Austerity zombies just don't have a clue...

[Enoch the Red]

Topinka: Illinois’ Unpaid Bill Crisis Just Keeps Getting Worse

SPRINGFIELD, Ill. (CBS) — Illinois keeps falling farther behind on its debt.
As WBBM Newsradio’s Regine Schlesinger reports, officially, the state has a backlog of more than $4.25 billion in unpaid bills.

But Illinois State Comptroller Judy Baar Topinka says when one factors in other bills, the figure is closer to around $8.5 billion. Those other outstanding bills include tax refunds, employee health insurance, and bills that have not yet reached her desk. Topinka says this is extremely disappointing, since a year ago, the state sharply increased income taxes (by 67 percent) and corporate taxes.

“After the largest tax hike in our history, the state continues to be in this precarious fiscal position with persistent payment delays, and frankly, the situation is unlikely to significantly improve in the near term,” she said.

Some state officials say the solution is more borrowing to pay the bills, but Topinka says the solution is to cut spending.

When will these damnable austerity zombies finally come to terms with the fact that we don't need to tighten our belts. We can both tax and spend our way out of debt.

[Nessus]

If this is meant as a jab towards me, these people aren't austerity zombies if they actually raised taxes. I can't be assed to go see which taxes were raised, so the jury's out on whether they were actually thinking or braiding their asses shut, but there you go. I suppose gassing granny would be the humane policy?

[wiggin]

Major taxes that were raised in IL were income tax, both personal and corporate.

[Enoch the Red]

If this is meant as a jab towards me, these people aren't austerity zombies if they actually raised taxes. I can't be assed to go see which taxes were raised, so the jury's out on whether they were actually thinking or braiding their asses shut, but there you go. I suppose gassing granny would be the humane policy?

That's kind of the point. The state raised income taxes by 67% last year, but failed to significantly cut spending, and as a result are suffering a huge budget shortfall. I know it's much more fun to put your fingers in your ears and pretend like there's no possible way you could live beyond your means, but that's ignoring reality, and shortchanging future generations, (and by generations I mean the people who are still alive next year).

[Nessus]

That's kind of the point. The state raised income taxes by 67% last year, but failed to significantly cut spending, and as a result are suffering a huge budget shortfall. I know it's much more fun to put your fingers in your ears and pretend like there's no possible way you could live beyond your means, but that's ignoring reality, and shortchanging future generations, (and by generations I mean the people who are still alive next year).

I don't suppose it would be polite of me to bow out of this conversation just because it was opened so rudely? Ah well.

When I use the term "austerity zombies", it's meant to refer to the branch of Reaganomics which advocates slashing nearly all gov'ment spending; the tax raising portion of austerity is out of vogue these days, which is why Illinois' recent tax hikes were a pleasant surprise for me. To borrow from the recent presidential debates (ours, not yours), I'm not for the Greek model, at all. You seem to think I am, or at least expect me to defend the Greek model, given your post here. I will not do so, as much as I like playing devil's advocate from time to time.

If you want an actual in-depth economics discussion, I might oblige later tonight, but I really am afraid Loki will be around eventually and well we know what that'll mean.

If it is simply the term "austerity zombie" that has offended you, then I don't have much comfort to offer. And you may've wasted a good discussion for a pet peeve, but given the lack of activity in here to begin with, I'm sure there'll be plenty of responses in the long term.

[wiggin]

I don't think you're really right, Enoch. Illinois cut a decent amount last year (though clearly not as much as the revenue increases), and they're talking up more cuts for this year. It's not Greek-style austerity, but it's actually pretty serious cuts, especially when so many services are currently non-negotiable (e.g. Medicaid payments). Illinois is doing a decent job of finally taking responsibility for their budget issue, though I'd have preferred they slant more towards spending cuts than tax increases. The big issue left unresolved, though, is pensions. I'm not sure how they're going to fix that issue, and it's frankly outrageous that they made so many promises to their employees without having anywhere near enough money to pay for it.

My dad's a state employee and is very concerned with the whole pension mess (he's likely to retire within the next decade). I agree with him that it's unreasonable for the state to have habitually underfunded his pension fund and then decide to just cut his promised benefits rather than being responsible and paying what they promised, but from a macroeconomic perspective there doesn't seem to be much choice. We'll have to see what happens.

[Enoch the Red]

I don't think you're really right, Enoch. Illinois cut a decent amount last year (though clearly not as much as the revenue increases), and they're talking up more cuts for this year. It's not Greek-style austerity, but it's actually pretty serious cuts, especially when so many services are currently non-negotiable (e.g. Medicaid payments). Illinois is doing a decent job of finally taking responsibility for their budget issue, though I'd have preferred they slant more towards spending cuts than tax increases.

I would suppose it ends up being a matter of perspective. To say that Illinois cut a decent amount last year, while in the same breath acknowledging that it's currently and systemically underfunding its pension plan seems to be talking out of both sides of your mouth. I have a feeling they have gone after what the general public in Illinois would consider the budgetary low-hanging fruit, but I can't help but feel there are tremendous strides that have to be made if Illinois wants to do more than tread budgetary water.

Has Illinois made cuts that have been painful to the people of Illinois? Undoubtedly, but I'm not sure I buy the argument that there is no fat left to be trimmed. Looking at inflation adjusted numbers from 1995 to 2006, the budget has increased tremendously, without a corresponding increase in services. For instance, education alone has seen a general increase of over 25%. Now, whether or not that is due to unfunded federal mandates, rising costs, or bureaucratic inefficiencies, I think we can all agree that the quality of education for the average student probably hasn't seen a corresponding increase.

The big issue left unresolved, though, is pensions. I'm not sure how they're going to fix that issue, and it's frankly outrageous that they made so many promises to their employees without having anywhere near enough money to pay for it.

My dad's a state employee and is very concerned with the whole pension mess (he's likely to retire within the next decade). I agree with him that it's unreasonable for the state to have habitually underfunded his pension fund and then decide to just cut his promised benefits rather than being responsible and paying what they promised, but from a macroeconomic perspective there doesn't seem to be much choice. We'll have to see what happens.

Casting it as an unresolved issue may be putting it too mildly. The sword of Damocles might be more accurate.

If you want an actual in-depth economics discussion, I might oblige later tonight, but I really am afraid Loki will be around eventually and well we know what that'll mean.

I'd be fairly interested in a moire in-depth look at what you believe constitutes an austerity zombie, or, for that matter, what could be considered a government living beyond its means.

[GGT]

....I'd be fairly interested in a moire in-depth look at what you believe constitutes an austerity zombie, or, for that matter, what could be considered a government living beyond its means.

Best spelling mistake ever.



Hey, Enoch, show us any government, state or nation that's been living within its means, without any type of borrowing or rolling over its debt.

[Enoch the Red]

Best spelling mistake ever.



Hey, Enoch, show us any government, state or nation that's been living within its means, without any type of borrowing or rolling over its debt.

You're asking a staunchly limited government libertarian to show you where governments have been living within their means? I'm not going to go out of my way to admit and acknowledge my bias, but I think it should be pretty obvious here.

[RandBlade]

My dad's a state employee and is very concerned with the whole pension mess (he's likely to retire within the next decade). I agree with him that it's unreasonable for the state to have habitually underfunded his pension fund and then decide to just cut his promised benefits rather than being responsible and paying what they promised, but from a macroeconomic perspective there doesn't seem to be much choice. We'll have to see what happens.

On the one hand I'd agree that it's wrong to make commitments then change at the last minute.

However on a more general level and not specifically about your dad it's been known for decades that the commitments made to baby boomers in general were unsustainable. That they were unfunded and something would have to give. Arrangements and adjustments could and should have been made decades ago, but any party wanting to do that would not have been elected. That's wrong too unfortunately and we don't have a time machine.

Its rather harsh sounding to say so, but the rather difficult decisions that were put off for decades should not all fall on our generation.

[GGT]

You're asking a staunchly limited government libertarian to show you where governments have been living within their means? I'm not going to go out of my way to admit and acknowledge my bias, but I think it should be pretty obvious here.

Sure, your POV is obvious. Let's try this another way, then. Show us any private corporation that's "lived within its means"....treated its employee pension benefit contracts as paramount, even as important as CEO golden parachutes.

[wiggin]

I would suppose it ends up being a matter of perspective. To say that Illinois cut a decent amount last year, while in the same breath acknowledging that it's currently and systemically underfunding its pension plan seems to be talking out of both sides of your mouth. I have a feeling they have gone after what the general public in Illinois would consider the budgetary low-hanging fruit, but I can't help but feel there are tremendous strides that have to be made if Illinois wants to do more than tread budgetary water.

The pension problem was an issue long before the current crisis, and is not a current deficit problem so much as a future liability issue. I think it need to be dealt with, but wrt current general revenue and spending, they cut a decent amount. I don't doubt it was far from perfect, but it was painful and fairly serious in terms of budgetary blood-letting, and the immediate gratification of a better-balanced budget needs to be balanced against the economic effects of too-extreme austerity. I don't think they got the balance completely right, but they hardly raised taxes without any significant cuts to expenditures. To suggest otherwise is dishonest.

Has Illinois made cuts that have been painful to the people of Illinois? Undoubtedly, but I'm not sure I buy the argument that there is no fat left to be trimmed. Looking at inflation adjusted numbers from 1995 to 2006, the budget has increased tremendously, without a corresponding increase in services. For instance, education alone has seen a general increase of over 25%. Now, whether or not that is due to unfunded federal mandates, rising costs, or bureaucratic inefficiencies, I think we can all agree that the quality of education for the average student probably hasn't seen a corresponding increase.

I suspect the story is a very complicated one, and I have no doubt that Illinois has been spendthrift. That doesn't mean they didn't make some serious cuts recently. They did.

If you want, I'm acquainted with a state senator in IL - next time I see him I'll try to get the straight dope on how the budgetary process worked out in the last decade or so, and where the real drivers of cost growth were.

On the one hand I'd agree that it's wrong to make commitments then change at the last minute.

However on a more general level and not specifically about your dad it's been known for decades that the commitments made to baby boomers in general were unsustainable. That they were unfunded and something would have to give. Arrangements and adjustments could and should have been made decades ago, but any party wanting to do that would not have been elected. That's wrong too unfortunately and we don't have a time machine.

Its rather harsh sounding to say so, but the rather difficult decisions that were put off for decades should not all fall on our generation.

No, I agree with you (though I try not to say it too forcefully in front of my father). But I understand his frustration. As I understand it, they renegotiated their contract sometime in the 90s (he's a teacher) to contribute 9.4% of payrolls (a not unreasonable amount, and a big hit to his paycheck) into a retirement fund in exchange for the state promising to fund the remainder for a negotiated pension amount. So, he's been giving about a tenth of his (already small) paycheck to the state for investing in the expectation that he'd be rewarded by a fixed benefit pension when he retired. Not an unreasonable tradeoff, but the state has failed to fund its part of the bargain adequately, so the fund is some $40-odd billion short of its projected needs.

Put it this way: your company promises to run a retirement fund where they invest 10% of your paycheck in addition to their own contributions to fund a DB pension system. Instead of fulfilling their fiduciary responsibility, though, they skimp on their own contributions to fund company operations. Once it becomes clear the pension fund is screwed, instead of fessing up and making painful adjustments to company revenues, they tell you that your pension is going to be cut by, say, a third (that's the current proposal going around for those who choose the 'Tier II' reform to the TRS in Illinois). In any other world than the state, that would be gross malfeasance and punishable by the full weight of the law. Because they're the government, though, they can get away with it.

I realize that the size of the pension liability (for teachers and others) is simply too large to deal with without at least some form of benefit cuts. But it's grossly unfair, and we should all recognize that. The state has been raiding the pension fund for as long as I can remember.

[RandBlade]

No, I agree with you (though I try not to say it too forcefully in front of my father). But I understand his frustration. As I understand it, they renegotiated their contract sometime in the 90s (he's a teacher) to contribute 9.4% of payrolls (a not unreasonable amount, and a big hit to his paycheck) into a retirement fund in exchange for the state promising to fund the remainder for a negotiated pension amount. So, he's been giving about a tenth of his (already small) paycheck to the state for investing in the expectation that he'd be rewarded by a fixed benefit pension when he retired. Not an unreasonable tradeoff, but the state has failed to fund its part of the bargain adequately, so the fund is some $40-odd billion short of its projected needs.

Put it this way: your company promises to run a retirement fund where they invest 10% of your paycheck in addition to their own contributions to fund a DB pension system. Instead of fulfilling their fiduciary responsibility, though, they skimp on their own contributions to fund company operations. Once it becomes clear the pension fund is screwed, instead of fessing up and making painful adjustments to company revenues, they tell you that your pension is going to be cut by, say, a third (that's the current proposal going around for those who choose the 'Tier II' reform to the TRS in Illinois). In any other world than the state, that would be gross malfeasance and punishable by the full weight of the law. Because they're the government, though, they can get away with it.

I realize that the size of the pension liability (for teachers and others) is simply too large to deal with without at least some form of benefit cuts. But it's grossly unfair, and we should all recognize that. The state has been raiding the pension fund for as long as I can remember.

Once again I agree with you. It's wrong and the state has, not for the first time, acted disgracefully. Definitely in a manner that could result in incarceration let alone other penalties had any private organisation acted so neglectfully.

The problem is that at successive elections people have voted in favour of actions that cause such a mess.

However without sounding rude again, its sort of too late now for the baby boomers to do much to fix the situation. Starting to save now won't help, while on a state level the money's already been spent. Which is why I suspect (and I'm OK with) our generation will end up footing most (though not all) of the outstanding bill.

Which is why I think we need to ensure history doesn't repeat itself. I grew up in the 80s/90s and it is that which perhaps most of all leads to my fiscal conservativism. I don't expect to retire with any of the commitments supposedly expected. From the age of 17 when I got my first part time job I have never spent all of my pay. I expect to have to save personally to fund my own retirement, while paying through taxes to fund the generation before. Which is why I am also an austerity zombie and always have been. We need to have respect for those who can't help themselves any further. We need to get those who can, to do so. I would rather my taxes go to fill in the gaps for somebody like your father who reasonably expected his deal to be honoured, than those my age who don't work because then "I'll lose my benefits".

The longer we leave it to get to grips within living within our means - potentially living within less than our means to clear up the older generations debts - the harder it'll be.

[GGT]

wiggin, you're also describing what auto and airline workers experienced, when their employment contracts were minced to pieces. The CEOs walked away with million dollar golden parachutes that didn't reflect their management bungling. The shareholders were placed higher in value than any worker. It was lucrative to pay dividends, or buy back their own shares.

That's counter-intuitive in so many ways....and destructive when it means public teacher pensions.

[Enoch the Red]

The pension problem was an issue long before the current crisis, and is not a current deficit problem so much as a future liability issue. I think it need to be dealt with, but wrt current general revenue and spending, they cut a decent amount. I don't doubt it was far from perfect, but it was painful and fairly serious in terms of budgetary blood-letting, and the immediate gratification of a better-balanced budget needs to be balanced against the economic effects of too-extreme austerity. I don't think they got the balance completely right, but they hardly raised taxes without any significant cuts to expenditures. To suggest otherwise is dishonest.

I think that's a fair criticism of my original post. It would have been far more accurate of me to say they weren't austere enough.

I suspect the story is a very complicated one, and I have no doubt that Illinois has been spendthrift. That doesn't mean they didn't make some serious cuts recently. They did.

If you want, I'm acquainted with a state senator in IL - next time I see him I'll try to get the straight dope on how the budgetary process worked out in the last decade or so, and where the real drivers of cost growth were.

I think that would be a very interesting perspective to have.

Sure, your POV is obvious. Let's try this another way, then. Show us any private corporation that's "lived within its means"....treated its employee pension benefit contracts as paramount, even as important as CEO golden parachutes.

I suppose now is the time to also let you know that I'm not a big fan of corporate welfare either. But if you want me to show you a private corporation that has lived within its means then you're not really giving me a tall order. There are thousands and thousands of them the world over.

[GGT]

I suppose now is the time to also let you know that I'm not a big fan of corporate welfare either. But if you want me to show you a private corporation that has lived within its means then you're not really giving me a tall order. There are thousands and thousands of them the world over.

Really? How many of those private corps have employee pension benefits? I don't mean matching 401-k contributions....but true pension plans. The type where workers trade some of their earned income today, in exchange for contractual retirement income in the future. Almost like an annuity, with the company as trustee, or at least the CFO acting on behalf of the workers as much as the executives. That's practically non-existant today, but it's hardly "corporate welfare" either.

[RandBlade]

Defined benefit plans are stupid, there's no way to know your living within your means. It's a good thing they're not offered anymore. The state should stop offering them too then we wouldn't be in this mess.

[GGT]

Defined benefit plans are stupid, there's no way to know your living within your means. It's a good thing they're not offered anymore. The state should stop offering them too then we wouldn't be in this mess.

Says the guy with national healthcare?

It's a pretty crappy choice, when workers have to decide between NO benefits, healthcare that's unaffordable, and a retirement tied to the volatility of Wall Street.

[RandBlade]

Retirement tied to volatility isn't as volatile as you make out.

[GGT]

Retirement tied to volatility isn't as volatile as you make out.

What does that even mean?

Healthcare, housing, transportation, utilities, and food are all volatile costs. Especially to the near-retiree, and the retiree living on fixed income.

[Enoch the Red]

Really? How many of those private corps have employee pension benefits?

Not many? And that is a large part of them being able to spend within their means.

[GGT]

Not many? And that is a large part of them being able to spend within their means.

Well, sure...it's "easy" for any company to live within its budget and be productive, when it's just crunching numbers in/numbers out. Costs, revenues, profits. The US has lost plenty of manufacturing to Canada (whose tax structure provides healthcare to everyone, without burdening certain employers). Or to Mexico (with third world healthcare that's so cheap people cross borders exchanging quality for cost).

When corporations AND governments are engaging in zombie austerity.....cutting work and benefits, what's a person supposed to do? What's your plan?

[oldmunchkin]

Strange how this works out sometimes. I was just talking to a guy today who has worked for the state of Wyoming since he was 16 years old. The first 6 or 7 were part time and summers while he was in school, and after college he went to work for WDoT! He "retired" last spring from the road crew here in BFE. In Nov., he went back to work for the state as a "specialist" at the local Port of Entry!

We shall call my friend "Steve" to save typing! Steve is in his early 60's. He was forced to retire from the road crew because the state says you aren't fit to drive a snow plow after age 62! He was/is also a terrific saver, unlike so many here. He owns outright 2 houses and whothehellever knows how many cars. He put 2 step-kids through 4 years at UW. But, that "iron-clad" pension he has paid into for 45+ years isn't there now! Or at least not enough for him to live comfortably for him and his wife in their "declining" years! (Bear in mind that Wyoming actually has a surplus in the state pension fund, and is much more fiscally responsible than other states.) So, he now works a desk job, full time, while also tapping his road crew pension!

Point is, if this can happen to someone who has done all the right things, saved all his life, worked his ass off in weather that most of us want to curl up with a book during, and invested wisely, it can happen to anyone at any time!

Until other states, ones that are "in debt" start to follow the blueprint of states like Wyoming and don't incur debts that can't be paid immediately, the whole damned nation is gonna end up in the gutter! Whoa, wait...maybe it is and I just missed that part of the bullshit floating around the politicians speeches!

[Enoch the Red]

Well, sure...it's "easy" for any company to live within its budget and be productive, when it's just crunching numbers in/numbers out. Costs, revenues, profits. The US has lost plenty of manufacturing to Canada (whose tax structure provides healthcare to everyone, without burdening certain employers). Or to Mexico (with third world healthcare that's so cheap people cross borders exchanging quality for cost).

When corporations AND governments are engaging in zombie austerity.....cutting work and benefits, what's a person supposed to do? What's your plan?

Take care of themselves? Have their family take care of them? Rely on the kindness of strangers? I know it's radical idea not having someone who acts as wet nurse for you from the cradle to the grave, but it's never-the-less the right thing to do.

[GGT]

Take care of themselves? Have their family take care of them? Rely on the kindness of strangers? I know it's radical idea not having someone who acts as wet nurse for you from the cradle to the grave, but it's never-the-less the right thing to do.

I appreciate your sentiment and philosophy, but in the 21st century it's just not possible....for everyone to "take care" of themselves, or rely on family and/or charity to do that. Do you know the REAL costs of a hip replacement, or open heart surgery? There aren't enough charities or churches to cover them. Any idea how much Rehab or Long Term Care costs? How about Special Education for kids with special needs? Neither private Insurance, employer-based insurance, nor government programs can manage the costs.

Sorry, but it's not as simple as it was in earlier days. Our modern society, with all its high-tech possibilities and expectations makes it vastly different. You can't expect one person (usually a woman) to stay home and care for the kids and elders, using homeopathic remedies or whatever. Especially not when most families now rely on two incomes just to make ends meet under "normal" circumstances. People don't expect to die at the age of 50 anymore. And why should they?

[Aimless]

What the hell is a wet nurse?

[GGT]

What the hell is a wet nurse?

A "wet nurse" is a lactating woman who isn't related to the child she's breastfeeding. Historically, wet nurses were poor women who were 'retained' by wealthier women who didn't want to breastfeed their own babies. As you know, a woman can keep lactating and producing milk simply by having babies suckle at their teat. Like a cow.

[oldmunchkin]

Wow! You said that a lot nicer than I could have! I was thinking Roots and going from there!

[Aimless]

A "wet nurse" is a lactating woman who isn't related to the child she's breastfeeding. Historically, wet nurses were poor women who were 'retained' by wealthier women who didn't want to breastfeed their own babies. As you know, a woman can keep lactating and producing milk simply by having babies suckle at their teat. Like a cow.

But how the hell is that very much like having a social security net?? Is this kinda like how buying local honey is racist??

[oldmunchkin]

But how the hell is that very much like having a social security net?? Is this kinda like how buying local honey is racist??

It's not so much a SS net, it's more of a welfare net. Basically means you never learn to stand on your own two feet!

EDIT: Buying local honey is racist?