Illinois released its budget. Here are the gory details, all 472 pages worth. Here is a nice column by the indispensible Eric Zorn about the controversial $8.75 billion borrowing measure. Here are two other good sources from the Tribune and from Micah Maidenberg at Progress Illinois.
If you don’t care about any of that, here is me droning about it on Chicago Public Radio. If you don’t care about that, either, here’s the story.
This is a painful budget that includes deep cuts that will hurt real people. If you are a Medicaid patient needing dental services, you just took a hit. If you need addiction treatment, you just took a hit, too. Low Medicaid reimbursement rates are already a key problem for Illinois providers and for county governments. These rates will be cut even further. There’s no painless way to close a huge budget gap, especially when the state lacks the proper revenue.
We need (a) to pay off the state’s unpaid bills, (b) to rise more revenue through expanded and more progressive taxation, and (c) to establish a more transparent and professional budget process that holds both parties to the kind of scoring process imposed at the federal level by the Congressional Budget Office.
As this scenario is playing out across the county, would any fellow progressive out there like to take a stab at answering this question: just what kind of progressive tax hike (and what variety) would end these deficits, while maintaining the services & safety net we all want?
I’m sorry but I’m going to go ahead and disagree with you here. Illinois’ problems are due to the liabilities of retiree’s pensions and healthcare costs. If the cost of Illinois’s retirees were zero the state would have a budget surplus instead of huge unfunded pension obligations. And this isn’t just the state of Illinois but also the City of Chicago, the Chicago Transit Authority and basically every level of government in the state.
And this isn’t just Illinois. This isn’t just a Yankee problem. Pensioners bankrupted a city in Alabama too.
http://www.nytimes.com/2010/12/23/business/23prichard.html
The problem is that America is bankrupting itself by cutting spending on programs that will benefit the future (education, research, infrastructure, children’s healthcare) and spending that money on programs that are a dead weight loss to society. Social Security, Medicare, pensions. But go ahead and advocate for spending our children’s money on people that will never contribute to society. It’s not really any better than the Republican position.
Benny-I do happen to believe that unfunded retiree benefits are a problem and must be addressed in some sort of negotiation. These are the cause of future serious deficits, NOT the current one. See, e.g., my guest blog here: http://www.tnr.com/blog/jonathan-cohn/77030/public-workers-overpaid-underfunded
Hey Harold,
Thanks for totally misrepresenting my argument. Nowhere did I say that unfunded retiree benefits are the sole cause of current deficits. Instead I mentioned the cost of programs for all retirees like Medicare along with pensions and the health benefits for retirees covered outside of medicare. But you knew that because you’re smart guy. So why are you trying to misrepresent my argument? Do you really think the current demographics are sustainable and if so, why?
Characterizing Social Security, Medicare and pensions as “a dead weight loss to society” is an interesting position. The only way I can see it working is if working voters are intensely stupid and don’t actually count deferred benefits as part of their compensation. (Or, conversely, don’t respond to the elimination of those deferred benefits by insisting on additional current compensation equivalent to the risk-adjusted net present value of the deferred benefits.)
If we use similar logic about corporations, the answer to Illinois’s budget problems is simple: just tell the providers with overdue bills that they’re not going to be paid. The services have already been rendered, so paying for them is just a deadweight loss. And certainly there will be others coming forward to do the same work without asking for a risk premium or cash in advance.
Benny: “If the cost of Illinois’s retirees were zero the state would have a budget surplus instead of huge unfunded pension obligations. And this isn’t just the state of Illinois but also the City of Chicago, the Chicago Transit Authority and basically every level of government in the state.”
I’m willing to bet that the Illinois budget would also be in great shape except for the costs of road (re-)building and maintenance.
Is there a right-winger who is even *capable* of honest financial talk?
paul,
I don’t think you understand what I’m saying. I don’t see any evidence that either party will attempt to strip benefits from people who are already retired. I see an attempt to strip benefits from people who are working. Let me ask you this question: how many working age people believe that Social Security will be solvent by the time they retire? I don’t know of any working age person that believes this. So you’re basically asking people to pay taxes into a payout fund that they will never collect. And the same is true of pensions. These state workers have paid into a pension fund for years that they will probably never collect. They are already being told their payouts will be reduced. So middle class workers are again being squeezed. And troglodytes like Barry think I’m some dishonest right wing troll. LOL WAT! And you think workers are unaware that they will take a haircut to fund senior’s benefits? LOLZ!
I’m sympathetic to the plight of retirees who have seen their savings evaporate. 401k’s took a beating when the market crashed in ’08 and all their equity dissolved in the housing crash. So now all they have left is pensions and social security. Which is why Republicans have made defending old people’s benefits top priority and cutting benefits to workers and potential workers (children) the next priority.
I mean we have to be honest here. After all, this is the reality based community.
I’m still confused about characterizing medicare, social security (solvent indefinitely at constant-dollar benefits higher than those currently paid) and pensions as “a dead weight loss to society”. Unless you’re willing to engage in some kind of Logan’s Run scenario, those costs have to be paid by someone.
When a 65 year old gets hip replacement surgery, said individual gets a lot of utility from the surgery. They can now continue to walk around the mall or whatever. But it won’t increase their productivity at all because they aren’t working (generally speaking) and never will.
When a 35 year old gets back surgery, said individual gets a lot of utility from the surgery. It might allow that person to be a more productive worker. Maybe they can stand longer at the checkout counter and take fewer sick days. Maybe they can be a better roofer.
There is a good ethical reason to spend money on old people. By definition being old means you can’t really be productive in most things or do many of the jobs in society. Can a 65 year old be a firefighter or beat cop? Or a bricklayer? Or even a nurse, which is a surprisingly physical job.
But spending money on seniors isn’t something that will result in increased productivity in the aggregate. It is like building a bridge to nowhere in Alaska. A few people make money but in the long run it wasn’t a wise investment.
The way I see things, with Illinois’ budget, and government budgets in general, is that workers are being asked to cut investment in things that have long term benefits, like education, but keep up spending on things that don’t have long term benefits, like hip replacement surgery for seniors. Make no mistake I am not advocating for turning America into Calcutta and letting the old and the sick die on the streets. But I have to really advocate for sacrifice across the board and not just for the young and the current generation of workers.
how many working age people believe that Social Security will be solvent by the time they retire? I don’t know of any working age person that believes this.
Can we please restrict our arguments to the facts, rather than what people believe (e.g. 51% of Republicans believing that Obama wasn’t born in the U.S.), on a reality-based form?
Social Security’s solvency woes are tiny, decades away, and easily headed off. (Medicare’s, no. But they are distinct programs.)
“Social Security’s solvency woes are tiny, decades away, and easily headed off.”
Now who’s strayed from facts and into beliefs? What evidence is there that we will easily head off these problems? Because we are already gutting the program.
http://yglesias.thinkprogress.org/2011/02/the-strangest-social-security-cut/
It is hard to believe in a program that so many people want so badly to kill. Why do you?
Benny Lava, your logic is wanting. But let’s accept your framework. I’ll volunteer to be the one working person who does believe that social security will pay me every penny promised, when I retire. So now Social Security is no longer a fund from which no-one can collect, and it’s perfectly OK for people to keep paying taxes into it.
QED.
(This is in response your assertion that “I don’t know of any working age person that believes [that Social Security will be solvent by the time they retire]. So you’re basically asking people to pay taxes into a payout fund that they will never collect.”).
If the crazy scenario were accurate, you’d see republicans extolling the stability of social security and medicare rather than denigrating them, because without belief in those deferred benefits you’d have huge upward pressure on wages (to fund what people believe the government won’t) and massive increases in savings rates ditto. Both of those things would be serious drags on the economy right now. All you see is pressure for tax cuts on people who don’t need to save more. Hence, that’s not what’s going on.
“without belief in those deferred benefits you’d have huge upward pressure on wages”
Why?
“massive increases in savings rates”
Again why?
I’m not trying to be obtuse here, but why I see no reason whatsoever why there should be an upward pressure on wages. Wouldn’t that come from a constrained labor market? I see no reason why it would constrain the labor market.
People aren’t saving enough for retirement, and they know this. But I don’t wonder why.
http://www.bankrate.com/brm/news/retirement/Oct_07_retirement_poll_results_a1.asp
“I’ll volunteer to be the one working person who does believe that social security will pay me every penny promised, when I retire. So now Social Security is no longer a fund from which no-one can collect, and it’s perfectly OK for people to keep paying taxes into it. ”
This makes absolutely no sense. It doesn’t really matter what you believe. You can believe that faeries and unicorns will change your diaper when you retire. So you’re an idiot. Who cares?
http://www.gallup.com/poll/141449/six-workers-hold-no-hope-receiving-social-security.aspx
6 in 10 American workers don’t believe that social security will be there when they retire (for the reality based people in this discussion). Why are we even arguing about this? You’re just pouting because your favorite social program is probably going to die in your lifetime. Don’t take it out on me.
Benny: “It is hard to believe in a program that so many people want so badly to kill. Why do you?”
IIRC, the people who want to kill Social Security are (a) the financial elites, who want the money, and right-wing wh*resons (and -daughters, Ms. McArdle)who want to kill it because they hate money going to anything but the elites.
A poll that shows 6 in 10 Americans believe something? Well, it must be true. I wouldn’t be surprised that 6 in 10 Americans believe in fairies.
Benny: “But go ahead and advocate for spending our children’s money on people that will never contribute to society. ”
Wait a second. Were you under the impression that the reason people advocate for social security, pensions and medicare was because we expect them to contribute more to society? Setting aside the argument that pensions are a form of deferred salary, I thought the question was one of human dignity? I thought we just wanted people to have a safety net when they got old? I thought we assumed that at least our old ought to not have to die in poverty and untreated illness?
You can oppose that all you want. But let’s not create false arguments.
Eli,
“I thought we just wanted people to have a safety net when they got old? I thought we assumed that at least our old ought to not have to die in poverty and untreated illness?
You can oppose that all you want. But let’s not create false arguments.”
It looks like it is you who are creating false arguments. You are either A) too stupid to read correctly or B) purposely misrepresenting my argument. I will be charitable and assume the answer is B. To quote myself “There is a good ethical reason to spend money on old people.”
You’re being petulant because I’m pointing out the obvious, that Social Security won’t be around in another 20 years, and then angrily lashing out by constructing arguments that I didn’t make. Or else confusing my arguments with someone else’s.
You still haven’t explained why all the costs of seniors should be borne by workers, and why seniors shouldn’t be asked to make any sacrifices. Workers are making huge sacrifices right now, the kind that seniors were never asked to make. Why is that? Obviously the answer is that seniors vote more frequently than any other demographic, so their interests are well represented. Seniors have enough political capital to keep their own benefits going but the ladder will be pulled up underneath them. Funny that you don’t see anyone advocating for the current generation of workers in the “Reality Based Community”.
And you wonder why you lost so bad in 2010.
Benny darlin, Eli paid for his Social Security. He even increased the amount he was paying in in 1985. Eli wants his, and if you try and take it away he will come looking for you and yours.