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(I)f Illinois decision makers ultimately fail to enact a General Fund budget for FY2016 — which ends in just about two months — state spending on social services will end up anywhere from $400 million to $500 million less in FY2016 than last year.
Meanwhile, the harm caused by Illinois’ disinvestment in social services won’t end with denying vulnerable populations the support they need to lead better, healthier lives. The state’s economy will suffer too. Here’s why. Consumer spending represents 67 to 70 percent of all economic activity. The best consumers are low- and middle-income families, who generally spend most or all of their earnings.
But when state government cuts spending, what’s really getting cut is either the jobs or the wages paid to the workers who actually provide services to the public. For the most part, those workers are middle-income. When they lose jobs or have their wages cut, they spend less in the consumer economy, generating private sector job loss. Based on multipliers developed by Mark Zandi of Moody’s, the bond rating agency, the $400 million to $500 million in estimated social service spending cuts for FY2016 will cause the loss of some 5,000-plus jobs statewide.
Ugh.
Way to create jobs, governor.
* But here’s something else to pay attention to…
And while low-income families of all races suffer when Illinois’ poor fiscal policy forces spending cuts, African Americans are hurt disproportionately. Sure, most — 54 percent — poor people in Illinois are white, but that’s just because most of the state’s population, 77.5 percent, is white. However, as a group, only 11 percent of Illinois whites are poor. Meanwhile African Americans, who represent just 14.5 percent of the state’s total population, nonetheless account for 29 percent of its poor folks. Indeed, almost one-third of Illinois’ African Americans live in poverty.
Which is why it’s so incredible — as in, lacks credibility — when some politicians and talking heads claim that Illinois’ fiscal problems won’t be fixed until some “crisis” forces a resolution. Apparently, it isn’t a crisis when lousy fiscal policy just harms poor folks generally and African Americans specifically.
The House Black Caucus was instrumental in passing the higher education stopgap funding bill. It needs to stand up again and push Speaker Madigan to the negotiating table so we can get a real budget for this state.
posted by Rich Miller
Thursday, May 19, 16 @ 9:46 am
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Perhaps now the governor’s whiz kids will give us their projections on how many jobs will be created by enactment of the governor’s non-budget agenda.
I’ll be especially fascinated to hear how changing redistricting rules after the 2020 census will “grow the economy.”
Numbers, please. The catch phrases, I got.
Comment by Anonymous Thursday, May 19, 16 @ 9:52 am
The real damage of the governor’s insistence on the turnaround agenda has been felt and is readily quantifiable. In contrast, he has yet to quantify its benefits to our state. Platitudes are not worth human lives.
Comment by out of touch Thursday, May 19, 16 @ 10:00 am
We get it.
Unfortunately, the solution we appear to be heading towards is to disproportionately tax the entire working middle class, including the majority who do not work for nonprofits or for the state, to get whatever additional funds
are needed to resolve this budget dilemma.Both parties are fairly well united on that approach, although they rarely talk about it. The state income tax is regressive. Sales taxes are regressive. The rich in Illinois are getting way richer. But let’s not talk about that. Too uncomfortable, not only for politicians, and advocates of various persuasions, but also for the journalists who are supposed to be asking the tough questions. Ha.
Comment by Cassandra Thursday, May 19, 16 @ 10:01 am
But nonprofit agency jobs just don’t count. You see, you aren’t really working unless you work for profit. Helping others doesn’t count unless you can make a profit off it. Honestly, it’s amazing that Rauner hasn’t gone after those nonprofit religious groups (churches, temples, mosques), which contribute no more to society than the social services he’s destroyed. After all, nonprofit bad, profit good, rip apart and sell off the remains great.
Comment by RIJ Thursday, May 19, 16 @ 10:01 am
===But nonprofit agency jobs just don’t count===
I understand your point. But the Moody’s study didn’t just include those jobs. It included the broader impact that cuts have on economic demand.
Comment by Rich Miller Thursday, May 19, 16 @ 10:06 am
I would imagine that the black caucus also realizes that those union jobs they are trying to protect are the only jobs where African American and female workers are paid the same as their white counterparts.
Comment by Trolling Troll Thursday, May 19, 16 @ 10:07 am
This is why many of the members of our trade group are considering, and some cases dropping, their membership in their local Chamber. They have had it with the cheering from the Chamber while they as members, are laying off staff and not being paid.
As one member said, Chamber leadership does seem to think my staff members pay taxes or buy goods and services so why should I pay to be a member of a organization cheering on those putting us out of business.
Comment by Give Me A Break Thursday, May 19, 16 @ 10:10 am
this same point applies to the govs plan to cut worker pay by doubling health insurance and freeze salaries. these are the folks who spend their money in the economy. worker will have less pay to spend, so the economy loses the money shifted to the highest ins premium for a latge company in the area; the health companies, spfld clinic, Memorial, st johns lose money under the new plans that punish utilization, and all the people who earn a living off of worker spending will lose money, so they spend less etc. Basically Rauner is grinding down the economy by freezing and teducing state worker pay.
Comment by Ghost Thursday, May 19, 16 @ 10:10 am
== Way to create jobs, governor. ==
That’s the (sad) joke of all this. Or at least one of many (sad) jokes.
This Governor, with all his vaunted business acumen, is steadily draining away local jobs and local buying power and local economic strength.
Actual, flesh-and-blood working folks are seeing their hours cut or their jobs eliminated as a result of his actions.
And he looks right past them, as though they don’t exist, all in the push for “reforms” that he won’t really spell out in detail, and whose economic superpowers his office cannot quantify.
Unreality TV.
Comment by Linus Thursday, May 19, 16 @ 10:11 am
Yeah, but Martire relies on something called data. Many people in government are more concerned with what plays well to their base than the actual facts. Sound bites like we have high taxes in Illinois play better than the fact that are a low tax state when you look at all taxes in Illinois as a percentage of income……and even with the 2011 tax hike I think we were someplace in the middle of the US with taxes as a percentage of income.
Comment by nobody Thursday, May 19, 16 @ 10:26 am
==Consumer spending represents 67 to 70 percent of all economic activity. ==
Yup - the velocity of money…what comes around goes around - Economics 101.
Duh….This is the key. Money makes the world go ’round.
“Trickle-down” does not work, has not worked.
I just do not get why the Chamber of Commerce keeps trying to bankrupt the customers of small businesses.
Comment by TinyDancer(FKA Sue) Thursday, May 19, 16 @ 10:33 am
–The House Black Caucus was instrumental in passing the higher education stopgap funding bill. It needs to stand up again and push Speaker Madigan to the negotiating table so we can get a real budget for this state.–
Yes, especially with all the union pandering the Speaker is doing for the same mainly white-male dominated unions who often shut out minorities.
Comment by Ahoy! Thursday, May 19, 16 @ 10:36 am
“It needs to stand up again and push Speaker Madigan to the negotiating table so we can get a real budget for this state.”
So long as that doesn’t involve Madigan and the Dems selling labor down the river.
Comment by DHSJim Thursday, May 19, 16 @ 10:58 am
“Apparently, it isn’t a crisis when lousy fiscal policy just harms poor folks generally and African Americans specifically.”
Most of the 1% group could care less about the poor or disabled folks. They think their problems are their own fault.
Comment by Mama Thursday, May 19, 16 @ 11:25 am
Mark Zandi for Governor! Or anyone chosen by random…
Comment by James Knell Thursday, May 19, 16 @ 11:29 am
Ralph Martire for Governor!
Comment by Arthur Andersen Thursday, May 19, 16 @ 11:42 am
Ralph Martire for Governor! He’s so public spirited.
Comment by Steve Thursday, May 19, 16 @ 11:47 am
AA +1
=The best consumers are low- and middle-income families, who generally spend most or all of their earnings.=
This is why tax breaks for the wealthiest citizens do little to stimulate and economy, if they do anything at all. When you make $57 million you already have much of what you need. Am extra million or two isn’t going to make or break a purchasing or investment decision.
The converse is true for middle and lower income families. According to data 95% or more of new/additional income for middle and low income families goes back into the economy.
That is why the Brownback’s, Arduin’s, and Laugher’s of the world are such snake oil selling charlatan’s.
Comment by JS Mill Thursday, May 19, 16 @ 1:26 pm
===When you make $57 million you already have much of what you need.===
Mr. Mill, while you may not be very pleased with exactly where his money goes, this particular millionaire has pumped tens of millions of dollars back into the economy just running for office and supporting others who do.
I get your general point, but I’ve known a lot of wealthy people who spend a lot of money on stuff all across the spectrum. They are consumers too.
Comment by A guy Thursday, May 19, 16 @ 1:53 pm
== this particular millionaire has pumped tens of millions of dollars back into the economy just running for office and supporting others who do. ==
Which explains why he ran the table in newspaper endorsements in 2014. Way to go, Illinois newspaper publishers. We know you’ve got our backs… ummm… got us in the back. I don’t think I’ll ever be able to say thank you enough.
Comment by James Knell Thursday, May 19, 16 @ 2:25 pm
The Dems would be wise to run Ralph Martire for Governor in 2018.
Comment by Mama Thursday, May 19, 16 @ 3:11 pm
= Ghost - @ 10:10 am:=
I agree with you. However, you forgot to mention Rauner’s plans to outsource as many state jobs to who knows where (IN.?). That is another huge decrease in spending power in IL.
Comment by Mama Thursday, May 19, 16 @ 3:24 pm
I beg to differ with Rich and strongly disagree with Ahoy!
Unions work forces and public sector unions in particular are far ahead when it comes to providing opportunities for African Americans and Latinos for middle class jobs.
There is some variance to be sure, but from Pullman porters to the baker’s union at Nabisco, the union record is very strong.
At IFT and AFSCME, it is Exceptional.
Turning their backs on organized labor under the threat of pain to social services and higher Ed is exactly the course of action Rauner hoped for and Ken Dunkin advocates.
Democrats can hang together, or they will hang separately.
Should Democrats continue to meet with Rauner and the Republicans? Sure.
Should they exchange ideas? Absolutely.
I for one would love to see individual Democrats offer up their own ideas that might have some appeal to moderates.
Heck, why not even commit to participate in an agreed bill process on work comp?
If Quinn had held the budget hostage to force Republicans to support marriage equality, or Blago had held the budget hostage until the GOP agreed to reinstating the Structural Work Act, the GOP would have been outraged, Democrats would have been embarrassed, editorial boards would have been outraged, and rightly so. Rauner’s actions are no different, and deserve the same scorn.
Comment by Yellow Dog Democrat Thursday, May 19, 16 @ 4:28 pm
Martire in ‘18!
Comment by anon Thursday, May 19, 16 @ 5:02 pm