If you believe that states–and commonwealths–cannot declare bankruptcy, you are technically correct. But last week a commonwealth, Puerto Rico, filed for bankruptcy in all but name, utilizing the Puerto Rico Oversight, Management, and Economic Stability Act, which President Barack Obama signed into law in 2016.
That bill of course was written for Puerto Rico in mind, but with Republicans in control of all levels of the federal government, similar bills can be proposed for the fifty states, or just some of them, including California, New Jersey, Connecticut, and Illinois. Those three are among the states that have fallen victim to what New York City Mayor Michael Bloomberg dubbed the “labor-electoral complex” in his farewell address four years ago.
What’s that? It’s when public-sector unions, consisting of workers on the taxpayer payroll, cajole politicians–almost always Democratic ones–to increase their salaries or defer their pay hikes by way of generous yet unaffordable pension plans.
And of course these pols are cajoled by these unions through campaign contributions.
Many local government workers don’t pay into social security and many of them have no other pension plans. In states like Illinois, if you work for the state government, funds deducted for your retirement only go to one place–an Illinois retirement plan. So far so good–unless the politicians neglect to properly fund those pension programs.
And that has been the sad case in those blue states I mentioned earlier, as well as Kentucky.
Now that Puerto Rico has declared, well, something, investors will very likely take a closer look at sinking cash into what may be sinking ships. Puerto Rico has negative population growth. So does Illinois. That means fewer taxpayers are participating in funding these failures. And it’s the productive citizens who are leaving Illinois and Puerto Rico.
Yesterday Puerto Rico announced it was closing 184 schools and there is speculation that commonwealth retirees may suffer a 20 percent cut in their pensions. Expect much more bad news from there.
It doesn’t have to end up this way in states like Illinois–if corrective action is taken immediately. Let me define “immediately” for those politicians who may be reading this post.
Immediately means 2017, not ten years from now.
Ten years ago the financial situation in Puerto Rico wasn’t as dire.
I’ve been saying that Chicago will be the next Detroit for years, and on Thursday, syndicated talk radio show host–and former Tea Party congressman–Joe Walsh, was making the same prediction on his program.
Walsh was discussing a just-released pension study which the Chicago Sun-Times reported on.
Standard & Poor’s surveyed pension obligations in New York, Los Angeles, Chicago, Philadelphia, San Francisco, San Diego, San Jose, San Antonio, Phoenix, Jacksonville, Dallas, Houston, Columbus, Indianapolis and Austin.
Chicago performed the worst across the board — registering the highest annual debt, pension post-employment benefits costs as a percentage of governmental expenditures and the highest debt and pension liability per capita.
And there is more:
The report noted that the “median weighted pension funded ratio of 70 percent” for the 15 cities “underlies a wide range of positions with Chicago only 23 percent funded across all plans and Indianapolis the most well-funded at 98 percent.”
Chicago’s pension burden is $12,400 per person–more than double that of New York City and it has the lowest bond rating of those 15 surveyed cities. The S&P report says that in 2015 Chicago “only made 52 percent of its annual legally required pension contribution.”
If you are looking for more bad news you came to the right place. More than five times as many people live in New York and Los Angeles combined–but there were more murders in Chicago last year than the total in both of those cities. As for Chicago’s population, it’s at a 100-year-low. Leading the exodus are middle class blacks.
Chicago’s jobs program for people with education degrees, better known as Chicago Public Schools, has been cited by other middle class ex-Chicagoans, including your humble blogger, for decades as the main reason they abandoned the city. CPS bonds are rated as junk. Lack of money may lead to the last thirteen days of the school year being cancelled–and the CTU may add a fourteenth with a one-day strike in May to protest that early shutdown. Yep, I don’t get it either.
CPS officials have been battling the union for years to force teachers to pay more into their own pension funds. Yeah, they can afford it–of teachers in the largest school districts, CPS teachers rank in the top three in pay. But hey, the union members probably are thinking, “Why should we pay more when we have so many taxpayers who can foot the bill?”
But that’s the mindset that got Chicago into its mess. Oh that, and public-sector unions contributing heavily into the campaign funds of Democratic politicians.
Critics of my Chicago-is-the-next-Detroit hypothesis point out that large corporations have been moving their corporate headquarters into Chicago of late, the most prominent examples are ConAgra relocating its HQ from Omaha to Chicago and McDonald’s, which will move back to the city after four decades in suburbia. But no one can say how many of these corporate big shots will live in Chicago.
Two years ago Chicagoans were slugged with the largest property tax increase in the city’s history to pay for, yes, unfunded pension liabilities. Last year Chicago water and sewer taxes were hiked. Remember what what I wrote earlier, Chicago’s pensions are only 23-percent funded. Does anyone think that there aren’t additional massive tax increases in Chicago’s future? And when the producing segment of Chicago is even more depleted–chased out, that is–how will Chicago pay for street repair, schools, and snow removal–as well as adequate police and fire protection?
The Illinois Supreme Court recently ruled that public-worker pensions cannot be reduced.
Here’s what I base my Chicago dystopia projection on. Defenders of the status quo place blind faith into their hope that Chicago can somehow hang on until enough pensioners die, which probably won’t be until the middle of the century. They offer no credible solutions. Nothing. They’re as delusional as Gerald O’Hara meticulously counting out his Confederate bonds in Gone With The Wind–“All we have left”–after General Robert E. Lee surrendered.
There’s a way out–changing state law so municipalities and government agencies can declare bankruptcy, which is something Bruce Rauner, Illinois’ reform governor, favors. But the Democrats and the public-sector unions will never agree to that.
John Ruberry, who moved from Chicago to the suburbs in 1999, regularly blogs at Marathon Pundit.
On the Sunday after the 9/11 attacks, Jeremiah Wright, then Obama’s pastor, bellowed, “God d–n America” and “America’s chickens are coming home to roost” from the pulpit of his Chicago church.
Two nights from now President Barack Obama will give his farewell address in Chicago, his adopted hometown. The Hawaii-born 44th president moved to Chicago a year after graduating from college where he worked, with at best mixed success, as a community organizer on the Far South Side. It’s an area still beset by violence and poverty with no hope of a turnaround thirty years after Obama left that post so he could attend Harvard law school.
It was in 1996 Chicago where Obama launched his political career. One of his first campaign stops–perhaps his first–was at the home of his friends, unrepentant Weather Underground terrorists Bill Ayers and Bernardine Dohrn. Eight years later another Chicagoan, state Senate President Emil Jones Jr, put Obama’s name on some key bills that bolstered his liberal credentials. Obama scored a surprise win in the Democratic US Senate primary, and after the Republican nominee imploded, he easily won in the general election.
You know the rest of the story.
However, Obama was not a slam-dunk in the 2008 presidential election against John McCain–what we now call the Great Recession sealed the deal–and America elected its first black president.
Chicago is still recovering from the ’08 economic collapse. Of the nation’s 35-largest cities, Chicago has the largest percentage of underwater home mortgages.Two years ago Chicago enacted its largest property tax hike in history, the impetus for it was to pay for underfunded municipal pension funds. What does this have to do with Obama? Chicago hasn’t had a Republican mayor since 1931, Obama is the most hyper-partisan president in memory. Along the White House ride for Obama was Valerie Jarrett, his senior advisor and “Berlin Wall,” the former slumlord was a deputy chief of staff for Chicago Mayor Richard M. Daley. It’s Daley, not his successor, former Obama White House chief of staff Rahm Emanuel, who bears the responsibility for the Chicago pension debacle. But Chicago’s generous municipal pensions are political payback for public-sector unions, who’ve been an arm of the Democratic Party in all but name for decades.
Obama has always been very cozy government labor unions.
Two years ago–under Emanuel’s watch–Moody’s downgraded Chicago’s bonds, and those of Chicago Public Schools and the Chicago Park District to junk. Other rating services haven’t followed suit yet, but they absolutely don’t view Chicago favorably.
Chicago’s population is at it lowest level in 100 years.
Last year at least 762 people were murdered in Chicago–an appalling 57 percent increase over the year before. Chicago suffered more killings than New York City and Los Angeles–combined. One of the reasons cited for the soaring murder rate was Rahm Emanuel’s inept handling of the shooting of unarmed black teen Laquan McDonald–with sixteen bullets–by a white cop, all of which has compelled Chicago Police officers to use less aggressive law enforcement tactics. Chicago is a hotbed for Black Lives Matter activists. The outgoing president has been supportive of this radical group, which deems racist the statement All Lives Matter.
That leads to last week’s racist atrocity in Chicago, the torturing of a white special needs man–thirty minutes of which was streamed live on Facebook–by four blacks in the East Garfield Park neighborhood on the West Side. The victim was bound, gagged, beaten, slashed, forced to drink toilet water, and coerced to say “F–k Donald Trump” and “F–k white people.”
Two months earlier in another West Side neighborhood a white man was pulled from his car and brutally beaten by four blacks. That attack was captured on video, the assailants screamed, “You voted Trump” and “Beat his a–.” While the victim was indeed a Trump voter–yes, there are a few in Illinois besides me–he told authorities that there was no way the thugs could have known that. There was no Trump bumper sticker on his car–he was white and that was enough provocation for these creeps.
Obama’s chickens–and those of Chicago Democrats–have come home to roost.
Our collectivist president has practiced identity politics for his entire adult life. which for the most part means race politics. Us versus them. And as a collectivist Obama has appointed himself as the savior to put the pieces back together.
But breaking things is much easier than putting them back together.
Some final thoughts.
As a public service I am recommending that if you are planning to attend Chicago’s McCormick Place address, please use public transportation. I’ve been fortunate enough to visit 45 of our 50 states. With the exception of Detroit, the worst-maintained streets and roads I’ve encountered are in Chicago. And while you’re driving around potholes and crevices, please beware of Chicago’s ubiquitous red light and speeding cameras. An astounding 1.9 million traffic camera tickets were issued between 2010 and 2015. Chicago has 2.7 million or so residents. Most of those tickets were written while Emanuel was mayor.
Someone needs to come up with a misery index for big cities like Chicago, which should include such items as corruption, low high school graduation rates, unfunded pension obligations, red light cameras, crumbling infrastructure, population loss, taxes, and yes of course, crime.
Perhaps Austan Goolsbee, Obama’s amiable pal who is an economics professor at the University of Chicago, can absolve himself of leftism and get to work on this much-needed project.
Thank God I left Chicago for the suburbs nearly two decades ago.
And Obama, at least for now, won’t live in Chicago after he moves out of White House next week. He’ll probably only return to visit his presidential library.
John Ruberry is a fifth-generation Chicago area resident who writes the Marathon Pundit blog. The Chicago Convention and Tourism Board had no input in composing this blog entry.
Last week American Apparel, the biggest clothing maker in Los Angeles, said it might outsource the making of some garments to another manufacturer in the U.S., and wiped out about 500 local jobs. The company still employs about 4,000 workers in Southern California.
and it’s not just the big manufacturers who are getting hit
Felix Seo has been making clothes for wholesale in downtown for 30 years. His company, Joompy, used to count giant retailers like Forever 21 among its clients. But as prices have gone up in recent years, he said, those fast-fashion peddlers are no longer giving him orders.
“I used to pay $5 to get this sewn, and now it costs $6.50,” Seo said, holding up a patterned dress. “But my customer doesn’t want to pay that, so I can’t sell it anymore.”
To survive, Seo, 59, said Joompy may have to start importing goods instead of producing them locally. “It will be impossible to make clothes in Los Angeles,” he said.
The Unions of course are saying it’s all greed
“It’s always, ‘Oh woe is me, If I pay minimum wage at this rate I can’t turn a profit,'” said Nativo Lopez, a senior adviser with Hermandad Mexicana, which is helping American Apparel workers unionize.
Martinez, a 53-year-old bellhop, has hauled tourists’ luggage across the flagstone plaza of the Sheraton Universal in Studio City for two decades. He said he was excited after the council’s vote to raise the minimum hourly wage at large hotels to $15.37, which he expected to boost his paycheck by 71%.
He soon found out he wouldn’t be getting a raise after all. Under an obscure provision of the city’s wage hike, unionized hotels were granted an exemption allowing them to pay their employees less. The result is that Martinez, who pays $56.50 every month for membership in the hotel workers union Unite Here, now makes less than those doing the same job in non-union workplaces.
“That’s what really makes me mad,” Martinez said. “I just wanted to be treated equal. Don’t exempt us, because we’re the ones paying union dues.”
I’m old enough to remember when Unions didn’t fight for the right to treat their members as 2nd class citizens.
But either way the working poor in LA are discovering that the real minimum wage is always zero.
I wonder if anyone will mention this to Hillary or Bernie?
Whether it’s Occupy Wall Street, Black Lives Matter or a teachers union, leftist protesters who block streets and disrupt private businesses claim they are the spiritual descendants of Martin Luther King and the 1960s Civil Rights movement. Many of the members of these groups–and there is some overlap–wish they had been a part of the Civil Rights movement so it’s understandable that they try to connect their causes with the legacy MLK.
When I complained on Twitter earlier this month about a February 3 Chicago Teachers Union rally–which they almost certainly didn’t bother applying a permit for–ruining an evening rush hour in downtown Chicago by blocking streets, a Twitter leftist of course defended in a reply to my Tweet that protest was a natural outgrowth of King’s use of civil disobedience in the 1960s and earlier.
I replied that these 21st century civil disobedience demonstrations are different because unlike blacks sitting at all-white lunch counters and Rosa Parks refusing to surrender her bus seat to a white man in 1955 as a protest against Jim Crow laws, CTU members, as well as Black Lives Matter and the Occupy activists, can vote provided they are old enough and they are United States citizens and, in some states, not convicted felons. The civil rights marchers in Selma, Alabama didn’t have a permit in 1965; had they applied for one of course it would have been denied by the racist government authorities. And the blacks who lived in Selma then, despite the passage of the Civil Rights Act the year before, faced enormous obstacles if they wanted the register to vote. And before then, they couldn’t even do that.
“Throwing the bums out” via the ballot box wasn’t on option.
Last week five public schools in Detroit were closed due to sick-outs, that is, these for-the-kids educators called in sick when they weren’t, likely by the direction of the Detroit Federation of Teachers.
This is a strike in everything but name, and teacher strikes are illegal in Michigan. And no one it seems, except for Detroit News reporter Ingrid Jacques, to be angry about these phone-in walk outs. Why aren’t the parents up in arms?
Will the “sick” teachers be punished? Will their union be cited for organizing an illegal strike? Will Detroit parents finally get angry? The parents should already be angry because for the fourth straight year Detroit’s elementary schools ranked last in reading and math scores among big cities.
Pick your cliché: Do you prefer “rearranging deck chairs on the Titanic?” Or is it “Fiddling while Rome burns?”
Let me conclude about Detroit’s so-called resurgence since the city emerged from bankruptcy in 2014. Yes, there are construction and rehab projects under way, mostly downtown, in Midtown, and in New Center. Yes, some hipsters have moved into those areas as well as Corktown. But eventually some of them will start families. The prospect of sending their children to a DPS school–along with the burden of a municipal income tax, will likely send those hipsters packing.
It’s been four months since Illinois operated with a budget.
But the story goes back a year when Land of Lincoln voters tossed out Democratic incumbent Pat Quinn, Rod Blagojevich’s two-time running mate, and chose Republican businessman Bruce Rauner to, as his proclaimed in his campaign slogans, “Bring back Illinois” and “Shake up Springfield.” Rauner has certainly achieved the latter.
But the Chicago Democrats who run the gerrymandered-empowered General Assembly, House speaker Michael Madigan and Senate president John Cullerton, had a trap awaiting Rauner when he arrived in Illinois’ capital city. No, it wasn’t the dilapidated governor’s mansion, but a fiscal 2015 budget that assumed the supermajority of Democrats would make permanent a 2011 “temporary” tax increase pushed through in a lame duck session by Quinn. Yet Rauner and the General Assembly resolved that shortfall that spring, but the two sides are deadlocked over the fiscal 2016 budget.
Meanwhile Illinois lowest credit rating of the 50 states and the worst-funded state pension system. These millstones predate Rauner’s election.
Who is willing to compromise? Well, Rauner is. Although he campaigned against a tax hike, Rauner says he will sign a budget that includes one–as long as it the General Assembly agrees to changes to the state’s expensive-to-employers workers’ compensation laws, tort reform, term limits, and taking the decennial legislative redistricting powers out of the hand of the General Assembly. The Democrats oppose all of these items, well, except the tax increase. It is they who are the stubborn ones.
Amazingly, Illinois government continues to function, sort of, as ninety percent of state funding continues, although the state’s backlog of unpaid bills, which also predates Rauner’s inauguration, is growing. But it is business-as-usual for most Illinoisans, including myself, as I no longer have a child in the public school system. Even if I did. I probably notice anything different. However, my license plates are up for renewal, and I won’t receive a reminder in the mail to purchase a new annual sticker because of the budget standoff.
Meanwhile, Saul Alinsky-style demonization attacks on Rauner are stepping up. On Friday Karen Lewis, the hardened leftist who is the president of the Chicago Teachers Union, called Rauner a sociopath in a speech while Madigan and Cullerton mutely sat in the audience.
Rauner has been governor for just nine months. Illinois’ fiscal failings go back nearly thirty years.
Slow and steady wins the race.
John Ruberry, a fifth-generation Illinois resident, regularly blogs at Marathon Pundit.
San Francisco’s Newest Fast Food: Healthy, Cheap and Served by Robots
Across the country, restaurants are looking for innovative ways to keep humans out of the picture. But what’s unique about Eatsa is the focus on health and taste. It’s a fully-automated experience, so Eatsa can afford to offer high-quality food for less. Workers’ salaries account for about 30 percent of the restaurant industry’s costs.
The team spent over two years rigorously testing the texture of the sauces and the grain to optimize the taste. Eatsa will also offer a range of beverages, which are sugar-free or low in sugar. Eatsa plans to open two more locations in the coming months, including a restaurant in Los Angeles.
This story is likely no surprise for our regular readers but for our friends on the left it must come as quite a shock that they have made this alternative cost effective:
Yup, technology will serve the meals, not unskilled, inexperienced, $15 an hour, coffee break and maternity/paternity leave humans. Thanks to unions and Leftists, the poor will get poorer, those in poverty will have fewer opportunities to get out from under and the techies will continue to take over the world.
The latest figures, for 2013, show California’s housing cost adjusted poverty rate to be 23.4 percent, nearly half again as high as the national average of 15.9 percent.
Back in the years when the nation had a “California Dream,” it would have been inconceivable for things to have gotten so bad — particularly amidst what is widely hailed as a spectacular recovery. The 2013 data shows California to have the worst housing cost adjusted poverty rate among the 50 states and the District of Columbia. But it gets worse. California’s poverty rate is now more than 50 percent higher than Mississippi, which long has set the standard for extreme poverty in the United States (Figure 1).
And the migration of those still able to leave that began long before
How bad are things in California? California’s domestic migration has been negative every year since at least 1990. In fact, since 1990, according to the U.S. Census, 3,642,490 people, net, have left California. If they were in one city, it would be the third largest city in America, with a population 800,000 more than Chicago and within 200,000 of Los Angeles’ population.
It’s very likely that we will see California revert to the old feudal days of powerful rich landowners and peons with nothing who will have only the state and the church to sustain them. That is of course if the feudal lords of the left allow the church to remain.
Two closing thoughts:
1. As this chain expands how long will it take for other chains needing to compete with them to also go the robot route?
2. How much longer will it be before the cooks are replaced by machines too?
I have yet to be replaced by a Robot so the only way I can keep doing this full time is if my pay comes from you. My annual goal is Twenty Two grand which will give me a nominal living doing this.
For a Donald Trump the 22K that would cover my expenses for the and the extra $10K that would pay for the roof, car, floor kitchen and bathroom repairs that I had to put on plastic would be nothing and if my traffic was the size of a Drudge getting enough people to kick in to cover those bills would likely not be an issue.
But I have to take things as they are so if you like what you see here including my paid writers like Tim Imholt, Fausta Wertz, Pat Austin et/al and have a little extra you can spare. I’d appreciate it if you would hit DaTipJar
That gets all the bills paid. If I can get to Forty Thousand I can afford to travel outside of New England and/or hire more blogger to help me get it done.
Consider Subscribing 100 Subscribers at $20 a month will get the job done and then some.
Additionally our subscribers get our podcast emailed directly to them before it show up anywhere else.
About 20 percent of Illinois’ operating budget goes to state worker pensions. With so much cash going to retired Prairie State employees, you would think that the state where I live would be on diligent in funding the system. But Illinois’ pensions are the worst funded among the 50 states. Some years Illinois skipped or shorted pension payments–and public-sector unions (gasp!) supported that move.
But now because of a lawsuit brought forth by a former lobbyist for the Illinois Federation of Teachers union–long-suffering Land of Lincoln taxpayers have a poster child for pension abuse. A little-noticed 2007 bill sponsored by a Democrat allowed that lobbyist, David Piccioli, to qualify for pension from an education pension plan, the Teachers Retirement System. He is currently collecting a $31,000 annual TRS pension even though–except for one day–he never taught in a classroom
Let’s look at the one day–Piccioli was a substitute in a Springfield classroom and he earned $93 for his efforts–which probably consisted of popping DVDs into a player. But because of that 2007 law–Piccioli became eligible for additional $36,000 in additional TRS benefits. Another IFT employee, Steve Preckwinkle, also subbed at a school for a day and applied for a additional pension benefits as Piccioli did.
Suddenly self-righteous state lawmakers quickly removed the one-day loophole but last month Piccioli sued to get his classroom pension back.
There are many villains who created the Illinois public pension debacle and yes, politicians deserve most of the blame. For instance, allowing workers to retire at 50 and then collect most of their old salary when they will probably live another 30 years was a cataclysmic move.
But the unions–and people like David Piccioli–played their part in this disaster.
Four years after Wisconsin became the chief battleground in the war of taxpayers versus public sector unions, a new front is developing south of the Cheese Curtain in Illinois.
With the possible exception of California, no where else in America are government unions so powerful. And of course it should be no surprise that both states are fiscal basketcases.
My fellow Land of Lincoln taxpayers and I are burdened by over $100 billion in unfunded public worker pension debt. Over $150 million has been contributed by just six government unions to Illinois pols in addition to countless hours of volunteer time by unionized state employees. Illinois’ new reform governor, Republican Bruce Rauner, has proposed banning public sector unions from donating to Prairie State political campaigns. Major state contractors are already prohibited from doing so.
“After you win, let’s negotiate our pension and work rules and healthcare,” Rauner says is the longtime game plan of the government unions, one that has been successful for them–but toxic for everyone else in the state. AFSCME represents the most state workers, its contract in July and there is speculation that there will be a first-ever strike by state public servants. Their is much for taxpayers to dislike in the current AFSCME contract, for instance, workers can play hooky from work twelve separate times before getting fired. At my job, I’d be fortunate if I got away with that once.
Four years ago Wisconsin’s reform governor, Scott Walker, fought the unions and won. But Walker had Republican majorities in both chambers of the state legislature, while thanks to gerrymandering, the Democrats in Illinois enjoy veto-proof majorities in the General Assembly. On the other hand Rauner has a $20 million PAC, much of it self-funded, to promote his case, and unlike his predecessor, the self-made multi-millionaire is not deeply unpopular.
Rauner has another ally in his upcoming fight against the unions: mathematics. Unlike the federal government, states can’t print money. And the great majority of Illinoisans are not union members or public sector employees.