Tag: Illinois

Jim Geraghty of National Review and Greg Corombos of Radio America discuss rapidly dropping rates in illegal immigration across the southern border. They also reproach Illinois state representatives – especially Republicans –  for agreeing to tax hikes instead of dealing with major fiscal problems. And they question CNN’s decision to intimidate an anonymous Reddit user over the controversial GIF President Trump re-tweeted on Sunday. To finish off the day, they criticize the History Channel for concluding what happened to Amelia Earhart based largely on one photograph.

Ian Tuttle of National Review and Greg Corombos of Radio America celebrate the House passing “Kate’s Law” and agreeing to further crackdowns on sanctuary cities. They also discuss the dismal financial prospects of Illinois, which has racked up massive amounts of debt and that additional tax increases cannot solve despite the insistence of Democrats. And they contemplate the partisan fallout if Twitter releases a “fake news” button for its site. Finally, they extol the genius of America as they prepare to celebrate Independence Day and the Three Martini Lunch pauses until July 5.

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We’re now in day 3 of the special session of the Illinois General Assembly, called by the Governor to make it look like we’re doing something about getting a budget. The first 2 days have been, well, less than productive. Today’s Chicago Tribune editorial sums it up pretty well: “Day Two of the Illinois General […]

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Progressively Bankrupt

 

A recent story in the Wall Street Journal foretells a grim financial future for Connecticut, the wealthiest state in the union by per capita income. Its great wealth, however, does not translate into financial stability. For this coming year, the state expects a $400 million shortfall in tax collections that will only compound its looming budget deficit of some $5.1 billion, attributable to the usual suspects: service on existing debt, a lowered credit rating, surging pension obligations, runaway health care expenditures, and a declining population. In both 2011 and 2015, Connecticut Governor Dannel Malloy sought to fill the fiscal gap by engineering two tax increases on the state’s wealthiest citizens, so that today the state’s highest tax bracket is 6.99 percent. Under the state’s tax pyramid, about one-third of the state’s $7-billion budget is paid by the several thousand people earning over $1 million per year.

But reality has finally set in. Kevin Sullivan, head of Connecticut’s tax commission, has conceded that “you can’t go back to that well again.” Determined progressives may claim the path to prosperity remains blue. But sooner or later, the bubble has to burst. Even the well-heeled individuals willing to pay high taxes for superior services will cut back their business activities or flee when fleeced. Massive government wealth transfers cannot succeed if those whose wealth is to be transferred end up leaving the state altogether. Indeed, in some cases, the departure of just one billionaire can lead to a hole in the budget, as with David Tepper’s departure from New Jersey.

But if Governor Malloy has thrown in the towel on higher taxation, he has not offered any alternative program that will allow Connecticut to escape from its economic doldrums. Yet there is a path forward. His state can return to financial health if it reverses its policy course and removes many of its vaunted restrictions on labor and real estate markets. Fortunately, states have no power over interest rates and the money supply, so in order to survive, they are forced to look inward to make the necessary changes.

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We’re heading into the final 2 weeks of the spring session of the Illinois legislature, and tensions are running pretty high. Small wonder, since we’re no closer to a budget and the effort to revise our antiquated method of paying for education is plodding along with little sense of urgency. I came up with the […]

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The Illinois Policy Institute put together an excellent documentary about Michael Madigan.  They have made it available on YouTube.  Anyone that wishes to learn more about the blatant corruption in Illinois, this is worth your time.  It is just under an hour long.  Michael Madigan has been speaker of the Illinois House for 31 of […]

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Probably the least-watched Senate race in the US right now is the one in Illinois. It features Senator Mark Kirk (R) vs. Representative Tammy Duckworth (D). Sen. Kirk is known for being surprisingly flexible and is able to easily put his foot in his mouth or his cranium up his own derriere.  He once described […]

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Illinois on the Fiscal Brink

 

shutterstock_203635339Illinois — a state that has long embraced progressive fiscal policies — has moved one step closer to the financial abyss. Last week, Moody’s Investors Service issued the jarring announcement that it was downgrading Illinois’s general obligations bonds to Baa2 from Baa1, which is just two levels above junk bond status. The next day, Standard & Poor’s followed suit by lowering its rating to BBB+, or three levels above junk bond status. In one important sense, this is really not news at all, since Illinois had 13 bond downgrades under its previous governor, Patrick Quinn, even though it passed a temporary tax increase that collected an additional $31 billion in revenues between 2011 and 2015, 90 percent of which was funneled into pension payments for public employees.

The reason Illinois’s credit ratings have declined is that the state has been unable to live within its means. Even with its tax increases, Illinois has not had a balanced budget since 2001, though one is required under its Constitution. The latest credit downgrade stemmed from the inability of key players in the state to agree on any budget at all for the coming year. It is therefore no surprise that Moody’s observes: “The rating downgrade reflects continuing budget imbalance due to political gridlock that for more than a year has kept Illinois from addressing revenue lost due to income tax cuts that took effect in January 2015.” This remark reflects the bias of rating agencies to worry more about the condition of government balance sheets than the overall health of the state economy. Reduced expenditures are another, superior way to bring a budget into balance, which is necessary, for — as Moody’s ruefully notes — Illinois is running a structural budget gap of about 15 percent of its general fund expenditures.

The backstory is somewhat more complicated. In January 2015, when Bruce Rauner, who had amassed a tidy fortune in private equity, was elected governor, the temporary Illinois tax increase to a flat 5 percent reverted to its former rate of 3.75 percent. Many Democrats, led by the formidable Michael Madigan — Speaker of the Illinois House of Representatives for 31 of the last 33 years — wanted to reverse those tax cuts and replace the Illinois constitutionally mandated flat tax with a progressive tax in order to cut the deficit. Without any deliberation, the Illinois House passed an unbalanced budget with revenues under $33 billion and expenditures at close to $40 billion — a $7 billion deficit. Rauner did not have to exercise his veto threat because the budget was rejected by the Illinois Senate, even with its large Democratic majority. But a few days ago, Rauner did exercise his veto of a stop-gap educational measure that would appropriate $4 billion for education and human services, which he chastised as an “unfunded, empty promise.”

Will a Mark Kirk Victory Keep the Senate in GOP Hands?

 

Official PortraitPiggybacking off yesterday’s post from Canadian Cincinnatus on hotly-contested US Senate races, Senator Mark Kirk of Illinois faces a formidable challenger in Congresswoman Tammy Duckworth. Kirk squeaked by in 2010, helped by a contentious race for governor at the top of the ballot. Even though the gubernatorial election was lost, Kirk received enough help from it to carry him to his first victory, though in a squeaker: he won 1,779,000 votes to his opponent’s 1,719,000 (the gubernatorial election was similarly close). And let’s recall that 2010 was a good year for Republicans.

Let’s jump ahead to 2014. In the governor’s race that year, we had a much stronger Republican, Bruce Rauner, who won a slightly-more-comfortable victory with 1,823,627 votes to the Democratic incumbent’s 1,681,343. But while Rauner has been fighting for deep structural reforms to the state government, Kirk has been working against conservatives and Republicans in Washington. Kirk thinks his victory in 2010 and Rauner’s in 2014 means he can do well this year, but Rauner’s attention and resources have been spent elsewhere, and the governor has generally been quiet about the US Senate race. It’s not without reason.

Turing to this year’s Senate primary results, Rep. Duckworth received 1,220,128 votes in a three-way race where 1,859,257 were cast. Kirk, meanwhile, faced a single challenger (whose name I had never seen until I voted) and won only 931,619 votes (70 percent) out of 1,320,190 cast. Kirk’s votes look even less impressive when you compare it to those in the presidential primaries held on the same day. Short version: Of the Republicans who showed up to vote on primary day, only 65 percent voted to re-nominate for their incumbent senator to retain his seat.

Conservative Mike Flynn Takes on the Establishment

 

Mike FlynnRemember Aaron Schock? Killer abs, big “Downton Abbey” fan, resigned in disgrace? On Tuesday, voters in Illinois’s 18th District will decide which nominee should finish the remainder of Schock’s term and perhaps represent them going further.

Out of the goodness of their hearts, Republican leadership wanted to make the choice for Illinois voters. They anointed Darin LaHood, current state senator and son of CD18’s former representative, Ray LaHood. Most recently, dad flaunted his conservative cred by serving as President Obama’s Secretary of Transportation and demanding Congress spend, spend, spend on an endless list of pet projects. LaHood Sr. now works as a lobbyist, of course, so it’s understandable that Speaker Boehner, et al., want his son to be another cog in the profitable Beltway machine.

But another Republican lives in the LaHood Family heirloom, a sprawling Central Illinois district that includes Peoria, Springfield, and Quincy. Mike Flynn is a smart, passionate conservative who decided to challenge the well connected scion and present a choice for his fellow small-government Republicans.

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Whelp, Illinois has done it again. Aaron Schock has just resigned from his congressional seat representing the 18th district. I suppose that’s O.K. given that he: Was involved in at least one shady real estate deal Got caught taking rides on private jets at taxpayer expense Was given tickets to a sold out Katy Perry concert […]

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Bruce Rauner’s Battle to Dismantle ‘Blue Model’ Illinois

 

RaunerBeen awhile since I’ve written explicitly about Walter Russell Mead’s Blue Model analysis. as WRM explains, “the core institutions, ideas and expectations that shaped American life for the sixty years after the New Deal don’t work anymore.”

Gone is the world of heavily unionized and regulated Corporate America, dominated by oligopolies, with little overseas competition, to a large extent living off the huge technological advances of the 1920s and 1930s. As Ashwin Parameswaran has described the era:

Most large American firms were also largely insulated from strong shareholder pressure to improve profitability. This combination of low import competition, low rate of entry by new firms and weak shareholder pressure meant that there was very little process innovation or cost control. It is not a coincidence that many view the 1950s and 1960s as a golden age of economic growth and stability. It was essentially a period when neither firm owners, managers or workers felt the threat of failure or even had the incentive to improve efficiency or control costs. It was a period of stability for all, masses and classes alike.

Bruce Rauner and the Winds of Change

 

This past November, Bruce Rauner was the only Republican candidate who was able to defeat a sitting Democratic governor, Pat Quinn. He did so in Illinois, a state that has long been subject to an excess of one-party rule, and one where the  electorate was obviously weary of the dismal economic performance of the state, constantly illustrated in painful detail by the state’s free-market gadfly, Illinois Policy.

One quick read of Rauner’s inaugural State of the State speech makes it clear that elections have consequences; in this instance, beneficial ones. Rauner’s election breaks the Democratic monopoly over Illinois government. In the face of a Rauner veto, the Illinois Legislature cannot continue to pile on additional laws that hamper growth and development in the state, nor can it advance new taxes and restrictive labor legislation. But stopping new legislation does not roll back the many current laws on the book that continue to drive productive businesses and workers to other states (especially Illinois’ neighbors, where job opportunities are greater and tax levels are lower). Modern federalism ensures that the exercise of these exit rights help discipline wayward state governments. Illinois is learning that lesson the hard way.