- Politics and Social Issues»
- United States Politics
Chicago Drowning in Red Ink
Chicago's debts unsustainable under Rahm Emanel
For years, promises were made and gifts exchanged between city leaders and public employee unions. Fast forward to 2017 and bloated union pension plans are threatening to bankrupt the city. Of the nation’s bloated, underfunded public employee pensions, Chicago’s mounting super-debt sticks out like Meryl Streep dancing on a lounge table inside Trump Towers. Financially, things have gotten so bad in the windy city that one of Mayor Rahm Emanuel’s top aides is frantically lobbying skeptical investors for a cash infusion at interest rates that might make Al Capone blush.
Republican governor gets involved
Emanuel was taken aback by Rauner’s recent decision to veto a house-approved bill that would gift Chicago Public Schools $215 million to bail out its unfunded pension plan, but the governor is determined to hold Chicago’s big-spending city leaders accountable for state money.
The city and it’s school system believe the state is responsible for blindly funding their pensions with taxpayer dollars. The city’s logic is a lot like telling your bank to make the outsized down payment on your auto loan because you wanted a 2017 Maserati GranTurismo, not last year’s model Chevy Volt.
Meanwhile, even as Emanuel is increasing taxes nearly $900 million per year to cover unfunded pensions, Moody’s rates Chicago’s credit as something akin to “junk”. Sadly, the city’s unfunded liability is set to expand for another 15 years, and that's only if the city hits its 7.5 percent investment target, according to Moody's. So grab your wallets and purses Illinoisans, Crook County needs you more than ever - even if Chicago is not your kind of town. #chicago pension debt #detroit pension debt
Mayor's aid pleads for investor loans
Wednesday’s bond pitch by Chief Financial Officer Carole Brown to potential loan agents was arranged to save Chicago from going bankrupt, but skeptical bankers are pushing back. The problem is simple. The city doesn’t have nearly enough money to pay pension benefits teachers and city workers were “promised” - not nearly enough, as in billions. Mayor Rahm Emanuel seems to be trying to top Detroit when it comes to municipal bankruptcies. For example, nine years: that’s how long Detroit could fund its entire transportation system with the money it will spend on its looming pension bankruptcy settlement. Similarly, Emanuel’s Chicago pension quagmire needs to borrow $1.16 billion to fund part of Chicago’s general obligation bond issue, and at whatever interest rate he can get; never mind that the city is staring at the next funding cliff in just five years. Talk about leading from behind - of course in five years it will likely be a different mayor selling the city’s future to fund bloated pensions - and the beat goes on, or at least it has so far.
Backroom deals between mayors and governors
Deficit arrangements between Illinois governors and Chicago's mayors - backroom deals to garner state funding to pay for city employee pension plans that swell exponentially - are historic, but the can is getting too large and heavy for politicians to kick down the road. Now, with debts so massive, a Republican Governor has put the brakes on state funding for Chicago's failing pension plans. Illinoisans outside of Chicago city limits seem to be tiring of Emanuel and the city’s ever-needy pensioners. They elected Republican governor Bruce Rauner - who campaigned on investigating underfunded pension deficits - to see that Chicago’s leaders stop building unsustainable deficits into their city budgets.