Illinois is nearing junk bond status, and I am happy to report that’s not a big deal.
I say this because the two men who ought to be most concerned — Republican Gov. Bruce Rauner and Illinois House Speaker Michael Madigan — seem to be in good moods. Rauner is traveling around the state bragging that Madigan is to blame for this financial mess, instead of locking himself in a room with legislators until they come out with a budget agreement.
As for Madigan, the state’s Democratic Party leader, he is holding hearings to determine if anyone cares that Illinois has not passed a budget and what the impact has been after two years of financial chaos.
For those of us claiming the sky is going to fall, let’s review some of the basic facts.
Illinois has more than $14 billion in unpaid bills sitting on the comptroller’s desk because, well, this state doesn’t have the money to pay its bills. Illinois schools are owed $1 billion and Chicago Public Schools had to take out a loan to keep classrooms open this spring.
The state’s pension debt is $130 billion and increasing by millions of dollars every day. Even so, Illinois is spending about $6 billion a year more than it has coming in from taxes and other revenue sources, even without a budget. That’s largely because the courts and federal government have mandated that the state continue spending money it doesn’t have.
Illinois’ bond rating has already been reduced to one level above junk bond status, the worst in the nation’s history for a state.
No state has ever achieved a junk bond rating, but according to S&P Global Ratings, we could be the first as of July 1 if the state doesn’t pass a budget.
Yet, Rauner, who spent $65 million to become governor in 2014, has invested $50 million of his own money in his campaign fund for 2018. If he thought this state was going bust, would he really want to be the guy at the helm? Wouldn’t that ruin his reputation as a shrewd businessman?
J.B. Pritzker, a billionaire Democrat, has dropped $7 million into his gubernatorial campaign fund. He’s expected to outspend Rauner if he gets the Democratic nomination. So we’re talking $75 million, maybe $100 million of his money.
Rauner has billionaire friends who are also writing checks for millions of dollars to assure his re-election.
Would Republicans, financial conservatives, people who rip Democrats for wasting money on things like food stamps, public housing and health care, be investing money in the Illinois election if this state was about to financially collapse?
These rich guys must know something, right? They’re pretty clever. They have convinced the rest of the country they are overtaxed — even if they do have $50 million to waste on political campaigns — which demonstrates they really are smarter than the rest of us.
As for Madigan, he has been a member of the Illinois House of Representatives since 1971 and speaker for all but two years since 1983. He has made state government his life’s work. He has been the one constant at the helm of Illinois government as it failed to make its pension payments, failed to support the schools and caused property taxes to skyrocket.
Would he really want to be known forever as the architect of this state’s financial collapse?
Then again, maybe junk bonds aren’t a bad deal for everyone. Because they’re considered a high risk investment, they pay very high interest rates. If you had a lot of cash to invest, or had friends who did, and thought the state would one day raise taxes to pay off its bonds, well, you could make a killing.
In that case, junk bonds could be a really good thing. As for the average Illinois taxpayer, he would be stuck with the debt.
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