for their stadiums and high speed rail- cut capital program & dept of commerce and economic opportunity.

Cut medicaid
According to Kaiser:
19% Illinois live in poverty- 21% US live in poverty
21% IL residents on medicaid- 20% nationally…

Fewer people in Illinois live in poverty but our medicaid benefits are higher.

Comment by LIberty_first Monday, May 21, 12 @ 11:33 am
Ahem…

More taxes for thee not for me….

Comment by OneMan Monday, May 21, 12 @ 11:37 am
I’m not opposed to taxing retirement benefits as long as the original investment was put in tax free (like regular IRAs). If the retirement investment was taxed when it was put in, then it shouldn’t be taxed when you take it out.

Regarding the idea of taxing the rich - I have some mixed feelings. I believe everyone should have the opportunity to enjoy the fruits of their labors. But at a certain point - wealth becomes so self-sustaining and self-generating that it tax increases have substantially lesser impact on them than individuals of more humble means. And its pretty well established that those with more money can afford access to resources to help reduce their tax burden, while those with less money have to make do with H&R Block or TaxCut to help identify savings.

I don’t blame people for making money. We all want to do it - and we damn sure want enough that we don’t have to worry about anything in the future. But in this day and age where the median CEO salary jumped 27% (median salary of 9 mil in 2010) while worker salaries only increase 2%(2010) - the rationale that tax loopholes for companies somehow create jobs seems thin on the surface. I’m sure that some company somewhere took that tax loophole money and directly it into jobs. But I haven’t seen it, and its hard for those of us at the lower-end of the financial food chain to feel the pain of those who get to fly their private jet between their home in Ohio to work in Chicago, while at the same time complaining that they need more money or a bailout.

Comment by Name Withheld Monday, May 21, 12 @ 11:38 am
Source for CEO salary
http://www.usatoday.com/money/companies/management/story/CEO-pay-2010/45634384/1

Comment by Name Withheld Monday, May 21, 12 @ 11:40 am
@Liberty First -

Happy to join you in your quest for cutting Medicaid enrollment. Which do you prefer:

A) Denying preventative care and doctors visits to children so we can treat them in the ER instead;

B) Denying medical care to seniors so they die quicker;

C) Leaving people with disabilities out on the streets to fend for themselves;

D) All of the above

(Hint: seniors and the disabled make up 2/3 the cost of Medicaid)

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 11:44 am
Yellow Dog Democrat - You and others who want to close corporate tax loopholes consistently do not point to any except the Sears deal. Itemize the loop holes you want to see losed if you really want an honest debate.

Comment by johhnypizza Monday, May 21, 12 @ 11:45 am
==Just because we don’t have a Washington style graduated tax structure…==

Seven states (including Illinois) have flat income taxes, while 35 have graduated tax structures. I suspect there is some merit to such a structure beyond mimicking DC. http://www.taxadmin.org/fta/rate/tax_stru.html

What I find curious, is that this is discussed annually, but the proposed amendments to allow a graduated income tax (one each in the House and Senate) never made it out of committee.

Comment by Pot calling kettle Monday, May 21, 12 @ 12:19 pm
SEIU’s objections to Medicaid cuts are particularly focused on both seniors and people with disabilities who receive home services. Doug Finke’s column completely avoids this critical fact. These cuts are largely in contradiction to the Governor’s proposal to re-balance services to seniors and people with disabilities from state institutions to community services.

SEIU is not alone in its opposition to these cuts, Judith Gethner, Executive Director of Illinois Partners for Human Service has repeatedly asked these questions: Where do you think these people will go? Who will be in community to provide them services?

Mr. Finke reduces the problem to the tax solution for funding these services and avoids the reality of these cuts themselves. I am a little surprised that Rich agrees with Mr. Finke’s article because from prior comments Rich has made I have seen some honest concern with where our state is going in relation to human services cuts that are interrelated to Medicaid cuts. It is not the unions or the service providers job to find a funding solution that is consistent with our flat income tax constitutional provisions, it’s the job of the elected members of the General Assembly and our Governor.

Comment by Rod Monday, May 21, 12 @ 12:20 pm
and they are, Rod. They’re cutting spending to more closely match revenues

Comment by steve schnorf Monday, May 21, 12 @ 12:26 pm
==You and others who want to close corporate tax loopholes consistently do not point to any except the Sears deal. Itemize the loop holes you want to see losed if you really want an honest debate.==

Reality Check’s 11:04 am post has a couple of them.

Comment by anonymice Monday, May 21, 12 @ 12:28 pm
Yellow Dog, you forgot to add a few options:
e) take measures, such as photo id, to cut down on fraud.
f) scale back benefits to more closely match those of surrounding states.
g) put recipients on an HMO, instead of a PPO plan. Its good enough for millions of other workers, it should be good enough for medicaid.

Comment by lincolnlover Monday, May 21, 12 @ 12:34 pm
How about we tax pensions, but we only do it temporarily?

Maybe sunset it after ‘x’ years, like we did with the income tax rate.

Comment by Rufus Monday, May 21, 12 @ 12:38 pm
@Steve - Revenues that are temporarily depressed due to the “Great Republican-caused Recession” that has had the most profound effects on the middle class. And the middle class, victimized again, is a main target of the current crop of proposals.

Depressed revenue streams are temporary, but, again, changes being considered to deferred employee compensation will have effects for decades after this recession, and it’s revenue-decreasing effects have ended.

Comment by PublicServant Monday, May 21, 12 @ 12:39 pm
@lincolnlover -

A) The largest source of fraud in the system is by providers, not recipients. The answer is stiff criminal prosecution and aggressive financial recovery, which has already started happening.

B) “Scaling back benefits” is just a fancy way of saying “cut off care.” The health system is interconnected, so unless you’re suggesting that we start turning people away from ER rooms, there’s always a back door into the system. Its just a very expensive back door.

Take, for example, the “reasonable” idea of scaling back dental care. Sounds reasonable until you consider that instead of spending $10 to fill a cavity, we’ll now be paying for an ER visit, X-rays and emergency oral surgery.

C) The claim that HMO enrollment will save money is dubious at best. First, as any working stiff can tell you, managed care companies primarily “save” money by denying coverage for legitimate care. See B. Secondly, managed care companies save money by squeezing reimbursement rates…its kinda hard to imagine how they’ll squeeze reimbursements any lower than they already are; IL is lowest in the country. Third, 2/3 of Illinois’ Medicaid costs are for the elderly and disabled…there’s not a lot of cost savings to be eked out from those who are already chronically ill.

If you need further proof, as experts point out, many states with Medicaid HMO’s actually spend more per enrollee than Illinois.

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 12:56 pm
@Rufus -

I could live with the temporary income tax hike to give us more breathing room to find a permanent fix.

I don’t think there’s support on either side of the aisle for another temporary fix.

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 12:59 pm
@Schnorf -

I understand the siloed logic of the $2.7 billion in proposed Medicaid cuts; it makes political sense, it just doesn’t make economic sense.

If gas prices went up 20%, you wouldn’t balance the family budget by telling your boss you’re not coming in to work on Fridays any more.

You’d probably look to save money by eliminating things that are less essential first.

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 1:26 pm
I’m sure IPI and the Civic Committee are fine with pitting state employees against the poor in this recession, but here’s a plan that allows SURS to remain a competitive tool for the universities to recruit great professors, with the added benefit of saving the state money on the SURS pension…and it might actually be legal.

http://www.sj-r.com/thedome/x639943528/U-of-I-professors-offer-alternative-for-university-retirement-plan

Comment by PublicServant Monday, May 21, 12 @ 1:34 pm
Dog, I won’t even try to argue that most of the cuts are programatically “good”, just that they are necessary, at least in the short to medium term. We simply can’t, especially after a $7B tax increase, blithely keep spending more than we are bringing in. It has to be dealt with.

Servant, if you believe revenues are “temporarily depressed”, you are in the minority. No one I know of sees a return to the 5%+ growth rate of the late 90s anywhere in the foreseeable future; instead forecasters are seeing 2+ to 3+ %. I believe you further weaken your case by your self-admitted partisanship. As usual, there’s plenty of blame to go around.

Comment by steve schnorf Monday, May 21, 12 @ 1:41 pm
@Schnorf -

Before we start cutting off people’s health care, don’t you think we ought to at least examine statutorily mandated expenditures?

Illinois was just just given a ZERO by the Pew Center for its management of tax expenditures; we’re still haven’t done the long-awaited review of our state mandates, and we’ve got $8 billion in 500 special funds, right?

Poll after poll consistently shows that of the state’s Seven Priority areas, Education, Health Care and Human Services are at the top of the public’s list of priorities.

Logically, the other four Areas are the ones that should be cut, right?

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 3:22 pm
If a number of Republican legislators vote to double the state tax on cigarettes, that will violate the Norquist pledge most of them have signed.

Isn’t it worse to vote for a tax hike if a legislator is also violating a pledge than if he never took the pledge?

Comment by reformer Monday, May 21, 12 @ 3:54 pm
@reformer:

“A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.”

- Emerson

Comment by Yellow Dog Democrat Monday, May 21, 12 @ 3:58 pm
Yellow dog, I prefer cutting medical care to seniors so they die earlier. according to Dartmouth’s center for Health Policy research 25% of medicaid goes to the high cost of treating chronic disease. Most medicare patients are cared for by 10 doctors in their final days. Medicaid provides cancer treatments costing hundreds of thousands of dollars to extend life by 10 days. Poor people and minorities are more likely not to use hospice care and have do-not-resuscitate orders and consume moree life-sustaining treatments at the end of life. there is also a connection between poverty and lifestyle.

Comment by Liberty First Monday, May 21, 12 @ 5:02 pm
@Liberty First -

Good luck with your “Death Panel” legislation.

At least its more intellectually honest than cutting prevention programs like child abuse prevention, illness prevention, or drug addiction prevention and then acting surprised when the inevitable happens.

Comment by Yellow Dog Democrat Tuesday, May 22, 12 @ 3:35 am