“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein

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The Ever-Too-Short Route to Chaos

Sir Thomas More“When statesmen forsake their own private conscience for the sake of their public duties…they lead their country by a short route to chaos.” – Sir Thomas More, “A Man for All Seasons”

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From this morning’s “Illinois Playbook”:

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The Niles Township Democratic Organization is recruiting candidates to run against state Rep. Yehiel “Mark” Kalish, a Chicago Democrat who decided not to take a position on the Reproductive Health Act — the measure that made access to abortion and other women’s health procedures “a fundamental right” in Illinois.

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Kalish, the first rabbi to serve in the General Assembly, is one of 10 Democrats who didn’t support the bill, which was ultimately passed 64-50 and has since been signed by the governor. Six of those Dems voted no and another four, including Kalish, voted present.

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But Kalish is the only one taking heat: When he was appointed to the seat vacated by former Rep. Lou Lang, he promised Democratic committee members that his votes would align with Lang’s progressive record on gay rights, gun safety, unions and abortion rights.

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That was true through much of the session. But when it came time to support RHA, Kalish backed out. Apparently, it’s one thing to believe in the abortion-rights movement but another to support a bill that declares “a fertilized egg, embryo, or fetus does not have independent rights.”

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Lang understands now that Kalish’s non-vote was an act of “conscience.” Nevertheless, Lang told Playbook, “I wouldn’t have chosen him if I’d known how he was going to vote on this bill. It’s a gut bill. It’s a bill about the present and future of the Democratic Party.”

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What does it say about our politics when the present and future of the Democratic Party takes precedence over a man’s conscience? It profits a man nothing to give his soul for the whole world – but for the Democratic Party? It just underscores the fact that the Lou Langs of this world have no soul.

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Mark, if this is the vote by which your service in the House will be measured, I’m proud to say I served with you.

Posted in Abortion, Life, Religious Freedom | Tagged , | Leave a comment

An Open Letter to My House Colleagues: The Progressive Income Tax Won’t Work

As we move into the new week and the prospect of considering the resolution to place the progressive income tax on the 2020 ballot, I’d like to add an additional objection to its passage.

 

It won’t work.

 

The Governor has said that the measure will add $3.25 billion to revenue in its first year. Based upon the bills we’ve passed just this term, that money’s already been spent.

 

But the big issue hanging over us is the same one that’s been plaguing us for years: Debt. Our backlog of bills is huge, but it pales in comparison to our pension debt. Just consider what the payment “ramp” requires us to do over the coming years:

Pension Ramp

When you start out by taking 25% or more from General Revenue and putting it into pensions, there’s no way that any change to the income tax structure will accommodate both that and the need to fund essential state programs. The cost as a percentage of General Revenue may drop as a result of the tax change, but the dollar amount is the same. Where’s that money supposed to come from? The Governor is on record as saying he’ll allocate $200 million per year of the tax increase toward the debt, but as you can see, that amount won’t even keep up with the annual increases that are called for under the ramp. It’s a rounding error.

 

Do we need tax reform? Absolutely. But this isn’t the way to do it. We need a global review of our entire tax structure with an eye toward creating a tax system that moves in the direction of our economy, which requires us to look at not only income taxes, but all sources of revenue: sales taxes, motor fuel taxes, user fees and property taxes. That doesn’t mean raising rates across the board, but looking at changing the mix, broadening bases and thus encouraging economic development, which is the real solution to our problem. Otherwise, the rates that we’re going to be asked to vote on as part of this package of bills will have to be raised, by a large amount and soon.

 

There’s an element of moral hazard at play here, as well, and that’s the real risk that people will think that by going to a progressive income tax, we’ll have solved our fiscal problems. We know that’s not the case. And when it doesn’t, we’re going to find ourselves back here with the same problems and fewer options to fix them.

 

We can start down a path of fixing this mess. But it begins by acknowledging the depth of our problem and making a bipartisan commitment to fixing it. The progressive income tax isn’t it, and may very well end up making things worse.

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Please vote “No”.

 

Posted in Cost of Government, Income Taxes, Taxes | Tagged , , , , | Leave a comment

Rich Miller: Thanks for the Shout Out

Rich MillerRich Miller, the chief cook and bottle washer at the Capitol Fax blog, took aim at me for some comments I made on the House floor last week where I said that the rush for a progressive income tax and other revenue measures is taking front seat over our lack of concern about what happens to that money when we get our hands on it. He started by referencing a line in a story from the Illinois News Network:

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“State Rep. Steve Reick, R-Woodstock, told lawmakers on the House Floor that they’re ignoring the problem and need to begin examining where state money is sent in lieu of properly funding pensions.”

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His response to that:

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“What we need to do is pay into the freaking system and stop the gimmicks and the scare tactics. Neither are getting us anywhere. You wanna help? Find $2 billion a year. Auditing state contractors ain’t gonna do that.”

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Rich, I didn’t just fall off the turnip truck. Of course I know that auditing state contractors “ain’t gonna do that.” But what a deeper examination of the operations of state agencies might do is show taxpayers that we’re serious about fiscal responsibility. It might make them more trusting of us when we do go to them for more money. Hell, it might have actually saved us a few million dollars.

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You seem to be quite fond of scoffing at any suggestion such as mine, and would probably say that there are any number of cost studies that have been done that never went anywhere and are gathering dust on some shelf at some state agency, and you’d probably be right. That’s not the fault of those who commissioned the studies; it’s the fault of the Legislature for its failure to do the necessary work of implementing their recommendations. It says more about us as a body than it does about those who thought it might be a good idea to see where all that money goes.

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I’m not saying that we don’t need more revenue. We do. And I’m not one of those who spends all his time railing against new revenue without offering up any ideas as to how we’re supposed to pay the bills except to insist that we can do it through cost cutting. They’re more unrealistic than you say I am. And you know who I’m talking about. Dogma and principle aren’t the same thing, and nothing was ever accomplished by relying upon dogma.

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But raising revenue piecemeal: a progressive income tax here and a hike in the motor fuel tax there and God knows what other proposals that will spring from the fevered minds of those who now control all the levers of State government is not the answer. We need systemic change of our entire taxing system; we need a tax system that tracks the direction of our State economy, which is away from heavy industry and its reliance on income taxes to services and consumption. It involves every source of State revenue, but is a task that will take longer to accomplish than we have before the next election cycle, so of course it’s doomed.

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So, Rich, if you want to have that conversation, let’s have it. But come to that conversation with an open mind, because if you don’t, all you’re doing is scoring cheap points at the expense of those of us who actually give a damn.

Posted in Cost of Government, Taxes | Tagged , , , | Leave a comment

The Difference Between Genius and Stupidity is That Genius Has Its Limits

IgnoranceToday’s lesson is about what the newly-elected members of Congress from the 6th and 14th Districts of Illinois don’t know about their jobs.

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It begins with a headline in the Northwest Herald that says: “Underwood, Casten Call for IRS to Help With Local Tax Burden.” The article goes on to say:

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“Rep. Lauren Underwood, D-Naperville, and Rep. Sean Casten, D-Downers Grove, are urging the IRS to address what they call the disproportionate tax burden on Illinois taxpayers because of the changes in the law, which limit the state and local tax deduction.”

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The pair wrote a letter to IRS Commissioner Charles Rettig expressing their concerns about IRS efforts to alleviate the burden of the new rules as being “insufficient”:

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“We are concerned that the Internal Revenue Service’s (IRS) current efforts may be insufficient to alleviate these burdens…Illinoisans are already facing higher federal taxes due to the Republican tax law, which places a uniquely large burden on middle-class families in the Illinois 6th and 14th Congressional Districts. Working families are being unfairly double-taxed, This law limited the state and local tax (SALT) deduction to just $10,000 for individuals and families—a devastating financial blow to many of the nearly two million Illinois households that claim the deduction. SALT taxes allow our communities to pay law enforcement and first responders, offer high-quality public education, and provide a multitude of other services that contribute to the well-being of our communities. We urge your attention to this important matter and request an update in writing on the IRS’s actions to address these burdens on Illinois taxpayers no later than February 12, 2019,”

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The fundamental ignorance on display in the letter these two sent beggars the imagination. If they don’t understand that the IRS is simply an administrative body empowered to enforce the laws passed by Congress, and has no authority whatsoever to “address the disproportionate tax burden on Illinois taxpayers because of the changes in the law” then what else don’t they know about the responsibilities of the office to which they’ve been elected?

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It says right there in Article I, Section 8 of the U.S. Constitution, that document they swore an oath to uphold, but probably haven’t taken the time to read:

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“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States…”

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Nowhere in the Constitution does it say that members of Congress can run to the IRS, of all places, to “alleviate the burden placed on the citizens of Illinois by limiting the deduction for state and local taxes.” If they don’t like the tax bill that was passed in the last Congress, the proper remedy for what they’re trying to do is (wait for it!): pass a law! It’s in all the civics books, or at least it used to be.

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Of course, they aren’t the only Democrats trying to alleviate the tax burden of the very people they’re generally busy trying to gouge. Last year we had a group in the Illinois legislature that tried to change taxes into charitable contributions so as to get around the SALT limitation. That idiotic scheme met the same fate as the appeal to the IRS will have.

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So, class, this is what you should take away from today’s lesson:

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If you live in the 6th or 14th Congressional Districts of Illinois and you voted for Sean Casten or Lauren Underwood as a way to send a message to Donald Trump, you brought this vacuous nonsense upon yourselves, but unfortunately you brought it upon the rest of us, as well. As Ed Koch famously said after losing his mayoral bid: “The people have spoken, and they must be punished.”

Posted in 2018 Election, Taxes | Tagged , , , | 2 Comments

Debt Option #3: Bankruptcy

BANKRUPT: bank·rupt  /ˈbaNGkˌrəpt/

adjective: bankrupt

  1. (of a person or organization) declared in law unable to pay outstanding debts.

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By all conventional measures, Illinois is bankrupt. The State Supreme Court would disagree, having said in its decision to strike down the 2013 pension law:

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“The General Assembly understood that the provisions would be subject to the pension protection clause. In addition, the law was clear that the promised benefits would therefore have to be paid, and that the responsibility for providing the State’s share of the necessary funding fell squarely on the legislature’s shoulders. The General Assembly may find itself in crisis, but it… is a crisis for which the General Assembly itself is largely responsible.”

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The shorthand version of the above statement is that so long as the state has the ability to tax, there is no crisis deep enough to strike down the pension guarantee clause of the Illinois Constitution, thus the suggestion that unless we choose to tax our way out of this mess, there needs to be a pathway for states to file for bankruptcy.

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Let me say at the outset that I’m not saying that if Illinois were to be given the option of filing for bankruptcy that it should do it. What I am saying is that, unless the option is hanging over everyone’s head like the Sword of Damocles, there will be no incentive to sit down and come to a sensible solution to this problem. Imminent danger tends to focus the mind.

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States cannot now file for bankruptcy for two reasons:

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First, the federal bankruptcy code has never allowed state governments to declare bankruptcy. Since 1937, municipalities have been able to declare bankruptcy, but the term ‘municipality’ is defined as a ‘political subdivision or public agency or instrumentality of a state.’ This definition is broad enough to include cities, counties, townships, school districts and public improvement districts, as well as entities that provide services which are paid for by user fees. Congress would need to pass legislation to allow it.

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The second reason stems is found in the “Contracts Clause” (Article I, Section 10, Clause 1) of the U.S. Constitution, which prohibits state governments from ‘impairing the obligation of contracts.’ As originally understood and enforced, this clause prohibited state legislatures from passing any laws to relieve either private debt or the state government’s own debt. Beginning in 1934, however, the Supreme Court began to interpret the contracts clause as not being an absolute bar to state debt relief laws, though in 1977 and 1978 , it ruled that ‘a state cannot refuse to meet its legitimate financial obligations simply because it would prefer to spend the money (on something else.)’.

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Thus, were Congress to amend the federal bankruptcy code to authorize states to repudiate debt (which is the whole rationale for bankruptcy in the first place), the Supreme Court would then need to rule that state bankruptcy would not violate the Contracts Clause.

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In United States v. Bekins (304 U.S. 27 (1938)) as in cases that preceded and followed it, the Constitutional limit seems to some degree based on necessity and the absence of any reasonable alternative.

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Posted in Cost of Government, Public Pensions, State Government | Tagged , , , | Leave a comment