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Griffin’s Rauneresque gambit

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Illinois

* Greg Hinz writes about a meeting between the state’s wealthiest then-resident and Illinois’ billionaire governor...

Was there a way for two of Illinois’ richest residents to reach peace and avoid a yearslong war, with Gov. J.B. Pritzker getting the tax revenue he wanted to run the state and Citadel’s Ken Griffin keeping both his residence and his company headquarters in Illinois? […]

In the Pritzker account, Griffin talked mostly about the necessity of cutting the state’s spiraling pension costs by using Pritzker’s political clout to push for an amendment to the Illinois Constitution allowing a cut. There also may have been discussion about moving new state workers to a defined-contribution 401(k)-style retirement plan.

Pritzker said no, on the basis that pensions are a promise that should be maintained and that dumping the Constitution’s pension clause would be rejected by the courts. […]

Griffin told Pritzker he had a rare opportunity to run the state not from the political left but the center, dealing with unaffordable pension costs, such as a 3% compound annual cost-of-living increase for retirees, while stabilizing state finances with additional revenues, the Griffin account goes.

So, cut pension benefits and Griffin won’t challenge the tax hikes. Pritzker would’ve had to completely alienate organized labor and Democratic legislators from the get-go on a no-win proposal, but, no worries, Griffin would have his back if he somehow beat all odds and succeeded.

This is the same sort of deal that Bruce Rauner offered to legislative Democrats: Give me what I want or I’ll cut off the money, albeit likely offered up in a more polite way.

It takes a three-fifths majority in each chamber to put an amendment on the ballot, and that wasn’t gonna happen. Pritzker would’ve been insane to take that offer. He’d have been ruined politically by blatantly flip-flopping (and undoubtedly failing) on a major pledge to one of his party’s most important and powerful constituencies - and in the wake of a four-year war with an anti-union governor, labor unions were still fiercely united and stronger than ever. The rest of Pritzker’s entire agenda would’ve been derailed.

Apparently as a result of Pritzker’s refusal, Griffin stepped in big to help kill the governor’s graduated income tax proposal. He tried to finish the job this year with a candidate against Pritzker, but came up short and then packed his bags for Florida, where Rauner already resides.

posted by Rich Miller
Wednesday, Jul 6, 22 @ 1:51 pm

Comments

I find it really grotesque that a gazillionaire like Griffin wants to take away pensions of state employees.

Comment by Demoralized Wednesday, Jul 6, 22 @ 1:59 pm
Maybe Griffin and Rauner will someday have beach-side drinks and reflect on their failed methods to destroy middle class working families. And that they were in the wrong state from the get-go to think union and pension busting ever had a chance, especially with their my way or the highway approach. Enjoy the warm weather fellas.

Comment by Baloneymous Wednesday, Jul 6, 22 @ 1:59 pm
Griffin is but one billionaire. What about all the rest of the “dark money” with their own list of demands? “Yale” DeSantis does these deals in Florida all the time (as does his Dixie counterparts), but are the majority people of Florida (and the South) better off as a result? It is heartening to see a Governor with the interests of the great mass of people, and that is why I am thankful to live in Illinois.

Comment by Ares Wednesday, Jul 6, 22 @ 1:59 pm
===Griffin told Pritzker he had a rare opportunity to run the state not from the political left===

Funny how extremists always think they are in the center. His desire for more money at the expense of the life savings of hard working regular folks is gross and disturbing.

Comment by Jibba Wednesday, Jul 6, 22 @ 2:04 pm
The I will not ruin you if you agree to ruin yourself deal. Griffin makes a lot of money but he needs to quit this political hobby because he sucks at it.

Comment by Obama’s Puppy Wednesday, Jul 6, 22 @ 2:05 pm
Three percent isn’t all that much in inflationary times.

Comment by Big Dipper Wednesday, Jul 6, 22 @ 2:09 pm
– Pritzker said no, on the basis that pensions are a promise that should be maintained and that dumping the Constitution’s pension clause would be rejected by the courts –

First reason, OK, well, that’s a political position, and we can agree to disagree.

Second reason? Utter bullhockey. Pure conjecture, at best. The Constitution is not a suicide pact.

Comment by JB13 Wednesday, Jul 6, 22 @ 2:09 pm
Griffin is the worst kind of billionaire. It’s not enough that he has more, other have to have less.

Comment by Jocko Wednesday, Jul 6, 22 @ 2:09 pm
One wonders what Griffin could have gotten if he actually had realistic asks. JB might be allies with organized labor but I don’t think he actually *wants* to be anti-business.

Comment by Nick Wednesday, Jul 6, 22 @ 2:10 pm
Since when did honoring pension obligations become “the political left?” When did depriving people of what they’ve earned become the center? And if it is, I would be very worried about Social Security and/or Medicare. Because I can assure you that guys like Griffin won’t be content with merely sticking it to public sector employees.

Griffin’s objectives are simple. He wants 401Ks (or similar vehicles) to be the sole means of funding an individuals retirement because it’s in his personal and business interest to see that become a reality.

Comment by Pundent Wednesday, Jul 6, 22 @ 2:10 pm
Griffin established that he isn’t going to pay a progressive state income tax in Illinois or the generous public pensions that compound at 3%. Someone else will have to pay.

Comment by Steve Wednesday, Jul 6, 22 @ 2:11 pm
“but came up short”

Like when I tried to take Charlize Theron to the Oscars, but came up short.

Comment by The Captain Wednesday, Jul 6, 22 @ 2:11 pm
“[Pritzker woul]d have been ruined politically” if he had done the right thing? If a billionaire can’t afford to cash in his political capital, who can? The political courtesans who depend on their salary?

Comment by Jim Edgar's Guilty Conscience Wednesday, Jul 6, 22 @ 2:20 pm
It is the standard Republican offer of “compromise.” Stop fighting and roll over on your basic principles and we’ll stop actively making the government worse. Maybe.

Negotiating with Republicans in the last 30 years has always been the same as negotiating with hostage takers.

Comment by Homebody Wednesday, Jul 6, 22 @ 2:21 pm
== if he had done the right thing==

Taking away people’s pensions is the right thing?

Comment by Demoralized Wednesday, Jul 6, 22 @ 2:25 pm
===The Constitution is not a suicide pact===

Coulda fooled me /s

Comment by Rich Miller Wednesday, Jul 6, 22 @ 2:25 pm
Ken had to go be with Bruce; that’s where they keep their shine boxes.

Comment by Give Us Barabbas Wednesday, Jul 6, 22 @ 2:26 pm
@Jim Edgar’s Guilty Conscience, lol, reneging on your debts, being a deadbeat, is doing the right thing? You’re funny.

Comment by Perrid Wednesday, Jul 6, 22 @ 2:27 pm
The cowardly lion of Wall Street. At least we now know we have nothing to fear from him. He will run.

Comment by Ducky LaMoore Wednesday, Jul 6, 22 @ 2:30 pm
Thanks for highlighting the absurdity of Hinz’s premise, Rich. He’s become a complete joke.

Comment by Excitable Boy Wednesday, Jul 6, 22 @ 2:32 pm
Let me point out some basic math that should be pretty obvious to folks but which everyone who keeps floating this idea of a Grand Bargain seems to fail to grasp.

There are around 50% of voters that support a graduated income tax.

There are around 40% of voters who support reducing pension benefits for future public employees.

The percent of Illinoisans who support a Grand Bargain that does both is not 90%. Let me repeat “is not 90%.”

Union members, for example, who might support broader state social programs are not going to support them if it means having their retirement benefits reduced. And Millionaires would sure love to see those state pensions crippled, but not if it means paying an extra $30K in taxes a year for the next 20 years.

The overlap of the two circles in that Venn Diagram is about 7% as I recall from polling by the Paul Simon institute.

What’s more, much to the chagrin of Republicans and some Progressives, Pritzker has managed to prove Illinois can survive without doing either.

Illinois has balanced its budget, eliminated its backlog, built a rain day fund, and is making its pension payments without raising the income tax. Griffin should be declaring victory and endorsing Pritzker.

Comment by Thomas Paine Wednesday, Jul 6, 22 @ 2:33 pm
-He will run-

If you are spending more than 3 months a year in other cities: you have to begin consider the tax consequences of being a resident of a state that taxes income . Economic calculation does, at some point, become something to consider.

Comment by Steve Wednesday, Jul 6, 22 @ 2:35 pm
===The Constitution is not a suicide pact===

But the 2nd amendment…

Comment by Baloneymous Wednesday, Jul 6, 22 @ 2:35 pm
Welching on a promise one is capable of paying has somehow become the dogma of the so-called business class.

Comment by Three Dimensional Checkers Wednesday, Jul 6, 22 @ 2:40 pm
“then packed his bags for Florida”

Griffin cut the ILGOP loose like a bankruptcy. Serves that party right, for running to him after he and Rauner purposely tried to wreck this state in their hatred of unions.

Comment by Grandson of Man Wednesday, Jul 6, 22 @ 2:40 pm
Public employees hired over the last ten years will have a horrible pension. Why can’t Republicans be happy with that “win”?

Comment by Big Dipper Wednesday, Jul 6, 22 @ 2:40 pm
=== Since when did honoring pension obligations become “the political left?” ===

Excellent question. We can add it to the ones dealing with honesty, supporting democracy, taking responsibility, etc., etc.

Comment by Norseman Wednesday, Jul 6, 22 @ 2:42 pm
“dumping the Constitution’s pension clause would be rejected by the courts”

As I understand it, what this means is that even if the pension clause was to be changed, the state would still be bound by the obligations made when the pension clause was in effect.

tl;dr- If you work for me, then I will give you this is a legally binding agreement even without any pensions clause.

And that ain’t bullhockey.

– MrJM

Comment by MisterJayEm Wednesday, Jul 6, 22 @ 2:47 pm
Well, there’s a lot of Wirepoints/IPI flunkies out today

Comment by Morty Wednesday, Jul 6, 22 @ 2:50 pm
Giffin must be a bit a math wiz to make those billions of dollars but he still can’t figure out what a 3/5th majority is?

I wonder what Ken thinks of a front desk worker being shot to death inside a South Beach Hotel a week ago.

Crime out of control in Miami or was is just all about taxes Ken?

Comment by Cool Papa Bell Wednesday, Jul 6, 22 @ 2:51 pm
=or the generous public pensions that compound at 3%.=

SSI COLA adjustment was more than 6%. I’ll take that instead of a 3% increase. SSI- the cadillac retirement.

=Economic calculation does, at some point, become something to consider.=

They guy is worth $25 billion or something like it. A 5% tax on new income is going to have zero impact on his life. The guy might be wealthy, but he is a crybaby.

Comment by JS Mill Wednesday, Jul 6, 22 @ 2:56 pm
==Griffin told Pritzker he had a rare opportunity to run the state not from the political left but the center==

Pssst…JB Pritzker *is in* the political center of this state.

Comment by Arsenal Wednesday, Jul 6, 22 @ 3:05 pm
==Public employees hired over the last ten years will have a horrible pension==

Made possible by the “man who was put on earth to fix pensions” himself, Gov. Quinn aka Squeezy.

Comment by Just Sayin Wednesday, Jul 6, 22 @ 3:06 pm
@JS - I really appreciate your comments today on a number of threads. Keep up the good work.

Comment by Cool Papa Bell Wednesday, Jul 6, 22 @ 3:09 pm
–Giffin must be a bit a math wiz to make those billions of dollars but he still can’t figure out what a 3/5th majority is?–

Griffin has and still has such a feeble grasp of IL politics 101.

Comment by King Louis XVI Wednesday, Jul 6, 22 @ 3:13 pm
==Made possible by the “man who was put on earth to fix pensions” himself, Gov. Quinn aka Squeezy.==

As if Rauner wouldn’t have signed the same bill just a few years later.

Comment by Big Dipper Wednesday, Jul 6, 22 @ 3:14 pm
=Economic calculation does, at some point, become something to consider.=

The economic consideration wasn’t a consideration at all for Ken Griffin. He was willing to pay higher state income taxes as a condition of cutting pension benefits. He was holding pension benefits hostage in the same way our former governor was holding the budget hostage. But why? Maybe because the “economic calculation” for Ken was that it would be far more lucrative to move pensioners into 401K plans.

Comment by Pundent Wednesday, Jul 6, 22 @ 3:21 pm
Trying to cut pensions is one of those be careful what you wish for items. Griffin might not like the results in his own businesses.

Let’s run through two scenarios … far fetched ones but something that would be a logical progression required to void the Illinois pension obligations.

Scenario 1

Assume that Griffin, et al, managed to get the Pension Clause removed from the Illinois Constitution. OK, that was Step 1. But guess what, those pensions have been ruled to be individual contracts. Currently, you can’t unilaterally change an existing contract.

So on to Step 2. You have to modify the Illinois Constitution to void existing contracts. Let’s say you manage that also, and Illinois law says contracts are worthless pieces of paper that don’t have to be honored.

But you still have the US Contracts Clause, so Step 3 involves voiding the Federal Contracts Clause. Again,let’s assume you accomplish that. I’m going to assume at this point that Griffin or his lawyers have some kind of delusion they could only void pension contracts, but I don’t see that flying.

Now all contracts in the United States are null and void. Nobody has to pay their mortgages, car loans, student loans,credit card debt, etc. The banks would no longer have to honor their contracts to safeguard deposits and return the funds to you when requested. Same for investment and brokerage firms. So the entire world of capitalism and consumer commerce would come tumbling down.

Wonder how Griffin would like it that now if his contracts had to honored? He might be OK with it if he could seize all the money invested with his companies. If he managed to do that, he would make the Robber Barons of the late 1800’s and early 1900’s look like pikers.

Scenario 2

Somehow get the Feds to approve bankruptcy for the State of Illinois, an unlikely event given a number of legal issues and past president. But if you did manage it, then the courts step in. If we look at some of the somewhat recent bankruptcies in Detroit and Puerto Rico as indicators of what a Federal Bankruptcy Court might do, it would be likely that the pension obligations would only be cut by around 10% or so, leaving most of the pension debt still owed. However, it is also likely the holders if Illinois bonds would get a major haircut, losing as much as 80% or 90% of their capitol. Rich people like Griffin would take a bath … but hey, they could declare their loses on their income taxes for the next 1,000 years, slightly reducing their income tax bill.

Back to the real world from rich people’s fantasy land.

Given the IL SC rulings on State Retiree Healthcare and State Retiree pensions, nothing is going to happen. And not just for political reasons, but also for reasons of maintaining the current commerce system.

I have to give credit to the author’s of the IL Pension Clause. They were brilliant to start it by declaring pensions are a contract. But they also had a blind spot, because they thought the Pension Clause would be enough to scare the future Legislature and Governor into properly budgeting for pensions; that part didn’t work out like they thought it would.

Comment by RNUG Wednesday, Jul 6, 22 @ 3:23 pm
Tier 2 pension raises = half CPI or 3%, whichever is less. So if there were any Tier 2 retirees collecting, they would likely get the same as Tier 1 next January; 3%. Given enough time, the Tier 2 deal will “fix” the overall pension underfunding problem.

In my mind I’m seeing Ken G as Veruca Salt… “I want it now.”

Comment by From DaZoo Wednesday, Jul 6, 22 @ 3:28 pm
I will take the bait on a Pension Amendment and raise you one outlawing assault weapons.

Comment by Publius Wednesday, Jul 6, 22 @ 3:43 pm
Also what about Police/Fire Pensions? To be fair you would also need to get rid of those also. Then wouldn’t you be anti Police? Worse yet I can just call Griffin someone who wants to defund the Police? All this talk about cutting taxes forgets that at the local level the vast majority of taxes is used to pay for Police/Fire along with their pensions. Someone in our local town was running for mayor he wanted to cut taxes. I said he was in favor of defunding the Police and he didn’t like that but since that was most of the town budget not sure how that isn’t true.

Comment by Publius Wednesday, Jul 6, 22 @ 3:50 pm
RNUG, as usual, nails reality regarding the Pension Clause in the Illinois Constitution. Thanks, pal.

Comment by PublicServant Wednesday, Jul 6, 22 @ 4:10 pm
===Public employees hired over the last ten years will have a horrible pension. Why can’t Republicans be happy with that “win”?===

By 2027, Tier 2 pensions will have to be sweetened, or they’ll be in violation of Federal law for not meeting the Social Security benchmark.

Comment by Fivegreenleaves Wednesday, Jul 6, 22 @ 5:59 pm
Yeah but even if meeting the SS benchmark they will be less than Tier One, which is not as generous as some like to make out in the first place.

Comment by Big Dipper Wednesday, Jul 6, 22 @ 6:03 pm
== Griffin told Pritzker he had a rare opportunity to run the state not from the political left but the center==

Ah yes, a chance to break from Illinois’ long history of radical left-wing governors…

This is what this guy preoccupies himself with. He is standing on a balcony, looking down at retired state workers and saying “Let them eat cat food.”

Comment by granville Wednesday, Jul 6, 22 @ 6:23 pm