Analysis: Rahm’s troubles plentiful, allies scarce

SHARE Analysis: Rahm’s troubles plentiful, allies scarce

Mayor Rahm Emanuel pauses as he talks to supporters after he was unable to get a majority vote in the Chicago mayoral election in February. File Photo. (AP Photo/Charles Rex Arbogast)

Mayor Rahm Emanuel knew the second term that he spent $22 million to win would be a mountain of trouble. But even he didn’t expect it to be this high a climb and this lonely along the way.

Much has changed since April 7, when an exhausted Emanuel claimed victory in Chicago’s first-ever mayoral runoff.

A junk bond rating that not even Emanuel saw coming has made the city’s $30 billion pension crisis worse — by triggering $2 billion in added borrowing at higher interest rates and saddling Chicago taxpayers with hundreds of millions of dollars in penalties.

A Republican governor with whom Emanuel had a personal friendship and thought he could do business has turned into a stubborn political wild-card.

The Democratic House speaker appears to be more preoccupied with staring down the governor than he is with helping pull Chicago away from the financial cliff.

And a federal investigation of alleged contract irregularities has forced the resignation of Emanuel’s hand-picked schools CEO, leaving a power vacuum at the Chicago Public Schools when strong leadership is needed most.


Instead of building, what he hopes will someday be a “firewall” between the city and CPS, Emanuel alone is wearing the jacket for $200 million in school budget cuts that are only the beginning.

The double-downgrade by Moody’s Investors Service that saddled Chicago with a junk bond rating shared only by Detroit among big cities was like a kick in the gut.

It surprised and infuriated the mayor because it came after the state Supreme Court overturned state pension reforms. The ruling placed Emanuel’s plan to save two of four city employee pension funds in similar jeopardy. But the city reforms haven’t been overturned yet and they still have a slim chance to survive.

But for a control freak such as Emanuel, the state budget stalemate between Democratic House Speaker Michael Madigan (D-Chicago) and rookie Republican Gov. Bruce Rauner over Rauner’s demand for pro-business, anti-union reforms has to be the most exasperating post-election development.

It has forced Emanuel onto the political equivalent of a desert island.

Forget about a Chicago casino, a sales tax on services, a restored state income tax hike, teacher pension reform or the police and fire pension relief that has already passed both chambers.

The mayor of Chicago couldn’t even persuade the Democratic-controlled General Assembly to postpone the day of reckoning for CPS — by putting off a $643 million teacher pension payment until Aug. 10.

Instead, Emanuel was forced to go it alone and make the payment on deadline day using a painful mix of borrowing and budget cuts that will trigger more than 1,000 layoffs.

Schools will open on time and class size will not increase. But schools and students will be impacted.

And if the Chicago Teachers Pension Fund doesn’t agree to make a five-month, $500 million loan from next year’s pension payment, even more devastating cuts will be needed that could raise classes to 35 students, force more than 3,000 teacher layoffs and trigger system-wide furlough days.

Fortunately for Emanuel, the pension fund is inclined to grant the loan, thanks to the extraordinary guarantees dictated by CPS’ junk bond status and the school system’s history of pension holidays and partial payments.

The loan would carry a 7.75 percent interest rate. CPS would shift from a lump-sum pension payment to monthly payments for 10 years with the $696 million payment due on June 30, 2017, accelerated. And if CPS misses even one monthly payment, $750 million in taxpayer-owned school buildings pledged as collateral on the loan would become the property of the teachers pension fund.

Emanuel and Rauner are friends, education reform allies and former business associates who made millions together. Their families have vacationed together and shared expensive bottles of wine.

Given that history and Emanuel’s difficult relationship with former Democratic Gov. Pat Quinn, the mayor had good reason to believe that better days were ahead for needy Chicago when Rauner used his personal fortune to defeat Quinn.

Instead, the mayor’s petty fights with Quinn while Chicago came out pretty much ahead are beginning to look like the good ol’ days.

When and if the Springfield stalemate ever ends, Emanuel has to be wondering right about now just how much help he can realistically expect to get in a toxic political atmosphere that may well drag on at some level for Rauner’s entire term as governor.

For now at least, the mayor of Chicago is reduced to ordering school budget cuts and denouncing what he just did as “intolerable, unacceptable and totally unconscionable.”

He’s a lonely voice in the wilderness pleading with Springfield to “get off their duff” and offering to raise Chicago property taxes by as much as $225 million for schools, but only if teachers accept the equivalent of a seven percent pay cut and the state reimburses CPS for “normal” pension costs.

The 7 percent pension pick-up appears to be going nowhere. That much was evident when teachers picketed the mayor’s office just when Emanuel thought he had opened new lines of communication to Chicago Teachers Union President Karen Lewis that could lead to a one-year contract and a united front in Springfield.

Emanuel moved up the unveiling of his own city budget until September in hopes that he would know by then how much help he would get from the state and how big a hole would be left to fill by the City Council.

But it’s looking more and more like most of the heavy lifting will have to be done in Chicago by a mayor who spent $22 million to get re-elected and just might be suffering from a case of buyer’s remorse.

David Axelrod, the mayor’s friend of 30 years who served together with Emanuel in the Obama White House, acknowledged that the “situation in Springfield” has been “far more challenging than even he” [Emanuel] anticipated.

“It’s not fun to have to ask so much from so many and have so few to count on,” Axelrod said.

But Axelrod said Emanuel “knew what he was signing up for” when he fought so hard and spent so much to win a second term.

“He knew there were legacy problems coming to a head. There are factors that have made it even more difficult. But, tough times require a tough leader, and he’s tough. I have not heard him say I wish I hadn’t” won, Axelrod said.

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