As such, I wasn’t too surprised to see this tweet with some profoundly insane data.
What’s astounding is that politicians expanded unfunded pension liabilities even though the city’s finances are a catastrophe.
Here are some excerpts from a column late last year in the New York Times by Andrew Biggs.
The word bankruptcy has been hanging over Chicago like a storm cloud about to burst. …The Windy City’s woes are the product of decades of fiscal profligacy and a cautionary tale to policymakers in every region and at every level of government: Retirement benefits are like free junk food to politicians — everyone loves them, and the bills don’t arrive until later. …At the heart of Chicago’s deficit are decades of increasingly generous retirement benefits offered by Chicago’s leaders to more than 30,000 public employees, a politically powerful constituency. Today, a city employee retiring after 35 years with a final salary of $75,000 would receive combined pension and retiree health benefits of about $77,000. …Retirement benefits and debt service together made up 43 percent of Chicago’s budget in 2022, the highest rate of any U.S. city. Chicago spends more on debt and pensions than it does on the police and infrastructure… In other words, Chicago is paying for the past… Chicago owes bondholders almost $29 billion. It also faces $35 billion in unfunded pension liabilities and almost $2 billion in unfunded retiree health benefits. And these figures do not include an additional $14 billion in unfunded benefits owed to Chicago’s teachers. The watchdog group Truth in Accounting gives Chicago a grade of F for fiscal responsibility, ranking it 74 out of 75 cities.
It’s run for the benefit of bureaucrats, not for ordinary citizens.
By the way, there’s one horrifying sentence in Biggs’ column.
The state of Illinois, which faces vast debts of its own, is not in a position to bail out its largest city, so Congress or the Federal Reserve might have to step in to help.
At the risk of understatement, if asked whether the federal government should bail out Chicago, the answer is not just no. It is [expletive deleted] no!
I hope Biggs was merely speculating and not suggesting that would be an acceptable option.
That being said, he does have a more appealing recommendation for dealing with Chicago’s chronic recklessness.
Washington could make it illegal for politicians to promise goodies without setting aside money to pay for them.
State and local government pensions…operate with much lower funding standards than federal government pensions or those offered by private companies. As with private pensions, state and local governments should be required to assume conservative returns on pension investments and to address unfunded liabilities quickly.
Since I’m a big believer in federalism, I don’t like the idea of Washington mandating pension honesty. But if the alternative is balouts, that might be necessary.
Given the reckless spending by Chicago politicians, this means endless pressure to grab more money.
Unsurprisingly, the city’s awful Mayor is pushing for more and more tax increases, as reported by the Chicago Tribune.
By opening the door to a pair of polarizing corporate taxes, Mayor Brandon Johnson could galvanize a progressive base itching to see him deliver on a campaign promise to “make the ultra-rich pay their fair share,” but also infuriate business opponents already set on defeating him in 2027. …Johnson last week said he would consider the return of a per-employee “head tax” on businesses or a much bolder payroll expense tax. …He told reporters Tuesday his administration would take a serious look at how “individuals with means, particularly our billionaires and the ultra-rich who have benefited from a growing economy, can put more skin in the game”… A mayoral working group…has been meeting regularly behind closed doors to come up with fresh revenues and efficiencies after Johnson said he won’t push a property tax hike for 2026, which had dim prospects of passing the City Council anyway. The mayor’s office late last week shared its estimates for what nearly three dozen new or expanded taxes, fees or revenue schemes might raise. …the business community pushed back, suggesting that implementing such a tax would not only deter new business and spur relocations out of the city… “If I’m a business and I’m more mobile or making a decision on whether to come to Chicago, I’m considering what’s going on on the local level,” said Jack Lavin, the president of the Chicagoland Chamber of Commerce. …“I also think taxpayers in general are tired of the constant increase in taxes and (thinking), ‘What are we getting out of it?’” Lavin said.
Let’s close with some observations from John Kass, a former member of the Chicago Tribune’s editorial board.
Chicago Mayor Brandon Johnson…was unequipped for the job and his campaign was all about slogans, Marxist rhetoric from his allies in the Chicago Teachers Union, and race. Now those who can are in a rush to leave. He’s falling apart. His administration is falling apart. And the city is falling apart rapidly. …Throughout all those years, the joke in Chicago was that any time things looked bad, at least we weren’t Detroit. But now that’s an insult to Detroit… The city’s self-inflicted wounds are septic now. …The public schools prepare Chicago schoolchildren only for prison, not success in life. Public transportation is dangerous and filthy and smells like a urinal. …The city government is a billion dollars in debt. And the public schools are a billion in debt. …So who’ll stay in Chicago now? Only those who are financially tied to it, and those who can’t afford to leave.
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