A very curious op-ed article appeared Monday (July 6) in the Chicago Tribune. Tom Geoghegan, best known as a liberal lawyer who represents labor unions, made a plea for more taxes. Not just any taxes for any reason, but “Tax me, please, so Illinois can compete.” Let me set the stage for this commentary.
First, we have a mayor who has been adhering religiously to maintaining property taxes at a relatively low level, compared to many suburbs, while struggling to make the city’s books balance amid pressure to keep the city’s pension funds solvent. Pension funds for both city and Chicago Public Schools retirees promise reasonably generous benefits that include a three percent cost-of-living yearly increase, which certainly beats Social Security in most years because its increases vary with the Consumer Price Index. (For the record, my wife is a Chicago Public Schools retiree.) These agreements have been in place for many years, but for many years the city and the school system have not met their obligations to fund these pensions adequately. The city is also making its perennial argument in Springfield that Chicago residents pay twice for pensions because their own teacher pension fund relies on local property taxes while all other systems in the state rely on state income taxes, which, of course, Chicagoans also pay. Suburban and downstate legislators counter that Chicago gets more of other types of state support because of higher numbers of families in poverty, an argument that strikes me as lame because Chicago is hardly the only city in the state with poor people.
Welcome to the twisted logic of politics in Illinois. We also have a constitutional provision that cements flat-rate income taxes in place. We could only enact a progressive state income tax by first amending the state constitution to allow such a thing. Meanwhile, Illinois is undergoing a bruising battle between a conservative rookie Republican governor, Bruce Rauner, and a legislature with large Democratic majorities in both houses. It is now July, and they have not agreed on a budget, and a judge has ruled that, without statutory authority in the form of an enacted budget, the state cannot pay its workers more than the federal minimum wage until this gets sorted out.
It is not apparent to me, or many others, that either the state of Illinois or the city of Chicago lack considerable wealth or the ability to pay their bills if we sort out our priorities and match spending with revenue. Rauner refuses to budge on the revenue until the legislature adopts at least some of his pro-business, anti-union agenda—he basically wants to make Illinois a right-to-work state—and the legislature is busy enacting budgets that necessarily entail large deficits, so Rauner vetoed their most recent attempt. A standoff is throwing Illinois into turmoil.
To be brutally honest, I could never hope in this short blog post to do justice to all the intricacies of this situation. I am providing only a broad outline of the conflict as background to the Geoghegan commentary. Basically, his perspective is that school closings driven by budget cuts drive middle-class residents to the suburbs for better schools for their children, which they pay higher taxes to achieve. In short, lower taxes make the city less competitive in attracting talent, resulting in a less competitive business climate. He bolsters his argument by pointing out that other big cities facing many of the same macroeconomic challenges have survived the recession and are thriving in ways that Chicago is not. And in ways that Illinois also is not. People in those other states pay higher, progressive income taxes that support public services that make their states and cities more competitive. In short, he says “blue states that collect higher taxes thrive and red states with lower taxes do not.” I am sure one can find some exceptions to his general rule, but he has a point. Taxes alone do not make a state less competitive, especially if used wisely to create better public education and amenities and infrastructure. All these things matter. Then comes Geoghegan’s clincher:
“Illinois is a blue state that tries to govern like a red state. And that’s why the state and its crown jewel, Chicago, are about to go belly up.”
So far, so good. Geoghegan concludes with his plea to “tax me, please,” to achieve better public solvency and make the state and city more competitive. But his article fails to answer or address the question of why a blue state would try to “govern like a red state.” There is an understandable, though also cowardly, fear among legislators and aldermen about raising taxes because there is public resistance. Some public resistance to higher taxes is always to be expected, but in many places it can be overcome with a solid explanation of how that money will be used or invested. It is when it is repeatedly misused or poorly invested that public suspicion becomes a cancer that afflicts the trust people must feel before they are willing to open their wallets to the state and city.
That is where a new book by Thomas J. Gradel and former Chicago alderman Dick Simpson becomes important. Simpson, now teaching at the University of Illinois at Chicago, was an independent who was once a thorn in the side of Mayor Richard J. Daley, the Democratic party boss, subject of the famous Mike Royko book, Boss, whose son Richard M. later ascended to the same office. Richard M. Daley retired before the 2011 mayoral election, when Rahm Emanuel was elected mayor. Corrupt Illinois is a no-holds-barred attack on the pervasive culture of corruption not only in the city but the entire state of Illinois, now famous for having sent two recent governors to prison, Republican George Ryan and his immediate successor, Rod Blagojevich, who ironically had promised to clean up the mess Ryan left behind. Instead, he created his own mess, including the attempted sale of the U.S. Senate seat vacated by President Barack Obama.
There is not room here to review the hundreds of cases of corruption the two authors discuss, stretching from the city of Chicago to numerous suburbs, including the notorious case of Cicero, to downstate communities where clerks and mayors have stolen public funds, to the state capitol, where matters now speak for themselves. What Gradel and Simpson document is the high, very high, cost of public corruption in the erosion of public trust. Taxpayers like to know that, when they fork over more money that is supposed to build roads and bridges or support schools or social services, that money will not end up illicitly in the back pocket of some operator tolerated by politicians who look the other way, or worse, pocket some of it themselves or find other ways to violate the public trust.
Moreover, this is not a partisan issue, as some would like to contend. Both parties have participated in the skullduggery in their own ways. The book supports an observation I have long shared in talking about other states with similar issues, like Louisiana: Once a culture of corruption takes hold, it becomes a bipartisan enterprise. The same can usually be said of the virtuous cycle of comparative honesty in states where such practices meet with immediate public condemnation. I have long encountered people who have difficulty believing me when I tell them that, when I once ran for city council in Iowa City while a graduate student at the University of Iowa, by city ordinance the limit on contributions by any individual to a candidate for a specific election was $50. There are no missing zeroes. It was 1983, but even allowing for inflation, that limit comes nowhere near the inflated sums that float around in Illinois elections. Public tolerance makes a huge difference.
Rauner attempts in his ham-handed fashion, driven by the personal certitude of a hedge fund millionaire, to pose as the enemy of the political class in Illinois. What he does not understand is that his pose might sell far better if he did not also make himself the implacable foe of organized labor and the minimum wage, and if he did not have such a tin ear about the damage his policies are doing to badly needed services for the poor, disabled, and mentally ill. That undermines any public sympathy he might otherwise muster for a legitimate campaign to root out public corruption, which seems at best to be only a secondary target.
If you do nothing else to understand the hole that Illinois has dug for itself, read this book. At times, Corrupt Illinois may seem repetitive, even slightly monotonous, unless you develop a perverse fascination with just how corrupt a state can become. That is because the authors have so much raw material to work with that it is a wonder they fit it all into just 200 pages. They try mightily to be concise and to the point, but the point they make is unavoidable. Until Illinois voters insist on cleaning up this mess, and their political leaders finally grow a conscience and respond, there is no way out of our current impasse.