Lessons from Illinois
There is yet another newsworthy event that is barely getting any mainstream news coverage. In case you missed the barely mentioned event, Illinois is broke.
As of this writing they reportedly have not had an approved budget for two years, kind of like Obama and his Congress. Oh, wait, Obama is from Illinois, isn’t he?
Their woes get worse. The state’s unpaid bills total $14.3 billion. This is compared to their annual spending of $56 billion. Their bond rating is now at junk level with a debt amount of $154.6 billion. That doesn’t include unfunded liabilities. Annual revenues are about $130 billion.
They have essentially maxed out their credit card. They owe a huge amount to their pension fund along with other bills. How would you like to be a retiree from the state of Illinois?
In 2010 two neighboring states had similar financial woes. Wisconsin and Illinois both had budget deficits exceeding one billion dollars. Both had increasing debt used to cover deficit spending. And both had pension plans for retired state employees that had mind-boggling unfunded liabilities.
In 2011, the two states chose divergent paths. Wisconsin elected Republican Scott Walker as Governor. Walker instituted austerity measures which included a balanced budget, changing tax laws to be more favorable to business, and revising the state’s pension plan. Despite the backlash he faced for implementing these actions, including a recall attempt, the state is now flourishing.
Illinois chose a different path. They continued to pander for and buy votes with promises of more goodies and freebies. In 2010 Illinois had about $100 billion in debt. They managed to increase their debt by over 50 percent in seven years. I would say that is a record, but only if you don’t consider the federal debt change during the Obama years.
Illinois has been held as a model for how a state should be run. The state has been controlled by Democrats for decades. Chicago, as its largest city, has essentially run the show. Think Las Vegas on steroids. The state’s policies and philosophy reflect those of its Democrat leaders.
As with all liberal government philosophies, they eventually reached a day of reckoning. Illinois can’t pay its bills, its employees, or its retirees. It can’t borrow any more money. Its days are numbered.
What is the solution? There are a few options. The most predictable, in true Democrat fashion, is to seek help from the federal government. If Hillary had been elected, the rest of the country would be bailing them out. With this administration, I think and hope not. Force Illinois to spend within their means. It will be painful for those who believed the Democrat line, but it must be done.
If we bail out Illinois, there are several other state that will be standing in line with their hands out. We shouldn’t be made to bail out states where we gained no benefit from their policies but are forced to pay for their mistakes. It is like bailing out big banks who made stupid gambles. I didn’t like that either. Besides, the federal government is not in a fiscal condition to offer such aid, thanks to the Obama spending spree.
Other states not far behind Illinois include Connecticut, Massachusetts, New York, California and Kentucky. Also in the mix is Puerto Rico, who after numerous votes over the years against statehood finally voted to become a state. That vote appears to be strictly so the feds can bail them out.
The collapse of these state is coming. Unless they change their ways, which is doubtful, it is just a matter of when, not if. Their status and history is eerily similar to that of Illinois. Even if the federal government could afford to bail these states out, why should we? By doing so we are implicitly condoning their actions. Why punish the states who don’t make promises they can’t keep?
Tom Riggins’ column appears every other Friday. He may be reached at email@example.com.