“LOOKING FOR (IT PEOPLE) IN ALL THE WRONG PLACES”

I wrote a letter to the Wall Street Journal at the end of August in response to a technology entrepreneur who decided that computer science education at the college level is a failure because the people he hired, or tried to hire, in those fields from Harvard and the like didn’t work out.  He decided that he would look for people without degrees for such work.  While I can sympathize with people’s frustration at the quality of graduates some of our colleges are producing, I suggested a less radical path than eschewing college grads altogether.   You can probably guess where I directed him.

The letter was published a few days ago (Wednesday, 9/9/15).  In case you missed it, I have reproduced it below:

 

8/29/15

Dan Gelernter says the he is not looking to hire computer science majors because CS “education is a failure” and “Computer science departments prepare their students for academic or research careers and spurn jobs that actually pay money.”  (Opinion, 8/29-8/30/15)  To fortify his argument, he cites the failings of computer science programs at Harvard, Yale, and Princeton, of all places.

While I agree, to some extent, with Mr. Gelernter’s lament, perhaps he is looking in the wrong places.  If he would expand his search for CS candidates beyond the Ivy League cocoon from which he emerged (Yale, 2010) and look to places like Illinois, Purdue, Iowa, and Iowa State, he would find candidates who have been prepared, and are eager, for jobs “that pay actual money.”

There is a world out there beyond the Ivy League…thank God!

Mark Quinn
Naperville, IL

DETROIT BANKRUPTCY: “IT’S NOT TINSEL TOWN; IT’S NOT CHI-TOWN…” HMM….

12/3/13

U.S. Bankruptcy Court Judge Steven Rhodes ruled today that Detroit could indeed file for protection under Chapter 9 of the bankruptcy code.    Since I advised bankruptcy for the state of Illinois in yesterday’s post (SOLVING ILLINOIS’ PENSION MALADY:  WHY, ONE CAN ALWAYS COUNT ON THE WORD OF OUR LEGISLATURE!, 12/2/13), it probably behooves me to make a few comments on the Detroit situation, even though the decision was immediately appealed and may, though probably won’t, be overturned.

First, while the lawyers will have to sort this out, and doubtless arguments will be made to the contrary, it looks like all unsecured creditors, be they bondholders, employee pension funds, contractors, or anybody else, have the same priority in bankruptcy.   Regardless of the law, however, it would seem that some sort of special accommodation has to be made for employee pension claims.   Since the pensioners have no access to social security, their pensions are their only means of livelihood; to deprive them of their pensions would be to throw them out in the street.  We can’t do that.  Judge Rhodes knows that. Everyone knows that.

So while Judge Rhodes said that the court could cut future pension payments, he is not saying, as some people would have you believe, that the courts should, or even could, eliminate those payments.  Some, perhaps all, pensioners will see their payments cut; one suspects none will see them eliminated.  Some clever formula will have to be derived under which the most highly paid pensioners take some cuts, perhaps some big cuts, but those at the bottom take few, if any, cuts.   Even under the plan working its way through the Illinois legislature as I write this, a plan that was, of course, formulated away from the bankruptcy court, the people at the bottom of the pension ladder will be taken care of, as they should be.

Second, an argument is being made, and doubtless will be continued, that any substantial hair cut for bondholders will send a chill throughout the municipal bond market, that all municipal bond issuers will pay higher rates if Detroit bondholders are made to suffer.

I don’t know whether such damage will be done to the muni bond markets if the supposedly big boys who hold Detroit bonds are made to feel some pain.  But I do know whether such damage should be done…of course it shouldn’t!   If a potential investor cannot distinguish between the credit of Detroit and, say, Dallas, s/he has no business owning municipal bonds, plain and simple.  Having to suffer for buying bonds of a lousy credit is part of the normal workings of the market place.  Those who take such risks cannot cry innocence when their big, risky bets don’t work out.   You pays your money, you takes your chances…Capitalism without failure is like Christianity without hell…or any other trite expressions come immediately to mind.   Bondholders took the risk and thought they would be paid to do so.  They were wrong.   They should feel the pain.  That’s capitalism.  And that’s life.

Third, Judge Rhodes determined that Detroit was insolvent before its bankruptcy filing in the summer; that was the major reason that he allowed the bankruptcy to proceed.  By those standards, it looks like neither Illinois nor Chicago is an obvious candidate for bankruptcy because one could argue that neither is insolvent.   Or maybe not.   Contractors who do business with the state are waiting a long, long time to be paid.  Both state and city pension plans are severely underfunded.   And both the city and the state are effectively borrowing to pay operating expenses.  One could conceivably make the argument that both Chicago and Illinois are insolvent, but it would be a stretch.   It will only be a matter of time, however, before the practical, if not legal, bankruptcy of both becomes obvious.  By then, of course, the hole will be much deeper and the pain more intense, but what do the politicians care?

I prescribed bankruptcy for Illinois yesterday.  Last week (“OKLAHOMA VS. ILLINOIS”:  COMMENTS FROM SOMEONE WHO KNOWS SOMETHING ABOUT ILLINOIS POLITICS), I made the case that, contrary to the self-assured but fact denying chest thumpers in these parts, Chicago is Detroit in many ways.   Don’t think that I’m the only one thinking about Chicago and Illinois in the context of bankruptcy and Detroit.   Investors, taxpayers, state officials (in their more candid, perhaps very private, moments), and people who make decisions regarding where to locate businesses do not think a municipal bankruptcy in the Land of Lincoln is such a laughable proposition.

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. 

PAUL VALLAS ON THE TICKET: PAT QUINN MAKES ANOTHER BRILLIANT MOVE TOWARD RE-ELECTION

11/8/13

Regardless of what you think of the guy’s ideology, background, or performance on the job, you have to admit that Illinois Governor Pat Quinn (no relation) is running a brilliant campaign for re-election.  (See my 9/16/13 post ILLINOIS DEMOCRATIC PRIMARY:  DALEY IS OUT; IS LISA BACK IN? for only the most recent of my comments on the campaign.)  The latest manifestation of this brilliance is his selection of Paul Vallas as his running mate.

Mr. Vallas’ being on the Quinn ticket makes sense for all the obvious reasons.  Originally a budget wonk in Springfield who caught a lot of important people’s eyes, he was appointed budget director for Chicago Mayor Richard M. Daley early in the reign of Richard II, when the scion was a good mayor and fiscal manager, before Mr. Daley became a living, breathing argument for the wisdom of term limits.  After leaving that post, Mr. Vallas did a great job, or at least as good a job as anyone could do, given the circumstances, as the CEO of the Chicago Public School System.  After a failed run for governor (against Rod Blagojevich; how would you like to have that vote back?), which was partially Mr. Vallas’s fault but was at least partially engineered by the bosses in Chicago who ran Roland Burris to siphon the black vote from Mr. Vallas in the primary, Mr. Vallas went on to run the public school systems in Philadelphia, New Orleans, and, currently, Bridgeport, Connecticut.  His performance in all three tough jobs has been admirable.  So Mr. Vallas has expertise in the areas of education and budgets, the first of which is always important and the second of which is beyond critical at this point in Illinois’ history.

Some can argue that Mr. Vallas had made enemies among the teachers’ unions in his tenure at the helm of the CPS.  But so what?   Mr. Quinn has already enraged the public employee unions with his aggressive push for a solution to the state’s public pension problems.  And where else are the public employee unions going to go?  

So Mr. Vallas is a great candidate for the obvious reasons.  But yours truly also finds merit in the selection for what it says about Governor Quinn.  Mr. Quinn’s Republican opponents, who are supposed to eschew such things as racial, ethnic, and gender quotas out of principal, go about selecting running mates who just happen to be women, Hispanic-Americans, Asian-Americans, or some combination thereof.  Mr. Quinn, however, eschews such tokenism and selects a running mate based on the man’s merits.  This refusal to kowtow to the conventional wisdom is a mark of character on Mr. Quinn’s part. 

Don’t think voters don’t notice Mr. Quinn’s good sense…and his opponents’ hypocrisy lily-livered obeisance to pollsters, conventional wisdom, and addle-brained political correctness.  Don’t misunderstand me; Mr. Quinn has made a career of obeisance to pollsters, conventional wisdom, and addle-brained political correctness, but voters have short attention spans and hence politics becomes a game of “What ya done (for me or to me) lately?”

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. 

RAHM EMANUEL’S BUDGET, JOHN CULLERTON’S ATTITUDE: “WHY NOT USE YOUR MENTALITY? STEP UP, WAKE UP TO REALITY…”

10/23/13

Chicago Mayor Rahm Emanuel yesterday unveiled his proposed fiscal 2014 budget, a document that his trained circus seals in the City Council will doubtless overwhelmingly pass while taking the time to lick the Mayor’s boots in the process.   The budget proposes no increases in property, sales, or gasoline taxes.   However, the Mayor is counting on raising $130 mm from “enhanced” traffic and parking fines and $10 mm from an increase in the cigaret tax. 

If one stretched and craned and denied reality sufficiently, one could almost say that this isn’t a bad budget; there is no increase in the most politically charged, for good reason, taxes and yet the city raises $140 mm in badly needed money to help balance the budget.   However, such an observation would be wrong on at least one count.  All that added revenue from the red light cameras, the speeding cameras, the higher fines for parking where the Mayor doesn’t want you to park, etc., will not go toward balancing the budget.  No, the Mayor and his henchmen plan to spend that money on such feel good programs as summer jobs, children’s health and vision programs, cultural programming in neighborhood parks, tree-trimming, rodent control (in City Hall, perhaps?  But I digress.), graffiti removal, and other such vague yet anodyne pursuits.

One wonders how the city of Chicago will ever balance its budget on a sustainable basis, and begin to address the date with bankruptcy its long term budget “problems” promise, if the Mayor and his lackeys who shamelessly call themselves a legislative body always manage to spend whatever additional revenue they manage to raise.   Perhaps there is no need to wonder; the answer is that Chicago will never balance its budget on a sustainable basis and will never address its budget problems.

The Mayor has a ready answer for such objections.  He is indeed going to address Chicago’s leak-ridden long term financial superstructure, yes sir.  He is going to do so through “economic growth and revenue enhancement” from an improving economy, cost reductions that involve no lay-offs, and “improved fiscal management.”  Talk about boldly facing one’s problems with concrete proposals!  

One suspects that the only reason Mr. Emanuel hasn’t come up with a plan for spending the savings and revenue generated by the aforementioned maneuvers is that he, too, being nobody’s fool, realizes how phony baloney, pie-in-the-sky, I’ll gladly pay you tomorrow for a hamburger today such piffles are.

At the same time, one of Super Rohm’s water carriers, Senate President John Cullerton, is telling us that the state of Illinois has no pension crisis.  As long as we keep our business and personal income tax rates at their “temporary” elevated levels, everything will be fine, this financial Einstein reassures us.

Let’s stipulate that nobody ever thought there was anything remotely temporary about the recent 60% increase in the Illinois  personal income tax and the similar increase in business taxes that accompanied it.  So Mr. Cullerton is not telling us anything we didn’t know about the income tax.  He also is proposing very little, if anything, to reform pensions.  The problem is, though, that, even with taxes at these extortionate levels, we will still have an enormous pension hole, still around $100 billion, if we do nothing to reform public pensions in this state, despite what Mr. Cullerton seems to believe, or at least is pretending to believe.  

The only thing that Mr. Cullerton is achieving by denying the existence of a pension crisis as long as we keep taxes at their current level is betraying an attitude, misguided as it may be, that is by no means unique to him, to wit…as long as those poor suckers who work in this state continue to pay through the nose, the politicians can continue to buy votes with the money the saps fork over.   Mr. Cullerton, having made his living in politics, sees nothing wrong with such a situation; indeed, having the people of Illinois finance the exercises in self-aggrandizement he and his cohorts call careers is the political equivalent of valhalla and he thus obviously sees no reason to change it.   Why should he?   It works nicely for Mr. Cullerton…and we continue to elect his ilk, and usually with great enthusiasm.  

The shenanigans and attitudes of the likes of Rahm Emanuel and John Cullerton, combined with their enormous success at the polls, cause yours truly to do things.  First, I quote a man who is something of an idol to me, H.L. Mencken, and I do so twice:

“Democracy is the theory that the common people know what they want and deserve to get it good and hard.”

And

“Government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.”

Second, I continue to pursue plausible avenues of escape from the Land of Lincoln, and do so with an increased degree of enthusiasm, indeed, with an ardor approaching that of those poor souls looking for a way off the Titanic.   If you live here, you should do so as well.

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. 

METRA: THE WAY TO REALLY FLY…AWAY WITH OTHER PEOPLE’S MONEY

7/10/13

Metra Board Chairman Brad O’Halloran (pictured) did an interview with the Chicago Tribune yesterday in an effort  to cool the heat that will burn in his seat as he undergoes grillings from various governmental and quasi-governmental bodies this week regarding about the strange, unmerited, and at least extra-legal quarter million dollar severance kiss Metra gave its failed CEO Alex Clifford.

Mr. O’Halloran blasted those who think Mr. Clifford’s sweet deal was part of some sort of secrecy pact designed to keep the deep, dark secrets of Metra incompetence, or worse, deep and dark at least until Mr. O’Halloran and his cronies can make off with bundles of cash similar to those they gave Mr. Clifford.  Mr. O’Halloran explained that his critics have been “flat out wrong” and that Mr. Clifford was fired for poor performance.  Mr. O’Halloran specifically cited Mr. Clifford’s decision to increase the cost of 10 ride Metra passes, which eliminated any dollar benefit from buying the passes (See 4/21/13’s now seminal post THE METRA BOARD:   PARADISE FOR POLTROONS, POPINJAYS, AND PATRONAGE PARASITES) and Mr. Clifford’s approval of the construction of the Englewood Flyover, which might sound like a lot of things but is in reality a railroad bridge on the south side, for $93 million.

There are at least two problems with Mr. O’Halloran’s bleatings, other than the obvious, i.e., that if poor performance were grounds for dismissal, Mr. O’Halloran, the whole Metra board, and about 95% of the public and quasi-public servants in this state would be out of work.

First, Mr. O’Halloran’s listing of examples of Mr. Clifford’s incompetence explains why Mr. Clifford was fired, but does not explain why Mr. Clifford was entitled to a quarter million severance package.  Indeed, this listing of Mr. Clifford’s shortcomings undercuts the argument for such a reward.

Second, the Metra Board approved both the Englewood Flyover boondoggle and the bone-headed hike in the 10 ride pass.  Mr. O’Halloran himself voted for the latter.  If the hike in the price of the 10 ride fare pass were sufficient grounds for Mr. Clifford’s sacking (It was; again, see my 4/21 post.), and Mr. O’Halloran voted for it, the implications for Mr. O’Halloran’s continued service on the board should be obvious.

The performance of Mr. O’Halloran in l’affaire Clifford just adds further evidence to a point I made on 4/21, to wit…

…the Metra board is a repository for hacks, hangers-on, suck-ups, toadies, lackeys, and other virtually unemployables. 

This is Illinois, however, so Metra’s board is not at all unique in this respect.

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. 

MIKE AND LISA MADIGAN: WHAT’S A DAD TO DO?

6/19/13

A poll commissioned by Bill Daley’s gubernatorial campaign (See, inter alia, most recently my 6/17/13 post BILL DALEY’S GRASP OF FINANCE AND ECONOMICS:   WAS I MISINFORMED? and more saliently my 6/13/13 post BILL DALEY AND THE GOVERNOR’S OFFICE:   THE BROTHER ALSO RISES? and my 6/6/13 post “GOVERNOR BILL DALEY…SENATOR BILL DALEY.   THERE JUST WASN’T THE TIME…”) has shown that Lisa Madigan’s being Mike Madigan’s daughter will hurt her if (when?) she runs for governor.  

The poll showed that Lisa Madigan would defeat the only formally announced GOP candidate for governor, State Treasurer Dan Rutherford, by 11 percentage points.  However, when voters were reminded that Lisa Madigan’s dad is House Speaker Mike Madigan, the capo de cappi tuti of Illinois and Chicago politicians and were asked how they’d vote if Mr. Madigan stayed on as speaker, the race between Ms. Madigan and Mr. Rutherford becomes a dead heat.

Hmm…

Several things come to mind.

First, Bill Daley ought to look in the mirror; how does his being Rich Daley’s brother, and Dick Daley’s son, play downstate or in the ‘burbs?   The aforementioned poll did not explore this question.

Second, poll participants had to be reminded that Lisa Madigan’s dad is Mike Madigan?   And these people get to vote?   Remember this the next time someone pontificates on the wonders of democracy.

Third, let’s leave aside for a moment the near fact that if Lisa Madigan were not Mike Madigan’s daughter, she would not have served in the Illinois House and Senate, never been considered for Attorney General, and certainly not now be the governor in waiting.  Let’s instead buy blindly into the silly supposition that Ms. Madigan’s being Mr. Madigan’s daughter actually hurts her.

What could Mike Madigan do to help his daughter if his being Speaker of the House and chairman of the Illinois Democratic Party really is a disadvantage for young Lisa?

Some have suggested that Mr. Madigan could step down as Speaker but retain chairmanship of the Party, where they claim the real power lies.   But those who make this argument are stuck in the ‘60s or ‘70s.  As has long been the case, and as is illustrated, for the careful reader, in my two books, The Chairman, A Novel of Big City Politics and The Chairman’s Challenge, A Continuing Novel of Big City Politics, the days of the power lying in the party office rather than the public office are long gone.  Rich Daley knew this when he was elected mayor in 1989 and eschewed the post of Cook County Regular Democratic Chairman, which his father held even longer than Richard J. held the mayor’s office.  Young Mr. Daley even left his post as committeeman of the 11^th Ward, giving the post to his brother John.   Rich Daley knew that, largely through the efforts of his father, power had shifted from the Party to the Fifth Floor of City Hall.   To the extent that holding a Party position, even THE Party position, might imperil holding onto the Mayor’s office, young Mr. Daley wanted no part of that party office.

If you don’t believe me, first read my books.   If that doesn’t work, ask how much power the following men, who held the office of Cook County Regular Democratic Party Chairman after Richard J. Daley, wielded.   You might even honestly ask yourself if you remember some of these names:

George Dunne

Ed Vrdolyak

Tom Lyons

Joe Berrios

Fast Eddie Vrdolyak had some power, but he would have had that power even if he weren’t Party Chairman.   A few people remember George Dunne, but largely as something of a Daley lackey or as a guy who got into a little trouble with some comely female county employees in his twilight years.   Does anyone remember Tom Lyons?  I could describe him; nondescript northwest side committeeman who wanted a job no one else wanted.  But even I had to look up his name.   Does anyone think Joe Berrios was or is nearly as powerful as Richard M. Daley or Rahm Emanuel?   Or even Ed Burke?

It’s no different at the state level; the Party is largely toothless in this media age.   Mike Madigan’s power derives not from his heading the Party but, rather, from his having been Speaker for all but a few of the last thirty years, his thus being constantly cultivated by people who know how to return favors, and his therefore having the ability to make or break virtually any Democratic member of the legislature.   Retaining the chairmanship of the Party means little or nothing; ask, if you can remember, the following gentlemen who preceded Mr. Madigan in the post:

Gary LaPaille, who was something of a Madigan lackey who stepped aside for his boss

Vince DeMuzio

Cal Sutker

Mike Madigan, being a good dad, might resign from the Speakership, or even the House, if Lisa becomes governor, and promise to do so during the campaign.   In the opinion of yours truly, however, he would be crazy to do so.   For Mike Madigan, the Speaker’s office is a permanent, lifetime job.   The governor’s office, on the other hand, holds no such employment security.   If Ms. Madigan does run and win, and both are still highly likely, she might serve for eight years; Even if she manages to match Jim Thompson’s 14 year tenure, that would leave her in power only half the time her father has been Speaker. 

Mike Madigan, even as a good father, is highly unlikely to give away the permanent job of Speaker so his daughter can be governor for a relatively few years.   I realize he’s 71 years old, but that isn’t old and I am quite sure that Mr. Madigan doesn’t consider himself old and/or anywhere near the twilight of his career.   I’m not making a prediction here; I don’t know Speaker Madigan and, even if I did, he wouldn’t tell me what he is thinking.  I am saying, however, that to give up the Speaker’s job would be silly and Mr. Madigan is not given to doing silly things; see today’s other post MIKE MADIGAN, JOHN CULLERTON, AND PENSIONS:   SOMETIMES A CIGAR IS JUST A CIGAR?

One supposes that Mr. Madigan could stay in the House but replace himself with some stooge (There is no lack of stooges in Illinois politics.) who would serve as a placeholder until Governor Lisa Madigan either loses office or moves to Washington (or possibly replaces another major Chicago political figure whose ultimate goal is moving to Washington, but I digress) in some capacity or another and Mike Madigan feels safe getting his old job back.  But stooges sometimes start to think that they aren’t so stoogish after all and get comfortable in their old jobs.   The consequences can be dire; see yesterday’s post THE LEGEND LIVES ON FROM THE TEAMSTERS ON DOWN OF THE BIG GUY THEY CALL JIMMY HOFFA.  Mr. Madigan is not likely to take such a chance.

Those who haven’t ignored the obvious in their pursuit of today’s story realize that Lisa Madigan is helped a heck of a lot more than she is hurt by her being Mike Madigan’s daughter.   Mike Madigan is highly unlikely to give up his post as Speaker so that his daughter can become governor for a few years.   Ms. Madigan’s lineage will not hurt her in a Democratic primary, especially a three-way Democratic primary.   And, given the state of the GOP in Illinois today and its, er, lack of credible candidates, her being the Speaker’s daughter might hurt Ms. Madigan, but not fatally so.  Mike Madigan’s having been Speaker more or less continuously for the last thirty years did nothing to stop him from winning a supermajority in the House in 2012, despite pathetic GOP efforts to the contrary.  Either the voters are not as appalled by Mr. Madigan as some people seem to think…or they simply don’t pay enough attention to express their disdain in the voting booth.

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. 

MIKE MADIGAN, JOHN CULLERTON, AND PENSIONS: SOMETIMES A CIGAR IS JUST A CIGAR?

6/19/13

The Chicago Sun-Times today ran a page 6 story, trumpeted on page 1, asking a question I asked back on May 8  (See my post of that date, THE CULLERTON PENSION PLAN:  “THE (PUBLIC EMPLOYEE UNIONS) FAMILY DON’T EVEN HAVE THAT KIND OF MUSCLE ANY MORE”???):  Is the House Speaker Mike Madigan/Senate President John Cullerton disagreement over the solution to Illinois’s public pension problem a genuine “feud,” as the Sun-Times put it, or, as I called it on May 8, “part of some Machiavellian dance to avoid doing anything about our pension problems” in order to somehow give Lisa Madigan a boost in her run for governor?

 

Not knowing either Mike Madigan or John Cullerton, and being quite sure that even those who know either gentleman are not privy to such inner thoughts, I don’t know whether the two legislative leaders genuinely differ on pensions or are trying to pull some sort of elaborate maneuver to discredit Pat Quinn and help Lisa Madigan.  I suspect, however, that the disagreement is genuine.   Mr. Madigan is too smart to try to pull something so likely to backfire in his face and that would seemingly involve too many people (more than one) to keep very far under wraps.  Furthermore, perhaps I am naïve, but I genuinely don’t think that Mr. Madigan is so callous, so uncaring about the direction of the state, and/or so silly that he would further imperil our state’s nearly broke finances in order to hand his daughter an even more hopeless set of circumstances should she run for governor and should he be able to deliver the office for her.

The speculation that the whole Madigan/Cullerton thing is a Potemkin feud, though, gives me the opportunity to tell a story about the last time I thought two Chicago pols were putting on a fake fight worthy of the WWE….

In early 2005, Governor Rod Blagojevich shut down a landfill operated by Frank Schmidt, a cousin of Blago’s mother-in-law, Marge Mell, the wife of Dick Mell, one of Chicago’s then and now most powerful aldermen and committeemen.  The Governor contended that the landfill was taking illegal material while Mr. Schmidt was assuring shady customers who thus violated that law that there would be no trouble because of Mr. Schmidt’s connection to Mr. Mell.  This set off a public feud between Mr. Blagojevich and his father-in-law, and political Godfather, Dick Mell that reached epic proportions.

I suspected that the Mell/Blago feud was an elaborate ruse, designed to distance, for the naïve, the Governor from his father-in-law, whose reputation as a take no prisoners, old time ward boss from Chicago didn’t play well in the suburbs and downstate.   Blago would be running for reelection in 2006 and a charade of a crusading environmentalist young governor standing up to an old time, favor dispensing ward boss at enormous personal and political cost to himself would enhance his chances downstate while not hurting him in the city due to the winks, nods, and “say no mores” that would be part of such a ruse.

However, I started to hear from people who knew and worked with Mell in the 33^rd ward that the father-in-law vs. son-in-law feud was very real.  I sort of brushed off these assurances as part of the play.  One evening shortly after the fireworks started I was at a function at my old high school and heard from a Jesuit priest who was active in politics on the northwest side that the Mell/Blago feud was very real.   While this claim had more credibility, I have long adhered to my trusted formula of not trusting anybody whom I have not known for at least twenty years, and then not completely, and still thought Blago and Mell could be jerking everyone’s chains.

When Dick Mell several weeks later accused his son-in-law’s new best friend, Chris Kelly, a corrupt contractor who ultimately committed suicide at least partially due to the troubles that grew out of his association with Blago, of trading commission appointments for “$50,000 campaign contributions,” we all knew, or soon would know, that Messrs. Blagojevich and Mell were not playing some game of three card monte.   All doubt was removed by Mr. Mell’s comments regarding Mr. Kelly, which Mr. Mell doubtless regretted later and which ultimately led to his son-in-law’s taking up residence in federal housing.

That incident may have nothing at all to do with what some, including the Sun-Times, are labeling the Madigan/Cullerton “feud.”  But that quick, and wrong, presumption of Machiavellian machinations did reinforce for me something I have long known but that the more sensationalist among my fellow Chicago politics aficionados can’t seem to grasp:   sometimes things are as they seem, sometimes a cigar is just a cigar…even in the labyrinthine world of Chicago politics.

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. 

WAS PAT QUINN “PUT ON THIS EARTH” TO SOLVE ILLINOIS’ PENSION PROBLEMS?

6/15/13

Illinois Governor Pat Quinn (no relation), in his never ending attempts to “do something” about the $100 billion unfunded pension liability in this state, has called a special legislative session for next Wednesday.   As of this writing, the idea is to have the special session vote on Speaker Mike Madigan’s pension reform plan  (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.”)   The Senate will vote the plan down, as it did in the regular session.  Then a special, and just about unheard of, “conference committee” of legislative leaders will be formed to work toward pension reform throughout the summer.  Why as much couldn’t be accomplished by Speaker Madigan and Senate President John Cullerton sitting down together over a beer and a large sausage pie at Vito and Nick’s as will be accomplished in the conference committee is beyond me, but one supposes something resembling protocol must be observed.  Of course, I digress.   In short, the latest plan will accomplish as much on pensions as has been accomplished up until now…nothing.

But the Governor is trying.   And he will achieve some measure of success in these latest moves, probably not in addressing the pension issue but certainly in advancing a strategy for reelection; see my 6/5/13 post  PAT QUINN, PENSIONS, AND THE UPCOMING ILLINOIS GUBERNATORIAL PRIMARY:  WHAT WOULD JIMMY STEWART DO?.

Speaking of Governor Quinn, much ridicule has been made of his contention that he “was put on this earth” to solve Illinois’ public pension problem.  While there is doubtless plenty of the politicaster’s portentous and popinjayish puffery at work here, the Governor does have a point.  If the pension problem isn’t solved, Illinois goes bankrupt.   If Illinois goes bankrupt, the economic disruption throughout not only the state but also the country and the world would be enormous as the credit of every political entity short of those entities, like the federal government, that can print their own money, comes into question.  Not only would Illinois become something of a ghost state, if you will, but the whole world would face another financial crisis in which millions would suffer.

So, yes, solving the pension problem in Illinois, while perhaps sounding quite mundane to those who eschew things such as economics and finance in favor of loftier aspirations and purposes, would be quite a reason for anyone to have been “put on this earth.”  Pat Quinn knows that; too bad he is apparently alone among his Springfield colleagues in possessing this knowledge.

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. 

GEORGE RYAN AND THE “INABILITY” OF ILLINOIS TO SELL BONDS

1/31/13

The state of Illinois yesterday pulled (The State said “postponed.”) a $500mm bond issue intended to finance a slew of capital projects.   S&P recently downgraded the state to A- from A.  That technically ties Illinois with California for the state with the nation’s lowest bond rating, but since S&P has a “negative” outlook on Illinois and a “positive” outlook on California, our state is, in reality, at the bottom of the heap.  In pulling the deal, the administration of Governor Pat Quinn (no relation) cited that rating downgrade and the unsettling effect the inability of our public servants to address the state’s fiscal maladies has had on the market.  So it looks like the Governor is using the state’s inability to raise money in the public markets as a cudgel to prod the legislature (i.e., Illinois House Speaker Mike Madigan) to do something about our money woes.  Good luck with that, Governor; who do you think got us into this mess?  But I digress.

There are mixed reports on whether the projects that are supposed to be financed by the deal will go forward; the Wall Street Journal said this (Thursday, 1/31/13, page A3) morning that the projects “aren’t expected to be delayed.”  The Chicago Tribune reported on page 8 of today’s paper that whether the projects will go ahead is “unclear.”  Since when did the unavailability of money stop a politician, and especially an Illinois politician, from spending said money?   But, again, I digress.

It’s not so much the State of Illinois’s inability to raise money that “postponed” this deal.  The State can raise the money; it just doesn’t want to pay the interest rates that it would have to pay on the paper.  According to Thomson Reuters, 10 year Illinois bonds yield about 3.2%, about 120 basis points (“bp”s) over 10 year treasuries.  But on an apples to apples, tax adjusted basis, assuming a 35% income tax rate (not the highest rate after the Obama tax increase, but let’s assume, correctly, that not every buyer of Illinois, or municipal in general, paper is in the highest tax bracket), the Illinois paper yields a touch over 4.9%, or nearly 2 ½ times as much as comparable treasury paper.  Astounding.

Further, one suspects, though one can never know, that the only reason that Illinois can sell bonds at those yields, and the only reason that its bonds are not rated junk (BB+, four notches lower than they are now, or below) is because the market, and the ratings agencies, assume that the federal government will not let a state go bankrupt.   Certainly nothing in the finances of the state of Illinois merits more than a junk rating and a yield at least, just to throw out a number, 100 bps (1%) higher than it is now.

So why does the state of Illinois have to pay so much to bribe (a very appropriate verb for out great state, don’t you think?) investors and/or speculators to buy its paper?  

The raw numbers, most saliently, the now $96.8 billion unfunded pension liability and approximately $8.4 billion owed to trade creditors, are bad enough.   But there is something else at work.  Our politicians simply can’t, or won’t, address the state’s fiscal problems, especially its pension problems   Terms like “unfunded liability,” “actuarial assumptions,” and “assumed investment rate” are abstractions to these pols; they will only feel pressure when checks start to bounce or Mike Madigan says “jump.”  Neither is likely to happen in the near term, though the former may be approaching more quickly than most people think.  Why this reluctance to do anything about our pension problems?   The same reason that we got into this problem in the first place:  As I said in my now seminal 1/9/13 piece at the now defunct Rant Political, ILLINOIS PENSION PROBLEMS:   SEND THE CHECK TO MY KIDS,

politicians have learned that, through granting generous pensions to public employees, they can buy today’s votes with tomorrow’s dollars.

Who is going to surrender such a holy grail?   And so while the politicians are nearly inexhaustibly congratulating themselves about doing something regarding immigration reform  (See WOULD THE LAST GUY TO LEAVE ILLINOIS PLEASE TURN OUT THE LIGHTS?, Rant Political, 1/28/13, reproduced below.) and may soon be doing the same about gay rights and maybe even a Chicago casino (See A CHICAGO CASINO:  MORE MONEY FOR THE POLS, MORE PROBLEMS FOR THE TAXPAYERS?, Rant Political, 1/9/13, reproduced below.), they continue to dither about what is clearly the most important and immediate issue:  the looming, if not real, bankruptcy, of the state of Illinois.

Such self-inflicted impotence on the part of our public servants would be bad enough for Illinois’s ability to sell bonds, but there is something else at work:   Illinois’s history and culture, the latter real or perceived, of corruption.   With George Ryan’s having left prison yesterday, only one former Illinois governor is currently living in federally provided housing.   But four of our past eight elected governors have done time, albeit one (Dan Walker) for crimes committed after leaving office.   This is the one area in which Illinois stands head and shoulders above its 49 brethren.  

No one accuses Mr. Quinn (no relation) our current governor, of the types of shenanigans that landed four of his recent predecessors in the hoosegow; his faults lie in the area of competence rather than criminality.  But it is not too much of a stretch to say that, while some people might be surprised, few would be shocked, if virtually any other prominent figure in Chicago/Illinois politics suddenly became the focus of intense federal scrutiny.   This is the legacy left us not only by Rod Blagojevich, George Ryan, Dan Walker, and Otto Kerner, but also by legions of lesser pols throughout the state who have had to become federal guests because of their dastardly deeds.

Further, even leaving aside criminality, the honesty of the whole Illinois political system, and of most of its participants, has to justifiably come into question.   This is a state that repeatedly elects corrupt politicians to high office.   This is a state that nearly revels in its reputation for dirty, dishonest politics, for having the “best politicians money can buy” and where the honesty of a politician is often gauged by his determination to, once bought, stay bought.

Is this the type of state in which you would want to invest?   How much would it take to bribe (again, a very appropriate verb for the Prairie State) you into lending the state of Illinois money?  

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 this subject.

Promised reproduced articles:

WOULD THE LAST GUY TO LEAVE ILLINOIS PLEASE TURN OUT THE LIGHTS?

1/28/13

Illinois Governor Pat Quinn (no relation) signed legislation yesterday allowing illegal immigrants to obtain driver’s licenses in the Land of Lincoln.   The platform on which Mr. Quinn signed this bill into law was crowded with politicians of all ethnicities and of both parties, as if there were two parties in Illinois, but that is grist for another mill.  

Leave aside the merits of the bill, which are, despite the breathlessness of the press coverage, debatable and certainly not self-evident.   What really stunned yours truly about the signing ceremony was that the assorted pols spoke for a combined TWO HOURS in the wake of the signing.   TWO HOURS of being subjected to the bloviations of self-important politicians is enough to make even the most determined, American dream seeking immigrant turn around and head home.  

What is really illustrative about the two hours of self-congratulations, and perhaps about the bill itself, is what it says about the lilliputians we have elected in the Prairie State.   Our state’s major problem is not illegal immigration which, while affecting the lives of many throughout the state, is a federal issue.   Our state’s major problem is that it is growing broke.   Like most states, Illinois is growing broke because the politicians have figured out that, through granting generous, unaffordable benefits to public employees, they can buy today’s votes with tomorrow’s dollars, (See my 1/9/13 post  ILLINOIS PENSION PROBLEMS:   SEND THE CHECK TO MY KIDS.), hence our $95 billion unfunded pension liability.   The politicians on the dais yesterday, breaking their arms patting themselves on the back over passing into a law a bill of questionable importance and efficacy, are the same politicians who have spent the state into oblivion and the same politicians who lack the spine to do anything about the problem they created; again, see my 1/9 post.

Yet these poltroons and popinjays see fit to endlessly and tirelessly congratulate themselves over the licenses for illegals bill…and feel it necessary to take two hours of people’s valuable time to display their manifest wisdom to those on the receiving end of their largesse.   When do they appear before those on the giving end?

A CHICAGO CASINO:  MORE MONEY FOR THE POLS, MORE PROBLEMS FOR THE TAXPAYERS?

1/9/13

While Illinois legislators continue to look for ways to delay action on the pension time bomb that could soon make our state uninhabitable by any rational person, the secondary, and at least tangentially related, issue of a Chicago casino still lurks very close to the surface.  A deal that will bring a casino to the city of Chicago is a virtual lock, now that Governor Pat Quinn (no relation) and Mayor Rahm Emanuel have done the usual chest beating dance designed to show their constituencies that they are tough yet concerned.   And it looks like the ill-fated, perpetually bothersome, and therefore appropriately named Thompson Center, just north of City Hall, might well be the site of the proposed paean to parlous profligacy. 

But one has to ask what benefit a casino would bring to the taxpayers, given Mr. Quinn’s (no relation) insistence, and Mr. Emanuel’s seeming agreement, that 100% of the tax and fee revenue generated by such a casino be earmarked for school construction and modernization.  If all the money goes to construction of new schools and modernization of old ones, nothing, zero, nada, bupkus will go toward solving Illinois’s $95 billion pension problem, Chicago’s proportionally similar pension woes, or paying the state’s unpaid bills.  All we will have accomplished by opening the Loop, or some other city site, to gambling is to give the politicians more money to spend under the diaphanous ruse of “education.”   And it gets worse…not only will the politicians spend the money the casino generates, but they will commit to long term projects based on casino revenue projections that, if history is any guide, will prove too optimistic, leaving such projects to be funded by already exhausted general revenues in the (not too far) out years.   The casino will not solve Illinois’s, or Chicago’s, fiscal problems…it will at best have no impact on them and more probably exacerbate them.

On the other hand, perhaps the politicians in the Land of Lincoln are being clever enough to realize that money is a fungible commodity.  Then they can fund school projects with casino money and use money that would otherwise have been spent on those projects to pay past due bills and fund pensions.  Those with a sense of the history of our once great state remember that was the approach employed when the Illinois lottery was initiated; all the lottery proceeds went to the schools, leaving funds that would have gone to the schools available for pols to spend elsewhere in their endless crusades to remain on the public payroll.   If the same approach is used with casino revenues, and the newly available funds are used not for spending in areas other than school construction but, rather, to fund pensions and to pay bills, a casino would indeed have a salubrious impact on our state’s finances.   But those are too huge “if”s.   Further, such an outcome would require duplicity on the part of our politicians, but that is one of the few “virtues” our state displays in fulsome abundance.