Posts Tagged ‘pensions’

Another front in the Boss Madigan scandals is something for Illinois voters to remember on Election Day

Posted: October 23, 2022 by John Ruberry in crime, elections, News/opinion, politics
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Madigan graphic courtesy of the Illinois Policy Institute

By John Ruberry

In March, after years of investigation, Michael Madigan, the decades-long speaker of the Illinois House and chairman of the state Democratic party, was indicted on corruption charges. The heart of that indictment was centered on northern Illinois’ principal electric utility, Commonwealth Edison, in what the indictment termed a “years-long bribery scheme” involving contracts, jobs, and of course favors, such as legislation favoring ComEd. Earlier this month, Madigan was indicted again, this time AT&T Illinois, a subsidiary of the much-larger AT&T, was the company involved. 

ComEd’s parent, Exelon, is a publicly traded company, as is AT&T. 

In return for AT&T Illinois paying a $23 million fine and admitting guilt, charges will be dropped by the local U.S. attorney’s office in two years, according to the paperwork filed in federal court in a deferred prosecution agreement. ComEd agreed to a similar settlement, while paying a $200 million fine. 

Madigan, 80, entered public life in 1969 as a delegate to the Illinois constitutional convention. He was elected to the Illinois General Assembly from a Southwest Side Chicago district a year later. He became House Speaker in 1983. 

As I’ve remarked many times before, Illinois is in serious need of term limit laws.  

While he was running what the U.S. District Attorney of Northern Illinois later called “the Madigan Enterprise,” the Boss managed to expand his power even more by becoming chairman of the Illinois Democratic Party. Perhaps the most devious gerrymanderer ever, Madigan used that post and the speaker’s office to create supermajorities in both chambers of the General Assembly. Oh, Madigan’s daughter, Lisa, served four terms as Illinois’ attorney general during dad’s reign. 

During Madigan’s reign-of-error, Illinois’ pension bomb was created. The fingerprints of the Boss were on every state budget from 1983 until his departure from public life.

The Madigan Enterprise fell apart early last year after–on Illinois Democrats’ standards–a lackluster 2020 general election. The Boss, finally visibly tainted by the drip-drip of the ComEd scandal, was unable to win reelection as speaker. Madigan, bereft of the linchpin of his power, quietly resigned not only as state party chairman, but he also resigned his House seat. He even quit as Democratic committeeman of Chicago’s 13th Ward, where presumably he is still revered. Madigan was never interested in student council-style pretend-power, he only relished the real thing. 

AT&T Illinois sought out Madigan because it wanted to ditch its landline telephone business, which it did in 2017. The General Assembly overrode the veto of Governor Bruce Rauner, a Republican, to get the job done. 

According to the indictment, Edward Acevedo, a Madigan crony and former state representative, received $22,500 for an allegedly no-work AT&T Illinois consulting job. Acevedo is now serving time in prison for tax evasion tied to his role in the Commonwealth Edison scandal. 

Also indicted by the feds this month was AT&T Illinois’ former president, Paul La Schiazza, who has pleaded not guilty to the charges against him.

Many of the minions of Boss Madigan are still in the General Assembly, most prominently Chris Welch, the current Illinois House speaker who, Brutus-like, turned on Madigan last year. 

Who is still in office is something for Illinois voters to think about when they make their election choices this autumn. Especially since, I suspect, it’s hard to fathom that ComEd and AT&T Illinois were not the only companies that tried to illegally curry favor with the Madigan Enterprise.

I recently read Matt Rosenberg’s What Next, Chicago? Notes of a Pissed Off Native Son—my review is here. In it, Rosenberg recalls a conversation with a former Chicago alderman, Dick Simpson, who told the author, “We have a rule about bureaucratic crime, that if one person is convicted there were probably ten people involved with that particular crime or that general pattern, that were not caught.” 

When Madigan was sworn into office as a state rep in 1971, Illinois had 26 electoral votes. In 2024 it will only have 19. 

Surprised?

Disclosure: The author of this entry worked for AT&T Wireless for over a decade.

John Ruberry regularly blogs at Marathon Pundit.

Lots of Illinoisans are crossing the Wisconsin state line–permanently

Posted: November 21, 2021 by John Ruberry in business, crime, economy, News/opinion, politics
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By John Ruberry

“He crossed state lines with an AR-15” is a typical bellyache from leftist pontificators about Kyle Rittenhouse traveling from his home in Antioch, Illinois to help protect a business in Kenosha, Wisconsin during the riots (oops civil unrest) there last summer. 

The northern city limits of Antioch end at the Wisconsin state line. So for many people, including for Kyle Rittenhouse, travelling to Wisconsin is a daily trip. He worked in Pleasant Prairie, which is sandwiched between the Illinois state line and Kenosha. And Rittenhouse’s father and other relatives of his live in Kenosha.

Rittenhouse of course was found not guilty–and it was the correct verdict–of charges surrounding the self-defense shootings of three rioters (oops mostly peaceful protesters) in Kenosha last summer.

Do you need to fill up your gas tank? Only naive fools top off their vehicles in Illinois when there is a Wisconsin choice a short drive away. For instance, last month Mrs. Marathon Pundit and I visited Illinois Beach State Park in Zion. On our way out of the park I told Mrs. Marathon Pundit, “Let’s head up Sheridan Road and fill up our car.” And so we did. At the BP station there–which is just 50 yards north of the Illinois border, we paid 40 cents less per gallon than we would have south of the Cheese Curtain. The BP station is a large one–there were about ten vehicles filling up. And each one had Illinois license plates.

What about permanent moves to America’s Dairyland?

Just north of that border you see many manufacturing facilities and warehouses, most of them are newly built. Many of them are businesses that formerly called Illinois home. U-Line has a massive warehouse in Pleasant Prairie, they moved there, bringing 1,000 jobs, from Waukegan, Illinois in 2008. That facility has many neighbors that are equally massive. But on the Illinois side you see farms and some small scale businesses.

Why are they leaving?

Writing for the Badger Institute in 2019, Mark J. Perry said, “On 14 different measures of labor market dynamism, economic growth, various tax burdens, business climate and fiscal health, Wisconsin comes out ahead of neighboring Illinois on all but one of those measures — state individual income tax rate.” Perry added, “On net, Wisconsin has gained 116,000 Illinois residents between 2006 and 2017, an average of nearly 40 residents every day from 2014-’17.” 

Illinois has other substantial problems. Its public pension system is the second-worst funded of the 50 states–at just 39 percent–while Wisconsin’s public worker pensions are the best-funded at over 100 percent. Only an amendment to the Illinois constitution to eliminate the pension guarantee clause, a default, or hyper-inflation can solve the pension crisis. Illinois regularly contends for the title of most-corrupt state. Since I was born four Illinois governors have served time in federal prison. No governors of Wisconsin from that period have suffered the same disgrace.

Violent crime and robbery is a growing crisis in Chicago and its inner suburbs. Chicago will probably exceed 800 murders this year–numbers that the city hasn’t seen since the crack-fueled street gang wars of the mid-1990s. According to Hey Jackass there have already been over 1,400 carjackings in Chicago–nearly double than the yearly total of 2009. Flash mob robberies are occurring not just in Chicago but also the suburbs, such as this outrage where a gang of thieves on Wednesday filched over $100,000 in merchandise from a Luis Vuitton store in DuPage County. Two days later in Chicago’s downsized Magnificent Mile a flash mob of shoplifters struck Neiman Marcus–filling up three cars of merchandise. Wow, up until recently finding even an illegal parking spot was nearly impossible on the Mag Mile. Of course no one has been charged in these flash mob thefts. 

So crossing the Illinois state line into Wisconsin isn’t just a common occurrence. It’s the safe and smart move for people and businesses. 

Who knows? Mrs. Marathon Pundit and I might make that migration north too. Without a rifle. We only own a handgun.

John Ruberry regularly blogs just forty miles south of the Wisconsin border at Marathon Pundit.

High inflation will make Illinois’ pension crisis less severe

Posted: March 14, 2021 by John Ruberry in economy, News/opinion, politics
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By John Ruberry

Will high inflation offer benefits? In Illinois and other states burdened by woefully underfunded pension plans, it just might.

Boss Michael Madigan, the man behind Illinois’ financial debacle, is finally gone. Hard work by the Illinois Policy Institute, some Republicans, local radio hosts, and yes, bloggers, made the Madigan name toxic. The tipping point against the longtime chairman of the Illinois Democratic Party and the speaker of the state House for all but two years since 1983, was a disappointing 2020 general election. He’s now enjoying a comfortable retirement.

How comfortable? Madigan, 78, contributed just $350,000 to his retirement, an amount he’ll collect as a state pensioner in just three years, according to the Illinois Policy Institute. Over the next 17 years, of course if he lives that long, the Chicagoan will collect $2.9 million from his pension. Not that Madigan is poor. Presumably he’s made a lot of money from his law firm, Madigan & Getzendanner, which specializes in property tax appeals. How much money? We’ll never know because Madigan has never released his income tax returns. 

In 1989, Governor James Thompson, a Republican, signed into law a bill that gave Illinois retirees a three-percent annual cost-of-living increase raise in their pensions. Which means after twenty years their pensions double. Madigan was the House speaker when the pension COLA bill passed through the General Assembly. 

Over thirty years later Illinois’ pension plans are among the worst-funded among the 50 states.

Short of default–pension benefits are protected by the state constitution–or a federal bailout, there is no way out for Illinois in regards to these obligations. It’s that bad.

But then there is inflation. Joe Biden’s stimulus package, most of which is not related to COVID-19, has many economists, including Lawrence Summers, Treasury secretary under Bill Clinton, worrying about higher inflation. A basic explanation of how high inflation occurs is too much cash chasing too few goods. And Biden’s stimulus is more than double that of Barack Obama’s stimulus of 2009.

Here’s what Forbes’ Elizabeth Bauer said two years ago about inflation and pensions:

If the United States were to hit a period of high inflation rates, sustained over a long period of time, these liabilities would shrink considerably — and I’m not even speaking, snarky photo aside [the article contains a photograph of a Zimbabwean $100 trillion bill], of hyperinflation. Based on my calculations (and yes, these are real calculations, using real data for this plan collected for another project, not merely back-of-the-envelope estimates, however unlikely the very even numbers make it appear), an inflation rate of 10%, and assumptions for interest rate/asset return rate and salary increases over time which reflect the same net-of-inflation rates as at present, would halve the pension liabilities of the Illinois Teachers’ Retirement System.

Crisis solved? Kinda sorta. Public pension debt in Illinois will be less of a financial burden if 1970s-type inflation returns. And of course it’s easy to chuckle about the over 100,000 retirees who last year were collecting over $100,000 annually in their pensions, unless you are a member of this fortunate caste.

But what about the retirees collecting half of that–after years of seeing large chunks of every paycheck deducted for retirement? They’ll lose too.

When I was in college an economics professor explained to me and my classmates that inflation is a zero-sum game; he used the example of a five-person poker game. When the first cards are dealt there is, let’s say, $500 placed in chips, $100 per-player. When the final hands are played there is still $500. Some leave the table richer, others poorer. 

High inflation–and hyper inflation–will reward some, which is why, for my largely self-funded 401(k) plan, I recently moved some of my funds into real estate. Let’s hope I made the right decision.

Among hypothetical inflationary losers will be Illinois pensioners, and presumably other public-penioners, unless their plans are tied to the annual rate of inflation. 

Of course don’t expect the public-sector union bosses to quietly accept their fate if inflation deals them, excuse me for not letting go of the poker example, a bad hand. Among the lessons learned from the COVID-19 lockown is that teachers unions are very powerful and they have the ears of Democratic politicians, despite what the science says about the virus and how it spreads among younger people.

John Ruberry regularly blogs at Marathon Pundit.

The end of Boss Madigan, the man who destroyed Illinois

Posted: January 17, 2021 by John Ruberry in News/opinion, politics
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Madigan graphic courtesy of the Illinois Policy Institute

By John Ruberry

Had this event not occurred on the same day President Donald J. Trump was impeached a second time, the failure of Michael Madigan to win a 19th term as speaker of the Illinois House would have made national news. The luck of the Irish was somehow with him on his worst day in his 52 years in politics.

There is much to criticize with Madigan. While the one sentence summary of the Chicago Democrat’s career might be “Longest statehouse speaker tenure in American history,” it instead needs to be, “The man who destroyed Illinois.”

Here’s a graph created by the Illinois Policy Institute–which has been on the forefront of exposing Madigan to the masses for a decade–that shows the decline of Illinois’ credit rating. And the rating began its descent early in Madigan’s tenure as speaker. To be fair, it was Gov. Jim Thompson, a Republican, who in 1989 signed into law the annual compounded three-percent cost-of-living public pension raise for retired state employees, but that bill emerged from Madigan’s House. Nearly all state workers are members of public-sector unions, those unions have been an important cog for the Madigan Machine. Other GOP governors share some of the blame for the Illinois pension bomb. But for all but two years since 1983, Madigan was speaker and he had his hands on every budget since then. 

Illlinois’ credit rating now hovers slightly over junk status.

The Prairie State has lost population for seven straight years. People have wised up. After the 2020 reapportionment Illinois will once again lose a congressional district. Perhaps two.

Madigan’s political mentor was the first Mayor Daley, Richard J, the legendary boss of Chicago. Madigan was America’s last machine boss. As mayor Daley was also chairman of Cook County Democratic Party, since 1998 Madigan has been chairman of state party, a post that he, at least for now, retains. Like Daley, Madigan would reward his political supporters and their relatives with jobs, usually public-sector jobs. But recent scandals involving private-sector entities, including the Chicago area’s electrical utility, Commonwealth Edison, betrayed the burden of the pension bomb that is eating away at Illinois government. Allegedly ComEd was handing out jobs, as lowly as meter readers, to Madigan loyalists. The ComEd scandal has produced several indictments, including the company’s former CEO and some Madigan loyalists. A separate scandal centered around red-light cameras has bagged other Madigan cronies. These political brushfires, on top of allegations of sexual harrassment against a member of Madigan’s inner circle, finally made the Madigan name toxic. 

The result in 2020 was better-than expected results for the anemic Illinois Republican Party. Best of all, the so-called Fair Tax Amendment, would have replaced Illinois’ flat income tax with a graduated one, was resoundingly defeated. A majority of Illinoisans finally ascertained, as I quipped at the time, that if Illinois was given an unlimited budget, politicians here would still exceed it. 

Another sin against democracy committed by Madigan is gerrymandered legislative districts, unintended artwork that would make Jackson Pollock or Pablo Picasso proud. “The state’s legislative map looks like a Rorschach test on steroids,” Robert Reed wrote in 2019 for Chicago Magazine, “with districts of all squiggly sizes and shapes.” With a few exceptions, such as university towns, Republicans dominate downstate Illinois in gubernatorial and presidential races, but there are still plenty of central and Illinois Democratic members of the General Assembly. That is the power of Madigan’s gerrymandering. It also discourages challengers to the status quo; according to the Center Square, last year 44 percent of Illinois legislative races were uncontested. Why run? Because in most districts in Illinois the politicians choose their voters, not the other way around.

Illinoisans would have been better served if there was not a Madigan monoculture in power for years in Springfield.

Groups such as the Better Government Association of Illinois and the League of Women Voters have long called for a Fair Map Amendement, taking away the power of decennial legislative remapping away from the General Assembly and putting a non-partisan panel in charge of the task instead. Twice in the prior decade hundreds of thousands of signatures were collected to put such an amendment on the ballot for voters to decide the issue, twice a lawyer with ties to Madigan successfully sued to keep it off. Last year, for the first time ever, a state Supreme Court justice, Democrat Thomas Kilbride, who represented a downstate district, failed to win retention. His vote against the Fair Map Amendment was one of the issues that galvanized opposition from voters.

Illinois’ Democratic governor, J.B. Pritzker, finally the state’s most powerful politician now that Madigan is no longer speaker, has vowed only to sign only a fair map into law. 

Don’t hold your breath on that one.

Madigan’s successor is Chris Welch, a suburban Chicagoan who was once a member of the Madigan Machine. He’ll be the Land of Lincoln’s first black speaker. But there is already a cloud over him. In 2002 he allegedly slammed the head of his girfriend repeatedly on to a kitchen countertop. Eight years later another woman claimed that she lost her job at a high school because Welch, then a school board president, broke up with her. 

Still there is reason to have at least a glimmer for hope in Illinois. But barring a change in federal law that would allow states to declare bankruptcy, Illinois will remain in its financial sewer for many years. A different amendment to the Illinois constitution, one that will allow pension reform and remove the pension guarantee clause, is desperetely needed. 

John Ruberry regularly blogs in Illinois at Marathon Pundit.

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