WBEZ | budget

To please GOP, again, Obama offers Social Security cuts

Mon, 08 Apr 2013 12:50:00 -0500

Is President Barack Obama playing the Republicans – or is he playing us?

Do you believe the budget he’s presenting this week – the first time in history a Democratic president tries to cut Social Security – is a shrewd political move to divide the GOP, or do you think the president wouldn’t mind tying Social Security benefits to a new formula, called “chained CPI,” that would effectively reduce benefits to everyone?

This is, after all, the president who came up with the sequester as an idea that was so abhorrent no one in their right mind would let it actually occur … and thus the Republicans would come around and cut a decent debt-limit deal and get budget talks going. Except, of course, it didn’t quite happen that way …

And this is the president who extended tax cuts for the rich as a way to bring Republicans around, and who got his ass handed to him after giving the GOP nearly everything they wanted on the last round of budget talks a couple of years ago.

So when I see Obama proposing what are, for all practical purposes, cuts in Social Security – that is, not a new math on Social Security but actually less money in the paycheck to recipients – as a bargaining strategy, I get a little nervous.

As far as I’m concerned, the president is playing with fire.

And let’s be clear: This scenario – in which the budget proposal is just a ploy – is the one in which Obama’s getting the benefit of the doubt, in which I’m willing to suspend lots and lots of disbelief and pretend his Inner Republican doesn’t actually think Social Security and other social safety net programs should be cut. (Aside: I’m over “entitlements,” the GOP’s irony rich name for these programs which are, much more accurately, social safety net programs.)

Why cut Social Security, which is mere single digits of the federal budget and the national debt? Social Security is probably the best funded government program, with enough of a surplus to lend the government a bushel of billions and still keep enough cash on hand to pay its bills for the next three years without taking in a single dime. In fact, Forbes (!) says Social Security simply can’t go bankrupt – unless we change the rules to make it do just that.

But the Republicans have a boner for Social Security – their rich supporters, who don’t need Social Security in their old age, would like to keep those extra pennies they’re being forced to pay into Social Security.

And Obama has a boner for cutting a deal – any deal – with the GOP so he can say he did it, that he crossed that bipartisan bridge, that absolutely everyone likes him, at least a little. (He’s hosting another Republican Senate dinner this week as part of his charm offensive – a campaign, stealth before and overt now, that has netted him pretty paltry results in his four-plus years in power.)

Never mind that most Americans overwhelmingly support protecting Social Security and other social safety net programs. Or that Obama's proposal will do nothing to ease the debt.

Predictably, the left has exploded over Obama’s proposal. The head of the AFL-CIO – which poured millions of dollars and provided millions of volunteers for Obama’s re-election – has called the proposal “unconscionable.”

I say “predictably” because there’s a certain circular media narrative to all this that, in the end, seems to obscure some crucial facts, such as this: 75 percent of Americans nearing retirement age have less than $30,000 in their retirement accounts. How exactly are they supposed to survive, especially if Social Security gets cut, even by a little?

Pension costs projected to take up nearly a fifth of Illinois' general budget

Wed, 06 Mar 2013 05:00:00 -0600

Illinois Gov. Pat Quinn is expected to announce Wednesday that the state will spend almost a fifth of its general budget on pension payments next year.

In his budget address to state lawmakers, Quinn is expected to detail how he wants the state government to spend about $35.6 billion in the 2014 fiscal year. His budget office estimated the state will spend 19 percent of its general budget, more than $6 billion, on pension benefits alone.

“This is extremely painful presentation that we’re making,” said Quinn’s budget director, Jerry Stermer.

Stermer said that because more money would be going to pay teachers, judges and other state workers’ retirement benefits, there would be less cash for other state programs, including public schools.

Lawmakers have proposed some various measures to address the state's growing pension costs and $97 billion in unfunded liabilities, but legislative leaders and the governor have not come to an agreement.

Stermer said the governor is not proposing new taxes or fees in next year’s budget. After Quinn won election in 2011, he raised the personal income tax and corporate income tax. Those rates are scheduled to drop somewhat in 2015, although it’s likely to be a key topic of debate during next year’s race for governor.

Meanwhile, the state is also dealing with a backlog of bills in the billions, often paying vendors late. The governor’s staff wouldn’t say how he’s proposing to cut the money owed, but his budget office projects the total backlog will be cut from $7.5 billion to $6.8 billion next year.

Lawmakers: No funds for state worker raises

Wed, 28 Nov 2012 15:44:00 -0600

SPRINGFIELD, Ill. — The Illinois House of Representatives is sending a message to state employees who are in the midst of negotiating a new contract: don't expect a pay raise.

The House voted 84-29 Wednesday in favor of a resolution that says lawmakers will not approve funding in fiscal year 2013 for a salary increase.

The resolution is not binding. But Speaker Michael Madigan, who sponsored it, says it's intended to send a message to both Gov. Pat Quinn and the American Federation of State, County and Municipal Employees that there isn't money for increases.

The unions have opposed the measure, saying it restricts their right to freely negotiate a contract. They also say it hurts low-wage workers, including those who care for the disabled and elderly.

'Squeezy' pension video viewed 20,000 times

Wed, 28 Nov 2012 12:33:00 -0600

Officials say Gov. Pat Quinn's online pension reform campaign with its cartoon snake mascot has attracted more than 28,000 unique visitors.

He launched the website this month, billing it as a way to rally the public around a pension overhaul since lawmakers haven't come up with a plan.

The site has been criticized for its lighthearted approach, including images of the orange serpent, "Squeezy the Pension Python." The Democrat's office says a video with the cartoon has been viewed 20,000 times.

The campaign involves Facebook and Twitter pages.

On Tuesday, Quinn unveiled a video with educator Salman Khan. He runs a nonprofit academy and has developed thousands of online tutorials.

Illinois has the nation's worst pension problem with a more than $85 billion funding gap.

Illinois Senate Democrats announce their budget proposal

Fri, 18 May 2012 17:11:00 -0500

Illinois lawmakers are trying to iron out a budget by the end of the current session, which ends May 31st.

On Friday, Democrats in the state Senate proposed a budget that cuts spending almost across the board, with the exception of education.

Democratic State Senator Dan Kotowski, who represents Park Ridge, said that's what constituents want. "People want education funded, and they want us to get rid of waste and mismanagement. And that's what we're doing," Kotowski said.

Senate democrats announced the proposal would reduce the state's deficit by cutting in areas like public safety. Their plan would mean closing state facilities - like prisons - and cutting state jobs.

The plan also assumes huge cuts to Medicaid that Governor Pat Quinn is pushing.

The proposal comes during the final stretch of the current legislative session, as state legislators are trying to tackle the issues of the soaring costs of state pensions and Medicaid. Democratic leaders said their proposal spends less than Governor Quinn's original proposal. They said their plan cuts $317 million from the main category of state spending.

State Republicans have responded saying the Democrat's proposed budget still calls for too much spending.

"This will not get us on the path to reducing the tax increase,” Republican Sen. Matt Murphy said. “It will put us on a path, frankly, for needing another.”

East St. Louis district to close 5 schools

Fri, 13 Apr 2012 09:38:56 -0500

The East St. Louis school system says it will shutter five schools because of declining enrollment and in an effort to pare the district's roughly $12 million budget deficit.

The Belleville News-Democrat reports that the schools will close by June 30. Officials say that, along with related layoffs, could save the district $2.5 million to $3.7 million next school year.

School board President Lonzo Greenwood says the panel is saddened. But he says the closures are necessary because of a lack of federal funds that can't be replaced by local taxes.

A public town hall meeting is scheduled for April 26 at Mason-Clark Middle School to discuss attendance boundaries for the elementary schools that students will attend next year.

Chicago schools face another $700M budget hole

Thu, 29 Mar 2012 00:53:00 -0500

Chicago Public Schools officials are bracing for another year of staggering budget deficits. For the third year in a row, CPS says it could be facing a $700 million budget gap that will force painful cuts.

According to Chief Administrative Officer Tim Cawley, the deficit is driven by debt service and pension payments that ballooned when the pension fund lost a third of its value in 2008.

Pension relief enacted in Springfield and federal stimulus funds helped plug holes in the past, but Cawley said that’s not on the horizon now.

"This structural situation we’re in isn’t brand new, it’s just somebody rode to the rescue for us in the past. And sadly, we don’t see anybody riding to our rescue this year. Or next year," he said.

At the same time, Cawley said the district cannot abandon its mission of educating children, and it can’t stop innovating. CPS will move forward with a longer school day and new high school options.

Cawley said the school district will release the budget nearly two months earlier this year than it has in recent years, in part to give the public time to comment on proposals.

The Chicago Teachers Union issued a statement accusing CPS of "playing hide and go seek with budget numbers." The union said the district’s budget projections have lacked credibility for a decade.

Illinois budget inspires confusing, misleading claims

Mon, 27 Feb 2012 15:53:00 -0600

A state budget, like the one Gov. Pat Quinn proposed last week, practically guarantees a flood of confusing, misleading and surprising statements. After all, it's an incredibly complex document that can stir up anger over both policy and politics.

Here's a closer look at what Illinois officials have said about spending, prison overcrowding and political leadership.

Spending: Up or down?

In his budget address, Quinn said his proposed budget "calls for $425 million less in agency spending than last year's budget." Background material from his office says agencies would spend $901 million less than they did five years ago, a 3.5 percent drop.

Meanwhile, Republicans insist Quinn's budget actually would increase spending by $50 million from last year and a whopping $3.4 billion from five years ago.

Who's right? Both sides are, depending on what kind of spending you count.

Quinn is counting the dollars that he has the most ability to control — money for salaries or rent, for instance. He calls it "agency spending," meaning the money spent by the agencies he oversees.

He chooses not to count certain kinds of spending that increase more or less automatically. Mostly, that's pension costs, which are set by state law, and interest on debts. The governor and Legislature have taken some steps to limit pension expenses, and Quinn is now proposing more, but it's a far more complex task than routine budget-cutting.

Republicans consider Quinn's approach to be misleading. If you want an accurate view of state spending, they say, you have to include everything, even the difficult parts of the budget and the cost of borrowing money.

Independent budget experts are split on the best way to measure Quinn's budget-cutting progress.

The Center for Tax and Budget Accountability called Quinn's approach "quite honest." Chicago's Civic Federation said it doesn't make sense to look at state spending without counting Medicaid and pensions.

Prison population declining?

Illinois prisons are overcrowded — dangerously so, according to the union that represents guards. The most recent Corrections Department report shows 48,620 inmates crammed into space designed for 33,704.

So when Quinn proposed closing two prisons and six halfway houses, a natural question was how the remaining institutions could absorb those people.

"The prison population is actually declining," Quinn's chief of staff, Jack Lavin, told reporters. "We'll continue to work on that, but the trend right now is that it has declined somewhat."

Actually, Corrections Department statistics show population has increased pretty steadily for the past decade. At the end of November, it was 2.3 percent above the 2010 level and 6.6 percent above 2001. Annual reports don't reveal any significant drop in population since 2002.

To support Lavin's claim of a downward trend, the Corrections Department offered newer numbers showing a drop of 725 prisoners, or 1.5 percent, in the last five months. In addition, the department projects a drop of 2,746 in the next budget year.

Why does the department expect such a dramatic decline? That's not entirely clear.

A spokeswoman said it's based on plans to close those six halfway houses for inmates nearing the end of their sentences. The logic seems to be: The department can close some facilities because the population will drop, and the population will drop partly because the department is closing some facilities.

But releasing everyone in those halfway houses, known as adult transition centers, would account for less than half the drop that Corrections is predicting.

Also, closing the centers wouldn't change conditions for inmates and guards inside actual prisons, which are overcrowded now by nearly 15,000 people. Closing two maximum-security prisons will make the remaining prisons even more crowded unless the governor comes up with something unexpected.

Pension leadership

In advance of Quinn's budget address, two Republican officials spoke to reporters about their concerns with the governor's past performance. Pat Brady, chairman of the Illinois Republican Party, and U.S. Rep. Aaron Schock of Peoria both accused Quinn of failing to lead on the issue of controlling pension costs.

"Gov. Quinn's only solution to date has been to appoint a commission to study the issue," Brady said. Schock complained of an "unwillingness to lead."

Brady and Schock may wish that Quinn had done more, but it's not accurate to say the governor hasn't led at all.

Quinn was a vocal advocate for a pension overhaul that passed in early 2010 with overwhelming support from both parties. The legislation took a step toward limiting future pension costs by cutting benefits for new government employees.

The change meant that new employees must wait until age 67, instead of 60, to retire with full benefits. Cost-of-living adjustments are more limited. Pension checks are based a broader picture of employee salaries, so that a sudden raise at the end of a career doesn't have so much weight.

Brady implied that Quinn hasn't been more aggressive on pensions because he's too friendly with labor. "Is he going to stand up to his union backers and support a plan to reduce state pensions or is he going to back down?" Brady asked.

But Quinn supported the 2010 pension changes despite opposition from the American Federation of State, County and Municipal Employees. And he has blocked union raises, tried to cut jobs and pushed to shut down state facilities even when AFSCME objected.

Illinois plans $800 million bond sale

Wed, 04 Jan 2012 19:12:00 -0600

The state of Illinois is hoping investors will snap up $800 million worth of bonds next week. The investment world has not looked kindly on Illinois bonds in recent years as the state has struggled with a mountain of debt. Moody’s rates Illinois bonds the worst in the country, tied with California, and Standard & Poor’s rates the state second-worst.

But Illinois’s director of capital markets, John Sinsheimer, said he’s hopeful lots of investors will be interested in these bonds.

"We’ve seen a lot of changes in the state and its finances to the good, with the tax increases that were approved last year, so we would anticipate the bonds will be well bid," Sinsheimer said.

The state plans to use the money from next week’s sale for capital projects like building schools and fixing roads. Sinsheimer said Illinois will sell another round of bonds in March.

Evaluating the 'super committee's' super-big breakdown

Tue, 22 Nov 2011 16:19:00 -0600

Congress's super committee came up short of its goal to reduce the deficit over the next decade. Well, really short--$1.2 trillion short. Illinois Senator and Majority Whip Dick Durbin was not at the table for the latest go-round but he was no less disappointed in the results.

“It’s happened too many times over and over again; threats of shutting down the government threats of even shutting down the economy over the course of this year. So this is further disappointment and it won’t help the image of Congress” Durbin said.

And so came the trigger cuts. The idea was that the automatic cuts would be so unpopular that they would create an incentive for compromise.

To learn more about the fallout from the failure and the burgeoning ideological divide in Washington, Eight Forty-Eight turned to David Drucker, staff writer for Roll Call in D.C.

Music Button: Ursula 1000, "Very Leggy", from the album The Now Sound of Ursula 1000 (ESL)