BILL DALEY’S GRASP OF FINANCE AND ECONOMICS: WAS I MISINFORMED?

6/17/13

Today Bill Daley, who looks like a committed candidate for governor, at least at this juncture (See my 6/13/13 post BILL DALEY AND THE GOVERNOR’S OFFICE:   THE BROTHER ALSO RISES? and the posts to which it will refer you.), endorsed Mike Madigan’s pension reform package (See my 5/2/13 post, MIKE MADIGAN’S PENSION REFORM PLAN:  “THE BEST THAT (WE) CAN HOPE FOR IS TO DIE IN (OUR) SLEEP.”).   That was no surprise.  What was new, though perhaps not surprising, was a companion proposal Mr. Daley made:  He said that half the savings from pension reform should be spent on “education.”

I previously had thought that Mr. Daley had a firm, for a politician, grasp on financial and economic issues, but I suppose I was mistaken.  Let me try to explain something to him.  (Since I don’t know Mr. Daley and have never met Mr. Daley, I will have to do so in this forum.  As I have said before, it is unfortunate for both Mr. Daley and yours truly that we haven’t met.  At this juncture, it looks like the detriment to Mr. Daley of our being strangers if far greater than the detriment to yours truly.  But I digress.)

The reason that we need pension reform is not because we have a bunch of money lying around that we’d rather spend on other things than on public employee pensions.   The reason that we need pension reform is that WE DON’T HAVE THE MONEY to pay those pensions.   If we don’t reform our public pension system, we go broke.  (See one of Saturday’s posts,  WAS PAT QUINN “PUT ON THIS EARTH” TO SOLVE ILLINOIS’ PENSION PROBLEMS?)  If we do reform pensions, we avoid bankruptcy…unless the politicians go about spending the savings on other things, as one suspects this pack of poltroons will do.  

My suspicions regarding the propensity of the politicasters to blow any money we might save on other things have suddenly been heightened by Mr. Daley’s inane utterances regarding spending half the pension savings on “education,” which itself is code for “whatever the politicians want to spend money on as long as they can call it ‘education.’”  But that’s not the point.  The point is that the money is not there, is not projected to be there in any case, and will not be there even if we reform pensions.   If we could raise taxes or cut spending enough to meet our $100 billion pension liability, we wouldn’t have a problem.  But we can’t cut spending (or at least our pols, and, to be fair, almost all the citizenry, is unwilling to endure such cuts) or raise taxes to meet the liability, so we don’t and won’t have the money, whether we were to spend it on “education” or on pensions.

I hope, or at least I want to hope, that Mr. Daley, who is smarter than your typical pol, understands this and that his suggestion to spend the imagined windfall from pension reform on “education” is a purely political move, designed to garner support for pension reform from those who get a tingling feeling in their nether regions whenever a pol suggests spending money on “education.”  But I’m starting to think that my estimation of Mr. Daley’s financial acumen was inflated.  And if his proposal was purely political, someone should tell him that what Illinois needs now is not more of the same politics that got us into this soup but some leaders willing to make hard choices and to risk their lifetime sinecures doing so.