As I’m thinking of it, I’m a little worried about my hometown. As I’m looking at the policies President Trump is suggesting and the current state of the State of Illinois, Chicago might enter a financial cramp. Here’s what I see:
[ul]
[li]Trump is threatening to cut federal funding to “sanctuary cities”, on which Chicago is one (and Rahm Emanuel is refusing to comply). Judging from how Trump keeps most of his promises (most, not all), the city is going to lose funding in a few weeks or months.[/li][li]Trump’s “skinny budget” would cut funding to a lot of programs, hitting Chicago transit among others (unfortunately I don’t have a graph to list what’s getting cut, but I know it’s everything except for national defense.)[/li][li]State-side, it’s unlikely the State of Illinois will pass a budget and get state funding back on track (not with the political gridlock stateside), if by some miracle this time, that Rauner gets re-elected in 2018, there would probably be no state funding until 2022.[/li][/ul]
For years the city has not kept its financial security in check, and the loss of state and federal funding would create a massive cramp in the city. Now the questions:
[LIST=4]
[li]What do you think would happen to the city if the city was relying on city-side funding only? You can only raise taxes so high until people start moving to Indiana, Wisconsin, Iowa, Missouri or Texas, and you can only keep the city running until you reach the point of default.[/li][li]Let’s assume the city reaches the point of default and is forced to asked for a bailout. Would the city be granted one?[/li][li]Let’s assume the worst-case, all is lost, the bailout offer was denied (or not enough) and the city defaults. Would the city be quickly barren by then, or would we be alright anyways?[/li][li]Lastly, would the city rise up from the ashes or stay forever a small town?[/li][/LIST]
Done with this topic, now I want to hear the opinions.
According to an article, downtown Detroit is fine, and according to a commenter in the same article, the neighborhoods are not. That’s kinda what’s occurring to Chicago now- my father mentioned as we were driving down the Dan Ryan that the houses that once lined the Ryan are vanishing quickly (he lived in Chicago since 1950), so my guess is that Chicago is quietly declining in some neighborhoods.
Course Michigan’s financial state is slightly better than ours (Illinois is a BBB rating according to Fitch, AA for Michigan), according to a California treasurer’s handy list. Hell, if anything, both Chicago and Illinois might collapse together and then what?
Time will tell on this one:
From OP
“Trump is threatening to cut federal funding to “sanctuary cities”, on which Chicago is one (and Rahm Emanuel is refusing to comply).”
Seattle is going to file suit against Trump over the constitutionality of this. I wonder if other cities will, as well.
ultimate11 says what? Seriously dude, judging by Trump’s record there is nothing to worry about. I however do not think that one can assume he’ll bumble this as much as he bumbles everything else.
Chicago (and more so the state of Illinois) is in dire financial straits, unfunded pensions, downgraded bond rating, and more, but this Trump bit is the least of their worries.
Emanuel inherited a financial trainwreck from Daley; under Daley, the city sold off revenue-generating assets (like the parking meters) to private companies on long-term contracts for one-time payments, then immediately spent all of that money, supporting the illusion that the city’s book were sound. The city, and the state, both face enormous pension obligations, and the courts have struck down attempts to restructure those obligations.
Meanwhile, the governor (who was a businessman, not a politician, before his election) and the state senate have been in a stare-down over the state budget since he took office; the state has been operating without an actual budget for nearly 2 years.
I don’t think the defunding of sanctuary cities will survive the courts. Even if Congress passed a law defunding them, I don’t believe that would survive the courts, either. The Supreme Court has already ruled that the Federal government has limitations on using funding to compel states to do certain things. Trump’s proposals go far, far beyond the ruling in that case.
I don’t think Trump’s proposals to drastically cut domestic programs are going anywhere. It’s probably realistic to think that domestic programs will be either frozen or have smaller cuts made to them, but not the meat cleaver that Trump has proposed.
SD vs Dole seemed to make it pretty clear that legislation by pursestrings was legal. And how can the courts force the Feds to fund cities? Isn’t there a supremacy clause or something?
I doubt Chicago is any worse off than New York City was in the early-mid 1970s, It was so bad that police (forbidden by law and contract to go on strike) had “sick outs” or “blue flu” to protest pay and working conditions. This was the era that spawned the trope of NYC being an urban dystopia, such as the Death Wish movies.
“Seattle is asking a federal court to declare that it’s not breaking the law by refusing to join the Trump administration’s effort to strictly enforce federal immigration laws. In its lawsuit, Seattle is also asking a judge to rule on whether the executive branch is in breach of the 10th Amendment, which limits the government’s power to commandeer state entities to enforce federal regulations. And the city says the Trump administration is violating the Constitution’s Spending Clause by placing coercive conditions on the funding…” http://www.npr.org/sections/thetwo-way/2017/03/30/522030259/seattle-sues-trump-administration-over-sanctuary-city-threat
I can see the 10th Amendment argument but the courts are hesitant to acknowledge our Federalist system. As for Tax & Spend, no chance. Congress (de facto) can pretty much do what they want. Washington’s best chance is that the Courts want to rule that anything Trump does is unconstitutional.
The court ruled that funding limitations cannot be “coercive.” Congress threatened states with a 5% reduction to highway funds if they didn’t adopt a 21 year old drinking age, and that reduction was not found to be coersive.
Do you not think a threat to pull 100% of Federal funding is coersive?
People like paying less in taxes. Businesses like paying less in taxes. When taxes are too high in one place, people move to other places. You cannot fund endless enormous government by continually raising taxes on the rich or on anyone, because people can respond by moving out. Taxpayers moved out of Detroit, and it ended up going bankrupt. That will happen to Chicago as well. Can’t say exactly when, but it will happen.
Consider a few facts:
Chicago Public Schools managed to sell $725 million in bonds. Only after Mayor Rahm Emanuel hustled to New York to make a personal pitch to buyers. Only after CPS agreed to pay punishing interest rates of up to 8.5 percent. Only after CPS scaled down its original bid to sell close to $1.2 billion in bonds. … CPS will pay 8.5 percent interest at a time when the federal funds rate is bouncing barely above 0 percent. That’s simply staggering. … CPS expects to pay $538 million in debt service this year on the total of $6.2 billion it owed before this bond sale. This school year, that debt service will divert about $1,370 for every student to the district’s lenders. http://www.chicagotribune.com/news/opinion/editorials/ct-chicago-public-schools-bankrupt-emanuel-ctu-edit-0204-20160203-story.html
As of 2015, MEABF had $9.913 billion fewer assets than state actuaries said it needs to generate enough investment returns to fund its retirement promises. LABF is $1.23 billion short.
And is the state of Illinois going to ride to the city’s rescue with a bailout? The state’s situation is worse than the city’s. They’re $267 billion in debt.
EXCEPT there is a fundamental difference that I neglected to point out. A main issue in SD v Dole was that Congress was exerting influence over something that did not fall under an enumerated right. As such a national drinking age was unconstitutional under the 21st Amendment and use of Tax & Spend was an end-around. In this case Congress most definitely has the right to pass immigration laws. I would think that that makes a difference.
This is the one that worries me the most. I follow Illinois politics pretty closely, and what I keep hearing is that there will be no state budget until Rauner is out of office. The whole situation is mind-boggling; everyone in state government agrees that Illinois is careening toward financial catastrophe, but there’s a bizarre lack of urgency and a shrugging, whaddaya-gonna-do indifference. Illinois politicians act like passing a budget—something 49 other states manage to do—is a fanciful pipe dream. The social service system is headed toward collapse and I think it’s inevitable that there will be deaths directly attributable to the budget impasse.
It’s also shocking to me that the national media has essentially ignored this, as they’re currently focused exclusively on Trump. What’s happening in Illinois makes the antics of Scott Walker and Sam Brownback seem benign by comparison.
It’s interesting that you don’t mention Governor Bruce Rauner in your post; you praised him to the skies when he was running for the job. His fiscal management of the state has been absolutely ruinous. Under Rauner, Illinois has essentially stopped paying its bills. The pile of unpaid bills is expected to reach $24 billion by 2019, and the state’s bond rating will likely be reduced to junk. He’s made a mess which will take decades to clean up, and he doesn’t appear to care.
My company flat out won’t do business with the state of Illinois. No exceptions; don’t waste your time asking for one. I’m sure we aren’t the only one.