David Sirota: “Jon Bauman cites no inaccuracies in my reporting.”

– David Sirota writes for International Business Times. He has been doggedly on the story of the threats to public employee pensions. Following my posting of former Illinois Teacher Retirement System Executive Director Jon Bauman’s criticism of Sirota’s reporting, Sirota Tweeted me these comments:

He (Bauman) cites no inaccuracy – he just is forwarding his own interpretation.

Sirota adds: Here’s the section of IL law exempting Wall St firms from the state’s Freedom of Information Act:

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Then Sirota says, “Here’s what was in our story – 100% accurate.”

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And finally, “Here’s more of what we published – again, 100% accurate.”

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David Sirota’s latest entire report can be found here.

Pension theft proving toxic to Illinois Democrats.

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Republican Bruce Rauner holds a 12 point lead over Democrat Pat Squeezy Quinn in the polls.

Illinois’ Attorney General Lisa Madigan has always been thought of as unbeatable.

Daughter of State Democratic Party Chairman and Speaker of the House Michael Madigan, Lisa was considered a possible challenger to Quinn or a lock on a future Senate seat.

But Democrat’s assault on public employee pensions is proving toxic. As is any relationship to the one who insisted on Senate Bill 1, Michael Madigan.

The same polls now show the once popular Attorney General below a 50% approval rating.

Always a dangerous place to be 3 months before an election.

The same poll shows support for honoring pension promises is overwhelming.

One question asked whether the person surveyed would be more or less likely to vote for someone whose “Father is Illinois Speaker of the House and as Attorney General has rarely pursued political corruption cases.”

Perhaps not surprisingly, 60 percent said that would make them less likely or not likely at all to vote for the candidate, and only 13 percent said it would make them somewhat more likely to vote for her.

As for pensions?

Illinois is deeply in debt which of the following do you believe is most responsible for the hugh debt: Public employee Pensions; state tax and fee increases; Political corruption or failed political leadership?

23% Public employee Pensions
11% State Tax/Fee increases
29% Political corruption
29% Failed political leadership
8% Don’t Know

Only one quarter of the voters that were asked blamed pensions. Nearly 70% blamed unfair taxes, corruption and a failure of leadership.

Do you support pension reform that would include a reduction in benefits to public employees?
24% Yes
70% No
6% Don’t Know

Old and invisible in the NEA.

Lillian B. Rubin

Lillian Rubin died last month at the age of 90.

The psychologist Lillian Rubin died last month at the age of 90.

Rubin wrote about women, the relationships between mothers and daughters and, more recently, about ageism.

I don’t know about you, but the chirpy tales that dominate the public discussion about aging — you know, the ones that tell us that age is just a state of mind, that “60 is the new 40″ and “80 the new 60″ — irritate me. What’s next: 100 as the new middle age?

While I left the NEA RA in Denver with a mostly positive view, I also left with a strong feeling that retired educators were nearly invisible.

Sure. Both outgoing President Dennis Van Roekel came and addressed the Retired Conference. As did incoming President Lily Eskelsen Garcia.

But nobody really addressed the nationwide attack on public employee pensions from the main stage of the Denver Convention Center.

No NBI or legislative statement that acknowledged the worsening situation facing retired education employees and our pensions. Or did I doze during the discussion of 107 NBIs and miss it?

I thought about offering one up. But I knew that even if it passed it would remain words on a page if it didn’t have a movement from below.

Praise must be given to the Retired members from my Illinois delegation and to IEA Retired Chair Janet Kilgus who proposed a legislative amendment that addressed WEP/GPO. Those are the federal laws that deny Social Security benefits to public employees. Even to those who have paid into Social Security. It was endorsed by the Illinois Caucus, NEA Retired and passed by the NEA RA.

But if not for Illinois, NEA retirees would have been invisible at the RA.

And even in Illinois.

Out of almost 700 delegates, nine slots were given over to IEA Retired, even as our membership has grown to over 10,000.

By the way, retired membership in the NEA is the single area of membership growth.

As our membership increases, our budget at the national level has been cut.

In Illinois we have only one seat on the state’s Board of Directors.

At IPACE endorsement hearings, our chapters’ votes count for less then everybody else’s.

Of course, the attitude of the NEA and the IEA towards their older, retired members reflects the same ageist attitude of others in our society.

Have I mentioned the local progressive politician who used a walker as a symbol of issues he supported that were of concern to older voters? And he was the candidate I supported.

Even within the organizations of progressive educators and reform labor groups, we are invisible, not given a panel, a workshop or a spot among the speakers to address the nation’s massive pension theft. At best we are given 45 minutes late Sunday afternoon.

Perhaps we should expect more from the union we have been members of for over 35 years.

But that may be a fool’s expectation.

Instead of an expectation, we need to make it a demand.

“We don’t have the votes yet.” – Nekritz. Keep calling those legislators.

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Queen Pension Buster Democratic Party Senator Elaine Nekritz.

When Illinois’ Democratic Boss Michael Madigan put his pension busting bills up for a vote on Thursday, none could get more than five votes. Sixty votes are needed to pass a bill in the House.

Republicans refused to vote at all.

Queen Pension Buster Democrat Elaine Nekritz admitted there is no legislative support for the bill she and House GOP leader Tom Cross put together.

Cross said lawmakers should instead consider a bipartisan plan unveiled by House members this week. Under that proposal, annual cost-of-living increases would apply to only the first $25,000 of pensions, or $20,000 for those who also receive Social Security. Retirement ages would not rise for people 46 and older, but would be gradually increased for those 34 and younger. Employee contributions would rise by 1 percentage point the first year, and another 1 percentage point the second year.

But Rep. Elaine Nekritz, a Northbrook Democrat who days ago was promoting the bill she and Cross put together, said Thursday that the proposal lacks enough support to pass.

However, on no account should anyone think we are okay.

The biggest threat to public employee pensions remains Senate President John Cullerton’s SB001.

His bill creates a forced choice between retiree access to health care or the guaranteed COLA increase.

Cullerton’s bill is an attempt to circumvent the pension protection clause of the Illinois constitution which says that public employee benefits cannot be “diminished or impaired.”

Cullerton believes that by offering two shitty choices the bill will withstand a court challenge.

By the way. Thanks to all who signed the petition calling on the legislature to abide by the constitution. This weekend the petition reached 5,000 signatures. The campaign was a grass-roots effort, which was perceived as hostile by the leaders of the Illinois Education Association.

Go figure.

To me, it is grass-roots efforts like the petition, legislative visits, calls, emails and all other efforts by those of us at street level that will win this fight.

Glen Brown will deliver the signatures to legislators.

Increasing revenue, not cutting services and promised benefits. An idea so crazy it just might work.

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As the Illinois General Assembly starts a new session, the level of frustration among my retired teacher friends increases.

As much as those in the corporate Illinois Policy Institute and the Civic Committee want to paint the state’s public pensioners as greedy and fat (Hey. I’m working out four days a week), it just ain’t so.

But to many of my colleagues it seems as if the train is unstoppable and the politicians will pass a COLA cut. It will go to the courts, of course. And even though we think and hope the courts will find that a cut to COLA or other benefits violates the pension protection clause of the Illinois Constitution, who can be sure?

In the meantime the Teacher Retirement System has already sent an email to all TRS members informing us that if the General Assembly passes a pension bomb that impacts our COLA, our benefits will be frozen until the courts decide.

This is what causes frustration and fear among retired teachers and other state employees who planned and budgeted carefully.

We pension activists have repeated the mantra: This is a revenue problem, not a pension problem.

It seemed like it fell on deaf ears.

But maybe not.

Today the influential Springfield Journal Register called on Governor Quinn to avoid the state’s version of the fiscal cliff and called for a graduated income tax.

I reprint the editorial in full:

The numbers in Gov. Pat Quinn’s three-year budget projection are stark and a reminder of Illinois’ own impending fiscal cliff, starting in 2015.

The 2011 income tax increase that raised the individual rate from 3 percent to 5 percent expires at the end of 2014, which is midway through the 2015 fiscal year. That means the budget lawmakers are supposed to pass by June of this year, FY2014, will be the last containing a full year of the increased revenue.

The governor’s budget office projects that state sources of revenue (the corporate and individual income taxes, the sales taxes and other miscellaneous sources) will dip from $29 billion in FY2014, to $27 billion in FY2015 to $24.8 billion in FY2016.

That means nearly $4 billion more in cuts at a time when health-care costs and required pension payments continue to rise and education and health care have already been whacked.

There was chatter at the Statehouse that Quinn would nudge the legislature to make the income tax increase permanent during the recent lame-duck session, but such an effort didn’t materialize after Senate President John Cullerton iced the idea, saying whether to extend the increase is an issue for the 2014 election.

It wouldn’t have to be if Quinn and the legislature decided to tackle reforming the state’s tax system before then.

Illinois’ tax structure is an archaic relic of the economy of 30 years ago. The state sales tax doesn’t tax the growing service sector. It doesn’t effectively tax online sales. Both the sales tax and our flat income tax disproportionately hit the poor and middle class. Two-thirds of the state’s corporations don’t pay the corporate income tax, partly because of special treatment afforded them in the tax code.

Indiana, the panacea for pro-business politicians looking for a model state for other policy reforms, has a modern tax structure. It applies its sales tax to both retirement income and many services that Illinois does not. The Senate Democrats analyzed Indiana’s tax structure and determined that if Illinois had the same framework — before the income tax increase — the state would have $5.6 billion more in revenue. Illinois raised $6 billion to $7 billion by raising its income tax.

For his entire political career, Quinn has been for a progressive income tax, but in his four years as governor, he has never offered a serious proposal to institute one. His 2010 primary opponent, Dan Hynes, did offer a plan, one that would have spared 97 percent of taxpayers a tax increase, taxed some services and raised $5.5 billion in new revenue.

There’s a grand tradition of politicians stealing their opponents’ ideas after the election. Former Republican Gov. Jim Edgar famously swiped Democrat Dawn Clark Netsch’s plan to overhaul school funding but couldn’t get it through the General Assembly.

Quinn ought to say today he won’t seek to extend the temporary income tax increase when it expires.

The governor should dust off Hynes’ plan and make it his own. He should urge legislative Democrats, who now have supermajorities in both chambers and can place a constitutional amendment on the ballot without Republican support, to flex their political muscles. Quinn ought to ask the legislature to send voters an amendment in 2014 that would allow for a progressive income tax and then run alongside it as a permanent budget fix. He ought to couple that with a comprehensive plan to reform the state’s tax structure from top to bottom.

Quinn, who has indicated he plans to run again, continues to have low approval ratings. The sharks are circling. Recent weeks have brought rumblings from Chicago that former White House chief of staff Bill Daley is serious this time about running for the Democratic nomination for governor. Attorney General Lisa Madigan might also jump into the fray.

Quinn could get a jump on both by offering a fresh idea and some hope that Illinois’ fiscal state won’t continue to circle the drain.

The governor talks a lot about the need for bold solutions to problems. This is one. And it happens to be good politics, too.

Can it be that they are listening?

The inbox. Ralph Martire in Crain’s. A pension fix.

By: Ralph Martire
January 16, 2013

There was much wailing and gnashing of teeth when the recent lame-duck session in Springfield ended.

Why? No action was taken to address the $95 billion in debt owed to the state’s five pension systems.

This leaves the systems with just 40 percent of the funding they should have currently, which is well below the 80 percent generally deemed healthy for public systems. Good government groups and editorial boards alikelamented the Legislature’s failure to pass yet another proposal to reduce that ginormous obligation — this time by cutting almost $30 billion in benefits earned by current workers and retirees.

But rather than being dismayed, folks should be relieved. Here’s why.

A problem really can’t be solved unless the proposed solution addresses its true cause. And the proposal that failed to pass during the lame-duck session — like every other proposal introduced to date on this subject — focused its solution on benefit cuts and thereby failed to deal with this particular problem’s true cause.

See, three factors have contributed to the creation of this unfunded liability. The first two are items inherent to the pension systems themselves, like benefit levels, salary increases and actuarial assumptions; and investment losses suffered during the Great Recession. But if those were the only factors creating the unfunded liability, the systems would be around 70 percent funded today, meaning no crisis.

The vast majority of the unfunded liability is made up of the third contributing factor: debt. Indeed, for more than 40 years. the state used the pension systems like a credit card, borrowing against what it owed them to cover the cost of providing current services, which effectively allowed constituents to consume public services without having to pay the full cost thereof in taxes.

This irresponsible fiscal practice became such a crutch that it was codified into law in 1994 (P.A. 88-0593). That act implemented such aggressive borrowing against pension contributions to fund services that it grew the unfunded liability by more than 350 percent from 1995 to 2010 — by design. Worse, the repayment schedule it created was so back-loaded that it resembles a ski slope, with payments jumping at annual rates no fiscal system could accommodate. Want proof? This year the total pension payment under the ramp is $5.1 billion — more than $3.5 billion of which is debt service. By 2045, that annual payment is scheduled to exceed $17 billion, with all growth being debt service.

It is this unattainable, unaffordable repayment schedule that is straining the state’s fiscal system — not pension benefits and not losses from the Great Recession. And no matter how much benefits are cut, that debt service will grow at unaffordable rates. Which means decision-makers can’t solve this problem without re-amortizing the debt.

Given that the current repayment schedule is a complete legal fiction — a creature of statute that doesn’t have any actuarial basis — making this change is relatively easy. Simply re-amortizing $85 billion of the unfunded liability into flat, annual debt payments of around $6.9 billion each through 2057 does the trick. After inflation, this new, flat, annual payment structure creates a financial obligation for the state that decreases in real terms over time, in place of the dramatically increasing structure under current law. Moreover, because some principal would be front- rather than back-loaded, this re-amortization would cost taxpayers $35 billion less than current law.

One last thing — it actually solves the problem by dealing with its cause.

 

 

There is no pension benefit crisis.

To paraphrase Nobel winning economist and NY Times columnist in his piece this morning, “Let’s get this straight. Illinois is not facing a pension benefit crisis.”

There is a state funding crisis. The political leaders of this state, both Republicans and Democrats, refuse to address the fact that they can’t pay their bills by taxing the rich at the same rate that they tax the poor.

Taxing the poor is pointless. They have no money. That’s the definition of poor. The working class (what we now call the “middle class,” although somehow I don’t feel in the middle) have little in the way of discretionary dollars. Corporations and the state’s 1%? That’s where the money is, folks.

We now have the situation where Bizarro World Democrats and a handful of Republicans are proposing their latest version of Squeezy the pension killing cobra: HB6258.

This bill would:

  • Increase the retirement age of public employees
  • Decrease the pay of public employees
  • Reduce the Cost of Living Adjustment (COLA) for public employees

In his blog piece today, Glen Brown discusses the differences between Rhode Island and Illinois.

Rhode Island is also going through the process of attacking public employee pensions. Glen is exactly right that a key difference between Rhode Island and Illinois is that Rhode Island has no constitutional language protecting public employee pensions like we do in Illinois.

This is an important fact. It raises the issue of whether HB6258, or any bill like it, can pass constitutional muster in the courts. And it will end up in court if passed.

When you go to Springfield on January 3rd, this is an important point to bring up with your representatives.

They are sworn to uphold the constitution, after all. They frequently need to be reminded of this.

But in addition there are two more issues.

1. Nothing in these proposals will change the fundamental problem of state funding. Cutting a senior’s cost of living adjustment to their pension won’t pay the state’s bills.

2. Becoming Bizarro World Democrats will have a political cost attached. It has already likely doomed any Democrats’ chances of winning the governorship next time (unless the state’s Republicans are totally clueless and run a Tea Party candidate again).

For some politicians, upholding the constitution is not enough. They need to be reminded that they need to get elected next time or get a real job.

More Illinois Bizarro World pension news. Where up is down, black is white and Democrats are Republicans.

bizarro-world

Every day brings more evidence that Bizarro World is more than a sixties comic book. It is the state we live in.

Recall that in Bizarro World everything is the opposite of the real world.

In the real world Democrats appear to be the defenders of social programs, Social Security and Medicare. In the current over-the-cliff budget battle in Washington, the GOP are opposed to taxing the rich. The GOP calls for cuts in social programs.

But here in Bizarro World, Democrats go after public employee pensions and Republicans defend them.

Take former Republican Governor Jim Edgar.

Former Gov. Jim Edgar says the corporate titans who are pressing state officials to fix Illinois’ deep financial problems need to temper their criticism of the pensions received by government employees.

Edgar, a Republican who has served on some corporate boards, said he thinks some of the wealthy businessmen who’ve been pushing for a pension overhaul don’t understand that state workers don’t have the same types of compensation packages as those in private business.

“I think people in the private sector don’t understand there are some limitations in the public sector they didn’t have,” Edgar said. “I see what bonuses they get and things state employees don’t have.”

“We never had profit sharing. We never had stock options. We never had bonuses. All we really had was our retirement,” Edgar said. “They ought to be a little more understanding and not quite as harsh on state workers as they’ve been.”

The former governor’s comments came as Gov. Pat Quinn continues to push for pension legislation designed to begin addressing an unfunded liability of $94 billion within the state’s five employee retirement systems.

He adds:

“I know a lot of retirees are very scared,” Edgar said. “Some of them are very low income. They’ve been promised this. They had worked for 30 years understanding this is what they are going to get. That has caused a lot of fear.”

“There is no silver bullet on this thing. There is no quick fix,” Edgar said. “It’s going to take a long time, I think, for this to get resolved.”

Leading, led or standing still? Time is running short if we’re going to stop the pension deal.

Take out your calendars. Or open it on your iPad.

Here is the schedule:

The House and Senate are to convene Tuesday through Thursday of this week, and again December 4-6. This is the veto session. But that doesn’t mean they only meet to override Quinn’s veto of passed bills.

They might legalize marijuana for medical purposes. More casino gambling. Marriage equality. Maybe pensions. Maybe not.

A 3/5ths vote (71) in the Illinois House is required to pass anything. That means Republican votes are needed along with near unanimity among Democrats.

Then after January 1st they will have the lame duck session. Or the lame dick session as I called it on Ken Davis’ Chicago Newsroom.

Bills will require only a simple majority in both houses to pass. That includes the lame ducks (or dicks) who won’t be returning. It makes legislating look more like a game of Bananagrams then a calm deliberative process.

Public employee pensions will be targeted.

Maybe.

Elaine Nekritz says not until June.

Would you bet your retirement years on what Elaine Nekritz says?

January 9th.

That’s when the new General Assembly is called into session. Jim Broadway says,

On January 9 the 98th General Assembly convenes with veto-proof Democrat majorities in both chambers. That’s when controversial legislation featuring sharp disagreement between the two parties – legislation such as the pension reform long expected – will come to a vote.

Broadway seems to be on a different calendar then Nekritz. Nekritz wants you to sleep. Broadway wants your eyes wide open. Bet on Broadway’s schedule.

The question is which calendar is IEA President Cinda Klickna using?

Blogger Glen Brown called on the IEA and others public employees to mobilize the nearly 700,000 members of the state’s public employee pensions in a mass action to demand that the law be followed, the constitution obeyed and the covenant made with the public servants of the state be honored.

Klickna says that she’s on it.

Something is being planned, she says.

Great!

What something?

Who knows about it?

Have the busses been reserved? Or is this another get there on your own, like last August.

I’m a member of IEA-Retired. Remember. I’m the one that got assigned to the non-existent Skokie chapter. Maybe that’s why I didn’t get a notice about the something we’re going to do.

Does this sound snarky?

Hey. This is November 26th. The shit potentially hits the fan starting tomorrow.

And there has been no word, mockingbird.

A reader of this blog says that if our union leadership won’t do it, we should do it ourselves.

But I say, “Hell no.” Hold our union leadership’s feet to the fire. This is the moment to see how our dues are being used. Fish or cut bait. Show and tell. Lead or get out of the way. Don’t stand in the doorway. Don’t block up the halls. It is we who gets hurt if it is she who has stalled.

Did Bob Dylan say that?

Contact cinda.klickna@ieanea.org

Tell her you’re ready to go. To fight. We can see the whites of their eyes.

A friend writes:

Fred.  The sky is a gun metal gray and the temperature is hovering at about 38 degrees.  The wind has a bit of dampness in it, and holiday shoppers are careening into one another on the streets.  Several homes still smolder after aborted deep-fried turkey schemes, and Madigan et. al. are once again nesting in the Capitol – Nekritz says possibly no deals until June 30.   Quinn says deal must be done by Jan 8.  

Yes, The Riddler has once again proved that she’s out ahead of all of us in less than a sentence.  

January is only a month away and we’ll need some organizational movement early to get this to be for real.  I wonder what CTU did to organize the rallies they held?  I wonder if Cinda is in contact with those people?  I wonder if Montgomery or Bayer or others now aware of Glen’s call to action know of Cinda’s response?

Planning?

Permits?
Buses?
Meeting points for various unions?
March times?  
Street logistics?
Marketing/communication?
Speakers?
National Exposure?
Generating urgency?
Identification of legislators to pressure?

Hey guys, the clock is ticking.

Illinois Democrats are digging a deep hole. Didn’t they learn anything from the Republican debacle?

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Nekritz went back to eating her salad.

On November 6th things looked pretty sweet for Democrats.

In Illinois too.

After all, there were several high-profile congressional races that the Democrats won. A couple were really unexpected – like in the 10th CD where Republican Robert Dold had a huge money advantage, but lost to centrist Democrat Brad Schneider.

And the Democrats won veto proof majorities in the state house and senate.

But scratch the surface, look a little deeper and there is trouble ahead.

Back before the election I posted about a conversation I had with Representative Elaine Nekrtiz, Democrat from the north suburban 57th house district.

This was at a luncheon of the North Lakeshore unit of the Illinois Retired Teachers Association.

I suggested to Representative Nekritz that the anti-labor stand of the Governor and the leading role of the state’s Democrats in going after public employee pensions would cause a rupture in the traditional alliance between labor unions and Democrats in the state. I further suggested that if the Republicans nominated a non-Tea Party moderate in the Jim Edgar mold, it would be difficult for a Democrat to hold on to the governor’s mansion.

Certainly not Pat Quinn.

Nekritz shrugged and went back to eating her salad.

She can’t say I didn’t warn her.

The defeat of the Constitutional Amendment gives a hint of what I called a stealth vote when I was on Ken Davis’ Chicago Newsroom last week.

With modest union effort and a grassroots campaign, the amendment  garnered 1.7 million no votes. Given that the wording of the amendment as it appeared on the ballot essentially urged a yes vote, the no votes constituted an informed intentional voting bloc. And those voters are spread out in every legislative district in the state.

Pat Quinn’s unilateral termination of the AFSCME contract with state employees sealed the deal on his reelection. It won’t happen.

And there is more.

Read Glen Brown’s recent post on the theft of public employee pensions.

There won’t be a union voter in Illinois who won’t know about and be ready to retaliate over this attempt at grand theft robbery. Whether the theft is successful or not.

Illiinois Democrats should take no comfort in the November 6th’s wins.

They were mostly the result of Madigan-mandering state and congressional districts – not because of popular support. Without the hugely popular President Obama at the top of the Illinois ticket things will look very different in 2014.

Unless, of course, the Republicans nominate another Tea Party fool.