Andy Shaw: Should Washington bail Illinois out of pension mess?

SHARE Andy Shaw: Should Washington bail Illinois out of pension mess?

Gov. Bruce Rauner delivers his annual budget address to a joint session of the General Assembly on Feb. 17. (AP Photo/Seth Perlman)

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It’s hard to predict public reaction to our watchdog work at the Better Government Association.

Some of our investigations, lawsuits, policy initiatives, civic engagement activities and media outreach only kick up a little dust, but others touch a nerve, including a recent story in our “Rescuing Illinois” series that posed a provocative question about the state’s pension crisis:

Is it ripe for a federal “bailout” of some type?

We pointed out that Illinois’ five major pension plans are $111 billion in the hole, and there’s apparently no legal or politically viable state remedy.

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So what about a federal “rescue” that could feature a mammoth taxpayer-backed cash infusion, like the lifeline thrown to Wall Street and the auto industry in ’08?

Or access to low-interest loans backed by the Federal Reserve Bank, the lender of last resort?

We’re not supporting a federal bailout, but as the crisis deepens, our responsibility as watchdogs is to examine alternatives, including a 9-1-1 call to Uncle Sam.

The issue didn’t come up in Governor Bruce Rauner’s budget address last week.

In fact, he addressed the pension disaster only in minimalist terms, endorsing a micro-deal he struck recently with Senate President John Cullerton that could save taxpayers $1 billion annually.

It’s a start, but a billion a year is just nibbling around the margins of the crisis.

In previous comments the governor didn’t slam the door on federal help, but a spokesman says he prefers a state-backed solution.

We talked about the bailout issue on WTTW’s “Chicago Tonight” and posted links to our story on social media, and boom — more than 300 people have commented on Facebook since then.

Most hate the idea of federal help, and here are a few reactions, edited for clarity:

+ “No way. Illinois should be able to file bankruptcy and reduce the liability of these excessive pensions and diminish the strength of the unions. The bank bailout was needed as it affected our economy throughout the whole country. If state employees want to get their pensions then they need to agree to concessions and come to the table with our governor in a reasonable way.”

+ “The only fair way to fix the mess is to have a (state) constitutional amendment and cap the pensions at $40,000 to $50,000.”

+ “No…government and business need to work within their means.”

A few endorsed a request for a federal life preserver. For example:

+ “Let me get this right. If the federal government offers the state a way out, some of you oppose it? Why would anyone not accept this help? After all, you’re complaining your taxes are too high. I don’t get you people. Take the friggin’ handout and run for the hills, idiots.”

+ “Absolutely it should. The feds gave the banks billions in loans and tax breaks.”

Illinois, as our story noted, isn’t the only state mired in a pension quagmire.

Nationwide, unfunded public pension liabilities are almost $1 trillion, 27 states are at least $10 billion in the hole, and 26 are “at risk” under federal regulatory standards, according to a recent survey.

So asking the federal bailout question is timely and obviously evocative, and we welcome the feedback from those of you who weighed in, pro and con, on social media and in other ways.

We’d rather touch a nerve than simply kick up a little dust.

So keep bringing it on.

Andy Shaw is President & CEO of the Better Government Association.


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