THE CULLERTON PENSION PLAN: “THE (PUBLIC EMPLOYEE UNIONS) FAMILY DON’T EVEN HAVE THAT KIND OF MUSCLE ANY MORE”???

5/8/13 

On Monday, State Senate President John Cullerton unveiled the multi-faceted approach to pension reform that he formulated in collaboration with the leaders of the state chapters of AFSCME, SEIU, and the AFL-CIO along with leaders of the IFT and IEA.   As readers will recall, Mr. Cullerton was in something of a snit when House Speaker Mike Madigan came up with his own plan for addressing Illinois’ $100 billion unfunded pension liability and vowed to come up with his own plan; see my 5/2/13 piece MIKE MADIGAN’S PENSION REFORM PLAN:  “THE BEST THAT (WE) CAN HOPE FOR IS TO DIE IN (OUR) SLEEP.” 

Mr. Cullerton’s plan is complicated because it offers workers a menu of choices, but its common theme is a trade-off between continuing to receive retiree health benefits and having pension cost of living (“COLA”) adjustments grow at simple interest rather than compound .  Unlike Mr. Madigan’s plan, Mr. Cullerton’s union backed plan would not increase the retirement age for state workers or limit the amount of a worker’s pension subject to COLA adjustment.   Again, see my 5/2/13 piece for details of the Madigan plan.

The Cullerton plan has a few virtues.  One is that, since it does not directly reduce retirees’ benefits but instead offers workers and retirees something of a Hobson’s choice between health care benefits in retirement and reduced pension benefits, the plan is less likely than the Madigan plan to run afoul of the Illinois constitution’s provision that pension benefits of public employees cannot be “diminished or impaired.”   One wonders, however, given the highly politicized nature of the court system in this state, whether any plan with the full backing of Mike Madigan would encounter more than rhetorical resistance even in the state Supreme Court.

Another virtue of the Cullerton plan is that it has the backing of, and indeed was formulated in association with, the state’s public employee unions, who are apoplectic over the Madigan plan.   But one wonders (I’m not being disingenuous here; one really does wonder.) how much muscle the public employee unions have any more.  That Mr. Madigan, a life long ally of those unions, formulated a pension plan that ostensibly sent the unions through the roof indicates that perhaps Mr. Madigan, the state’s shrewdest politician, doesn’t think the unions hold the aces they once did.

Those virtues are more than offset by the Cullerton plan’s major weakness:  it does little to address the state’s gaping budget hole.  The Cullerton plan reduces the state’s $100 billion unfunded pension liability by $10 billion while the Madigan plan lops of $30 billion, and even that $30 billion is not enough.   If we insist on getting into the fantasy land of the distant future, the Cullerton plan saves the state $46 billion over the next 30 years while the Madigan plan supposedly saves the state $140 billion.   But that larger number depends on the state’s politicians’ keeping their promises, albeit, according to the Madigan plan, legally enforceable promises. (This enforcement mechanism would only force bankruptcy…if the state isn’t already in court by 2019, the date of the first enforceable payment…more quickly if the state’s finances don’t begin to show nearly impossible improvement.  But that is grist for another mill.).   And since when have this state’s, or any state’s, politicians kept their promises?   One of the reasons this problem arose is because our state’s “leaders” refused to honor promises to fund pensions.

Two other points worth pondering…

First, doubtless some will, if they haven’t already, argue that the whole Madigan/Cullerton plan is part of some Machiavellian dance to avoid doing anything about our pension problems.   The Madigan plan has passed the House, the Cullerton plan will pass the Senate, and the whole thing will die in conference.   This doesn’t make much sense, though.  Why would Mike Madigan so infuriate the unions, especially when his daughter is apparently conducting a campaign for governor, while achieving nothing?   The unions may not have the power they once did, but it makes no sense, especially to someone as savvy as Mike Madigan, to incur their wrath for nothing. 

Some might argue the unions are in on the whole conspiracy.  While this is plausible, remember the old adage about the reducing likelihood of keeping a conspiracy secret as the number of conspirators grows.   Talk of a Madigan/Cullerton plan to appear to be doing something about pensions while doing nothing is even too cynical for yours truly and assumes Mike Madigan is even more Machiavellian than he is…isn’t it?

 Second, even if something does get done on pensions, one cannot be sanguine about the fiscal future of our state.  Note John Cullerton’s comments as he unveiled his proposal

“We know we have to pass a pension reform bill this year.  We’re the worst funded in the nation.  It’s affecting our budget.  We have to free up money next fiscal year and fiscal years after that.  And that’s why we have to pass these bills.  We know that.”  (Emphasis mine)

One suspects that when the likes of John Cullerton speak of “free(ing) up money,” it’s not to roll back the “temporary” income tax increase he and Mr. Madigan passed with the help of Governor Quinn a few years ago.   Mr. Cullerton is talking instead of “free(ing) up money” for, you guessed it, more spending…on “the children,” or “public safety,” or “health care,” or any of the many anodyne labels politicians put on ladling out your money to their contributors.  What will have been achieved if we save money on pensions only to blow it on something else?

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics. 

NEWS FLASH: GOVERNOR QUINN IS ABSOLUTELY RIGHT!

3/7/13

Regular readers know that I am no big fan of Governor Pat Quinn (no relation).   We are generally on opposite sides of the political spectrum, though lately, given the mewing that has been emanating from those who claim to hold the conservative banner,  I’ve had a hard time determining where on the political spectrum I stand.  See my 2/28/13 post CHRIS CHRISTIE AND CHUCK HAGEL NEED NOT APPLY.   Beyond that, Pat Quinn’s career has been characterized by either misguided or malevolent demagoguery that betrays either a fundamental misunderstanding of how wealth and prosperity are generated in a free market society or a desire for power and recognition so powerful and consuming that it rides roughshod over the facts, common sense, and, in some cases, decency.

All that having been written, I don’t believe that Mr. Quinn is a fundamentally indecent man.   Though he often substitutes emotion for sound thought and reasoning, he genuinely seems to care about the poor and downtrodden and feels a duty, on his part and on everyone’s part, to do what he can to ease the plight of our fellow citizens.  He feels, I suspect, that we are our brothers’ keepers, though he seems to think he is, or ought to be, first among equals in this duty to keep an eye out for what he perceives to be the little guy. 

Furthermore, the people I know who know Quinn, and who have known him for years, tell me he is essentially a good guy.   Some of these guys are pretty hard core conservatives, yet they still vote for Quinn.  Given what I have learned about what the role of ideology should be in politics when personal ties are in place, I don’t blame them for voting for a guy they know and like regardless of their lack of ideological affinity, but that is grist for another mill. 

I don’t know Pat Quinn, but, a long time ago when he was either State Treasurer or between jobs, he, I, and an economist friend of mine had a long lunch with Mr. Quinn to talk about the state’s finances.   While Mr. Quinn, being a politician, was doubtless more interested in political contributions (which didn’t come from either of us) than our opinions on money issues, he certainly made it seem that he wanted to hear what we had to say and he asked very good questions; the man clearly is intelligent.

Finally, when Pat Quinn, or any politician, is right, I, who have little or no regard for any but a very few people who practice his craft, have to admit that he is right.   And Pat Quinn was very right when, in presenting his budget, he pointed out the obvious, to wit, that we must do something about our pension problem in this state.  Yes, we all know that.   But a firm grasp of the obvious eludes most politicians, so the your typical pol deserves some credit even for stating what is plain to those of us who hold, in the eyes of the politicians, lower stations in life.  

The mutual desire of that Mr. Quinn and this Mr. Quinn to solve our pension problems arises from opposite motivations.   Yours truly would like to save the state from bankruptcy and perhaps cut taxes while Pat Quinn would like to find more money to blow on real, potential, or even perceived constituencies and thus help in his ongoing struggle to stay on the public payroll as long as possible.   Nevertheless, we both see the need for addressing this problem.

Further, Mr. Quinn was right when he said, in delivering his budget address

“We all know that we must reform the Illinois public pension system.   So, members of the General Assembly, what are you waiting for?  Illinois taxpayers are losing patience with your lack of action…It’s time for you to legislate.”

It is indeed time for the motley crew of no account poltroons that we call legislators to get off their taxpayer padded posteriors and do something.

As one might guess, though, Mr. Quinn’s call for the legislators to stop whistling past the graveyard didn’t sit well with those esteemed public servants on either side of the aisle.  Even the Republicans, who profess to want to “address our pension problems,” as long as it won’t cost their constituencies anything, had little good to say about the scolding Governor Quinn delivered.   The most inane of these comments came from Senate Minority Leader Christine Radogno (R. Lemont).   Ms. Radogno, suddenly defending the institution she spends most of her time castigating, from the inside, opined that it was “unfair” (boo-hoo) of Quinn to lay blame on the lawmakers, arguing 

“Most of the work that has been done on pensions has come out of the General Assembly, and not out of the governor’s office.”

That statement was inane enough, given that NOTHING has been done on pensions by either the General Assembly or the Governor.   Most of nothing is still nothing.   But Ms. Radogno compounded this whopper by arguing that

“The governor should have turned and put that to the guy standing behind him in
a navy blue suit. ... I think people here are tired of his style of politics.” 

The “guy standing behind (Governor Quinn) in a navy blue suit” at the time literally but not nearly as figuratively as Ms. Radogno, in her febrile imagination, would like to believe, is House Speaker Michael Madigan.  (See, inter alia, my 2/28/13 post REDFLEX TRAFFIC SYSTEMS:   CHICAGO POLITICS CLAIMS A “VICTIM” ON THE OTHER SIDE OF THE WORLD.)

Hmm…

First Ms. Radogno says that it is “unfair” (How I hate that word when used by adults!  When has fairness ever been a prominent feature of life?   But I digress.) of the Governor to blame the legislature for Illinois’ pension problems.   Then she says that Quinn should have “put that to the guy standing behind him in the blue suit,” none other than Michael Madigan. 

Does Ms. Radogno realize what office House Speaker Mike Madigan holds?   He is the Speaker of the House…and the House is half the legislature.   Further, if truth be told, the Speaker controls not only the House but, though his close association with (Some might say, with some justification, control of) Senate President John Cullerton, the Speaker also commands the other half of the legislature.  

So in Ms. Radogno’s world, we aren’t supposed to blame the legislature for the pension mess; we are supposed to blame the guy who runs the legislature, the guy who, for all intents and purposes, is the legislature.

In my 2/27/13 post MR. SUNSHINE ON ROBIN KELLY, DEBBIE HALVORSON, AND THE ILLINOIS 2^ND CONGRESSIONAL DISTRICT RESULTS, I wrote

Watching Ms. Halvorson in action could almost lead one to the conclusion that the Democrats of the 2^nd District should be excused for nominating Robin Kelly, or at least were smart not to have nominated Ms. Halvorson.  Ms. Halvorson was once Majority Leader of the Illinois Senate!  O tempora, o mores!  That such an unimpressive candidate, shallow thinker, and reflexive flip-flopper could actually have been the Majority Leader of the Illinois Senate explains a lot about the sorry condition of the state of Illinois.

Judging from current Republican Senate Leader Christine Radogno’s failure to understand that the legislature is the legislature, the quality of the leadership in the General Assembly has not gotten any better since the days of Debbie Halvorson.  If such a thing is possible, it may have gotten worse. 

No wonder why we find ourselves slogging through such deep excrement in this great hog producing state.

See my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, for further illumination on how things work in Chicago and Illinois politics.