Only You Can Prevent a Shipwreck
Shipwrecks aren’t supposed to happen in this day and age. We have GPS, and radar, and sonar, and computerized navigation. Ships are big, and built for safety, and made of steel. But remember the Costa Concordia? It was a fully equipped modern ship worth over $500,000,000, carrying over four thousand passengers.
The Costa Concordia ran onto the rocks, the ship was a total loss, and 32 people lost their lives.
If the captain and the crew on the bridge perform badly enough, you can sink the ship, despite all the safeguards, no matter how big and expensive it is.
The governments of large, modern communities in the developed world are not supposed to become insolvent. They have taxing power, and the rule of law, and democratic elections, and competing political parties, and a free press, with people who are free to leave if the government is incompetent, and there are bond rating agencies to give you early warning that your finances are not in shape. But look at Illinois. It is a fully modern state, with a gross domestic product of over $650,000,000,000 annually, with a per capita income of $44,815, with 30% of its people holding college degrees, with world class banks, universities, research laboratories, hospitals, transportation facilities and, as Governor Quinn reminded us, a big lake.
Yet Illinois is like an ocean liner whose hull is scraping sand, grating against submerged objects, and about to wreck itself on the rocks.
The political leadership in Illinois has performed so badly that it is about to sink a perfectly good state, with thirteen million passengers whose safety and wellbeing rely on the ship staying afloat.
The elected branches of Illinois government have had clear warning of the rocks ahead. Illinois has been run badly for decades. But the consequences are becoming more severe lately, and it is getting harder to carry on with business as usual.
During Pat Quinn’s term as governor Illinois has had (so far) thirteen downgrades to its general obligation bonds. The bond rating agencies assess the risk to borrowers of lending money, and Illinois is in a downward spiral. Illinois now has the lowest rating of any of the fifty states. The bond buyers of the entire world are looking at Illinois, and they are seeing a state that is too risky to loan money to, unless the states pays a steep premium. That premium is paid by the taxpayers of Illinois, and it is money entirely lost, with nothing to show for it in terms of services from the state. It is a penalty for the incompetence of our lawmakers.
The government of Illinois has a lot of unfinished business to attend to. The most pressing is its incapacity to face its insurmountable public pension burden. On May 31, 2013, the Illinois legislature ended its session without passing any pension reform. Speaker Madigan had a plan. Senate President Cullerton had a plan. Both plans were deeply flawed. Neither plan passed. The session ended, the legislature went home, and the entire world was treated to the appalling sight of a ruling political class walking off the bridge while the ship is about to go aground, much like Captain Schettino abandoning ship with passengers still on board.
As it happens, neither Madigan’s plan nor Cullerton’s plan will solve the problem of Illinois’ pension obligations. The only proposal currently on the table that would solve the problem is House Bill 3303, which stalled in committee. Springfield ain’t ready for reform, apparently.
Pat Quinn is trying to get Madigan and Cullerton to agree to a plan, and to get both houses to pass a bill he can sign in a special, one day legislative session on June 19, 2013. It remains to be seen what this emergency session will be able to accomplish. The deadlock between Madigan and Cullerton appears to be deepening.
Attempting to resolve the number one public problem faced by this state in a rushed, crisis atmosphere, compelled to action by crumbling bond ratings, proves once again that we have a dysfunctional political class in Springfield. Panic on the bridge does not give anyone confidence in the future management of the ship.
But, as of today, there remain some flickering rays of light in the darkness. Illinois is headed rapidly for the rocks, but it has not actually crashed yet. Illinois’ bonds are the worst in the USA, but they are not yet junk, and its ratings can be improved. Illinois is at or near rock bottom in the nation by far too many economic measures, like unemployment. But our latent capacity to recover still exists. We do have a lot of strengths here, which are currently being squandered, but they exist. We are not a bombed-out shell like Detroit. We are instead a solid Midwestern state that should be thriving. We are held back by a political leadership that cannot say no, cannot imagine alternatives, and lies to the voters. They are only slowly and painfully learning that the perpetual increase in spending really has to come to an end.
And if the current crop of legislators in Springfield cannot learn that lesson, they can be, must be, and will be replaced.
Voters of Illinois: What happens next is up to you.
It’s your ship.
Don’t let the policy makers sink it.