Sunday, November 20, 2011

Illinois Debt Crisis / Why No Protests?

Wisconsin has been beset by major protests and a campaign to recall their governor, yet Illinois has remained virtually free from protests. This is puzzling, because according to Report on Illinois Debt, we are in far worse fiscal shape than Wisconsin. In fact our per capita debt level is three times greater than Wisconsin's. Illinois has the dubious record of: having the worst credit rating, the most underfunded pension system and the third worst business climate of all the states of the union and $8 billion in unpaid bills! This has resulted in a net exodus of businesses, tax payers and jobs. Chicago alone owes $63 billion and when we calculate the total debt and unfunded liabilities of the cities, counties and state, we are on par with Greece and Portugal! And unless dramatic measures are taken, we will continue down the classic debt spiral path, in which an ever greater portion of our budget will go towards servicing our debt, prompting weary lenders to raise their interest rates. Ultimately I believe that this dire situation has not promoted protests for two reasons: At least in the short run, vocal special interests, such as Illinois's public sector unions benefit from the status quo. And the simple narrative of good (public unions and students) vs bad (Wisconsin's Governor Scott Walker) are much easier to comprehend for the economically illiterate than issues of unfunded liabilities and capital outflows. 

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