The fifth largest economy in the United States is falling apart. Because of the fervor surrounding the national elections, no one is paying attention. Illinois has now gone without a state budget for 11.5 months, yet it isn’t really shut down. Federal consent decrees ensure that 90% of the programs are paid for without any approved budget. Good for those programs, but bad for others. Non-profit social service agencies have been hit hardest. The Department of Aging is no longer supporting its local branches. Child care assistance was stopped for more than a month, causing many people to lose their jobs, before it was reinstated requiring a much lower income to qualify. State universities have only been given 30% of their appropriation for last year, causing Eastern and Western Illinois Universities to lay off over a third of their workforce, including some professors. How did this happen? A businessman came and said our state was dysfunctional, and he would “shake up Springfield”. That he did. Essentially he refused to sign a budget until Unions were crippled and could no longer bargain over wages or benefits (I guess they would bargain over who purchases what kind of coffee and the ambient temperature in the office), but he wanted a lot more. They passed one that had 3.5 billion more spending than revenue, he vetoed it, yet we are 9 billion in debt this year spending at previous levels based on a higher tax rate and consent decrees.
The Democrats in the General Assembly told him to pound sand as his demands were ridiculous. Even Scott Walker didn’t get so much and he had same party lackeys in his legislature. Rauner is used to getting his own way. He’s a “bidnessman” as he pronounces it, trying to sound folksy. He also drops his “g”s. He sounds like an uneducated hillbilly and wears a Carhartt jacket because that’s what he thinks the people of our state can relate to. He talks about his vast business experience, and told everyone he’d negotiate a “fair” contract with State employee unions. By fair he meant his way or the highway. Right now he is trying to bypass an arbiter and go straight to his appointed Illinois Labor Relations Board to declare an impasse so that he may unilaterally impose his draconian terms. Doubling the cost of healthcare, reducing it to Bronze level 60/40 split after deductible is met, unlimited outsourcing (currently the state has the onerous burden of proving it would save money before outsourcing, never mind he says he wants to outsource to save money. I guess it is just too much of a hassle to have to prove). He has run up the deficit by nearly ten billion dollars not including what is owed to universities, to achieve “business friendly reforms” that his own numbers show will only increase the SDP by 1.4%. The math doesn’t add up.
Before I go into why his ideology doesn’t make a lick of sense, let me just point this out, as a CEO, his orders were followed because he was determined to “hurt not only his business adversaries, but their family members as well”, as a matter of course during negotiations. He doesn’t understand government. No ruthless CEO type can. Anyone who looks at someone who has been successful in the business world and thinks,”Gee I bet they’d make a good representative” has no understanding of the differences between government and businesses. When you put a businessman in charge of government, or even one branch, he or she doesn’t work for the collective good, he or she makes demands and refuses to bargain. Most of those demands revolve around reducing programs for the needy, destroying social services,
and cutting taxes and regulations for businesses especially, and destroying unions. The added bonus of that last one is that it cuts out a major donor to democrats and could turn a blue state red. Businessmen like Rauner look out for business, no one else. Even worse, they don’t have any idea what compromise is. For heaven’s sake, they’re taught the “tricks” to get a union to its knees. They try to do the same with legislators, refusing to acknowledge they are a coequal branch of government. These Rauner types are used to being surrounded by yes men and underlings who would never challenge them.
Anyway, Masters of the Universe, like Governor Rauner said they knew exactly what we need. We need to deregulate nearly everything, cripple unions, eliminate prevailing wage, and make workers comp virtually worthless. Of course he didn’t campaign on this. He just said he wanted to,”Shake up Springfield”. You see all of these savings to business will cause rapid growth of, wait for it… 1.4% remember, and those are his numbers, so they are on the optimistic side. What are the effects of deregulation on the public, what happens when union employees no longer have decent paying union jobs? Rauner is looking out for businesses bottom line and thinks that alone will spur economic development. He’s wrong, because he’s only seen the game from one side of the table. If his business isn’t making much money, they downsize, eliminating jobs. What about the converse?
The governor says if businesses pay less taxes they will hire more people, but that is only true if another employee will provide that business with less than the amount of profit that the tax cut saved. If the business would make more than that tax cut by hiring someone, they already would have. The tax cut won't help with reinvestment and capital improvements either, as there are already tax incentives there. So in these rare cases the money the State does not take from the business, goes directly, along with any increased profits the labor of said employee is used to pay the salary of the new employee. Many people might assume that tax cuts to business would go to lowering the cost of their products or service. After all, conservatives tell us increased taxes are always passed on to the consumer, but the cuts don’t. They never do. Just look at what happened when Illinois last reformed workers comp. Payouts got cheaper for the insurance companies, but the prices they charged stayed the same. Cutting business taxes benefits only that business. It doesn't cause them to hire staff they don't need, and it doesn't help them lower cost to increase sales. In the case of a non-S-Corp, it does absolutely nothing but increase the cash reserves of the business, their margin too, but unless they hold on to the cash, the tax cut is essentially meaningless. It does nothing.
You can't force more sales by providing money to the supply side of the equation. That's crazy. You could however, increase the amount of money on the demand side. When Joe six-pack makes an extra 100 bucks each month, he dines out with the family, and maybe buys some new boots. He increases the sales at some restaurants and shoe stores. Multiply that by a couple hundred thousand and you have booming businesses with customers they either didn't have previously, or that didn't spend as much money before. They then might need to hire new wait staff or salespeople to keep up with the increased business, and it circles back from there. This cycle continues increasing demand albeit in smaller and smaller ways down to the last person benefiting. Here's the thing though, those businesses don't just hire people who want a job or want a better job, they also use accountants, butchers, wholesalers, lawyers, insurance agents, etc. Those businesses experience increased business and contribute to other businesses themselves which contributes again to the loop. This is why every dollar you give a poor person ends up creating multiples of itself in economic activity, the exact number escapes me, but its quite a bit more than 2.
Taking that in, I think every citizen of Illinois can agree that we should do our best to increase business profits in Illinois! Don't just lower their taxes, grow their customer base and that customer base's spending power. Also remember that for a similar reason, tax cuts for the wealthy don’t generate economic activity, as they end up sitting in the stock market (again, if they were invested in their own business, they wouldn't be taxed), so the best way to spur growth is to provide more take home pay for those who live paycheck to paycheck, poor people who don't have any discretionary income, or those who have only a little. Give it to people who will spend it. This is why we need a graduated income tax.
Illinois should "open for business" a little different than our neighbor to the North. We should honor contracts with businesses and employees. Pay our bills, and as it is necessary increase taxes, but do it in a way that leaves low income people with the same or more take home pay. They are the ones who will spend it to grow the economy. If you give a rich person, your "job creator" a tax cut, they hoard the money, invest it in a hedge fund, or buy commodities like gold with it. People don't start businesses because they have extra money. They don't give people jobs because they are richer. They don't start businesses they think will fail. The time has come to stop being "Deadbeat Illinois". The time has come to stand up for supposed conservative values like honoring contracts, and avoid paying 9-12 percent interest on money owed, when you have the ability to levy taxes to make revenue equal to expenditures. Illinois could bond that ten billion right now at a lower interest rate than we are paying and pay it off with higher taxes (raising or providing an increased exemption to not hit those who can't afford it if we cannot pass a Constitutional Amendment to remove the flat tax provision) over the course of several years. Pass legislation that dedicates that funding source (lol, people in IL will understand the humor in this) to the bonds and make it part of the offering so no future GA can alter it. Retire the taxes when the bonds are paid off, or use them to start hacking away at the pension funds. This isn't rocket science. The state payroll is less than 3.5 billion dollars including benefits *not including the increase in pension contribution required because the state welshed on or reduced its payments with legislation in many, many previous years. Now, please tell me how much the bill backlog has increased under Rauner? Please tell me how much is not even included in that number because it is money we have to give to universities and community colleges but have failed to appropriate?
When you get to ten billion dollars, which you will fast, you need to relearn math, because making up for that ten billion dollars taking money from 40000 government employees, well you're going to need to squeeze 250,000 on each one. Not even the Superstars TM make that much (again inside IL joke). Our taxes are going up. Deal with it. This isn't about savings. The Governor's union busting agenda has cost each man, woman and child in this state 833 dollars. They can take it from the wealthy, take it equally, but they will eventually have to take it. That's how much the gov's refusal to sign a budget last year cost. Why do we all owe 833 bucks? It is simply because he wouldn't line item the budget to match revenue, or sign it as is. That would have cost us $280 if he didn’t reduce a single line item. I should state though that only ten percent of spending is discretionary, so matching that side to revenue is, was and always will be, impossible. Taxes are the only answer, but right now the Governor is telling the media he’s compromising. He’ll let the democrats raise taxes if they let him bust unions he says. Since taxes must go up that seems like a pretty bad deal for Dems. Sell out a core constituency, and you get to get hammered this fall for raising taxes. We might have been born at night gov, but….
The city of Springfield, where 60% of the state workforce is based, will look worse than the ghost town Danville, Illinois if he gets his way. Some state workers will end up needing the social services that no longer exist to survive. This isn't hyperbole. Those just starting out, making 26k or less but having to pay 600-1000 dollars for healthcare per month, or pay 40% of their medical bills after they pay several thousand dollars to meet their deductible, will see food taken off of their tables. It will put restaurants, pubs, theaters, car dealerships, doctors, and service providers of all kinds out of business. It will decimate home values as many get foreclosed upon and are sold under value at auction. There will be an exodus which will further depress the local economy and that cycle will repeat.
Illinois is burning, and no one, including Bruce Rauner cares. The national news does not report on the effects of Rauner trying to be the CEO of a state. The effects of someone bringing their business skills to government. It doesn’t work. Governments exist to provide services to the public, not to turn a profit, yet the businessmen who claim they have all the answers have only two. Reduce taxes, and then cut spending. Never mind the fact that when you reduce those services real people are harmed. That doesn’t factor in at all. Anyone who is looking at Trump should take a good hard look at Illinois and see how a state run like a business works:
It doesn't. It really doesn't.
Rauner’s wife runs Ounce of Prevention, a non-profit the state has not paid since 30 June 2015. They have sued the governor to be paid for services rendered along with a host of other social service providers and other charities holding contracts with the State. Rauner has stated an intention to craft legislation allowing local districts to declare bankruptcy to negate contracts. He has said he will take over Chicago Public Schools and declare bankruptcy, tearing up the union’s contracts and he thinks eliminating their pensions. In similar cases bond holders have always been the first to get a haircut, so I have to ask him,