Thursday, July 13, 2017 12:17 am
The next big thing
Illinois needs a modest proposal to fix its pensions
Pensions. Everybody complains about them but no one talks about them much, if by “talk” you mean conversations intended to explore the problem in the hope of solving it. Pensions are Illinois’ climate change, a problem almost too big to think about. The total obligation over time comes to something like $140 billion. Just covering next month’s checks for the quarter of a million or so retirees who are or will be owed money under the old pension system seems impossible. The gap between what the state has available to pay and the system’s current costs is widening; barring further tax increases, the difference will have to be paid out of money that would otherwise pay for services. The state’s future can be seen in some of its cities today. Springfield’s annual police and fire pension payments now total as much or more than the city’s total take from property taxes.
Look, and be afraid.
Foolish the state’s promises to retirees might have been, but binding promises were made, and those promises must be kept – don’t they? The state could of course just stiff the geezers. It isn’t constitutional, but then little that Bruce Rauner has done as governor is strictly constitutional, if one accepts “constitutional” to mean not only the literal meaning of the document but its animating spirit. And as the U.S. high court has proved, politically problematic provisions of such documents can be simply interpreted out of existence. Rauner bought himself a governorship and is likely to buy himself a legislature next year; who’s to stop him from buying a supreme court?
Our liberty-lovin’ rightists would have our public servants supported by their families in their twilight years, or rely on savings they don’t have or the profits from houses they can’t sell. That would take us back to the mid-18th century, when poverty was crushing the Irish people. In 1729 Jonathan Swift famously presented “a modest proposal” to prevent Irish poor children from being a burden to their parents or the government by selling their kids as food for the rich. As you might expect, cowardly liberals shrank from implementing it.
We can look for wisdom closer to our own time. As I have noted previously in this space, in the 1840s Illinois state government borrowed heavily to finance new railroads and canals that the state’s economy could not support. A state government shutdown loomed. A substantial part of the public clamored that their legislators borrowed the damned money, so why should the taxpayers have to repay it? To quote then-governor Thomas Ford, they were “willing to fasten upon the commonwealth the disgrace of Repudiation, with all its attendant evils.”
Ford realized that you couldn’t trust the people who got Illinois into its mess to get it out of it. (“We have had enough in our history,” he wrote later, “of the management of money matters by public officers.”) He sold off the railroads for pennies on the dollar and entrusted the job of finishing the abandoned infrastructure projects to trustees, most of whom were selected by the bondholders. As for the debts outstanding, the price the state paid for its foolishness was taking on debt to pay off the debt, which wasn’t paid off until 1880. Such is the price of folly.
A prudent policy would raise taxes just enough, and for just long enough, to pay off the money owed to retirees, but the taxpaying public, with very good reason, has little confidence that taxes raised to pay off pensions will be spent for that purpose. The sole bright spot in this gloomy picture is that every single state pensioner will go the way of all flesh in 20 years or so and become God’s problem, but will the commonwealth finances survive those 20 years? Here’s an idea that would please the ghosts of both Swift and Ford. Have every newspaper in the state spotlight local retirees, complete with their medical condition. Every town would hold a lottery, with citizens buying a chance to guess which one will croak next. That would boost lottery sales, and the proceeds could enrich the pension fund and the larger public would be cheered at visible reminders that nature at least was on their side by making their pension mess smaller by the day.
Silly? No sillier than Bruce Rauner’s solution, which is to reduce future government pension debt by transforming public servants into Uber drivers. The Illinois Policy Institute would get behind a death lottery anyway; it ticks all their boxes.
Contact James Krohe Jr. at CaptBogue@outlook.com.