This is the second post in a week on Chicago’s epic financial train wreck. That’s a lot of attention and it probably won’t happen again, given the target-rich world we live in.
But, jeeze, talk about not learning from past mistakes.
This latest chapter begins with the Chicago mayoral race and the two candidates’ stances on the Jussie Smollett controversy – one is on his side, the other on that of the Chicago PD.
That’s interesting but otherwise irrelevant.
The race is between two African American women, one gay and the other presumably not, one from deep in the local political machine, the other from outside it. So far so good. The tent is getting bigger, more categories of people can aspire to high office, go Chicago.
But this is also apparently irrelevant, because when it comes to saving the city from pension-driven financial collapse, well, here’s a snippet from today’s Wall Street Journal:
There’s little daylight between the two Democrats on policy. Both support higher taxes to pay for pensions, though they differ on which levies to increase. Ms. Lightfoot this week endorsed a value-added tax on legal and accounting services. She’s also proposed an increase in the city hotel tax—already among the highest in the nation—and a real-estate transfer tax. Ms. Preckwinkle is supporting Democratic Gov. J.B. Pritzker’s proposal for a graduated state income tax. Both oppose modifying worker pensions and want to impose a moratorium on charter schools.
Trailing in the polls, Ms. Preckwinkle and her supporters have resorted to weaponizing identity politics. Last weekend U.S. Rep. Bobby Rush smeared Ms. Lightfoot at a Preckwinkle rally as a killer of black people and champion of police because she has served on the Chicago Police Board and Police Accountability Task Force. “Everyone who votes for Lori, the blood of the next young black man or black woman who is killed by the police is on your hands,” Mr. Rush declared.
Ms. Preckwinkle declined to denounce the comment. She may believe fomenting racial discord will help her turn out the vote in the city’s heavily black South and West sides, where she performed well during the primary. Thus, Ms. Preckwinkle may not want to be seen supporting the police investigation of Mr. Smollett, who claims to be innocent and a victim of racial discrimination.
The Journal reporter concludes:
“Neither candidate appears likely to arrest the city’s spiral into insolvency. But stopping its descent into cynicism and racial grievance may be an equal imperative.”
Wrong, WSJ. The financial spiral is everything. Chicago is experiencing an already catastrophic rate of out-migration, as people who can afford to (a.k.a. the tax base) move to less rapacious places. And the two mayoral candidates both oppose scaling back union benefits while proposing much higher taxes and more stringent regulations, which will turbo-charge the descent into financial chaos.
And this, recall from the post that appeared here a few days ago, comes as both Chicago and its host state Illinois begin massive and sustained borrowing campaigns to cover existing shortfalls.
The conclusion? They can only behave this way in a financial market that assumes no matter how badly they mess up, national taxpayers will be coerced into saving them and their investors. Look up “moral hazard” in the dictionary and you might find a picture of the Illinois state seal.