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Springfield Shell Game

The Springfield Shell Game

Russ Harrison

Whoo Hoo! Our elected leaders in Springfield finally passed a new “pension reform” bill. I am so excited that I can barely contain my sarcasm and absolute disdain for the Springfield Circus Clowns that rammed this legislative Sword of Damocles down our throats. For those folks unfamiliar with the tale of the Sword of Damocles, it is a legend about a courtier (substitute Illinois legislators) that pandered to King Dionysius II (substitute Madigan or Cullerton) that surrounded himself with opulence and allowed luxuries to those benefactors (substitute Union Bosses) that kept his position as ruler secure at the cost of their serfs. (Substitute Illinois State Employees Union Members and taxpayers.) The legend states that King Dionysius allowed Damocles to sit in his throne and enjoy the power and privileges associated with it. However, the King suspended a large, heavy sword over the throne held in place by a single horse hair taken from the rump of the animal (substitute a horse’s ass). Damocles was so stressed about the imminent and obvious danger associated with that sword that he gladly relinquished the throne back to Dionysius.

This new pension “reform” bill is a sword that hangs over the head of each tax payer in Illinois. It hangs over the heads of those loyal state employees that have faithfully contributed parts of their paychecks to insure a decent retirement income in their golden years. The numbers used to justify the legislation are at best questionable, and are in truth overly optimistic. The new pension reform bill mandates that we, the non-state employees, pay homage to the state  into the state employee’s pensions as a priority over paying for schools, emergency services, and social programs. The bill was hammered out behind closed doors during the Thanksgiving holiday season and pushed through with little time for our legislators to thoroughly examine the contents (325 pages), and more important, the premises that were used to validate and justify this bill.  

An ironic part of this unsavory legislative action is that the political party that railed the most for pension reform (The Republicans) actually had a higher percentage of votes AGAINST this bill than the party we would have expected to fight hardest against it (the Democrats). Also ironic is that both the current pension plans and the proposed “reform” have a very strong potential to harm the very same people that these pensions were designed to provide for, and that risk is real and certain. The pension program for Illinois state employees is simply unsustainable, and it has been that way for years. The proposed “reforms” bill is also unsustainable. It relies on overly optimistic forecasts and re-defined accounting practices. It is similar to a shell game or street scam of 3 Card Monty. Guess right and you win, guess wrong and you go bust.

The merest hiccup to the state’s revenues could result in a complete collapse of the pension system. Without a doubt, it will be challenged in court as unconstitutional by union representatives. This will be an astronomically costly legal battle to defend a bill that is risky and has the potential to obliterate an already weakened economy.

So why would our legislators vote for this “reform” if it has such high risks and potential for morphing into an even larger fiscal disaster than we currently face? The easy answer is votes…many State legislators from both parties are up for re-election again. Some, like Brady and Dillard, are seeking new positions as Governor. These elected officials have to do something or risk losing votes. They too are sitting under the Sword of Damocles and some will do anything to get out from under the sword that they themselves placed above their own heads and ours…with a few commendable exceptions.

Rep Tom Cross (R) voted against the reforms. His reasoning was that the reforms simply were not going to work. The data was wrong, the systems used to “proof” the bill were wrong, even the analysts objected to the systems and data used to create this “solution”. So Tom Cross voted against the reform bill not because he didn’t believe the pension system was in dire need of change, but rather that he didn’t believe that the “reform” bill would do anything more than pass a bigger burden to the taxpayer down the road. While I do not agree with some of Mr. Cross’s beliefs (a graduated tax on personal income will kill jobs is something I can’t swallow) I do agree with him on the pension reform bill being nothing more than a “kick the can down the road” solution from a group of career politicians with neither the courage nor the conviction to offend their union donors. For those that say Tom Cross can afford to go against the current because he’s not seeking re-election, I’ll answer with this: Tom Cross is stepping down as a State Representative because he is running for State Treasurer, and as a candidate for that position he certainly cannot be on record as voting in favor of such a risky do nothing reform bill. For that conviction he has my respect.

On the opposite side is Senator Bill Brady, another Republican and a repeat candidate for the seat of Governor. One of only 10 Republican Senators to vote in favor of the bill, he has applauded the pension reform bill and is touting it as the answer to our pension liability problems. Then again, Mr. Brady and his brothers were recently sued (and lost) for defaulting on 2.4 million in loans they personally guaranteed (13 or so loans) in McClean County Circuit Court , so I really do not think he has the ability to fully grasp the financial impact the current and proposed pension agreements have on Illinois’ future. He has also proposed (several times) that the minimum wage in Illinois should be reduced to stimulate job growth. This defies basic economic logic. Less money in the system means less spending, and that means less need for jobs.

When we toss in his proposals to allow discrimination in the work place and housing against gays, I’d say we have a “Man of the Century” advocating for this new pension reform bill. The problem is, he’s a man of the LAST century that can’t seem to grasp the idea that Illinois can no longer spend and then borrow and expect its’ taxpayers to foot the bill. Then again, Mr. Brady will recoup all of his 20 plus years of contributions to his pension after his first year of retirement and will continue to enjoy a guaranteed raise to his $6 FIGURE$ STATE RETIREMENT for the rest of his life. He’s also comfortable believing he has a loyal base of voters that will elect him Governor of Illinois. You can watch his supporters gazing at the sky, wondering exactly when the donkey will fly by…

That leads us to how Senator Kirk Dillard, (yet another Republican and repeat candidate for Governor) voted on the pension reform.  Several times in the past, Mr. Dillard had voted for and voiced support for various pension reform bills. This time, however, he voted “no” to the new pension reform bill stating that it “didn’t go far enough…”, a conviction shared by many Republican legislators but not his own running mate and Lt Governor candidate, State Rep. Jil Tracy.  She was one of only 15 House Republicans and 10 Senate Republicans to vote in favor of the proposed “reform”. This is a surprising split in opinion between 2 running mates and may be a forecast as to just how cooperative the 2 candidates can be in leading the state. One answer that Mr Dillard did not have a solid reply was the question of  “Well, if the pension reform bill didn’t go far enough…then how far is far enough?” The answer appears to be far enough to convince people to elect him Governor but not far enough to lose union support or to ensure this sort of thing never happens again.

Governor Pat Quinn’s (D) outward attitude towards this reform has been one of “Don’t look at me, I just signed the darned thing…” but again he has done little to upset his union supporters other than agree that there is a problem, it will be challenged in court, but nothing will change until after the election, thank you. Maybe then he’ll be a bit more concerned about what his legacy as Governor will be like in the future. Dan Rutherford (R) State Treasurer and first time candidate for Governor has done little more than issue statements about concern for the growing problem of pension liability. He also states support for the idea that a solution can be reached. In other words, “I hope I haven’t offended anyone and can I please have your support in getting elected Governor? I’m not doing so well in the polls and I’m just about out of money to campaign with…”

Interestingly, each of these Governor candidates has at least 20 years of elected service, and that’s an important number to remember. Why? Well, the pension crisis first started in 1989 by most accounts, and the warning signs that it would eventually implode became clearly evident around 1995, a year when each of these candidates were in office. Yet they did nothing to avoid this catastrophe. Why?

 

20 years later they are each finally addressing the issue, but with a bill that is so weak and inefficient as to remind me of Neville Chamberlain waiving a peace agreement to British citizens just moments before Hitler launched his Blitzkriegs. They don’t seem to believe that the voters will not hold them accountable for this tremendous boondoggle that has turned Illinois, a state that for decades was considered the benchmark for production and job security, into the laughing stock of the nation. But then again, they really know nothing other than politics.

There is another Governor candidate that doesn’t seem afraid to call it like he sees it. Bruce Rauner, a self made gazillion-aire, used to manage a portion of the state employee pension fund. Under his leadership, the portion his company managed was able to grow those funds by an average return of 17.5%, even during some very troubling economic times. So I tend to put more credence in his opinion than I do in those of the fellows that caused this mess in the first place.

Mr Rauner puts it bluntly when he says “This new pension reform bill is a disaster…period.” In order for the reform to work, the union members themselves would have to give up a GUARANTEED pension amount and experience a loss of retirement income. No hard working person in their right mind would agree to that. But supporters of the bill say they have a safeguard. The new reform has an option that would allow current employees to “freeze” their pension benefits and begin to pay into a 401K type of retirement plan. The problem with that idea is that if more than a small percentage, say 5%, of state employees were to avail themselves of this option, then the MANDATED contributions to the GUARANTEED pension fund already in existence would decrease to a point where the current unfunded pension liability would not shrink… it would grow! The statement that the new pension reform will save 160 Billion Dollars over the years can only be substantiated through questionable accounting and redirection of alleged “savings” back into the fund. As Mr Rauner has stated, “any college freshman with a calculator and a basic introduction course to accounting or economics can tell you this won’t work…it’ll just get worse in a few years”.  

Since Mr. Rauner has a batting average of over .900 in business investments without saddling up companies with debt and moving the jobs out of Illinois, I tend to think he’s the guy we should listen to. When we look at the fact that he owns a capital investment group that is set up to specifically invest into companies in Illinois or to entice companies to Illinois, I believe him when he says that there is a way to solve the pension liability problem without sticking the bill to the taxpayers and businesses. Unfortunately, Mr Rauner is not a career politician and has a difficult time making statements that are designed to be ambiguous enough to appease the largest voting demographic groups. If he’s calling the new reform bill a turd, then maybe we should all play it safe and buy some extra toilet paper…or maybe we can just guess which cup has the pea…or which card is the Red Queen. Or maybe, like Damocles, we should just give up our chair and move as far away from that sword as we can. 

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

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